The Financial Oversight and Management Board for Puerto Rico today certified the Fiscal Plans for seven instrumentalities of the Commonwealth of Puerto Rico, including the Puerto Rico Electric Power Authority (PREPA), the Puerto Rico Highway and Transportation Authority (HTA), the University of Puerto Rico (UPR), the Puerto Rico Industrial Company (PRIDCO), and the Puerto Rico Aqueduct and Sewer Authority (PRASA).
The Fiscal Plans certified at the Oversight Board’s 28th public meeting are building blocks for Puerto Rico’s recovery, stability, and growth. According to the federally-appointed entity, he Fiscal Plans provide an estimate of each instrumentalities' revenue and expenditure over five years as mandated under PROMESA, ensures the funding of the core services each instrumentality provides, outlines efficiencies that ensure each instrumentality prioritizes what is important and eliminates wasteful spending, and provides for capital expenditures and investments.
“Puerto Rico's future depends on accessible higher education provided by an efficient and stable UPR, reliable and affordable electricity, clean water, well maintained roads, and maximizing Puerto Rico's attractiveness to future investors who built companies that provide well-paying jobs,” said the Oversight Board's Chairman David Skeel. "The Fiscal Plans the Oversight Board certified today provide the road map to that future, a future of growth and prosperity for Puerto Rico."
Below, a breakdown of tthe Fiscal Plans for the aforementioned entities, as explained by the Oversight Board in a missive:
- The PREPA Fiscal Plan defines the transition of power generation to private operators and the procurement of renewable energy, continuing the transformation of Puerto Rico’s energy system to improve efficiency and reliability. The Fiscal Plan also details LUMA Energy’s performance evaluation and requirements to comply with performance metrics. Puerto Rico cannot grow without reliable and affordable energy.
- The HTA Fiscal Plan outlines the transformation of Puerto Rico’s transportation system to reduce traffic congestion, increase access to public transportation, and promote economic development and growth in Puerto Rico. The Fiscal Plan includes Toll fare increases designed to support HTA’s fiscal sustainability by increasing revenues modestly and consistently overtime.
- The UPR Fiscal Plan’s goal is to enhance academic excellence. The Fiscal Plan prioritizes learning and acknowledges potential savings from a more efficient bureaucracy; savings that should be used to improve the student experience as a whole. Higher Education is critical to the economic development of Puerto Rico by providing opportunity for students and for its potential to unleash the creativity and innovation that supports economic growth. The Fiscal Plan encourages sound fiscal self-management to ensure a stable financial future for UPR. Students deserve a quality education that provides them with a solid foundation for their future. Effective and efficient management is key to providing it.
- The PRIDCO Fiscal Plan includes strategic initiatives for improving capital expenditure funding plans, pursuing measures to drive increased occupancy, conducting a needs assessment relating to information systems, and evaluating the feasibility of alternative operating models. PRIDCO is an important element of Puerto Rico’s economic development and the properties available to potential investors are crucial assets to help bring jobs to Puerto Rico that will foster sustainable economic growth.
- The PRASA Fiscal Plan outlines measures to improve water leak detection and measuring water consumption expected to generate $13 million in savings. The Fiscal Plan also requires PRASA to replace its faulty and outdated water meters and implement moderate adjustments to water rates that ensure its real costs are fully covered by service revenues, and to conduct a study to determine its optimal rate structure for the future.
The Fiscal Plans also outline the unique opportunity Puerto Rico has today from the federal government’s recovery programs. The federal reconstruction funds provide many instrumentalities with significant strength to help their transformation as engines of economic growth.
The FOMB said that federal investment paired with reforms needed will reportedly transform these instrumentalities into modern, efficient organizations able to shed outdated ways to operating, build a modern infrastructure, and better serve the people of Puerto Rico. Per the Oversight Board:
- The PREPA Fiscal Plan outlines the use for the about $10.7 billion, including cost-share and state matched fund, that were obligated to rebuild Puerto Rico’s energy infrastructure over the next few years. To date, PREPA has received roughly $1.6 billion in funds through the FEMA Public Assistance Program, mainly related to damages caused by hurricanes Irma and Maria in 2017.
- The HTA Fiscal Plan outlines a more aggressive federal grants strategy to obtain Puerto Rico’s share of federal funds compared to U.S. states. Transportation entities must have a proactive strategy to identify and pursue federal funding for improvement and innovation projects.
- The UPR Fiscal Plan includes access to federal funds greater than ever before through the three federal COVID-19 related programs providing eligibility over $ 400 million in funds, nearly equally divided between institutional and student aid funds. Further, UPR has available about $163 million in scholarship funding from the Commonwealth. In addition, UPR has access to $ 315 million in federal disaster reconstruction funds through FEMA and the U.S. Department of Housing and Urban Development’s CDBG-DR program.
- The PRASA Fiscal Plan includes $3.66 billion in obligated FEMA funds to rebuild hurricane damaged infrastructure and $353 million in low-interest funding from the U.S. Environmental Protection Agency and the U.S. Department of Agriculture to cover qualifying capital projects.
The Oversight Board also certified the Fiscal Plans for the Puerto Rico Sales Tax Financing Corp. (COFINA) and the Public Corporation for Supervision and Insurance of Cooperatives of Puerto Rico (COSSEC).
The Fiscal Plans are available on the Oversight Board’s website.