November 30, 2020

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Governor signs resolution to expedite mandatory projects with FEMA funds

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STRENGTH – Governor Wanda Vázquez Garced signed House Joint Resolution 773 to expedite permanent works projects that are approved and mandated by the Federal Emergency Management Agency (FEMA) through government loans and advances. to said entities in anticipation of the receipt of federal funds.

“Puerto Rico has received billions in aid funds from FEMA for the reconstruction and rehabilitation of our island after the onslaught of hurricanes, storms and earthquakes. Specifically, the Department of Education and the Electric Power Authority (PREPA) received $ 13 billion. It is important that these projects are carried out and the funds are not lost because they do not have the money in advance to carry out the work, ”said the governor.

To that end, the Joint Resolution authorizes the Secretary of the Treasury to create a Revolving Fund, which will be independent and segregated from other funds and will have 750 million dollars from non-obligated and / or surplus funds from the Government, and establishes a uniform process and transparent for the request and granting of Recovery Advances. This, based on the provisions of the Certified Fiscal Plan, which contemplates the creation of the aforementioned fund.

The authorization to grant recovery advances expires on June 30, 2025. Only funds for Recovery Advances and administrative expenses eligible for federal reimbursement may be withdrawn, in accordance with the terms and conditions of the measure. Recovery Advances will only be disbursed once project funds are obligated by FEMA.

Once the government entities to which the Recovery Advances are granted receive the funds required by FEMA for their respective projects, they will be required to repay the amounts loaned or advanced by the government.

The Joint Resolution has the necessary safeguards to ensure the repayment of the Recovery Advances and avoid the interference of the government creditors and their public corporations in the Fund. If a government borrowing entity does not comply with the provisions, the Secretary of the Treasury would restrict the advance of additional funds to the entity and the specific corrective actions provided in the Joint Resolution will be taken. If despite the funds having been obligated, the government entity does not receive them, it will be obligated to repay the Advance Recovery from its own funds.

The Joint Resolution expressly provides that the creditors of the government and its public corporations may not interfere with or obtain a lien on the Recovery Advances, the repayment thereof, the Fund, or the funds received from FEMA.

It also establishes that the Financial Advisory Authority and Fiscal Agency (AAFAF) will assist the Secretary of the Treasury in the promulgation of the guidelines and regulations of the program and in the approval and administration of the terms and conditions of the Recovery Advances that are granted under the Joint Resolution. In addition, the AAFAF and the Department of the Treasury will provide monthly reports regarding the operation of the program and the status of financed projects. The Fiscal Oversight Board will also review and approve the Recovery Advances requested and granted, in compliance with the provisions of the Puerto Rico Supervision, Administration and Economic Stability Act, better known as PROMESA.

The measure, which had been sent by Vázquez Garced to the Legislative Assembly in the last extraordinary session, will take effect immediately.

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