Demand for expedited permitting for infrastructure projects under Title V has been slight
By The Star Staff
The Financial Oversight and Management Board said Thursday that the demand for expedited permitting for critical projects pursuant to Title V of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) has been minimal.
The U.S. Congress added Title V to PROMESA because Puerto Rico desperately needed a revitalized infrastructure. To facilitate private investment in infrastructure, Title V created the position of Revitalization Coordinator (RC), a position currently vacant, to review private infrastructure projects for consideration as critical projects. A critical project is one related to energy or an essential service and that meets other requirements, including the provision of jobs. The Title V Policy clarifies requirements for projects that involve doing business with any government agency or public corporation, especially energy-related projects that require a power-purchase and operating agreement (PPOA). All projects that require obtaining a contract or request for proposal (RFP) award from any government agencies or public corporations must obtain such a contract or RFP award prior to the project submission through Title V.
If the oversight board agrees with the RC that a project is a critical project, it is entitled to expedited local permitting. In 2017, the government adopted accelerated permitting procedures independent of Title V. Then the devastation of Hurricane Maria made Puerto Rico’s infrastructure needs all the more urgent, the board said in its annual report issued recently.
“Not only did Puerto Rico’s electricity infrastructure collapse in the wake of the hurricane, but also its roads, aqueduct and sewers system, housing, and other infrastructure assets,” the oversight board said. “During this past year, the demand for expedited permitting pursuant to Title V has been minimal.”
Historically, projects that came into the pipeline were primarily related to the Puerto Rico Electric Power Authority (PREPA). However, all the PREPA contracts needed to first either be approved or rejected in the Title III court. It was only in early June 2020 that PREPA announced the next steps for PPOA contracts. Further, early this year the first of six competitive procurement tranches ordered by the Puerto Rico Energy Bureau to reach compliance with Act 17-2019 concluded, resulting in the selection of 18 renewable-generation projects, which were approved by the oversight board in March.
“The Oversight Board expects that the demand for Title V projects will grow as PPOA contracts and new renewable generation projects are put in place,” the board said. “The Oversight Board is hopeful that as the business environment continues to improve, there will be more private sector investment seeking to take advantage of Title V. To ensure the Oversight Board is prepared to manage the renewed demand, the Board is currently in the process of hiring a full-time RC.”
By the beginning of fiscal year 2019, the RC had evaluated 55 projects totaling over $9 billion. Upon adoption of the Oversight Board Title V Policy as of July 31, 2018, active projects had to be withdrawn from participation or placed on hold since some 80% were energy-related, requiring a valid PPOA assumed under Title III, and the remaining 19% required a government RFP or similar.
One percent constituted a qualifying project (Viewpoint of Roosevelt Project), which was real-estate related, and a rejected project that did not meet initial requirements. Nevertheless, many energy-related project sponsors continued to negotiate their contracts with PREPA through the respective processes and demonstrated interest in reactivating their project submission upon successfully complying with the Oversight Board Title V Policy.