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  • Writer's pictureThe San Juan Daily Star

Fiscal board disallows lease for major real estate development at Roosevelt Roads

The Financial Oversight and Management Board said it rejected contracts for a large-scale development project at the former military base in Ceiba because the process leading to their being awarded was found to include several irregularities.

Citing irregularities, requires that redevelopment authority conduct new procurement process

By The Star Staff

The Financial Oversight and Management Board has disallowed leases for 1,100 acres at the former U.S. Naval Base at Roosevelt Roads in Ceiba for up to 100 years to develop a large real estate project because of irregularities in the process, according to a recent letter.

The oversight board said that after reviewing Contract No. 2020-000022, or the lease agreement between the Local Redevelopment Authority for Roosevelt Roads (LRA) and Loopland Development LLC; the amended and restated lease agreement, Contract No. 2020-000022A; and the proposed Second Amended and Restated Lease Agreement; it opted to reject, according to a Dec. 13 letter addressed to LRA Executive Director Joel Pizá Batiz, who is also the executive director of the Puerto Rico Ports Authority.

The contracts were rejected because the process leading to their being awarded was found to include several irregularities, the oversight board said. The procedure for awarding the contracts did not promote market competition, as required by the Puerto Rico Oversight, Management and Economic Stability Act (commonly known as PROMESA) and government policy, the board determined.

“Specifically, the lease agreement was awarded after receipt of an unsolicited proposal and involved direct negotiations with the LRA as the single proponent,” said Jaime A. El Koury, the oversight board’s general counsel. “Further, the LRA did not submit the lease agreement nor the first amendment to the Oversight Board for review and approval prior to execution, as required by the policy. Accordingly, the LRA must terminate the Lease Agreement and the First Amendment, and conduct a new procurement process that ensures transparency and promotes market competition. As you know, the proposed contract resulting from a new procurement process must be submitted for the Oversight Board’s review and approval prior to execution.”

The agreements called for the construction of 500 high-end residential units, 50 condo hotel units, a private golf course and other luxury recreational amenities, including piers, sports facilities, a water park, restaurants and stores, according to a document attached to the letter and labeled Appendix A.

The rejected contracts with Loopland Development amounted to nearly $53 million, according to the oversight board’s contract review website.

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