By The Star Staff
The Financial Oversight and Management Board (FOMB) approved a budget resolution earlier this week, appropriating $350 million to fund a settlement agreement between the Puerto Rico Ports Authority (PRPA) and the Puerto Rico Government Development Bank Debt Recovery Authority (DRA), paving the way for a cruise ship port public-private partnership.
Last week, the island Senate rejected a House concurrent resolution appropriating $353 million to fund the debt and other transportation needs. Using its powers under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), the oversight board approved the budget resolution on Monday afternoon.
“Governor Pedro R. Pierluisi submitted a proposed budget resolution to the FOMB on January 16, 2024, to include the appropriation, but one chamber of the Legislative Assembly failed to adopt a compliant budget resolution,” the oversight board said in a statement. “Every delay results in additional costs and postponement of the capital improvement plans.”
Therefore, pursuant to Section 202(d)(2) of PROMESA, the oversight board developed and certified a budget resolution compliant with the Fiscal Plan for Puerto Rico.
The board said the concession agreement signed in 2022 between the Puerto Rico Public-Private Partnerships Authority and a Global Ports Holding PLC subsidiary for the repair, improvement, operation and maintenance of the San Juan Bay Cruise Terminals stipulates that the PRPA must deliver the pier assets to the concessionaire “free and clear” of liens.
“The financial closing of the concession agreement has been extended several times,” the oversight board noted. “Further delays pose a real risk to the settlement and the improvement project overall, as well as Puerto Rico’s reputation as an investment destination.”
On Jan. 11, the oversight board informed the government that it had approved the proposed transaction to settle six legacy credit facilities owned by PRPA to DRA, as successor in interest to the Government Development Bank. The proposed settlement is critical to complete the development of the cruise terminals, which aims to transform Puerto Rico into the Caribbean’s main cruise ship destination by modernizing and expanding nine docks in San Juan.
The government’s contribution to fund the proposed settlement transaction comes from proceeds from the recent concession agreement between the Puerto Rico Highways and Transportation Authority (HTA) and Puerto Rico Tollroads LLC, specifically those used to repay the loan the commonwealth had extended to HTA in fiscal year 2022.