Oversight board warns mayors to stop implementing Acts 141 & 215

Robert F. Mujica Jr., executive director of the Financial Oversight and Management Board for Puerto Rico

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has ordered the island’s two mayors organizations to stop implementing two laws that expand municipal procurement and taxation powers, warning that the measures violate the certified Fiscal Plan and could jeopardize federal funding.

In a letter sent Monday to Camuy Mayor Gabriel Hernández Rodríguez, president of the Puerto Rico Mayors Federation, and Jayuya Mayor Jorge González Otero, president of the Puerto Rico Mayors Association, the executive director of the oversight board, Robert F. Mujica Jr., said several municipalities have begun applying provisions of Act 141‑2024 and Act 215‑2024 despite an ongoing review under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) § 204(a).

The oversight board reiterated that neither law may be implemented unless and until it determines they comply with PROMESA and the applicable fiscal plans.

Act 141 raises the threshold for requiring a public auction for construction and public improvement projects from $200,000 to $500,000, and allows contracts of up to $1 million to bypass competitive bidding during an emergency declaration. The board previously warned in January 2025 that the measure “contravenes procurement best practices and undermines market competition.”

Act 215 similarly increases procurement limits, doubling the sealed request‑for‑proposals threshold for municipal works from $100,000 to $200,000 and more than tripling the micro‑purchase threshold from $3,000 to $10,000. In a June 2025 letter, the board said the law weakens competitive bidding requirements central to the Fiscal Plan.

The oversight board also highlighted a second component of Act 215: a change to the Municipal Code that allows municipalities to impose construction excise taxes on projects even when the project owner is exempt, including projects financed with commonwealth or federal funds.

According to the letter, some municipalities have already begun collecting these taxes.

The board warned that taxing federally funded projects could be interpreted by federal agencies as a misuse of funds, potentially discouraging future allocations to Puerto Rico. It also cautioned that higher municipal taxes could make energy reconstruction and other critical infrastructure projects more expensive, less viable, or even unprofitable.

Additionally, the oversight board noted that allowing 78 municipalities to impose varying tax rates could lead to inequitable outcomes, distort where projects are located, and create administrative inefficiencies.

Mujica asked both mayoral organizations to confirm by June 22 that they have instructed their members not to implement either law until the oversight board completes its review.