By The Star Staff
The Financial Oversight and Management Board has issued a notice of violation with noncompliance points on the Puerto Rico Industrial Development Company’s (PRIDCO) 2023 fiscal plan, according to a letter.
The oversight board gave PRIDCO until May 12 to submit a revised fiscal plan, the April 28 letter said. Robert F. Mujica, the board’s executive director, told Gov. Pedro Pierluisi Urrutia that after reviewing the submission, the oversight board has determined certain revisions to the proposed plan are required to meet the certification requirements of Section 201 of the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA. The notice of violation contains details on the proposed plan’s primary points of noncompliance, recommendations for revisions, and requests for additional supporting information.
For instance, the letter asks PRIDCO to incorporate the findings from both the Expanded CapEx Study and the Divestment Study, which highlight critical repairs and improvements to PRIDCO’s portfolio of buildings and potential divestment of PRIDCO’s non-rentable properties.
Additionally, PRIDCO and the oversight board identified 33 properties within PRIDCO’s portfolio deemed structurally unsafe to enter. The 2022 PRIDCO Fiscal Plan set aside $15 million in demolition reserve to address 23 of those demolition projects. Accordingly, the proposed plan must provide a detailed plan to execute the 16 demolition projects for the structurally unsafe properties but not targeted for divestment. For the 17 properties marked for divestment in the Divestment Study, the entity must provide a schedule of estimated proceeds from divestments.
The oversight board also sought explanations as to why the proposal changes the total sale forecast for fiscal year 2023-24 from $9 million as required in the 2022 fiscal plan to $6.5 million.
Historically, PRIDCO’s delinquency rate has averaged 7.6%. The 2022 fiscal plan included a measure to reduce the delinquency rate to 5.0%.
The lower rate was phased in by 0.5% each year until achieving the 5.0% target.
“Please align FY22 and FY26 delinquency rates presented in the Proposed Plan document with the data presented in the Proposed Plan model. The documents do not align,” the letter notes.
The proposed plan also increases the cost of early retirement programs under Act 70-2011 and Act 211-2015 even though those programs are closed and retirees are transferring to the PayGo pension benefit plan, the oversight board said.
Completing the 2023 fiscal plan is critical for PRIDCO’s long-term planning and sustainability, the letter notes.