Puerto Rico Oversight Board to hire new revitalization coordinator

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Two members of Puerto Rico’s Financial Oversight and Management Board indicated Thursday that the Board is in the process of interviewing finalists to become revitalization coordinator for the commonwealth's infrastructure, adding that an effort in Congress to shift responsibility for the commonwealth’s economic revitalization is ill-timed.

Meanwhile, the House Natural Resources Committee is meeting Tuesday to consider removing the infrastructure revitalization section from the 2016 Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) that established the Oversight Board to restructure the commonwealth’s debt, improve its financial practices and promote economic growth.

The reason the amendment is under consideration is that the infrastructure section hasn’t been effective, according to a spokesman for the House committee, who said the original executive director, Noel Zamot, resigned in frustration.

Jose Carrion, the Oversight Board chairman, attributed the resignation to “the contentious process” caused by friction between the Oversight Board and Gov. Ricardo Rossello, who resigned Aug. 2.

That’s no longer an issue. Carrion described the Oversight Board’s relationship with the new governor, Wanda Vázquez Garced, as “a breath of fresh air.”

“From the perspective of the Oversight Board, we are very pleased” with the new governor, Carrion said at a forum sponsored by the conservative-leaning Heritage Foundation.

Carrion said Rossello’s opposition to the Oversight Board was based on “political expediency.”

Given the change in the political climate, Carrion said, “We're actually actively looking at re-engaging and hiring, we're in conversations with some folks as to moving that issue forward.”

The House Natural Resources Committee’s discussion draft of PROMESA amendments proposes the appointment of an overall reconstruction coordinator for the commonwealth and as well as a revitalization coordinator for the Puerto Rico Electric Power Authority apparently as a substitute for removing PROMESA’s section on infrastructure revitalization.

David Skeel, another member of the Oversight Board who attended the Heritage Foundation forum, said the PREPA restructuring is making progress and he’s concerned about the possibility of derailing that with a new position at PREPA.

“I would be very concerned about tinkering with that, with bringing in somebody else with decision making authority,” said Skeel, who is a law professor at the University of Pennsylvania Law School.

“We're very hopeful and cautiously optimistic that it will bring in a private contracts concessionaire or private operator to run the transmission and distribution,” Skeel said. “That will be the core of the proposal, or the core of the, the transformation. We also have a debt deal with a significant majority, with 90% of the bondholders.”

The Heritage Foundation forum was billed as a chance to discuss how the lessons learned from Puerto Rico’s debt crisis might be applied to the states.

Skeel said that changes made by Congress in 1984 to the federal bankruptcy code specifically excluded Puerto Rico and its municipalities from eligibility to file for debt reorganization under Chapter 9 of the bankruptcy code.

Skeel said the “real innovation” contained in the 2016 PROMESA law is that it allowed the commonwealth and its municipalities to file for debt reorganization.

State governments, however, are not eligible for bankruptcy debt restructuring.

“At this point it’s not clear whether the result is going to be a good one or a bad one,” Skeel said, adding later in his remarks, “I hope Puerto Rico will be a huge success but we’re not quite there yet.”

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PROMESA Debt holders Infrastructure Economy Commonwealth of Puerto Rico Puerto Rico Electric Power Authority Washington DC Puerto Rico