CHAPTER 1:
GENERAL PROVISIONS AND DEFINITIONS
Article
101.-Title.
This Act shall
be known and may be cited as the “Government Development Bank for Puerto Rico
Debt Restructuring Act”.
Article
102.-Public Policy and Legislative Findings.
The purpose of
this Act is to establish the legislative framework for the Restructuring
Transaction. The Legislative Assembly hereby finds that the Restructuring
Transaction (i) has a public purpose and is in the best interests of the people
of Puerto Rico, (ii) is fair and equitable for all creditors of GDB, (iii) is
necessary to ensure compliance with the GDB Fiscal Plan, (iv) achieves fiscal
responsibility for the people of Puerto Rico by providing for an orderly
restructuring of the liabilities of GDB, (v) settles and resolves potential
claims between GDB and other Government Entities, and (vi) permits the
provision of essential public services by the Government of Puerto Rico and
other Government Entities.
Article
103.-Definitions.
The following
terms shall have the meanings stated below:
(a)
“AAFAF”– means the Puerto Rico Fiscal Agency and
Financial Advisory Authority.
(b)
“Act”– means this “Government Development Bank
for Puerto Rico Restructuring Act”.
(c)
“Ancillary Agreements”– means the Bond
Indenture, the Transfer Agreement, the Servicing Agreement, and any other
agreement or instrument entered into by the Recovery Authority or GDB in
connection with, or in furtherance of, the Restructuring Transaction and in
accordance with, or in furtherance of, the Qualifying Modification.
(d)
“Asset Manager”– means the Person or Persons
designated by the Recovery Authority to act as asset manager and servicer of
the Restructuring Property in accordance with the terms of the Ancillary
Agreements.
(e)
“Authorized Activities”– means the activities
authorized to be carried out by the Recovery Authority under Article 204 of this
Act.
(f)
“Board of Trustees”– means the Board of Trustees
of the Recovery Authority.
(g)
“Bond”– shall have the meaning provided in
Section 5(2) of PROMESA.
(h)
“Bond Indenture”– means one or more trust
agreements, bond indentures and any supplements thereto, or similar contracts
or agreements, entered into by the Recovery Authority and the Indenture Trustee
pursuant to which Restructuring Bonds are issued, establishing the rights and
responsibilities of the Recovery Authority and of the holders of Restructuring
Bonds issued thereunder and secured thereby, and confirming the statutory lien
created pursuant to Article 402 of this “Act in the Restructuring Property in
favor of the Restructuring Bonds”.
(i)
“Chair”– means the chairperson of the Board of
Trustees.
(j)
“Closing Date”– means the effective date of the
Restructuring Transaction.
(k)
“Commonwealth Fiscal Plan”– means the Fiscal
Plan for the Government of Puerto Rico certified by the Oversight Board on
March 13, 2017, as the same may be amended from time to time.
(l)
“Designated Depositors”– means the Non-Municipal
Government Entities having claims in respect of funds on deposit at GDB as of
the Closing Date, after giving effect to the transactions set forth in Article
302 of this Act.
(m)
“Designated Deposits”– means the deposit
liabilities of GDB to the Designated Depositors transferred to the Public
Entity Trust pursuant to the Public Entity Deed of Trust.
(n)
“District Court”– means the United States
District Court for the District of Puerto Rico.
(o)
“Effective Date”– means the date on which the
Qualifying Modification becomes conclusive and binding pursuant to Section
601(m) of PROMESA.
(p)
“Excess CAE”– means proceeds of the special
additional tax which GDB has certified as surplus from the Municipal Public
Debt Redemption Fund (as defined in the “Municipal Financing Act”) prior to January
1, 2017 pursuant to Article 20(e) of the “Municipal
Financing Act”, corresponding to fiscal years 2015, 2016 and 2017 and which are
booked as on deposit in accounts at GDB in the name or
for the benefit of certain municipalities. For the avoidance of any doubt, the
term “Excess CAE” shall not include those proceeds of the special additional
tax which AAFAF has certified as surplus from the Municipal Debt Redemption
Fund (as defined in the “Municipal Financing Act”) after January 1, 2017 pursuant to Article 20(e) of the “Municipal Financing Act”,
corresponding to fiscal years 2017 and beyond and which are deposited in the “Municipal
Financing Act” accounts created in financial institutions outside of GDB in the
name or for the benefit of each municipality.
(q)
“Excluded Assets”– means those assets of GDB
that are not required to be transferred to the Recovery Authority in connection
with the Restructuring Transaction pursuant to the terms of the Qualifying
Modification, including, without limitation, the Public Entity Trust Assets.
(r)
“Entity Classification Election”– means an
election under Section 301.7701-3 of the Treasury Regulations promulgated under
the United States Internal Revenue Code of 1986, as amended.
(s)
“Financing Costs”– means all costs associated
with the Restructuring Transaction, including, without limitation, the costs,
fees and expenses to (i) issue, service, repay or refinance the Restructuring
Bonds, whether such costs are incurred upon issuance of such Restructuring
Bonds or over the term of the Restructuring Bonds, including, without
limitation, any interest paid in kind, (ii) make payments as required by
the Ancillary Agreements, (iii) pay any stamp, issuance or similar taxes and
other charges related to the Restructuring Transaction, provided, that this
provision does not limit in any way the exemption from taxes set forth in
Articles 208 and 306 hereof, (iv) prepare for and enter into the Restructuring
Transaction, (v) protect the Restructuring Property, including, without
limitation, any collection, enforcement, sale, monitoring, protection, or
settlement actions related to the Restructuring Property, (vi) confirm and
protect the statutory lien on the Restructuring Property in favor of the
Restructuring Bonds, in accordance with Article 402 of this Act, and
(vi) perform all ongoing activities relating to the Restructuring
Transaction. For the avoidance of doubt, Financing Costs also includes
pre-closing and post-closing administrative fees and expenses incurred in
connection with all Ancillary Agreements.
(t)
“GDB”– means Government Development Bank for
Puerto Rico.
(u)
“GDB Enabling Act”– means Act No. 17 of
September 23, 1948, as amended.
(v)
“GDB Fiscal Plan”– means the Fiscal Plan for GDB
certified by the Oversight Board on July 12, 2017, as the same may be amended
from time to time.
(w)
“Government Entity”– means any agency,
department, office, public corporation, trust, fund, system, instrumentality,
political subdivision, taxing authority or municipality of the Government of
Puerto Rico.
(x)
“Government of Puerto Rico”– means the
Commonwealth of Puerto Rico and the government thereof.
(y)
“Indenture Trustee”– means the Person designated
as trustee or indenture trustee under the Bond Indenture.
(z)
“Municipal Financing Act”– means Act 64-1996, as
amended.
(aa)
“Non-Municipal Government Entity”– means a
Government Entity that is not a municipality of the Government of Puerto Rico.
(bb)
“Oversight Board”– means the Financial Oversight
and Management Board for Puerto Rico established pursuant to Section 101 of
PROMESA.
(cc)
“Participating Bond Claims”– means the Bonds of
GDB that are subject to and bound by the Qualifying Modification.
(dd)
“Person”– means any natural person or legal
entity, including, but not limited to, any Government Entity, or any
individual, firm, partnership, joint venture, trust, estate, limited liability
company, corporation of individuals, association, public or private
corporation, organized or existing under the laws of Puerto Rico, the United
States of America, or any other jurisdiction or of any state, municipality,
political subdivision, taxing authority, agency or instrumentality of Puerto
Rico, of the United States of America or any other jurisdiction, or any combination
thereof.
(ee)
“PROMESA”– means the “Puerto
Rico Oversight, Management, and Economic Stability Act”, Pub. L. No. 114–187,
130 Stat. 549 (2016).
(ff)
“Public Entity Deed of Trust”– means the deed of
trust (i) pursuant to which (a) the Public Entity Trust shall be created and
(b) GDB shall irrevocably transfer the Public Entity Trust Assets and the
Designated Deposits to the Public Entity Trust and (ii) that satisfies the
conditions of the Qualifying Modification.
(gg)
“Public Entity Trust”– means the GDB Public Entity
Trust created pursuant to the Public Entity Deed of Trust.
(hh)
“Public Entity Trust Assets”– means the assets
identified in the Public Entity Deed of Trust for which legal and equitable
title is to be irrevocably transferred by GDB to the Public Entity Trust as
part of the Restructuring Transaction and which satisfy the conditions of the
Qualifying Modification, and all assets, collections, fees, charges, proceeds,
revenues, rents, insurance payments, income or other funds generated by, or
received by the Public Entity Trust or GDB in respect of, any of the
foregoing.
(ii)
“Qualifying Modification”– means the
Restructuring Support Agreement dated May 17, 2017 and certified by the
Oversight Board as a Qualifying Modification under Section 601(g)(2)(A) of PROMESA,
as the same may be amended from time to time in accordance with its terms.
(jj)
“Recovery Authority”– means the GDB Debt
Recovery Authority created pursuant to Article 201 of this Act.
(kk)
“Recovery Authority Assets”– means all legal and
equitable right, title and interest in and to: (i) all assets of GDB that are
in existence as of the Closing Date (other than Excluded Assets), including any
assets of GDB (other than Excluded Assets) that are in existence as of the
Closing Date but are identified after the Closing Date; (ii) the net proceeds,
if any, from public entity loans, the proceeds of which are required to be
transferred to the Recovery Authority pursuant to the Qualifying Modification;
and (iii) the net proceeds, if any, from any causes of action (other than
causes of action to enforce loans that constitute Excluded Assets, which shall
be transferred to the Public Entity Trust), including contingent or unknown
causes of action, the proceeds of which are required to be transferred to the
Recovery Authority pursuant to the Qualifying Modification.
(ll)
“Residual Participating Bond Claims”– means the
contingent and residual claims against GDB of each holder of a Participating
Bond Claim for the unsatisfied portion of such holder’s Participating Bond
Claim, to be provided for pursuant to the Ancillary Agreements, from and after
the Closing Date and until all of the Restructuring Property has been applied
to payment in respect of the Restructuring Bonds in accordance with their
terms, provided that the Residual Participating Bond Claims shall only be
enforceable against GDB if and to the extent the
Qualifying Modification, the Restructuring Bonds or the rights and liens of the
Recovery Authority, the Indenture Trustee or the holders of the Restructuring
Bonds in respect of the Restructuring Property or the Restructuring Bonds are
rescinded or avoided or are otherwise made to be unenforceable in accordance
with their terms as a result of legislative action or a final non-appealable
determination by a court of competent jurisdiction.
(mm)
“Restructuring Bonds”– means the bonds issued
by the Recovery Authority pursuant to this Act, the Bond Indenture and the
Ancillary Agreements from time to time, having terms that conform to, and that
are distributed in accordance with, the Qualifying Modification.
(nn)
“Restructuring Property”–
means all legal and equitable right, title and interest in and to the Recovery
Authority Assets (including, without limitation, the beneficial interest in
property of GDB, the proceeds of which are required to be transferred to the
Recovery Authority in connection with the Restructuring Transaction pursuant
to the terms of the Qualifying Modification) and all assets, collections, fees,
charges, proceeds, revenues, rents, insurance payments, income or other funds
generated by, or received by the Recovery Authority, any Asset Manager or GDB
in respect of the Recovery Authority Assets, including in respect of the
administration or reinvestment thereof.
(oo)
“Restructuring Resolution”– means one or more
resolutions of the Board of Trustees authorizing: (i) the issuance of the
Restructuring Bonds and describing the terms thereof; (ii) receipt of the
Recovery Authority Assets and ownership of the Restructuring Property, subject
to the statutory lien created pursuant to Article 402 of this Act; and (iii)
the payment of the Financing Costs, each in accordance with the terms of the
Qualifying Modification.
(pp)
“Restructuring Transaction”– means the
transactions contemplated by, or in furtherance of, the Qualifying Modification
including, without limitation: (i) the irrevocable transfer of the Recovery
Authority Assets to the Recovery Authority in consideration for the Recovery
Authority’s issuance of the Restructuring Bonds to the holders of Participating
Bond Claims in exchange for their Participating Bond Claims; (ii) the issuance
of the Restructuring Bonds by the Recovery Authority; (iii) the cancellation
and extinguishment of the Participating Bond Claims; (iv) the irrevocable
transfer of the Public Entity Trust Assets by GDB to the Public Entity Trust in
consideration for the assumption by the Public Entity Trust of the Designated
Deposits; (vi) the cancellation and extinguishment of the Designated Deposits;
and (v) the provision for the Residual Participating Bond Claims.
(qq)
“Servicing Agreement”– means the asset
management and servicing agreement by and between the Recovery Authority and
the Asset Manager pursuant to which the Asset Manager shall manage and service
the Restructuring Property.
(rr)
“Transfer Agreement”– means one or more transfer
or similar contracts or agreements entered into by GDB and the Recovery
Authority pursuant to which GDB shall irrevocably transfer all legal and equitable right, title and interest in and to the Recovery Authority Assets to the Recovery Authority.
CHAPTER 2: THE GDB
DEBT RECOVERY AUTHORITY
Article 201.-Creation
of the Recovery Authority.
The GDB Debt
Recovery Authority is hereby created as a statutory public trust and a
governmental public instrumentality of the Commonwealth of Puerto Rico,
independent and separate from any other Government Entity (including, without
limitation, GDB). The Recovery Authority and its existence shall continue until
one year and one day after all Restructuring Bonds, Financing Costs and other
indebtedness of the Recovery Authority have been paid in cash in full or
otherwise discharged pursuant to their terms. Upon the dissolution of the
Recovery Authority, and only after the Restructuring Bonds, Financing Costs and
other indebtedness of the Recovery Authority have been paid in cash in full or
otherwise discharged pursuant to their terms, the ownership of any remaining
Restructuring Property shall be transferred to the beneficiary of the Recovery
Authority, the Commonwealth of Puerto Rico.
Article
202.-Separate Legal Existence.
The Recovery
Authority is and shall be recognized for all purposes as a separate legal
entity from the Government of Puerto Rico, GDB and any other Government
Entity. It shall be operated independently, and its business and affairs shall
be governed by or under the direction of its Board of Trustees. Any delay in
remitting the Recovery Authority Assets, any commingling of the Restructuring
Property with the assets of the Government of Puerto Rico, GDB or any other Government
Entity, any servicing provided by GDB, and any other circumstances of the
Restructuring Transaction in accordance with the Bond Indenture and the other
Ancillary Agreements shall not defeat or impair the separate legal existence or
independence of the Recovery Authority or the complete and unassailable
ownership by the Recovery Authority of any of its assets.
Article
203.-Purpose of the Recovery Authority.
The Recovery
Authority is created for the purpose of (1) issuing the Restructuring Bonds in
order to (a) implement the Restructuring Transaction, (b) facilitate compliance
with the GDB Fiscal Plan, and (c) facilitate the funding of essential
government or public services by the Government of Puerto Rico and (2) owning
and managing the Restructuring Property. The Recovery Authority is created and
constituted to exercise essential government and public functions and the
performance by the Recovery Authority of the activities and powers granted
hereby shall be considered and constitute an essential function of the
Commonwealth of Puerto Rico for the good of the people of Puerto Rico. The
Recovery Authority is not created or organized, and its operations shall not be
conducted, for the purpose of making a profit, and no part of the revenues or
assets of the Recovery Authority shall inure to the benefit of or be
distributable to any private person or entity, except to service and pay the
Restructuring Bonds and pay fees and costs for actual services rendered as
herein provided or as otherwise required to carry out the intent of this Act.
Article 204.-Recovery Authority’s Activities.
The Recovery Authority’s activities shall be limited to the
following Authorized Activities:
(a)
Receiving the Recovery Authority Assets and
owning the Restructuring Property;
(b)
adopting the Restructuring Resolution;
(c)
issuing the Restructuring Bonds from time to
time,
(d)
entering into the Ancillary Agreements;
(e)
servicing or contracting for the servicing of
the Restructuring Property and the Restructuring Bonds and for administrative
services;
(f)
collecting, receiving, owning, enforcing,
monitoring, selling and protecting the Restructuring Property or otherwise
authorizing any of the foregoing, in accordance with the Ancillary Agreements
and for the sole purpose of realizing on, or preserving, the value of the
Restructuring Property or the proceeds therefrom, including, without
limitation, by initiating necessary legal action (subject to Article 206 (g) of
this Act);
(g)
fully accounting for and making all payments and
allocating partial payments, in accordance with terms of the Ancillary
Agreements;
(h)
entering into contracts and taking any other
necessary or convenient actions with respect to realizing the maximum value of
the Restructuring Property, including related to the collection, enforcement,
sale, monitoring, protection, forbearance or settlement thereof consistent with
the terms of the Ancillary Agreements;
(i)
preparing or directing the Asset Manager to
prepare reports and financial statements as required by the Ancillary
Agreements;
(j)
using or directing the use of the Restructuring
Property in accordance with the Ancillary Agreements;
(k)
making an Entity Classification Election; and
(l)
taking any and all other actions as may be
necessary or appropriate to effectuate the Restructuring Transaction and the
Qualifying Modification.
Article
205.-Ancillary Powers.
In order to
carry out the Authorized Activities, without limiting the foregoing, the
Recovery Authority shall have the power to:
(a)
Sue and be sued;
(b)
adopt, alter and use a seal;
(c)
formulate, adopt, amend and revoke rules for the
administration of its affairs, and such standards, rules and regulations that
may be necessary or convenient to exercise and perform the Authorized
Activities;
(d)
open and maintain bank accounts;
(e)
acquire, lease, hold and sell property;
(f)
have complete legal and equitable dominion over
its properties (including the Restructuring Property);
(g)
make, execute and amend contracts and all other
instruments necessary or convenient to perform the Authorized Activities,
including, but not limited to, entering into contracts with one or more service
providers to conduct such Authorized Activities and to commence any action to
protect or enforce any right conferred upon it by law, contract or other agreement;
(h)
appoint and remove officers, agents and
employees, establish their compensations, powers and duties;
(i)
pay its operating expenses and the Financing
Costs;
(j)
procure insurance against loss in connection
with its activities, properties or assets;
(k)
invest funds and establish and maintain reserves
and apply the Restructuring Property as required by the Ancillary Agreements;
(l)
indemnify the members of the Board of Trustees,
its officers, agents, employees, contractors and other third parties;
(m)
acquire by the exercise of eminent domain any
real property in accordance with applicable law, but solely to the extent that
such acquisition is deemed necessary by the Recovery Authority to maximize the
value of any assets that are part of the Restructuring Property;
(n)
exercise such other powers, not inconsistent
herewith, as are conferred upon trusts by the laws of Puerto Rico and to
exercise all its powers within and without Puerto Rico to the same extent as
natural persons might or could do;
(o)
take any action or measure necessary or
convenient to carry out its purposes and exercise the powers expressly granted
in this Section;
(p)
delegate to its officers, agents, employees or
contractors (including, without limitation, the Asset Manager and any
collateral monitor) authority to take actions in furtherance of this Act; and
(q)
execute, file and amend any relevant returns,
forms, elections or statements with any governmental authority.
Article
206.-Prohibited Activities.
While the
Restructuring Bonds are outstanding, the Recovery Authority shall not be
authorized to:
(a)
Merge or consolidate, directly or indirectly,
with any Person;
(b)
incur, guarantee or otherwise become obligated
to pay any debt or other obligations other than the Restructuring Bonds and the
Financing Costs;
(c)
pledge, create or record
liens on any of its properties (including the Restructuring Property), other
than the pledge to secure the payment of the Restructuring Bonds and the
Financing Costs created pursuant to Article 402 of this Act;
(d)
engage in business
activities other than as expressly authorized in this Act;
(e)
dissolve, liquidate,
transfer or sell any or all of the Restructuring Property, except as permitted
under the Ancillary Agreements;
(f)
pursue any collection or
enforcement action with respect to bonds, loans or notes of any Non-Municipal
Government Entity that are part of the Restructuring Property and are
outstanding as of the Effective Date, other than enforcing any and all rights
and remedies thereunder in a proceeding under Title III or Title VI of PROMESA
in respect of any such Government Entity and only to the extent necessary and
appropriate to ensure that the Recovery Authority receives a distribution (if
any) in such proceeding consistent with the distributions to creditors holding claims
with the same legal priority as the claims of the Recovery Authority; and
(g)
take any other action that
is inconsistent with the Recovery Authority’s purpose set forth in this Act or
ancillary thereto.
Article
207.-Board of Trustees.
The powers of
the Recovery Authority shall be exercised and its general policy and strategic
management shall be determined by the Board of Trustees.
(a)
Composition of the Board of Trustees.
The Board of Trustees shall be composed of three (3) members, who
shall meet the requirements set forth in Article 207 (b)(iii) of this Act and
shall be appointed by, and serve at the pleasure of, the Governor of Puerto
Rico.
(b)
General Provisions regarding the Board of
Trustees.
(i)
Each member of the Board of Trustees shall be
appointed for a term of three (3) years, provided that an individual may serve
consecutive terms as an appointed member;
(ii)
each member of the Board of Trustees shall be
entitled to one (1) vote;
(iii)
each member of the Board of Trustees shall
satisfy the independence and qualification standards (including that no member
of the Board of Trustees may be an officer, employee or director of any
Government Entity) set forth in the Ancillary Agreements;
(iv)
all decisions and actions of the Board of
Trustees shall require the affirmative vote of the majority of the members of
the Board of Trustees at the time serving; and
(v)
the members of the Board of Trustees shall
select a Chair from among themselves.
(c)
Vacancies.
In the event of
a vacancy in the office of a member of the Board of Trustees by death, removal,
resignation or otherwise, a successor member who meets the requirements set
forth in Article 207 (b)(iii) of this Act shall be appointed by, and shall
serve at the pleasure of, the Governor of Puerto Rico.
(d)
Compensation.
Members of the Board of Trustees shall receive such compensation as
is authorized pursuant to the Ancillary Agreements.
(e)
Adoption and Amendment of Rules.
As soon as practicable after the appointment of all members and
appointment of the Chair, the Recovery Authority shall adopt rules and
procedures governing its activities under this Act. The Board of Trustees shall
be entitled to amend such rules and procedures from time to time.
(f)
Quorum.
A majority of the members of the Board of Trustees at the time
serving shall constitute a quorum to make decisions or exercise any power or
function of the Recovery Authority. Any one or more members may participate in
a meeting of the Board of Trustees by teleconference or similar communications
equipment. Participation by such means shall constitute presence in person at
the meeting. Any action necessary or allowed in any meeting of the Board of
Trustees shall be authorized with no need for a meeting, insofar as all members
of the Board of Trustees give their written consent concerning such action.
(g)
Delegation.
The Board of Trustees may delegate to one or more of the members, or
to the Recovery Authority’s officers, agents and employees, such powers and
duties as the Board of Trustees may deem appropriate.
(h)
Protective U.S. Federal
Income Tax Classification Election.
Any member of the Board of Trustees and any
officer of the Recovery Authority shall be authorized to sign IRS
Form 8832 on behalf of the Recovery Authority to effect an Entity
Classification Election.
Article 208.-Tax Exemption.
(a)
It is hereby found and declared that the
activities of the Recovery Authority are primarily for the benefit of the
people of Puerto Rico, for the improvement of their welfare and prosperity, and
for a public purpose, and the Recovery Authority shall be regarded as
performing an essential governmental function in carrying out the provisions of
this Act.
(b)
The Recovery Authority shall be totally exempt
from, and shall not be required to pay any kind of taxes, assessments,
licenses, stamps, fees or other similar charges levied by the Government of
Puerto Rico or any Government Entity upon any of the property it owns,
possesses, holds or uses or on its activities, or upon any income, payment or
gain derived therefrom.
(c)
The transfer of the Recovery Authority Assets by
GDB to the Recovery Authority shall be totally exempt from all kinds of taxes,
assessments, licenses, stamps, fees and other charges levied by the Government
of Puerto Rico or any Government Entity, including but not limited to, internal
revenue stamps and vouchers related to the execution of public deeds, petitions
(instancias) and documents, as well as from all other fees and payments for
their recordation at the Registry of the Property.
(d)
The Restructuring Bonds, including, but not
limited to, any payments, income or gain with respect to the Restructuring
Bonds and the transfer of the Restructuring Bonds, shall, at all times, be
totally exempt from all kinds of taxes, assessments, licenses, stamps, fees and
other charges levied by the Government of Puerto Rico or any Government Entity.
Holders and beneficial owners of the Restructuring Bonds shall not be subject
to any tax return, tax reporting or similar requirement in respect of the
Government of Puerto Rico or any Government Entity by reason of holding, owning
or transferring the Restructuring Bonds.
(e)
The Restructuring Bonds shall at all times be
considered “debt” for purposes of all taxes levied by the Government of Puerto
Rico and any Government Entity, including but not limited to income taxes.
Article
209.–Inapplicability of Certain Laws.
The following
laws or provisions shall not apply to the Recovery Authority:
(a)
Chapter 4 of Act 26-2017, as amended, known as
the “Fiscal Plan Compliance Act”;
(b)
Act 1-2012, as amended, known as the “Puerto
Rico Government Ethics Act of 2011”;
(c)
Act 219-2012, as amended, known as the “Trusts
Act”;
(d)
Act 106-2006, as amended, known as the
“Commonwealth of Puerto Rico Government Fiscal Reform Act of 2006”;
(e)
Act 184-2004, as amended, known as the “Public
Service Human Resources Administration Act of the Commonwealth of Puerto Rico”;
(f)
Act 237-2004, as amended, known as the “Act to
Establish Uniform Parameters for Contracting Professional and Consulting
Services by Agencies and Instrumentalities of the Government of Puerto Rico”;
(g)
Act 197-2002, as amended, known as the “Act to
Regulate the Transition Process of the Government of Puerto Rico”;
(h)
Article 2.001 of Act 78-2001, as amended, known
as the “Commonwealth of Puerto Rico Electoral Law”;
(i)
Act 38-2017, known as the “Uniform
Administrative Procedures Act of the Government of Puerto Rico”;
(j)
Act No. 164 of July 23, 1974, known as the
“General Services Administration Act”;
(k)
Act No. 230 of July 23, 1974, as amended, known
as the “Government Accounting Act”; and
(l) Act 3-2017, known as the “Law to Address the Economic,
Fiscal and Budgetary Crisis and Ensure the Functioning of the Government of
Puerto Rico”.”
CHAPTER 3: THE GDB PUBLIC ENTITY TRUST
Article 301.–Creation
of the Public Entity Trust.
GDB shall be
authorized to execute, effective as of the Closing Date, a Public Entity Deed
of Trust to create and establish the GDB Public Entity Trust for the benefit of
the Designated Depositors and to set forth in such Public Entity Deed of Trust
such terms and conditions related to the operation thereof. Upon its creation,
the Public Entity Trust shall be a public trust and
governmental instrumentality of the Commonwealth of Puerto Rico, independent
and separate from any other Government Entity (including, without limitation,
GDB and the Recovery Authority). The Secretary of Treasury of the Government
of Puerto Rico is hereby authorized to appear in the Public Entity Deed of
Trust on behalf of the Designated Depositors and to agree to the terms and
conditions contained therein.
Article 302.–Obligations of Non-Municipal Government Entities after the Closing
Date.
Notwithstanding
any other law of the Government of Puerto Rico, effective as of the Closing
Date, the balance of liabilities owed between any Non-Municipal Government
Entity and GDB shall be automatically determined by applying the outstanding
balance of any deposit of a Non-Municipal Government Entity against the
outstanding balance of any loan of such Non-Municipal Government Entity owed to
GDB or of any bond or note of such Non-Municipal Government Entity held by GDB
as of such date (other than any loan, bond or note of a Non-Municipal
Government Entity secured by a mortgage over real property) in a manner
consistent with the conditions of the Qualifying Modification, without the need
for any further action. Such application shall be effected by reducing any
remaining installments of principal in inverse order of maturity and shall not
otherwise affect the repayment schedule of the corresponding bond, note or
loan. For purposes hereof, all agencies, departments, offices and
instrumentalities of the central government shall be deemed to be the same
Government Entity. The remaining balances of the bonds, notes or loans and of
the deposits of the Non-Municipal Government Entities shall be those certified
by AAFAF.
Article
303.–Transfer of the Public Entity Trust Assets.
Effective as of
the Closing Date, GDB is hereby authorized to transfer the Designated Deposits
and the Public Entity Trust Assets to the Public Entity Trust pursuant to the
Public Entity Deed of Trust in order to satisfy the conditions of the
Qualifying Modification. A transfer of the Public
Entity Trust Assets by GDB to the Public Entity Trust pursuant to the Public
Entity Deed of Trust shall be treated as an irrevocable, non-voidable and
absolute transfer of all of GDB’s legal and equitable right, title and interest
(as a true sale), and not a pledge or other financing, of the Public Entity
Trust Assets. Upon the transfer of the Public Entity Trust Assets to the Public
Entity Trust and the assumption by the Public Entity Trust of the Designated
Deposits, the Designated Depositors shall, immediately and forever, and without
further actions or documentation, cease to have any right, interest or claim
against GDB or any of its assets, or any successors or assigns thereof (other
than the Public Entity Trust).
Article 304.–Trustee of the Public Entity Trust.
The trustee of the Public Entity Trust shall have such powers as are
conferred to it in the Public Entity Deed of Trust. GDB shall initially act as
trustee of the Public Entity Trust, provided that AAFAF shall be authorized to
act as trustee or to designate any other Person to act as trustee of the Public
Entity Trust upon GDB’s resignation or in the event that GDB is otherwise
unable to continue acting as trustee of the Public Entity Trust, as determined
by AAFAF.
Article
305.–Distribution of Public Entity Trust Assets.
The Public Entity
Deed of Trust shall set forth the manner in which the Public Entity Trust
Assets shall be distributed among the Designated Depositors.
Article 306.–Tax Exemption.
(a)
The Public Entity Trust shall be totally exempt
from, and shall not be required to pay any kind of taxes, assessments,
licenses, stamps, fees or other similar charges levied by the Government of
Puerto Rico or any Government Entity upon any of the property it owns,
possesses, holds or uses or on its activities, or upon any income, payment or
gain derived therefrom.
(b)
The transfer of the Public Entity Trust Assets
by GDB to the Public Entity Trust shall be totally exempt from all kinds of
taxes, assessments, licenses, stamps, fees and other charges levied by the
Government of Puerto Rico or any Government Entity, including but not limited
to, internal revenue stamps and vouchers related to the execution of public
deeds, petitions (instancias) and documents, as well as from all other fees and
payments for their recordation at the Registry of the Property.
Article
307.–Puerto Rico Trusts Act.
The provisions
of Act 219-2012, as amended, known as the “Trusts Act” shall not be applicable
to the Public Entity Trust.
CHAPTER 4: THE
RESTRUCTURING TRANSACTION
Article
401.–Issuance of the Restructuring Bonds.
(a)
From and after the Effective Date, the Recovery
Authority shall be authorized to issue the Restructuring Bonds, from time to
time, pursuant to the terms of the Restructuring Resolution, the District Court
order approving the Qualifying Modification and the Ancillary Agreements.
(b)
The Restructuring Bonds may be issued from time
to time in one or more tranches pursuant to the Bond Indenture under the terms
and conditions authorized by the Recovery Authority and set forth in the
Restructuring Resolution.
(c)
The Restructuring Bonds shall be dated, shall
bear interest at such rates and shall mature at such time or times, not less
than one (1) year and not exceeding twenty-five (25) years from their date or
dates of issuance, as may be determined by the Recovery Authority and
authorized in the Restructuring Resolution in accordance and consistent with
the Qualifying Modification. The Recovery Authority shall determine the form of
the Restructuring Bonds and the manner of execution of the Restructuring Bonds,
and shall fix the denomination or denominations of the Restructuring Bonds and
the place or places of payment of principal thereof and interest thereon and
the other terms thereof, all in accordance and consistent with the Qualifying
Modification.
(d)
The Restructuring Bonds shall be payable solely
from the Restructuring Property in accordance with the terms of the Bond
Indenture and the other Ancillary Agreements, without recourse to the credit or
any other assets of the Recovery Authority or GDB (other than the Residual
Participating Bond Claim).
(e)
The Restructuring Bonds shall not constitute a
debt of the Government of Puerto Rico or of any public corporation or
instrumentality of the Government of Puerto Rico other than the Recovery
Authority. This statement shall be included in the Restructuring Bonds and the
disclosure documentation.
Article
402.-Statutory Lien on the Restructuring Property.
The
Restructuring Bonds and the Financing Costs shall automatically, upon the
issuance of the Restructuring Bonds, be secured by a statutory lien on the
Restructuring Property in favor of the Indenture Trustee for the benefit of the
Holders of the Restructuring Bonds, which shall be senior to any other lien
encumbering the Restructuring Property (except for valid liens and encumbrances
existing as of the effective date of this Act or that arise in the ordinary
course of business after the effective date of this Act and are existing as of
the Closing Date, in each case with respect to any real estate assets and any
personal property assets related thereto that are part of the Restructuring
Property) and may be enforced pursuant to the terms of the Ancillary
Agreements. Such statutory lien shall occur automatically and shall
automatically be perfected, valid and binding from and after the Closing Date,
in any case without any further act or agreement. No instrument needs to be
delivered or recorded in any official record or in any government registry or
office in order to perfect or continue such statutory lien or to establish or
maintain the priority thereof. No commingling of any Restructuring Property
with any other property of GDB or any other party shall limit, defeat, impair
or interfere with such statutory lien.
Article
403.-Authorization of Actions by GDB and the Recovery Authority.
Notwithstanding
any provision of the GDB Enabling Act or of any other act of the Government of
Puerto Rico, on and after the Effective Date, GDB or the Recovery Authority, as
the case may be, shall be authorized to: (i) irrevocably transfer the Recovery
Authority Assets to the Recovery Authority, subject to the statutory lien
created pursuant to Article 402 of this Act; (ii) issue the Restructuring Bonds
to the holders of the Participating Bond Claims; (iii) provide for the cancellation
and extinguishment of the Participating Bond Claims upon the exchange of the
Restructuring Bonds for the Participating Bond Claims; (iv) transfer the Public
Entity Trust Assets to the Public Entity Trust in consideration for the
assumption by the Public Entity Trust of the Designated Deposits; (v) pay the
Financing Costs in accordance with the terms of the Qualifying Modification;
(vi) provide for the Residual Participating Bond Claims; (vii) confirm the
statutory lien on the Restructuring Property created pursuant to Article 402 of
this Act; and (viii) take any and all other actions necessary or convenient to
carry out the Restructuring Transaction.
Article
404.-Transfer of the Recovery Authority Assets.
(a)
The Recovery Authority Assets shall be
transferred by GDB to the Recovery Authority, on the Closing Date and from time
to time thereafter, in accordance with the Transfer Agreement, the other
Ancillary Agreements and the Qualifying Modification. Each transfer of the
Recovery Authority Assets by GDB to the Recovery Authority shall be treated as
an irrevocable, non-voidable and absolute transfer of all of GDB’s legal and
equitable right, title and interest (as a true sale), and not a pledge or other
financing, of the Recovery Authority Assets. On the Closing Date, the holders
of Participating Bond Claims, whether or not outstanding on such date, and all
other creditors of GDB (including depositors), shall, immediately and forever,
and without further actions or documentation, cease to have any right, interest
or claim against GDB or any of its assets, or any successors or assigns thereof
(other than the Residual Participating Bond Claim). For the avoidance of doubt,
the foregoing shall not affect the statutory lien created pursuant to Article
402 of this Act.
(b)
The transfer of the Recovery Authority Assets by
GDB to the Recovery Authority, as authorized by the Qualifying Modification,
shall be valid, irrevocable, non-voidable and binding. Such transfer is made in
good faith for fair consideration and reasonably equivalent value, and in
furtherance of the public purposes of this Act, and shall not constitute a
transfer in violation of the GDB Enabling Act, the “Municipal Financing Act”,
Articles 1243, 1244 and 1249 of the Puerto Rico Civil Code or any analogous
provision or other legal theory or of the terms of any of the Recovery
Authority Assets. Upon the Closing Date and any upon subsequent transfers,
respectively, the Recovery Authority Assets shall vest in the Recovery
Authority free and clear of all claims (other than for valid liens and
encumbrances existing as of the effective date of this Act or that arise in the
ordinary course of business after the effective date of this Act and are
existing as of the Closing Date, in each case with respect to any real estate
assets and any personal property assets related thereto that are part of the
Restructuring Property) except for claims by the Recovery Authority, the
Indenture Trustee or the holders of the Restructuring Bonds.
(c)
All contracts or other agreements, whenever
created or arising, that are part of the Recovery Authority Assets (including,
without limitation, any notes, loan agreements or collateral agreements) and to
which any Government Entity is a party shall be exempt from recordation in the
Office of the Controller of Puerto Rico notwithstanding the transfer of the
Recovery Authority Assets by GDB to the Recovery Authority.
(d)
Notwithstanding the provisions of any other law
of the Government of Puerto Rico, any real estate asset that is part of the
Recovery Authority Assets shall be transferred to the Recovery Authority
pursuant to the Transfer Agreement, without the need for any further action
(including, without limitation, the execution of a deed of purchase and sale or
transfer), and the registrars of the property shall be required to record such
real properties in the Registry of the Property in the name of the Recovery
Authority and, if so requested, to record the statutory lien with respect
thereto created pursuant to Article 402 of this Act, upon the presentation of a
petition (instancia) to that effect accompanied by a copy of the Transfer
Agreement and which identifies the real properties that are part of the
Recovery Authority Assets, provided, however, that the non-occurrence of such recordation
shall have no impact on the rights of the Recovery Authority with respect to
such real estate asset or on the perfection, priority or enforceability of such
statutory lien.
(e)
For the avoidance of doubt, no debtor to the
Recovery Authority shall have any right to set off any debt owed by GDB, the
Recovery Authority or any other Government Entity to such Person against any
debt of such Person to the Recovery Authority, including, without limitation,
with respect to the Restructuring Property.
Article 405.-Right to Apply for the Appointment of a Receiver.
Upon the occurrence of an event of default
under the Ancillary Agreements and the continuation of such event of default
for a period of thirty (30) days, any holder or holders
of the Restructuring Bonds (subject to any contractual limitation as to a
specific percentage of such holders), or trustee therefor, shall have the right
to apply to any Commonwealth or Federal court of competent jurisdiction in
Puerto Rico for the appointment of a receiver for the Recovery Authority.
Subject to any limitation provided by the Ancillary Agreements, the receiver so
appointed shall have, hold, use, operate, manage, and control the property of
the Recovery Authority, including the Restructuring Property, and shall
exercise all the rights and powers of the Recovery Authority with respect to
such property as the Recovery Authority itself might do. The receiver shall
act under the direction and supervision of the court and shall at all times be
subject to the orders and decrees of the court and may be removed thereby.
Article 406.-Residual Participating Bond Claim.
Notwithstanding the cancellation of the Participating Bond Claims as
part of the Restructuring Transaction, each holder of a Participating Bond Claim
shall have a Residual Participating Bond Claim against GDB. Such Residual
Participating Bond Claim shall only be enforceable against GDB if and to the extent the Qualifying Modification, the
Restructuring Bonds or the rights and liens of the Recovery Authority, the
Indenture Trustee or the holders of the Restructuring Bonds in respect of the
Restructuring Property or the Restructuring Bonds are rescinded or avoided or
are otherwise made to be unenforceable in accordance with their terms as a
result of legislative action or a final non-appealable determination by a court
of competent jurisdiction.
Article
407.-Government of Puerto Rico Non-Impairment Covenant.
The Government
of Puerto Rico hereby agrees and covenants with any Person that acquires the
Restructuring Bonds that it will not, and no Government Entity shall be
authorized to, impair, limit, restrict, rescind, delay or modify the rights or
powers of the Recovery Authority, the Indenture Trustee or the holders of the
Restructuring Bonds under this Act or under or in respect of the Restructuring
Property, or the Recovery Authority’s ability to meet its obligations to its
bondholders until the Restructuring Bonds, together with the interest thereon,
and all amounts and obligations under Ancillary Agreements, have been
completely paid in cash in full or otherwise discharged in accordance with
their terms; provided, however, that any actions or omissions by the Government
of Puerto Rico or by any Government Entity relating to appropriations or funding
pursuant to the Government Fiscal Plan shall not be deemed to be a violation of
this Article 407. The Government of Puerto Rico further agrees and covenants
that no amendment to this Act shall impair, limit, restrict, delay or modify
any obligation or commitment of (i) the Recovery Authority to the holders of
the Restructuring Bonds or (ii) GDB to the holders of the Residual
Participating Bond Claims.
CHAPTER 5:
RECALCULATION OF MUNICIPAL OBLIGATIONS AND PAYMENTS TO MUNICIPALITIES
Article 501.-Recalculation of Certain Municipal Obligations.
Notwithstanding any other law of the Government of Puerto Rico
(including, without limitation, the “Municipal Financing Act”, as amended
pursuant to this Act), the principal amount of any bond, note and/or loan of
any municipality of the Government of Puerto Rico held by GDB shall be
automatically reduced by operation of law as of the Closing Date by an amount
equal to the balance of any proceeds of such bond, note and/or loan that were
not disbursed to such municipality and are held on deposit at GDB on the
Closing Date pursuant to the “Municipal Financing Act”, consistent with the
conditions of the Qualifying Modification, without the need for any further
action. Such reduction shall be effected by reducing any remaining
installments of principal in inverse order of maturity and shall not otherwise
affect the repayment schedule of the bond, note or loan. The remaining balances
of the municipal loans shall be those certified by AAFAF. After the effective
date of this Act, all future interest payments on said bonds, notes and/or
loans shall be computed based on the remaining balance of the municipal loans
pursuant to this Article 501, and as certified by AAFAF. Nothing contained in this Act shall be construed to prohibit
or limit municipalities from refinancing their current bonds, notes or loans
through another financial institution pursuant to the “Municipal Financing Act”.
Article 502.-Payment of Excess CAE.
Notwithstanding any other law of the Government of Puerto Rico
(including, without limitation, the “Municipal Financing Act”, as amended
pursuant to this Act), on the Closing Date, GDB shall pay, in cash, to each
municipality that has Excess CAE an amount equal to 55% of the undisbursed
Excess CAE corresponding to such municipality, consistent with the conditions
of the Qualifying Modification. The remaining portion of such undisbursed
Excess CAE shall be discharged as of the Closing Date, and no such municipality
shall have any further rights or claims with respect thereto and GDB shall have
no further liability or obligation thereunder.
Article 503.-Disposition of Restructuring Bonds.
Notwithstanding any other law or regulation of the Government of
Puerto Rico, any Government Entity, including any Municipality, that acquires
Restructuring Bonds as a result of the Restructuring Transaction shall be free
to dispose of, or grant a security interest over, said Restructuring Bonds
without any limitation and under such terms and conditions as such Government Entity
determines appropriate in its discretion.
Article 504.-Limitation and Mediation of certain Claims against
Municipalities.
From the Closing Date until June 30, 2019, no Person having a claim
against a municipality related to a capital improvement project financed with a
bond, note or loan subject to recalculation pursuant to Article 501 of this Act
shall commence or continue a judicial, administrative, or other action or
proceeding against such municipality with respect to said claim. Notwithstanding
the foregoing, any such Person may commence or continue litigation before June
30, 2019 solely to require the municipality to participate in mediation. The
goal of such mediation process shall be to reach a consensual agreement that
may allow the establishment of an alternative repayment plan or any other
alternative satisfactory to the parties, which shall be reflected in the
corresponding municipality’s fiscal year 2020 budget. The mediation process
authorized herein shall be governed, insofar as it is not incompatible with
this Act, by the provisions of Act No. 19 of September 22, 1983, as amended, as
well as by any regulations approved by the Puerto Rico Supreme Court regarding
mediation. In those cases in which no agreement is reached through the mediation
process and in which, after a judicial process, a final and unappealable
judgment is entered against a municipality, the provisions of Article 13 of Act
3-2017 shall apply to the payment of such judgment. Each party shall bear its
own expenses and attorneys’ fees with respect to such mediation process, as
well as with respect to any litigation commenced or continued after June 30,
2019. Mediator fees and related costs shall be paid by the parties on equal
parts, unless otherwise agreed. Nothing herein shall be construed as to
prohibit any municipality from making any payment with respect to claims
subject to this Article 504. Finally, this Article 504 shall always be
interpreted in the manner most favorable for the municipalities of the
Government of Puerto Rico.
CHAPTER 6:
AMENDMENTS TO OTHER LAWS.
Article 601(a).-Article 2 of Act 80-1991, as
amended, known as the “Enabling Act of the Municipal Revenue Collection Center”,
is hereby amended to redesignate items (a) through (g) as items (b) through (h),
respectively, to redesignate items (h) through (p) as items (j) through (r),
respectively and to add new items (a) and (i), to read in their entirety as
follows:
“Article 2.–Definitions.
(a) AAFAF.– shall mean the Puerto Rico Fiscal Agency and
Financial Advisory Authority.
(b) Public Agency...
(c) Base Year...
(d) Fiscal Year...
(e) Government Bank...
(f) Center...
(g) Commissioner...
(h) Executive Director...
(i) Designated Trustee.– shall mean AAFAF or one or more
private financial institution(s) designated by AAFAF, provided that any such
financial institution shall be authorized to act as depositary of public funds
pursuant to Act 69-1991, as amended, known as the “Act to Regulate the Deposit
of Public Funds and to Provide for their Security”, and to act as trustee under
the laws of the Government of Puerto Rico. Notwithstanding the foregoing, the
Government Bank shall act as Designated Trustee until AAFAF assumes such
functions or designates a financial institution that complies with the
requirements set forth in the foregoing paragraph to assume such functions,
which shall occur on or prior to the Closing Date (as such term is defined in
the “Government Development Bank for Puerto Rico Debt Restructuring Act”).
(j) Fund...
(k) General Fund...
(l) Commonwealth Government...
(m) Board...
(n) Municipality or Municipal Government...
(o) Person...
(p) Net internal revenues...
(q) Secretary...
(r) Additional Lottery System...”
Article 601(b).-A new Article 26 is added to Act 80-1991, as amended, known as the “Enabling Act of the Municipal
Revenue Collection Center”, to read in its entirety as follows:
“Article
26.-Designated Trustee.
All references
to “Government Development Bank for Puerto Rico”, “Government Development
Bank”, “Government Bank” or “Bank” in Articles 4, 15, 17, 18, and 22 of this
Act are hereby replaced with “Designated Trustee.”
Article 602(a).-A new Article 2.12 is hereby added to Act
83-1991, as amended, known as the “Municipal Property Tax Act”, to read in its
entirety as follows:
“Article 2.12.-Definitions.
For purposes of this Title, the following terms shall have the
following definitions:
(a)
AAFAF.– shall mean the Puerto Rico Fiscal Agency
and Financial Advisory Authority.
(b) Designated Trustee.– shall mean AAFAF or one or more
private financial institution(s) designated by AAFAF, provided that any such
financial institution shall be authorized to act as depositary of public funds
pursuant to Act 69-1991, as amended, known as the “Act to Regulate the Deposit
of Public Funds and to Provide for their Security”, and to act as trustee under
the laws of the Government of Puerto Rico. Notwithstanding the foregoing, the
Government Development Bank for Puerto Rico shall act as Designated Trustee
until AAFAF assumes such functions or designates a financial institution that
complies with the requirements set forth in the foregoing paragraph to assume
such functions, which shall occur on or prior to the Closing Date (as such term
is defined in the “Government Development Bank for Puerto Rico Debt
Restructuring Act”).”
Article 602(b).-A new Article 2.13 is hereby added to Act
83-1991, as amended, known as the “Municipal Property Tax Act”, to read in its
entirety as follows:
“Article 2.13.-Designated
Trustee.
All references
to “Government Development Bank for Puerto Rico”, “Government Development Bank”,
“Government Bank” or “Bank” in Articles 2.04(a) and (c), 2.05, 2.06 and 2.09
and the second paragraph of Article 2.11 of this Act are hereby replaced with “Designated
Trustee”.”
Article
603(a).-Article 3 of Act 64-1996, as amended, known as the “Municipal Financing
Act of 1996”, is hereby amended to redesignate items (a) through (o) as items
(b) through (p), respectively, redesignate items (p) through (aa) as items (r)
through (cc), respectively, and to add new articles (a) and (q), to read in
their entirety as follows:
“(a) “AAFAF”.- shall mean the Puerto Rico Fiscal Agency and
Financial Advisory Authority.
(b) “Mayor”...
(c) “Legislature”...
(d) “Government
Bank”...
(e) “Special
obligation bonds, notes or instruments”...
(f) “Municipal
general obligation bonds or notes”...
(g) “Refinancing
bonds, notes or instruments”...
(h) “Revenue
bonds”...
(i) “Center”...
(j) “Surtax”...
(k) “Basic
tax”...
(l) “Special
tax”...
(m) “Cost”...
(n) “State
of Emergency”...
(o) “Excess
in the Redemption Fund”...
(p) “SGELF”...
(q) “Designated Trustee”.- shall mean AAFAF or one or more
private financial institution(s) designated by AAFAF, provided that any such
financial institution shall be authorized to act as depositary of public funds
pursuant to Act 69-1991, as amended, known as the “Act to Regulate the Deposit
of Public Funds and to Provide for their Security”, and to act as trustee under
the laws of the Government of Puerto Rico. Notwithstanding the foregoing, the
Government Bank shall act as Designated Trustee until AAFAF assumes such
functions or designates a financial institution that complies with the requirements
set forth in the foregoing paragraph to assume such functions, which shall
occur on or prior to the Closing Date (as such term is defined in the “Government
Development Bank for Puerto Rico Debt Restructuring Act”).
(r) “Redemption Fund”. Shall mean the trust known as the
Municipal Public Debt Redemption Fund established by the Center with the
Designated Trustee. This trust has an account for each municipality in which
the Center deposits the entire product of the special surtax imposed by each
municipality, and any other resource from other sources, as established in
Article 20 of this Act, which is needed to service the obligations evidenced by
municipal general obligation bonds or notes, or notes in advance of general
obligation bonds of each municipality. Every quarter, the Designated Trustee
shall remit to the municipalities the interest generated by the deposits to
their accounts in the Redemption Fund.
(s) “Governor”...
(t) “Municipal
retail sale and use tax”...
(u) “Instrument
or credit instrument”...
(v) “Bidding
Board”...
(w) “Municipality”...
(x) “Notes
in advance of bonds”...
(y) “Notes
or instruments in advance of taxes and revenues”...
(z) “Revenue
generating projects”...
(aa) “Refinancing”...
(bb) “Secretary”...
(cc) “Service”...”
Article 603(b).-Article
20 of Act 64-1996, as amended, known as the “Municipal Financing Act of 1996”,
is hereby amended to read as follows:
“Article 20.-Provision for the payment of general municipal
obligations, first lien, use of the surplus in the municipal public debt
redemption fund.
(a) The
good faith, credit and the power of the municipality to levy unlimited taxes
are hereby committed for the prompt payment of the principal and interest on
all obligations evidenced by general obligations bonds or notes and the
interest on obligations evidenced by notes in advance of municipal general
obligation bonds which the municipality may incur.
(b) To make this guarantee effective, the Legislature shall
provide through an ordinance, for the annual levying of an additional special
tax, without limitation with regard to rate or amount, on all taxable property
in the municipality, that is sufficient to pay principal and interest on all
general municipal obligation bonds issued by the municipality, as such
principal and interest mature, excluding, however, any interest that has been
provided to be paid from the proceeds of the municipal general obligation bond
issue. Before remitting to the municipalities any existing surplus in the
Municipal Public Debt Redemption Fund, the Designated Trustee shall reserve
such sum that will allow compliance with the maximum annual payment of
principal and interest of all authorized and outstanding debt.
(c) In general terms, the first lien shall operate in the
following manner: The Center shall collect the proceeds of the special surtax
and any other taxes on the value of the property levied by the municipality.
The Center shall deposit the proceeds of the special surtax in the account of
the municipality in the Redemption Fund. If the Designated Trustee determines
that the deposits in said account in the Redemption Fund are not sufficient to
cover any payment of the principal or interest on any outstanding municipal
general obligation bonds or notes or any payment of the interest on any
outstanding note in advance of municipal general obligation bonds, the
Designated Trustee shall notify the Center and the Center shall deposit in said
account an amount proceeding from other income subject to the first lien established
by this Section that, together with the deposits in said fund, shall be
sufficient to make said payment. AAFAF, in consultation with the Center, shall
establish, through regulations, the specific procedure for the operating of
this first lien.
(d) The Designated Trustee, as trustee of the Redemption Fund,
shall pay the principal and interest on municipal general obligation bonds or
notes and the interest on all the notes in advance of the municipal general
obligation bonds of the municipality from the resources deposited in the
account of the municipality in the Redemption Fund. The Designated Trustee
shall make those payments on behalf of the municipality.
(e) Once the reserve or the portion equivalent to the payment
for the subsequent twelve (12) months of principal and interest of the loan is
assured, and once the payment of the municipal public debt is guaranteed, as
determined by the Designated Trustee, in the event there is a surplus in the
Municipal Public Debt Redemption Fund, the Designated Trustee shall be bound to
place said surplus at the disposal of the municipality. The surplus can be
requested once during each fiscal year. The surplus in the Municipal Public
Debt Redemption Fund shall be used, in the first place, for the payment of
mature, liquid and exigible statutory debts, including debts with the Municipal
Revenue Collection Center, or debts with any government entity or public
corporation. In the event that the municipality has provided for the payment of
such debts, it may use the surplus of the Redemption Fund for any obligation or
activity that pursues a legitimate municipal purpose.”
CHAPTER 7.
MISCELLANEOUS PROVISIONS.
Article 701.-Confirmation of Loans.
All bonds and notes issued by any Government Entity to GDB and all
loans made by GDB to a Government Entity prior to the effective date of this
Act, are hereby confirmed and the same shall continue to be valid and binding
obligations of the applicable Government Entity in accordance with their terms.
Article 702.-Binding Effect of Restructuring Transaction on
Government Entities.
All transactions effected pursuant to this Act (including, without
limitation, pursuant to determinations made by AAFAF or GDB under this Act)
shall be valid and binding with respect to all Government Entities as of the
Closing Date. Other than as expressly provided in this Act, in the Ancillary
Agreements and the Public Entity Deed of Trust, no Government Entity shall have
any further rights or claims against GDB, the Recovery Authority and the Public
Entity Trust, and any officers, directors, employees, agents and other
representatives thereof, of whatsoever nature and kind, whether now existing or
hereinafter arising, based, in whole or in part, on facts, whether known or
unknown, existing or occurring on or prior to the Closing Date. Each Government
Entity is hereby deemed to forever waive, release and discharge GDB, the
Recovery Authority and the Public Entity Trust, and any officers, directors,
employees, agents and other representatives thereof from any and all such
claims.
Article 703.-Lack of Authority and Standing of Government Entities.
Notwithstanding any other law of the Government of Puerto Rico, no
Government Entity shall have authority or standing to challenge this Act, the Restructuring
Transaction, or the other transactions contemplated in this Act in any local or
federal court.
Article 704.-Exculpation.
No Person shall have or incur liability for any cause of action or
otherwise to any Person for any action (or failure to act) in accordance with
this Act or the Qualifying Modification.
Article 705.-Severability.
This Act shall
be interpreted in a manner to render it valid to the extent practicable in
accordance with the Puerto Rico Constitution and the U.S. Constitution. If any
clause, paragraph, subparagraph, sentence, word, letter, article, provision,
section, subsection, title, chapter, subchapter, heading, or part of this Act,
were to be annulled or declared unconstitutional, the order to such effect will
neither affect nor invalidate the remainder of this Act. The effect of such an
order shall be limited to the clause, paragraph, subparagraph, sentence, word,
letter, article, provision, section, subsection, title, chapter, subchapter,
heading, or part of this Act so annulled or declared unconstitutional. If the
application to a Person or circumstance of any clause, paragraph, subparagraph,
sentence, word, letter, article, provision, section, subsection, title,
chapter, subchapter, heading, or part of this Act, were to be annulled or
declared unconstitutional, the order to such effect will neither affect nor
invalidate the application of the remainder of this Act to such Persons or
circumstances to which it may be validly applied. It is the express and
unequivocal intent of this Legislative Assembly that the courts of law enforce
the provisions and application of this Act to the greatest possible extent,
even if any of its parts is annulled, invalidated, affected or declared
unconstitutional, or even if the application thereof to any Person or
circumstance is annulled, invalidated or declared unconstitutional. This
Legislative Assembly would have passed this Act regardless of the ruling on
severability that a Court may issue.
Article 706.-Supremacy.
The provisions of this Act shall prevail over any other general or
specific provisions of any law or regulation of the Government of Puerto Rico
that is inconsistent with this Act.
Article 707.-Language Conflict.
This Act shall be adopted both in English and Spanish. If in the
interpretation or application of this Act any conflict arises as between the
English and Spanish texts, the English text shall govern.
Article 708.-Effectiveness.
This Act shall take effect immediately upon enactment.
Véase
Versión en Español. (See Spanish Version)
Notas Importantes:
1. Esta ley es
copia de la ley original cuando fue aprobada, no incluye enmiendas posteriores.
2. Presione
Aquí para ver la Ley Completa, con sus enmiendas integradas y
Actualizada (Socios
Solamente)
Presione Aquí para
regresar al Menú anterior y seleccionar otra ley.
Ver índice por años hasta el presente
Para Búsquedas
Avanzadas de todas las Leyes de Puerto Rico Actualizadas y Jurisprudencia
(Solo Socios)
ADVERTENCIA
Este documento constituye un documento de
las leyes del Estado Libre Asociado de P.R. que está sujeto a los cambios y
correcciones del proceso de compilación y publicación oficial de las leyes de
Puerto Rico. Su distribución electrónica se hace como un servicio público a la
comunidad. Siempre busque leyes posteriores para posibles enmiendas a esta ley.
Visite nuestro Club de
LexJuris de Puerto Rico.
LexJuris de Puerto Rico siempre está
bajo construcción.
