Puerto Rico fiscal board’s revitalization coordinator resigns
As previously reported by Caribbean Business, Noel Zamot, the man who holds the charge of revitalization coordinator under the Puerto Rico Oversight, Management & Economic Stability Act (Promesa), will be moving on.
Caribbean Business had previously learned of his resignation from two sources who spoke about his departure on the condition of anonymity. The move comes at a delicate juncture, as he was tasked with critical projects for the revitalization of Puerto Rico.
The Financial Oversight & Management Board (FOMB) confirmed the resignation Wednesday afternoon, thanking the “commendable work of Zamot, who established the processes and platform for the development of future critical projects” under Title V of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).
“Thanks to Noel Zamot, this process of Critical Projects that Title V of the PROMESA Law establishes – accessible via the internet – is transparent, agile and reliable,” Chairman José Carrión said in a joint statement with Zamot, who said that “working for the Oversight Board has been a privilege” and that he “feels extremely fortunate to have contributed to the economic development of Puerto Rico and the recovery of the Island after Hurricane Maria.”
His resignation is effective March 15.
Title V provides for a process of expedited permits, both local and federal, for those infrastructure projects that are certified as critical by the FOMB. The laws call for the revitalization coordinator to assess “critical projects” to improve performance of energy infrastructure and overall energy efficiency; expedite the diversification and conversion of fuel sources for electric generation from oil to natural gas and renewables; promote the development and utilization of energy sources found in Puerto Rico; contribute to transitioning to privatized generation capacities on the island; and support the Puerto Rico Energy Bureau (PREB) in achieving its goal of reducing energy costs and ensuring affordable energy rates.
Two sources on the Hill with knowledge of Zamot’s trajectory pointed to frustrations that arose when a pipeline with nearly $8 billion in projects set up for a fast track in permits came to a screeching halt when the FOMB put out new guidelines changing the rules for solicitors midstream.
A letter sent out by the FOMB in July informed exiting proponents on the critical pipeline list that “the Oversight Board adopted a new policy regarding Title V on July 31, 2018 (the “Policy”), effective immediately.
“As explained in the Policy, a copy of which is attached, the Revitalization Coordinator will require that any Public Project, defined in the Policy as one that requires obtaining a contract award or RFP [request for proposals] award from a Commonwealth Government agency or a public corporation before it can be executed, obtain such contract award or RFP award before it can be considered by the Revitalization Coordinator under Title V.”
The goal of the Policy is to focus the Revitalization Coordinator’s efforts on those Public Projects that have obtained the requisite contract award or RFP award, and on projects that are not Public Projects, such as those that are private-to-private or are with a municipal government. Doing so will enable the Revitalization Coordinator to prioritize those projects that are most likely to have the greatest impact because they are most likely to be executed and/or are nearest to completion.
Accordingly, effective immediately, if your Project is a Public Project, you must obtain the requisite contract award or RFP award to proceed with the Critical Projects Process. That means when the Oversight Board votes whether to approve or disapprove your Project as a Critical Project, it will expect that you have complied with the Policy, i.e., you have obtained the requisite contract award or RFP award. This applies regardless of whether the Revitalization Coordinator has already completed a Critical Project Report for a Project.”
Two of this newspaper’s sources participating in the development of critical projects point to that change in policy as a defining moment that helped prevent many projects from kicking off.
“You were already certified as a critical project and then this requirement was added, stating that you had to have a letter of intent or RFP with the government,” said one of the sources from the construction industry. “When you do that in the middle of the game, it tends to shake one’s confidence.” The numbers support the chilling dynamic as only $5o million of the $8 billion pipeline in projects are actually underway.
Zamot, a former commander of the U.S. Air Force, who was tasked with identifying, coordinating and fast-tracking the execution of infrastructure projects under Title V of the federal law Promesa, said he envisioned giving the seal of approval to projects that were cost-efficient, highly technological and that create jobs. It did not take rocket science for him to identify the financing challenges inherent in putting critical projects in motion.
Fly in the ointment
“This monkey wrench thrown into the equation is diametrically opposed to the spirit of expedited permitting that was at the core of the law when it was being drafted on the Hill,” said yet another source who helped work on the language in the run-up to Promesa.
“He was one of the proponents on the Hill helping to push for a reconstruction czar that could help to free up some of the money assigned for Puerto Rico’s reconstruction,” said one of the congressional sources. “Now, the discourse he helped set in motion is being pushed by Resident Commissioner Jenniffer González to work as an ally of the Financial Oversight & Management Board and not necessarily to bring another layer of bureaucracy.”
– Look for the rest of this story, which was sent to the press before confirmation of Zamot’s resignation, in the Thursday, Feb. 14, issue of Caribbean Business.