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San Juan mayor to challenge Puerto Rico gov’t bank restructuring in court

By on July 28, 2017

SAN JUAN – Even though it hasn’t been presented formally in the Legislature, San Juan Mayor Carmen Yulín Cruz announced Friday that she will challenge in state and federal courts a bill that seeks to validate the Government Development Bank’s (GDB) restructuring support agreement (RSA).

The bill, one of five to be considered in a special session called for July 31, creates a new government entity that would issue bonds backed by GDB assets. The government bank’s bondholders and depositors, which mostly comprise municipalities, will have to select one of three tranches of notes. The plan is to close the GDB within a 10-year period.

However, the mayor of San Juan believes the bill intends to prevent municipalities from going to court to demand reimbursement of funds they deposited in the GDB, which remain mostly frozen.

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“[The bill] legalizes abusive behavior toward municipalities,” Cruz declared in a press conference alongside Rep. Luis Vega Ramos and the former president of San Juan’s Municipal Assembly, Marcos Rigau. “We will have to go to court as soon as the outrage intended with this piece of legislation is committed,” she said. “This is the local version of a stay [on litigation].”

Since the bill proposes to determine the balance of certain GDB liabilities, for Cruz this confirms that the government bank “does not have clarity in its accounts” and is looking to “appropriate” certain funds deposited there.

Regarding the disbursement of special additional tax (CAE by its Spanish acronym) funds the bill would allow, the municipal executive anticipated that there could be preferences between towns and asked all mayors to prepare to fight the measure.

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“This is as if the government passed a law that citizens don’t have…legitimacy to claim money [owed],” Vega Ramos explained.

The representative called on House Speaker Carlos Méndez to hold public hearings, even if the special session is short, so mayors’ qualms with the bill are on record.

“The request to the mayors is to do the math, because the money taken from them is money they won’t have available, unless they don’t start passing the problem onto citizens,” the San Juan mayor said, adding that the capital’s deposits would be used for essential services.

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