Marine Diver. The San Juan Daily Star. Wednesday, November 18, Self-winding movement. Water-resistant to 300m.

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1 2 Wednesday, November 18, 2015 Marine Diver Self-winding movement. Water-resistant to 300m. 18 ct rose gold case. Also available in stainless steel. U LY S S E - N A R D I N. C O M The San Juan Daily Star

2 GOOD MORNING The San Juan Daily Star, the only paper with 3 November 18, 2015 News Service in English in Puerto Rico, publishes 7 days a week, with a Monday, Tuesday, Wednesday and Thursday edi on, along with a Weekend Edi on to cover Friday, Saturday and Sunday. PREPA Revitalization Plan Would Delay Green Energy Phase-In Local Mainland Business Interna onal Viewpoint Fashion Entertainment INDEX No cias en Español Legal No ces Sports Games Horoscope Cartoons By EVA LLORENS VELEZ llorenseva4@gmail.com Besides resulting in higher utility rates and passing on to consumers the costs of the contribution in lieu of taxes and subsidies, the Puerto Rico Electric Power Authority (PREPA) revitalization bill would also set back advancements in the use of renewable energy. Edward Previdi, president of Aconer, the Renewable Energy Association of Consultants and Contractors, said Article 27 of the proposed bill would delay the start of the use of renewable energy established in Law 82 of Among the changes that are being planned is to reduce the initial percentage of renewable energy from 12 percent to 10 percent and delay it to 2020 from 2015, Previdi said during a recent public hearing. While the goals should be achievable in light of technical limitations, the mere delay falls into the old habit of this country of approving laws so that they are not fulfilled or get amended further down the line. Previdi questioned what will happen if the island does not comply by 2019, suggesting that there will be another delay. He also said the bill allows PREPA to establish another way to measure and give credit to consumers who use renewable energy that is not what is established by regulations, which will result in consumers getting a lower amount in credit for their use of renewable energy The proposed changes established more complexity in the measuring [process], which will increase costs for PREPA and consumers, he said. During hearings, the Mayors Federation and the Mayors Association opposed changes to the contribution in lieu of taxes (CELI by its Spanish acronym). As the STAR first reported on Nov. 12, the cost of the CELI and other subsidies will be passed on to consumers. Those costs totaled around $800 million. The mayors said they oppose the repeal of the CELI, which is currently taken from a percentage of PREPA gross revenues. That business can not work if municipal property is not used. Municipalities are partners of PREPA, and by law they were not supposed to pay taxes, but rather contributions, said Mayors Association President Rolando Ortiz. The law is 60 years old and we can not eliminate it because it will result in higher rates. PREPA can not provide electricity without using city streets, and municipalities should receive compensation.

3 4 Wednesday, November 18, 2015 The San Juan Daily Star Ex-Bankruptcy Judge Says PR on Life Support, Favors Federal Control Board for Island Steven Rhodes By EVA LLORENS VELEZ Former Detroit bankruptcy judge Steven Rhodes, who is advising Puerto Rico on its economic problems, is supporting the creation of a federal control board for Puerto Rico, contending that the island is on life support as it struggles with its fiscal problems. Rhodes, in remarks to The Bond Buyer, called for a central control person or board, preferably designated by the federal government, to spearhead the proceedings in place of the island s governor and Legislature. He also said federal bankruptcy laws should benefit all of the commonwealth and not just public corporations. It is very tough on the people on the island, it is very tough on existing politicians, but the closest analogy is that when an entity like Detroit or like Puerto Rico goes into bankruptcy, they are on life support, Rhodes told Bond Buyer. And extraordinary measures have to be taken to assure the survival of the patient. He said Puerto Rico s struggles with unpayable bond debt and unfunded pension liabilities closely resemble those of Detroit, where Michigan Gov. Rick Snyder appointed Kevyn Orr to serve as an emergency manager for the city throughout the bankruptcy process. The commonwealth retained Rhodes in June as an adviser while it deals with its roughly $70 billion of debt. Rhodes, who retired as a bankruptcy judge in February, wants a bankruptcy regime that would apply to the entire commonwealth and not just its struggling public authorities as others have suggested. A public authorities-only bankruptcy would exclude the commonwealth s large general obligation debt. In a very real, practical, and economic sense, all of the entities and their fates are intertwined, Rhodes told Bond Buyer. And so what Puerto Rico as an entity needs is a holistic solution to all of its debt and financial problems. He added that creditors, who have largely opposed a bankruptcy solution out of concern they would lose a significant amount on their investments, should actually welcome bankruptcy as a way to get independent judgments that: are in their best interests; are fair and equitable between them; do not unfairly discriminate between creditor classes; and are actually feasible as Puerto Rico tries to fix its situation. The structured process of bankruptcy is a better solution than the one-off, year at a time solutions creditors would pursue through lawsuits and negotiations in the atmosphere that exists now, Rhodes said. The bankruptcy question for Puerto Rico is complex though, because the Chapter 9 protections that federal law affords state municipalities and public entities do not apply on the island. Two bills pending in Congress would close that gap, but both would only apply the law to public authorities instead of to the whole commonwealth. Also similarly to Detroit, Puerto Rico s leaders will have to balance paying back the debt and providing citizens with essential services, he said. Gov. Alejandro García Padilla has already said he will choose Puerto Ricans over the creditors if the choice presents itself. Rhodes used the essential service needs to balance those competing interests as another argument for a bankruptcy solution. The advantage of bankruptcy is that people will still continue to get their police, their fire, their emergency medical, their roads, their educations, their power, their water, even though the defaults are taking place, he said. At a Washington, D.C. event devoted to Puerto Rico s finances, Puerto Rico Resident Commissioner Pedro Pierluisi on Tuesday blasted the idea of a federal board to oversee the territory s troubled finances, saying it would amount to a dictatorship, according to The Hill, which co-hosted the event along with The Capitol Forum. Pierluisi, Puerto Rico s nonvoting member of Congress, dismissed the idea floated in the Capitol as an unforgivable breach on Puerto Rico s autonomy, even as the territory turns to Congress for help steering through its unbearable debt load. Some key Republicans, including Senate Judiciary Chairman Sen. Chuck Grassley (R-Iowa), have suggested a federal board similar to the one used in the District of Columbia during the 1990s could help the territory reconcile its troubled finances. But Pierluisi did not mince words in dismissing it. That would be a blatant exercise in colonialism like I haven t seen in recent history, he said Tuesday. Whoever proposes that is going to be facing me, and facing anybody that believes in democracy in the world.

4 The San Juan Daily Star Wednesday, November 18, Proposal Would Give Foreigners Living in PR the Right to Vote By EVA LLORENS VELEZ llorenseva4@gmail.com Gov. Alejandro García Padilla on Tuesday submitted to the Legislature an administration bill that would extend voting rights to foreigners domiciled in Puerto Rico and another that would prevent government officials from interfering with decisions made in public corporations. It was not clear whether the bills will be included in a proposed special session or will have to wait until the January session. García Padilla said the voting right amendment is permitted under federal law, which recognizes that states may legislate to enable foreigners to vote in state elections regardless of their immigration status, as does the island legal system. The measure would amend the electoral code. The bill would give foreigners living in Puerto Rico the necessary mechanisms to vote as long as they remain in the commonwealth and that on election day they have reached 18 years of age. They will be able to vote on the state ballot, the legislative ballot and the municipal ballot even if they are not U.S. citizens, but they will not be able to vote for resident commissioner. To meet this requirement, the measure calls for the election card to indicate that the person can not vote for resident commissioner and also creates a special ballot for foreigners to vote for gubernatorial candidates. The public policy of the current administration recognizes the population of foreigners without official immigration status as a part of society that should be granted greater democratic and political participation. Meanwhile, García Padilla also sent to the Legislature a bill to amend the Government Ethics Law to provide that any elected official of the executive or legislative branches or municipalities can not intervene with the duties of officials working in public corporations. The bill seeks to eradicate the practice of recruiting personnel based on personal considerations instead of professional capacity. It also seeks to prohibit undue interference in the decisions of officials of public corporations. The move came amid allegations that a former government official tried to influence an official in the Puerto Rico Aqueduct and Sewer Authority over contracts. The measure would amend Article 4.7, proposing that any person who violates the prohibitions and provisions of this Chapter and the regulations, orders or rules promulgated thereunder may be punished by the Executive Director with administrative fines that will not exceed $20,000 for each violation. This does not limit the power of the Executive Board to impose further administrative fine, including the penalty of triple damages. Similarly, Article 4.9 says that no elected official of the Executive Branch, Legislative Branch or from municipalities may, directly or indirectly, interfere in the performance of the functions or decisions of officials of public corporations, except in the case of a notice or formal communication officer as part of his efforts and his official duties when intervention is necessary to protect life, property or public safety in emergencies.

5 6 Wednesday, November 18, 2015 The San Juan Daily Star New Law Aims to Boost Effectiveness of Economic Incentives By EVA LLORENS VELEZ Gov. Alejandro García Padilla on Tuesday enacted into law House Bill 2504, which creates the Interagency Validation Portal for Granting Incentives for the Economic Development of Puerto Rico Act to ensure corporations comply with the conditions for obtaining economic incentives and to measure the effectiveness of those incentives. Through the portal or website, which will be assigned to the Puerto Rico Institute of Statistics, government agencies will connect with one another, allowing information from each interagency system to be validated. The new law is meant to help ensure that the country s resources are maximized. While unemployment has gone down, more Puerto Ricans are leaving the island because of the lack of jobs, prompting officials to seek ways of ensuring the incentives are used to create jobs. Laws 20 and 22, which seek to attract millionaire investors to Puerto Rico, have been criticized because beneficiaries pay little in taxes and have appeared not to be creating jobs. Economic Development and Commerce Secretary Alberto Bacó told the STAR earlier this week that the economy is evolving into one where research and services are the prime creators of jobs and not manufacturing. The new law will allow greater government efficiency, making the process to apply for incentives faster and simpler for the applicant. In addition, it will allow officials to evaluate the effectiveness of the requirements applicants must meet to obtain incentives in order to adapt them to the current reality of Puerto Rico and help retain local talent. The system will serve to validate and corroborate the information provided by taxpayers and determine whether the funds designated by the government are being used responsibly. Furthermore, this legislation will allow the government to measure the results of the incentives or benefits that are being granted in order to change strategies if necessary. With the approval of this measure, authored by Rep. Rafael Tatito Hernández, about 30 incentives, credits, exemptions, deductions and tax benefits were revised to ensure resources are adequately used in the generation of economic activities. Within the revised laws are amendments relating to job creation; the acquisition of raw materials, manufactured goods, building materials and agricultural products; and the hiring of local professional services. The statutes promote the use of financial services institutions with a presence in Puerto Rico. The Legislature had to do its own evaluation of the incentives, which concluded that there were no tools for evaluating their effectiveness. This measure is fundamental in the work of the administration of Gov. Alejandro García Padilla to restructure government, eliminate bureaucracy and simplify processes for the people, officials said. The current administration s policy includes increasing government efficiency with fewer resources and producing better results and quality of service. UPR Likely Headed Toward 1st Credit Default, S&P Says The University of Puerto Rico (UPR) is unlikely to make a $11.3 million debt payment due on Dec. 1, a credit analyst told Reuters this week, the latest manifestation of economic peril gripping the U.S. territory. S&P expects with virtual certainty: that the university will fail to make the payment, which would mark the first time a U.S. public university rated by S&P defaulted on a payment, said Bianca Gaytan, a director at the ratings agency. We re in uncharted territory, she said. A UPR spokesperson could not be reached for comment. If the university fails to make the payment, its credit rating will drop from its current CC rating with a negative outlook to D, which would signal to the market that it had failed to meet a financial obligation. From 1986 to 2014, just two rated U.S. private universities have defaulted -- Bradford College in 2000 and Thomas Jefferson School of Law in 2014, Gaytan said. That could be just the start of defaults for the university, which also has a principal payment of $19.97 million due on June 1 along with another $11.3 million interest payment. The university s economic struggles are tied closely to the struggles of the commonwealth as a whole. Moody s Investor Services said last week that Puerto Rico is likely to default on at least some of its $355 million in debt payments on Dec. 1 due to liquidity pressures. The university receives 68 percent of its revenues from the commonwealth, a much higher percentage than what most public U.S. universities on the mainland receive. As the Commonwealth goes, so goes the fiscal health of the university, Gaytan said. Natalie Cohen, a director at Wells Fargo Securities, said the university should capitalize on the increase in the number of Spanish-speaking people in the U.S. mainland looking for a quality education. Those students would pay more in tuition, helping to improve the university s financial position, she said. A strong education system is key to economic development and there are many creative ideas that could reinforce their programs, including endowments and special types of scholarships, she said.

6 The San Juan Daily Star Wednesday, November 18,

7 8 Wednesday, November 18, 2015 The San Juan Daily Star San Juan Hosting Major Regional Conference on Climate Change By The STAR Staff The U.S. Environmental Protection Agency (EPA), the U.S. Department of Commerce s National Oceanic and Atmospheric Administration (NOAA), U.S. Department of Agriculture s Forest Service, and the U.S. Department of the Interior are joining efforts with the governments of Puerto Rico and the U.S. Virgin Islands as they host a conference on Climate Change in the Caribbean today at Inter American University School of Law in San Juan. More than 350 people are expected to attend. The conference features dignitaries and scientists from many Caribbean islands and the U.S. who will explore the consequences of climate change for the region. Participants will discuss the progress that has already been made to address climate change and the need for further action. The objectives of the conference are to increase understanding of the climate challenge that exists in Puerto Rico, the U.S. Virgin Islands, and the broader Caribbean. The conference will highlight recent success stories in preparing for and responding to the effects of climate variability and change in the Caribbean, review new advances in Caribbean climate science, promote tools and strategies that support climate adaptation and mitigation activities, and inspire further collaboration in responding to challenges of climate change in the Caribbean. This conference reminds us of something very important when we talk about climate change: we are not alone in this fight. I think we can qualify it as the largest cooperative effort, until now, between the governments of the United States, Puerto Rico and the Virgin Islands to prepare for the great challenges that climate change may bring, Gov. Alejandro García Padilla said in a joint news release. We have before us a historic opportunity to show the world how our islands can cope and grow in adversity. At the end of the day, many of the challenges are the same: droughts, hurricanes and coastal erosion recognize no borders. During the conference, a Memorandum of Understanding will be signed between the governments of Puerto Rico and the U.S. Virgin Islands; the EPA will also sign the document, which is geared at Mona Barnes cementing a commitment to share expertise to address climate change in the Caribbean. Among the conference presenters are Carlos Fuller, Caribbean Community Climate Change Centre, Belize; Jean Yves La Cascade, special adviser to the president, Territorial Diplomatic Mission, regional council of Martinique; Shawn-Michael Malone, Office of the Governor of the U.S. Virgin Islands; Alejandro de la Camp, Caribbean area director of the Federal Emergency Management Agency; Mona Barnes, director of the USVI Emergency Management Agency; Augustín Carbó, chairman of the Puerto Rico Energy Commission, along with José Maeso, director of the Puerto Rico Energy Affairs Administration; and Johann Clendenin, chairman of the USVI Public Service Commission. I am pleased to join Gov. García Padilla, and key federal agencies in this continued effort to achieve resilient communities in the face of present and increasing impacts of climate change in our respective jurisdictions. I am personally and morally committed to this challenge and deeply encouraged by the collaboration I see resulting in this very important conference on climate change in the U.S. Caribbean, U.S. Virgin Islands Governor Kenneth Mapp said. I am confident that this conference will result in a broader awareness by our constituencies, stronger collaborations between Puerto Rico, the U.S. Virgin Islands and our federal partners in accomplishing the task of adapting to climate change. Mapp said he hoped that this will be the beginning of other collaborations between the U.S. Caribbean and the wider Caribbean as we all share the same climate, very similar economies and ways of life. Our climate challenges are synonymous, Mapp noted. Plenary sessions and panels during the conference will cover a wide range of topics, including: challenges the Caribbean faces in addressing climate change and implications of climate change for public health, infrastructure, water resources, and natural ecosystems. Other topics that will be addressed are the need to enhance community and ecosystem resilience, promote sustainable development, preserve water resources, and protect ecosystems; how best to prepare for, manage risk from, and respond to disasters; and climate mitigation and adaptation in the Caribbean, including in local communities. NOAA s National Ocean Service Acting Assistant Administrator Russell Callender said the Caribbean is exceptionally vulnerable to climate change and other coastal hazards, which makes the task of safeguarding these communities and this environment all the more challenging. This conference, with its emphasis on local successes and initiatives, provides another indication of the region s willingness to be proactive and share with each other what is working and what can be improved, Callender said. EPA Regional Administrator Judith Enck noted that climate change is affecting the Caribbean in serious ways, and that more impacts can be expected. This region is extremely vulnerable to sea level rise, extreme heat events, hurricanes and drought, she said. The fact that so many impressive thinkers and solution-makers from U.S. government agencies, Puerto Rico and the U.S. Virgin Island are in attendance shows that we all understand we must act now and act together to address the greatest environmental challenge of our time. Two programs that seek to enhance collaboration among federal and territorial agencies are the USDA Caribbean Climate Hub and the Caribbean Landscape Conservation Cooperative, both located at the U.S. Forest Service International Institute of Tropical Forestry. They have been established to enhance the flow of information from climate science to agencies and individuals making decisions. These organizations are designed to harness the collective capacity of government agencies and partners to develop new science and get the best information into the hands of people and agencies who carry out climate adaptation and mitigation actions. At USDA-NRCS, we are working to provide the necessary tools, technical and financial assistance to our farmers so that they can adapt to the impacts of climate change in the Caribbean Area, said NRCS Caribbean Area Director Edwin Almódovar. In June 2013, President Obama released his Climate Action Plan for the U.S., directing a wide range of U.S. agencies to take action to cut carbon pollution in the United States through regulations on vehicles and power plants; additionally, the president sought to prepare the U.S. for climate impacts and to put the U.S. in the lead on international efforts to address climate change. Nothing could be more closely tied to climate than the food we eat and the flow of ecosystem services from our natural landscapes. Warming temperatures, increasing climate variability and changing climate extremes affect food security, sustainable resources and our well being, U.S. Forest Service Research Ecologist William Gould said. The USDA plays a leading role in efforts to reduce organizational barriers to collaborative action on climate change. In 2014, NOAA administrator Dr. Kathryn Sullivan signed the NOAA Caribbean Strategy, which outlines the agency s mission priorities in the region. It focused on three goals: strengthened understanding of, and adaptation to, a changing climate; enhanced multi-hazard monitoring, forecasting, and risk management; and improved conservation and management of ocean and coastal ecosystems and resources.

8 The San Juan Daily Star Wednesday, November 18,

9 10 Wednesday, November 18, 2015 The San Juan Daily Star More Than Half a Million in PR to Benefit from Federal Healthcare Funding Fixes By MARIA MIRANDA SIERRA mirandasanjuanstar@gmail.com The Centers for Medicare & Medicaid Services (CMS) have indicated that administrative steps to provide more equitable funding to hospitals in Puerto Rico and to Medicare Advantage plans on the island will be taken, which will provide health insurance coverage to more than 560,000 senior citizens and individuals with disabilities living in the territory, Resident Commissioner Pedro Pierluisi announced Tuesday. I have been working on these issues for years. While far more work remains to be done, on both the legislative and administrative fronts, I am encouraged that CMS appears at least to be moving in the right direction, Pierluisi said in a written statement. Puerto Rico patients, physicians, hospitals and health insurers are treated inequitably under federal health programs in various respects, compared to their counterparts in the 50 states. In June, the resident commissioner introduced comprehensive legislation, H.R. 2635, the Improving the Treatment of the U.S. Territories Under Federal Health Programs Act of 2015, that would eliminate or mitigate nearly all of the disparities that Puerto Rico faces under Medicaid and Medicare. A nearly identical companion bill, S. 1961, was subsequently introduced in the Senate and is cosponsored by six U.S. senators. This effort appears to have borne fruit, Pierluisi said. In a regulation that it recently issued, CMS made clear that it agreed with our argument that the current Medicare DSH formula is unfair to Puerto Rico. The agency strongly indicated that it would propose to make the requested administrative correction beginning on October 1, 2016, the start of fiscal year [FY] The resident commissioner added that although he would have preferred the change to be implemented in FY 2016 rather than FY 2017, it is nevertheless a positive development. According to one estimate, this fix will result in at least $10 million in additional Medicare DSH payments being made to Puerto Rico hospitals each year, which will help those hospitals provide better care to patients, Pierluisi said. One disparity that Puerto Rico hospitals face involves the Medicare disproportionate share hospital program, known as Medicare DSH. Since the 1980s, the federal government has used the Medicare DSH program to provide additional financial support directly to hospitals that treat a high percentage of the most vulnerable population groups: Medicaid beneficiaries, low-income Medicare beneficiaries, and individuals without health insurance. Prior to passage of the Affordable Care Act in 2010, the formula that the federal government used to calculate Medicare DSH payments to hospitals consisted of several factors, including a factor called Medicare SSI days. This factor measured the number of times a hospital treated a patient who is enrolled in both the Medicare program and the federal Supplemental Security Income (SSI) program. This formula operated to Puerto Rico s disadvantage because Congress has elected not to extend the SSI program to the territory. The Affordable Care Act modified the formula used to distribute Medicare DSH payments, and the new formula substantially improves the treatment of Puerto Rico hospitals, increasing annual Medicare DSH payments by over 30 percent. However, the new formula still uses the Medicare SSI days factor in two places, and thus continues to disadvantage Puerto Rico. I included a provision in my comprehensive health bill that would provide a statutory fix to this problem, Pierluisi said. At the same time, however, I insisted to CMS officials that the agency did not need to wait for legislative action and could instead provide an immediate administrative fix. With respect to Medicare Advantage, Pierluisi has been working for years to ensure that the monthly payments made by CMS to MA plans in Puerto Rico are sufficient to enable these plans to provide high-quality and affordable services to MA beneficiaries on the island. Because Puerto Rico is a territory and not a state, it has always been treated unequally under both the Medicaid program and the traditional, fee-for-service Medicare program. This, in turn, causes all sorts of problems and aberrations in the way that the federal government compensates MA plans in Puerto Rico. As a result, MA plans in Puerto Rico receive monthly payments from the federal government that are far less than the payments received by MA plans in the states. This compromises patient care and results in lower payments by MA plans to physicians and hospitals on the island. Pierluisi noted that since 2010, he has been working to make sure that MA plans in Puerto Rico are fairly compensated for their services. He said that as a result of these efforts, CMS has made meaningful adjustments to the payment formula. Nevertheless, these adjustments have not been sufficient, and he continues to seek additional adjustments. He added that he is pleased to report that, last week, CMS issued a document proposing changes to the way in which MA plans nationwide are compensated under what is known as the Star Ratings system. This system seeks to reward MA plans that meet certain criteria by increasing the payments made to these plans, Pierluisi said. In the past, I and others have argued that the current Star Ratings methodology does not accurately capture the performance of MA plans in Puerto Rico and, therefore, does not provide enhanced payments to those plans even though they deserve it. Within the 27-page document just released by CMS, Puerto Rico is mentioned no fewer than 25 times, which Pierluisi says demonstrates that CMS is now paying close attention to this issue. More specifically, Pierluisi added, CMS states that it will make an adjustment to the proposed Star Ratings methodology to account for the fact that Medicare beneficiaries in Puerto Rico, unlike in the states, do not qualify for the low-income subsidy under Medicare Part D, which helps beneficiaries afford their prescription drugs. Although it is too early to estimate with precision how these proposed changes would affect the payments that CMS makes to MA plans in Puerto Rico under the new Star Ratings system, it appears that the impact could be quite positive for both plans and patients on the island, Pierluisi said. The resident commissioner emphasized that he has identified various other administrative steps that CMS can take to address the unequal treatment that Puerto Rico receives under Medicare, and he urged the agency to make those changes without undue delay.