Thursday, July 9, The San Juan Daily Star

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1 2 Thursday, July 9, 2015

2 GOOD MORNING 3 July 9, 2015 has exclusive New York Times News Service in English in Puerto Rico Governor Says Obama Cabinet Holding Back on Helping PR Local Mainland Business Interna onal Viewpoint Entertainment Movies INDEX Cinema Legal No ces Sports Games Horoscope Cartoons By EVA LLORENS VELEZ llorenseva4@gmail.com Gov. Alejandro García Padilla said Cabinet members in the administration of President Barack Obama could do more to help Puerto Rico, but refuse to do so. The Treasury secretary, the head of the Federal Reserve, could deal with Puerto Rico on a more active level, the governor said. They have been quite accessible and have provided technical help, but they could be more accessible. Some secretaries have done a lot and others have done less than they can do, García Padilla said at a news conference in Trujillo Alto. The governor said last week that the island has very little money with which to pay its debt. Still, the First Circuit Court of Appeals early this week declared a local bankruptcy law for public corporations unconstitutional, contending that it was preempted by the U.S. Bankruptcy Code. García Padilla s remarks were made on the same day federal marshals went to the island Health Department to collect a $5.7 million check to pay 330 primary medical centers, a day after the Circuit Court of Appeals rejected a request to paralyze the embargo of Health Department accounts. García Padilla said U.S. Health Secretary Kathleen Sebelius could resolve the issue by just signing an order citing Puerto Rico s shortage of funds in the Medicare Advantage program. His remarks were made in response to a request by U.S. Rep Nydia Velázquez (D-N.Y.), who asked President Obama to appoint a group to negotiate Puerto Rico s debt restructuring with creditors. The governor also declined to include representatives from different sectors in the Task Force for the Economic Recovery of Puerto Rico that will renegotiate the $72 billion debt starting next week and draft a five-year adjustment plan, contending that he did not want people to become a roadblock instead of helping the government. A group of Puerto Rico bondholders has hired the law firm Davis Polk and Wardwell to protect their investments as the government seeks to restructure its debt.

3 4 Thursday, July 9, 2015 Bill Would Scotch Resident Commissioner s Driver Privileges, Review Bodyguard Costs By MARIA MIRANDA SIERRA mirandasanjuanstar@gmai.lcom Popular Democratic Party (PDP) Sen. Gilberto Rodríguez on Wednesday insisted the costs of bodyguards assigned to former governors and the resident commissioner must be reviewed at a time when Puerto Rico faces the worst economic crisis in its history. The people of Puerto Rico spend over $7.5 million a year in bodyguards for the former governors and the resident commissioner, Rodríguez said. That is money and agents that could be assigned in other areas to reinforce the fight against crime. Senate Bill 1435, which would also separate the resident commissioner post on a fourth ballot during the elections rather than on the same ballot as the governorship, would also eliminate bodyguard privileges for the resident commissioner. The resident commissioner s bodyguard is a privilege awarded by the Police superintendent to the person occupying the seat in Washington, D.C. However, in the U.S. no other congressmen has a bodyguard paid for with state funds, Rodríguez said. The resident commissioner should stop the hypocrisy when it comes to talking about economic scarcity and adjust to the current fiscal reality. The cost of Resident Commissioner Pedro Pierluisi s bodyguard, according to information provided by the Police Department s Security and Protection Office, amounts to some $500,000 a year. This includes salaries, per diems, and two assigned vehicles. In addition to these expenses there is also the car provided to the resident commissioner by the General Services Administration, which costs about $20,000 annually, Rodríguez said. It s a totally unnecessary cost, and so we will file a resolution to investigate the scope of services the bodyguards provide to these officials, Rodríguez said. In addition, during the next ordinary session we will follow up on the bill that we filed so that it can be approved and we can eliminate the resident commissioner s bodyguard. Other officials who are assigned drivers and bodyguards are the Supreme Court associate justices, the Supreme Court chief justice and the Police superintendent. Agency heads also have drivers during the week, all paid with public funds. Gilberto Rodríguez High-Profile Investor Remains High on PR Bonds By EVA LLORENS VELEZ llorenseva4@gmail.com DoubleLine Capital s Jeffrey Gundlach, one of the nation s most outspoken investors, told Forbes that Puerto Rico is a good investment. Even though Gov. Alejandro García Padilla says the debt can not be paid and will start debt restructuring talks, leading investors still think the junk-rated bonds of Puerto Rico are a good bet. Gundlach rattled off a colorful new set of trades, many of which cover prominent market stories for the second half of 2015, at a meeting earlier this week. Municipal bonds are getting expensive, but Gundlach believes Puerto Rico pension bonds trading at 40 cents on the dollar and construction bonds trading at a bit over 70 cents are cheap relative to potential haircuts in an expected restructuring. Gundlach doesn t own Puerto Rico bonds in his DoubleLine Core Fixed Income Fund, or Flexible Income Fund. He also believes that the Federal Reserve s falling economic forecasts for the U.S. in 2015, combined with muted core inflation data, make it unlikely that the Federal Reserve will decide to hike shortterm interest rates at their September meeting. Global market volatility from a crash of Chinese stocks, the potential exit of Greece from the European Union, and a quick about face by the Reserve Bank of New Zealand after it hiked rates earlier in the year add to Gundlach s belief that the Fed will continue with a cautious stance, the magazine said. Gundlach also said investment grade bonds are beginning to cheapen relative to high yield after spending recent years in highly overvalued territory. Some DoubleLine funds have cut their allocation to high yield by 3 percent and plowed the money into investment, a market the firm s been avoiding for years, Forbes said.

4 Thursday, July 9, PR Officials to Kick Off Debt Negotiations With Creditors on Monday By EVA LLORENS VELEZ llorenseva4@gmail.com Puerto Rico is slated to meet with creditors at the offices of Citi Group on Monday following a meeting later this week to fine-tune details. La Fortaleza Chief of Staff Víctor Suárez said the fiscal recovery group created by Gov. Alejandro García Padilla will meet with a group of Puerto Rico s creditors on Monday in New York City to start the process of negotiating the debt. This will be the first meeting with creditors where they will be notified that Puerto Rico intends to restructure its debt, Suárez said in a press conference Tuesday after the meeting of the fiscal recovery group. The meeting will be with the creditors who have the largest amount of debt with the government and it will be transmitted through Internet LiveStream through a link which will be released soon. Suárez said the details of the report prepared by economist Anne Krueger will be unveiled at the meeting. Krueger will also attend the meeting and will give a report on the dire fiscal crisis on the island. Suárez stressed that Krueger s report will be used by the group as a basic document to begin the process of debt restructuring. Asked about the Víctor Suárez elements in the report that have been opposed by various island sectors, Suárez said Gov. Alejandro García Padilla does not agree with all of Krueger s recommendations and that indeed the report will serve as a working paper. Government Development Bank President Melba Acosta said the fiscal recovery group will meet again on Friday to work on the fiveyear fiscal plan. The group has until Aug. 30 to turn in a fiscal plan. Monday s meeting will be the first with creditors since the governor said the island can not pay its debt. BRINGING the CARIBBEAN CLOSER with GREAT LOW FARES

5 6 Thursday, July 9, 2015 Seilhamer Calls for Economic Stimulus, Denounces Taxation as Wrong Approach By MARIA MIRANDA Senate Minority Leader Larry Seilhamer charged Wednesday that the economic recovery alternatives being proposed by the government continue to have the wrong approach, because they are based on establishing more taxes and strangling public workers and the working class. The New Progressive Party (NPP) senator said the administration of Gov. Alejandro García Padilla instead should aim at promoting economic stimulus programs, creating jobs and expanding the workforce, in addition to promoting an investment climate through methods that have proven results like the public-private alliances [PPAs]. Seilhamer noted that the reality is that although two and a half years have passed since this administration came into power, there is no strategic economic-development plan to address the situation in the short, medium or long term. Currently in Puerto Rico the workforce is less than 40 percent and the jobs promised, which are needed to increase this number, haven t been created, he said. He said that to have an ample workforce there has to be an investment climate within a credible and trustworthy environment. Seilhamer said that before the government imposed so many taxes, it should have created a governmental fiscal structure that complied with the ministerial duty to maximize revenues by improving collections, eradicating tax evasion and minimizing the underground economy, which Treasury Secretary Juan Zaragoza says amounts to $20 billion. This was suggested by the KPMG report, which cost the people millions of dollars; however, the government discarded what was recommended and chose instead to approve a supposed tax reform behind closed doors, Seilhamer said. Among the alternatives Seilhamer proposed are promoting and encouraging the private sector through the PPA model. This government hasn t presented one single PPA in 30 months, he said. In fact, they opposed them in the past and now have had to recognize that they work and are necessary. Seilhamer added that the Popular Democratic Party was opposed to important measures such as stimulus programs for the real property market and for the development of infrastructure projects. He added that the administration amended the Permits Law and went back to a bureaucratic and inefficient system that has complicated the development of new businesses and companies. Despite the taxes that have been imposed and the substantial loans taken, the government hasn t made any investments in infrastructure or job creation, which keeps the island s economic stagnation and the massive exodus of Puerto Ricans. It s time to execute an economic stimulus plan with real and concrete measures, he added. Díaz Says Burden of Proof on SJ Mayor to Verify Budget Surplus By MARIA MIRANDA SIERRA mirandasanjuanstar@gmail.com New Progressive Party (NPP) San Juan mayoral hopeful Leo Díaz on Wednesday said Mayor Carmen Yulín Cruz should produce evidence proving she hasn t balanced the capitol city s budgets by taking out loans. She is the one who must be held accountable and tell the people of San Juan the truth and stop hiding behind pre-recorded messages and publicity ads. It is time for her to leave her comfort zone and assume her job with responsibility, Díaz said in a written statement. She needs to issue a sworn statement confirming that she has not taken out loans worth over $200 million. Díaz added that Cruz should open San Juan s books to public scrutiny. On Tuesday, Cruz gave Díaz 24 hours to produce a sworn statement with the corresponding documents supporting and demonstrating his claims that there is no existing surplus in San Juan s finances, as Cruz asserted when presenting the 2015 budget earlier this week. She said that if Díaz didn t have the evidence to support his allegations, then he would be unmasked as a fake. Cruz s statements came after Díaz insisted in a news release that the $17 million surplus the San Juan mayor claims for her administration is a surplus based on loans. The mayor has not been clear about San Juan s finances; she questions the president of her political party, who is also the governor, while she increases spending in San Juan and limits her [budget] message from having the depth that financial issues merit, Díaz said. The people of San Leo Díaz Juan demand more. It is necessary to see the evidence that supports her alleged achievements. Saying it is not enough. He added that to his understanding, Cruz doesn t like being questioned on the city s finances or to be taken out of her comfort zone. But that is not a reason to resort to insults or derogatory epithets that the people reject and that she would complain about [if they were directed at her], Díaz added. The mayor got it wrong if she thinks she can draw me into that. She is the one who has the responsibility of swearing under oath that she has not taken out any loans to balance the budget.

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7 8 Thursday, July 9, 2015 Businesses Must Keep Sanitary Services Open During Water Rationing By MARIA MIRANDA SIERRA Even though most of the San Juan metropolitan area is under a water rationing plan due to a severe drought, the Health Department has reiterated that businesses must have their sanitary services open to customers. Visits to several businesses by a local TV news crew showed that bathroom facilities were in fact closed, with signs posted on the bathroom doors saying Bathroom closed due to the water rationing plan. These establishments are breaking the Health Department s Environmental Health Division regulations. From fast-food outlets and shopping malls to restaurants and clothing stores, all businesses must have at least one bathroom operating that is clean and with a water supply to enable patrons to flush the toilet and wash their hands. If a business doesn t have a reserve of potable water, then it can t open, especially a food establishment, Health Department Environmental Health Division Director Carlos Carrazo said. Even if the business alleges it has no water at the moment due to the water rationing plan, the establishment must have at least one bathroom operating. If they have five bathrooms they can close four, but they have to leave one open, Carrazo noted. Even a shopping center in the metro area had a public bathroom closed, with the sign on the door saying Bathroom closed due to the water rationing plan. Carrazo explained that each establishment has to have at least one employee in charge of cleaning the bathrooms. One worker has to be in charge of making sure the bathrooms are clean, making regular rounds, flushing the toilets with non-potable water and keeping the bathroom clean, he added. The same metro area shopping center was, however, following Health Department regulations, at least in the area where food is sold and consumed. The person in charge of the restroom took about 30 minutes to clean the four sinks, flush and clean the six toilets, and sweep and mop the floors. In the end, the bathroom was completely clean, the toilets were flushed with non-potable water and sanitized. Any customer of a store, restaurant or any kind of establishment who finds the restroom closed can report it to the Health Department s Environmental Health Division at If any establishment fails to comply with these regulations they may face administrative hearings, Carrazo said. Senate Bill Mandates Study of Languishing Guánica Lagoon By PEGGY ANN BLISS sjstarbliss@gmail. com The Guánica Lagoon stands to regain some of its earlier splendor as a result of the tripartisan support of the Senate for the bill authored by Ponce District Sen. Martín Vargas Morales. Senate Bill 463 establishes Commonwealth Public Policy and gives several government agencies a year to conduct an economic, hydraulichydrological environmental impact study on the lagoon. It also orders the Land Authority and the Land Administration to cede to the commonwealth Department of Natural and Environmental Resources (DNER) the land for the river bed and the buffer zone needed around the river bed. Guánica Lagoon in its heyday was Puerto Rico s largest sweetwater lagoon, by extension occupying 1,400 cuerdas [1,360 acres] and representing an important link in the migration of birds between the coast and terra firma, said the senator and former mayor of the town. At any given moment, up to 46 bird species could be documented, 12 native species and 11 migratory. The lagoon was also used for fishing and hunting, as well as for irrigation and recreation. Our work is to establish public policy to provide a balance among the interests and needs of the greatest number of people, he said. The restoration of the Guánica Lagoon is one of these actions. The agencies being asked to deliver the study are the DNER, the Land Authority and the Planning Board. Vargas Morales clarified that as for the alleged loss of farmland, we have found no verifiable reference to the fact that the lagoon bed is or has been very productive, from the agricultural point of view. Even the data provided for us show that this area only represents 2.4 percent of the valley s agricultural production, measured in terms of gross agricultural income, he said. It would not appear that agricultural income from the river bed is not significant, nor that the elimination of forage there would have a significant impact on the agricultural production in the valley. The measure, which also received the support of the Puerto Rican Independence Party, was co-authored by Senate President Eduardo Bhatia, the minority leader of the New Progressive Party Larry Seilhamer, and Popular Democratic Party at-large Sen. Cirilo Tirado, chairman of the Senate Natural Resources Committee.