A Special Report on Ponce (August 1970)

August 1970

A SPECIAL REPORT O

COMMONWEALTH OF PUEnxO RICO

GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO SAN JUAN. PUERTO RICO

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A contrasí in culíiiral developineni i.s reacHly ctppareni beinecn Poncc'.s nuuiern and beauíiful Miiseitm of Arí and llic Oíd Firehouse—a ¡andmark of íhe city.

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l'oiice Miiscuin, rifíhi of i cnicr.

Hon. Juan M. Cinírón

Mayor of Ponce

PONCE, PUERTO RICO

Ponce, second largest city in Puerto Rico, founded in 1692, is traditionally the most Spanish of Puerto Rico's cities, retaining an oíd world atmosphere made up of the customs and traditions of earlier centurics. Yet today Ponce is a thoroughiy modern city, serving as the agricultura!, commercial, industrial and educational center of the fast-growing south coast. It is also the administra tiva center for many governmental agencies.

The industrial face of Ponce has changed substantially in recent years. A decade ago, industry consisted largely of sugar grinding and refining, rum distillation and ccment production.

As the new decade opens, industrial growth is in areas such as foods and canning, and apparel manufacture. The pctrochemical industry, which is developing into Puerto Rico's single most

important industrial segment, is to a large extent situated cióse to Ponce. A number of ''blue-chip" firms are now operating in Ponce and adjoining municipalities. Each year, new Unes of manufacturing are established in Ponce.

Ponce is situated on the Caribbean, about midway on the South coast of the island. The popula-

tion has shown a steady and rapid increase from 126,810 in 1950 to 145,586 in 1960 and to 156,498 in 1970.

On íhe island since 1963, Nalional Packing Co., a suhsidiary of Ralston Purina, produces canned tuna and caítle feed.

THE COMMONWEALTH OF PUERTO RICO General

Puerto Rico is the fourth largest of the islands in the Caribbean area. It is about 100 miles long and 35 miles wide, having an area of 3,423 square miles and a population of approximately 2,777,000. The topography is characterized by a fertiie coastal plain rising to interior mountains which run mostly from east to west. San Juan, capital of Puerto Rico lies some 1,690 miles southeast of New York, 3V4 hours by jet plañe, and 1,000 miles southeast of Miami, 2Va hours by jet plañe.

Under its compact with the United States, the Commonwealth of Puerto Rico exercises virtually

the same control over its internal affairs, and with the same general procedure, as do the fifty federated states over theirs. It differs from the States primarily in its relationship to the Federal Government. ín brief, residents of Puerto Rico do not vote in the national elections and are

represented in Congress only by a Resident Commissioner who has a voice but no vote in the

House of Representatives. On the other hand. Federal taxes do not apply in Puerto Rico except by mutual consent, such as social security taxes. No Federal income tax is collected from Puerto

Rican residents on income earned in Puerto Rico and Federal excise taxes collected on exported Puerto Rican products, such as rum and tobáceo, are returned to the Commonwealth Treasury.

This relationship with the Federal Government is defined through the médium of a compact entered into by Congress and the People of Puerto Rico, and is further described hereinafter.

Government History

Puerto Rico carne under United States sovereignty by the Treaty of Paris on December 10, 1898.

The Congress of the United States provided for a civil government for the Island in 1900. It

provided for a Governor, a Cabinet, a Senate and a Supreme Court Judiciary, all appointed by the President of the United States; only a House of Delegates was elected by the People of Puerto Rico.

Over succeeding years strong feeling developed for a more autonomous form of government and in favor of United States citizenship. The original Act was superseded in 1917 by the Organic Act

or Jones Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for local purposes. It also provided that members of both Senate and House were to be elected by the people, but the Executive and Judicial branches remained under control of Washington through appointment by the President.

No further change occurred until 1946 when the President for the first time appointed a Puerto Rican as Governor. In 1947 the Jones Act was amended to permit Puerto Ricans to elect their

own Governor, who in turn was empowered to appoint his cabinet and members of the Supreme Court.

The next advance toward complete local government occurred in 1950 when,in accordance with the wishes of the people of Puerto Rico, the 8Ist Congress enacted Public Law 600, approved

July 3, 1950. This law, which is "in the nature of a compact," became effective upon its acceptance by the electorate of Puerto Rico. It provides that those sections of the Organic Act which define the political, economic and fiscal relationship between Puerto Rico and the United States shall remain in ful! forcé and shall be thereafter known as the Puerto Rican Federal Relations Act.

It also authorized the people of Puerto Rico to draft and approve their own constitution. The Constitution was drafted by a freely elected constitutional convention, overwhelmingly approved in a special referendum, and approved by Congress and the President. It became effective upon proclamation of the Governor of Puerto Rico on July 25, 1952.

From the vast petrochemical complex in nearby Peñuelas, refined petroleum producís and chemicals are shipped to cities rhroughom Puerto Rico, to many United States parís and to various countries in Europe.

Prívale Hoiising Developmeni near ihe

Ponce Municipal Ballpark and Coliseum.

Tlie Ponce General District Hospital ivoí completed ín 1955

ai a COSI of $8,150,000 with a capacity of 434 heds.

The Commonwealth GovernmenI

The Constitution recognizes and assures a separation of powers among the executive, legislativa, and judicial branches as in the Federal Constitution, and as in those of the States. Both the Gov-

emor and the bicameral legislatura are subject to regular election every four years. The Legislatura operates under standard parliamentary and legislativa rules. Writs of error and appeals from judgments of the District Court of the United States for Puerto Rico may be taken to the United States Court of Appeals for the First Circuit and to the Supreme Court of the United States and

writs of error and appeals from judgments of the Supreme Court of Puerto Rico may be taken to the Supreme Court of the United States, in the same manner and under the same terms and conditions as writs of error and appeals may be taken from other Federal and State courts.

Governmental responsibilities assumed by the Commonwealth are greater than those normally assumed by a State Government. Municipalities which combine both rural and urban areas are the only local political subdivisions and are comparable to counties in scope. The only units of government with the right to levy ad valorem taxes are the Commonwealth Government and

the municipalities, There is, therefore, no other overlapping taxation or bonded indebtedness payable from taxes. The Commonwealth Government assumes responsibility for a number of important functions normally performed by local governments in the Continental United States.

Among these are pólice and fire protection, education, all major street construction, and public health and welfare programs. In addition, the Commonwealth Government supervises municipal fiscal affairs to a very substantial extent.

Administration of Government

The operation of the executive branch of the government is similar to that in state governments in general, with sepárate departments responsible for major activities, each headed by a secretary who as a group form the Governor's cabinet and who are appointed by the Governor subject to Senate approval. In addition. Puerto Rico has made substantial use of public corporations or agencies which are largely autonomous in their operations in providing specific services. Each is headed by an executive director or president who reports to a board of directors which in turn is appointed by the Governor.

Among the departments is the Department of State, whose Secretary becomes acting Gov ernor or succeeds to the govemorship in the absence or death of the elected Governor. Other departments include those of Treasury, Justice, Education, Public Works, Public Health, Com-

merce. Labor, Agriculture, Social Services, and Tourism. All activities of the departments are financed out of the General Fund of the Commonwealth Treasury, in accordance with an annual budget prepared under the direction of the Governor and approved by the Legislature. The stafí agencies of the Office of the Governor comprise the Burean of the Budget, the Planning Board and the Office of Personnel.

Among the public corporations are the Water Resources Authority which provides essentially all electric power on the island, the Aqueduct and Sewer Authority which provides all water and sewerage services, the Ports Authority responsible for seaport and airport facilities and the Highway Authority which is charged with all major road and highway construction, all of whose borrowings are secured by revenues produced by the entities, or by gasoline and diesel fuel taxes in the case of the Highway Authority. The Government Development Bank and the Industrial Development Company likewise are autonomous agencies which, after receiving substantial capital contributions from the Treasury originally, have subsequently augmented their funds by borrowing on their own credit.

Among other public corporations are the Urban Renewal and Housing Corporation and the

Public Buildings Authority, which provide housing facilities for persons of low and médium incomes and office space for government departments and agencies, respectively. Bonds of each

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The Ponce Intercontinental Hotel on El Vigía hilltop is ene of Puerto Rico's finest.

A morning art class for pre-school children in the main plaza of Ponce.

are guaranteed by the Commonwealth government but they are self-supporting in the first instances through receipts of mortgage payments or rentáis in the case of low and middle income housing, and from lease payments from government departments or agencies in the latter case.

Political Background

In 1938 a political party emerged in Puerto Rico which was to emphasize economic development to improve the welfare of the people. From 1940 until the elections in November, 1968, as the Popular Democratic Party, it was in control of the government of Puerto Rico, and was instru mental in establishing the present Commonwealth political relationship.

Since 1948 there have been two major thrusts in political life in Puerto Rico towards cióse association with the United States and a minor and almost negligible one in favor of independence.

The trends are illustrated in the following data on election results by parties in recent years.

1952

1956

1960

1964

1968

64.8% —

62.5% —

62.4% —

59.4% —

41.8% 10.0%

12.9% —

25.0% —

34.3% —

34.6% —

0.2% 45.0%

Commonwealth

Popular Democratic Party Peoples Party Statehood

Statehood Republican Party New Progressive Party Socialist Party

3.3%

—

Independence Party

19.0%

12.5%

—

—

Christian Action Party

—

—

—

3.3%

2.7%

3.0%

—

3.3%

—

As a general comment, it is obvious that desire for cióse and permanent ties with the United States has become an inherent ingredient.

Governor Luis A. Ferré, a prominent and highly successful industrialist, as well as a leading

philanthropist, was the candidate in 1968 of the New Progressive Party which he organized in 1967 after leaving the Statehood Republican Party. He campaigned on the basis of a need for change and for more effective government through new leadership. Political status did not receive emphasis as an immediate issue. He received 45.0% of the vote in the recent election, compared with 41.8% of the vote received by the candidate of the Popular Democratic Party. In the Legislature, the New Progressive Party also gained control of the House of Representatives, although the Popular Democratic Party retained control of the Senate, thus definitely establishing a two party system of Government.

Three factors pertaining to elections in Puerto Rico are worthy of mention. There is strong public interest in government affairs and a high degree of voter participation in elections. In the 1968 elections, 79.3% of those registered actually voted.

Second, in order to reduce pressure from special interests, Puerto Rican law limits political contributions from any one person or corporation to $300 in any one election year and $100 annually in other years. Yet, recognizing the need for funds to bring issues to the attention of, and to inform the voters, each recognized political party receives from the Commonwealth Treasury a contribution of funds to carry out its political campaign. This contribution is according to a formula

based primarily on the party's percentage of votes cast in the most recent election.

And third. Puerto Rican law provides that if a minority party receives a substantial vote, but fails to elect candidates to the Legislature, then, under certain circumstances that body is increased

in size by formula to assure minority representation. The Municipal Law (Act No. 142, approved July 21, 1960) also assures minority representation in the Municipal Assemblies since at least three members of each of these bodies have to be elected from the minority parties.

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Uninn Carbiüe Caribe faciliiy ai Peñuelas oi¡ llw Soiiili Coasl produces alcohol intermediates. Unión Carbide's petrochemical

expansión program calis for an Invesiment of $300 million.

1967 Plebiscite

In 1962 the Legislature of Puerto Rico petitioned the Congress of the United States requesting a plebiscite by the voíers of Puerto Rico through which an expression of preference could be demonstrated for either a continuation of the existing commonwealth relationship with the United States, or the attainment of Federated Statehood in the United States, or the establishment of Puerto Rico as an independent country.

In response to the petition, the Congress approved a bilí in 1964 providing for the establish ment of a United States-Puerto Rico commission to study all the factors involved. The membership of this commission consisted of three persons appointed by the President of the United States.

two each selected by the Senate and the House of Representatives, and six appointed by the Governor of Puerto Rico. The Commission concluded that the people of Puerto Rico should be consulted with regard to the status they preferred and, in December, 1966, the Puerto Rican Legislature passed an act providing for the holding of the plebiscite.

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This plebiscite, held July 23, 1967, strongly reaíñrmed the overwhelming desire of the Puerto

Rican people to maintain permanent and cióse ties with the United States. Of the over 700,000 ballots cast (66.3 percent of all registered votes) 99.4 percent were for either Commonwealth or Statehood and only 0.6 percent for Independence.

Political stability, one of the prime requisites of a sound, attractive investment climate, is outstandingly demonstrated in Puerto Rico. Only a small minority party favors independence. Both major parties hold maintenance of permanent ties with the United States as a basic principie, and differ only as to the form which that future political relationship should take.

Expansión and DIversificafion of the Economy of Puerto Rico Economic growth in Puerto Rico since 1950 has been very rapid. Gross product of the Common wealth has increased more than 5 times over its 1950 level and has more than doubled during the

past nine years ($4,093 million in 1969 vs $1,681 million in 1960). In the year ended June 30, 1969 gross product totalled an estimated $4,093 million, representing an increase of 10.6% over the prior year.

Net income of the economy has increased from a level of $614 million in 1950 to $3,403 million in 1969. Income, measured in current prices, has shown an average increase during the

last five years of about 10.3% compounded annually and in the year ended June 30, 1969 it increased by 10.5% over the previous year. Per capita net income is now $1,234 compared to $279 in 1950.

The Commonwealth Govemment's program of industrialization has aided the economy to

shift from one principally agricultural to one much better diversified between industry and agriculture. Concurrently with the expansión in net agricultural income from $149 million in 1949-50 to about $175 million in 1968-69, manufacturing income increased from $89 million to $908 million in 1968-69, substantially surpassing agriculture as a source of income.

Puerto Rican manufacturing has been increasingly diversified during the last two decades. In 1939-40 the manufacture of sugar products accounted for 35% of manufacturing income. By 1966-67 about 4.5% of manufacturing income resulted from this industry. Manufacturing income

is now generally derived from the production of new types of manufactured products, principally for shipment to the United States. Such shipments amounted to only $33 million in 1949-50. By 1968-69 they had reached a total of about $1,092 million.

These new products cover a wide range such as apparel, petroleum derivatives and electronic

products. Large, heavily capitalized manufacturing operations have shown a significant increase in recent years (especially during the last two fiscal years) as compared to labor intensive operations which were promoted during the early part of the industrialization program. Some of the more

important of the larger operations promoted during last year alone include the Unión Carbide Corporation, which is in the process of an expansión program totaling approximately $225,000,000; PPG Industries with a potential investment of $65,000,000; Fibers Intemational with a planned

expansión of $41,000,000 for the production of nylon fibers, which will serve as raw material in the attraction of new textile and apparel industries; Air Products & Chemicals, $9,000,000; AIRCO Ponce, Inc., $18,000,000; and other large operations, such as: Bristol Alpha Corporation, Squibb Beech-Nut, Inc., Southern Screw Company, Shulte & Diekoff (a Germán concern), Hercor Chemical Corporation, Pennyrich Intemational and many others that form part of the 493 projects promoted during last fiscal year.

The petrochemical industry is steadily becoming the most important industrial sector. Its increasing importance to the economy of the Commonwealth is signaled by its recent developments and its rapid growth. From an investment of $96,328,000 in 1960 with two refineries (Common wealth Oil Refining Co. Inc., and Caribbean Gulf Refinery) the industry has rapidly developed in

recent years with growing diversification of primary and secondary products that include gasoline,

naphtha and a wide spectrum of aromatic products and olefins. Expansión in this sector is con-

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The ultra moderii Ponce Municipal Coliseum under construction.

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tinuing with the incoming of Sun Oil Company which has announced its intention to invest up to $120,000,000 through 1971, the expansión of the operations of Unión Carbide Caribe up to $225,000,000 in investment, the entrance of PPG Industries with three plants to produce caustic soda, ethylene glycols and vinyl chloride with an expected investment of $65,000,000 and further expansión by Commonwealth Oil Refining Co. Inc., and Phillips Puerto Rico Core. It is expected that the next few years will see an expansión in this sector that will bring the total investment up to $1,058 million, thus making this sector the largest part of the industrialization program of the island, To date no major difficulties have been encountered with respect to import quotas for the crude oil and other feedstocks needed by this industry on the island. Should tariffs replace such

quotas as proposed by the Cabinet Task Forcé on oil import control, no material adverse effect is expected, at least so long as the proposed preference is granted by Venezuela crude.

Food, pharmaceutical, textile and apparel industries have also been of significant importance in industrial development. Three rice milis and large flour and feed milis supply an important share

of Puerto Rico requirements in their field. Four large tuna canneries are now in operation and with an additional one under construction the island has become one of the leading suppliers of canned fish in the United States market.

In the pharmaceutical and chemical industry sector Puerto Rico is rapidly becoming a manu-

facturing center. Bristol Alpha Corporation, Merck & Company, Pharmaseal Laboratories, Squibb Beech-Nut, Inc., Abbott Laboratories, Eli Lilly & Co., Parke-Davis & Co., and others manufacture

pharmaceutical products in Puerto Rico principally for export to outside markets.

The textile and apparel industry has continued to expand and is expected to continué to grow

with the expansión of Fibers International, Inc., which is a source of raw material in the form of nylon 66 fibers and nylon carpet yarns.

Many of the plants encouraged by the Economic Development Administration are branches or subsidiarles set up by such parent firms as General Electric Co., American Can Co., Consolidated Cigar, Phelps Dodge, Sun Oil Company, Daystrom, Carborundum, Sprague Electric Co., Van Camp Sea Food, General Foods Corporation, Van Raalte, Hooker Chemical Corporation, PPG Industries

Inc. B.v!d., Bristol-Myers Co., International Shoe, R.C.A. Corp., Westinghouse Electric Corp., Merck, Abbott Laboratories, Eli Lilly & Co., Squibb Beech-Nut, Inc., Libby McNeill & Libby, Del Monte Corp. and many others.

Underlying Puerto Rico's growing and changing economy there has been a steady expansión in investment. Average gross fixed domestic investment during the last five consecutive fiscal years, 1965-69 ran at a rate of 26% of gross product. It has increased from $112 million in 1950 to

$1 090 million in 1969. Inñowing long-term U. S. capital rose from $31 million in postwar 1947 to an estimated $630 million in 1969.

The Puerto Rican people have benefited greatly from the economic expansión achieved since

1950. Life expectancy has increased from 61 years to 70 years and the death rate has dcclined from 10.5 per thousand to 6.1 per thousand at present, which is now about the same as the U. S.

average. The birth rate has declined from 39.6 per thousand in 1950 to 24.8 per thousand in 1969.

The people are better educated, with literacy increased from 75% to about 86% in 1967. Institutions of higher learning have also expanded rapidly. University and college enrollment which was only 13,000 in 1950, now is 48,000 students.

It is significant that the Commonwealth Government has in the last three years directed approximately 47% of its expenditures to education and health.

The Commonwealth Government will continué to provide a climate conducive to further

economic development and growth. Thus it is expected that in the years ahead a sustained rate of economic growth can be maintained. Present projections indicate that gross product in terms

of current prices should reach $7,460 million in 1975. This will mean a personal income per capita of approximately $1,855.

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Mercedilci Airport which serves Fonce anil culjacení oreas on íhe Sottíh Coasí was fnriher modeniized diiring fiscal 1969.

PONCE, PUERTO RICO The Markel Area

Ponce is an important trading center in the southern area of Puerto Rico. According to 1967 Census of Business, a total of 2,639 wholesale, retaii and service enterprises were operating in Ponce. Net income from all secíors of the economy in 1969 was $229 million; per capita income was $1,465.

During 1967 it was estimated that within the Municipality of Ponce, net income generated in the manufacturing, agricultura! and commercial sectors accounted for approximately $100 million.

Manufacturing

The región centered around Ponce is one of Puerto Rico's most important industrial areas. As

a matter of fact, the petrochemical industry which is steadily becoming the most important indus trial sector in the island is situated in municipalities very cióse to Ponce. These include the Common-

wealth Oil Refining Co., Philiips P. R. Core Inc., Unión Carbide Caribe, The Hercor Chemical Corporation, Styrochem Corp. and others.

Manufacturing activity is carried on within the municipality of Ponce by enterprises of all types and sizes. During fiscal year 1969, piants prometed under the Industrial Development Program

totalled 62. As of October 1969 the total number of plants operating in Ponce was 136. Among the plans are the National Packing Co.—a tuna fish cannery, the Cianbar Corp.—a rubber shoe firm, the Ponce Candy Industries, the Ford Gum and Machine Co., Puerto Rican Textiles Ltd., the Puerto Rican Cement Co., Inc. and others.

Agriculture and Agricultural Based Indusfry

Agricultural activity in the Ponce región includes the growing of sugar cañe, coffee, dairying and the raising of beef cattle and vegetables.

Six sugar milis grind cañe grown in the Ponce area. About 42% of all cañe ground on the island comes from this area. About 44% of Puerto Rico's refined sugar is produced by these milis.

One of the Island's largest rum distilleries, Destilería Serrallés, maker of Don Q rum, operates in the municipality of Ponce. Ponce's pasteurizing facilities handle the milk production of a large part of the entire southern coastal región. A large farmers' cooperative at Ponce, handles the financ-

ing, warehousing and marketing of an important part of Puerto Rico's coffee crop.

Other Important Features

The port of Ponce, the second largest in Puerto Rico, serves the shipping needs of the southern región. Of the Island's total liquid commercial volume, mainly crude petroleum, the port of Ponce accounts for almost 63%. Ponce's airport handles frequent daily flights connecting with San Juan International Airport.

Hotel accommodations meet commercial needs and tourist ñow. The Ponce Intercontinental

has 170 rooms, Ponce's oldest established hostelry. Hotel Meliá has 68 rooms; Hotel El Coche and San José Guest House provide 37 additional rooms.

There are twelve (12) bank offices in Ponce of which two are the home offices of well known

Puerto Rican chartered commercial banks. In fiscal 1969-70 school enrollment at primary, secondary and high school level was 59,039. University enrolllment in 1968 totalled 5,126. Many of the departments and agencies of the Commonwealth Government maintain regional offices in Ponce. *

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Act No. 24 of June 8, 1962, grants complete property tax forgiveness on the first $15,000 of assessed valuation on all residences occupied by their owners, starting in the 1962-63 fiscal year.

Such properties will remain on the tax rolls, and to receive the benefit of the tax forgiveness, the taxpayer must file a certificate with the Secretary of the Treasury to the effect that he is the owner and occupant of the residence so affected.

The Act further provides for an appropriation from the general fund of the Treasury to be made each year to the municipalities in the amount of the total of the taxes forgiven on assessed valuations of owner-occupied homes up to $15,000. The municipalities would thereby receive the full amount levied, the only difference being the Commonwealth Treasury instead of the property taxpayer becomes the source of payments in the case of the owner-occupied residences up to this amount.

And finally, said Act No. 24 provides that such tax forgiveness will be suspended as to any municipality if in any fiscal year the appropriations to such municipality mentioned above should be discontinued and the available income of the municipality is not sufficient to pay principal and interest on its bonded indebtedness.

It should be emphasized that Act No. 24 does not modify or lessen the pledge of the full faith, credit, and taxing power of this municipality. The obligation remains unchanged to levy a special tax on all taxable property, including the first $15,000 of assessed valuation of owner-occupied homes, if tax forgiveness shall be suspended in the circumstances mentioned above, in an amount sufficient, with any other available funds, for the payment of the debt service on its outstanding bonds.

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Punce Milis, a BVD suhsidiary, produces coiton knitted fahrics. Shipments to tlie üniíed States from Puerto Rico's le.xtile industry increased froni $29.5 million in 1965 to $49.8 in 1968.

Fínancial Statemenf

On August 26, 1970, the municipality of Ponce will offer for sale a bond issue in the amount of $8,000,000, maturlng July 1, 1971 through 1991.

Assessed valuation of taxable property in Ponce in 1969-70 was $267,314,300'^ on which a levy of $23.80 per $1,000 was made. This levy consisted of $10.30 for Commonwealth purposes and the balance for municipal purposes, of which $8.50 was for the general fund and $5.00 for debt service funds.

Although the levy for the general fund was $8.50, the eflfective rate charged to the taxpayer was only $6.50. Act No. 16, approved May 31, 1960, directs the Secretary of the Treasury not to collect $2.00, granted as a reduction, and for the Treasury to compénsate the municipality in an amount equivalent to this reduction.

Collection of the current levy, $5,569,345*, to the cióse of fiscal year 1969-70 amounted to $4,754,945* or 85.4%. Total collections of $5,288,324* to June 30, 1970 were 95% of the current levy. * Preliminary as of June 30, 1970,

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ASSESSED VALUATION AND PROPERTY TAX COLLECTIONS(a) Total Coüections

Fiscal

Assessed

Tax Rate

Net

Year 1965-66

Valuatlon $184,160,960

Per $1,000 $23.80

Levy(b) $4,346,289

1966-67 1967-68 1968-69 1969-70(c)

195,377,860 239,503,110 257,501,530 267,314,300

23.80 23.80 23.80 23.80

GrossLevy $4,702,935 5,037,704 5,717,441 5,927,286

1965-66 1966-67 1968-69 1969-70(0)

Total

Per Cent of

Collections CurrentLevy $4,158,839 95.7

4,735,989 5,041,692 5,370,707 5,569,345

4,491,260 4,456,611 5,312,373 5,288,324

Discount $356,646 301,715 346,734 357,941

94.9 88.4 98.9 95.0

Net Levy(b) $4,346,289 4,735,989 5,370,707 5,569,345

(a) Property tax collections are about 57% for Ponce and 43% for Commonwealth purposes. (b) The gross figure of taxes levied was reduced by discounts for prompt payments as shown just above. (c) Preliminary as of June 30, 1970.

The record of total municipal receipts and expenditures given below indicates maintenance

of comfortable cash balances. Receipts in 1968-69 of $12,235,555 were comprised of $3,438,960 from property taxes, $4,796,595 from local impost, receipts in lieu of taxes, and other budgetary sources, and $4,000,000 from the sale of bond anticipation notes which will be retired from the proceeds of the current bond issue.

OPERATB^ÍG RECEIPTS AND EXPENDITURES

Fiscal

Cash Balance

Total

Total

Cash Balance

Year

Beginningof Year

Receipts

Expenditures

atYearEnd

1965-66

$1,961,743

$ 5,316.630

$ 5,170,883

$2,107,490

1966-67

2,107,490

7,346,419

6,350,275

3,103,634

1967-68

3,103,634

8,201,716

8,537,174

2,768,176

1968-69

2,768,176

12,235,555

10,802,046

4,201,685

1969-70=^

4,201,685

7,716,330

7,544,356

4,373,660

* As of April 30. 1970.

Bonded debt as shown in table below for the past five years remains modérate while assessed

valuation has increased by more than 45%. Gross debt of $11,440,000 as of June 30, 1970 was offset by bond redemption funds of $3,353,202, leaving a net debt of $8,086,798. Of this amount

$8,000,000 represents bond anticipation notes to be paid off from the proceeds of the $8,000,000 bond issue now being sold. Gross debt will be 4.28% of the 1969-70 assessed valuation, and a per capita net debt of $73.10.

TREND OF BONDED INDEBTEDNESS

As of

Gross Bonded

Redemption Funds

Net Debt

juiy 1

Debt

as of .luly 1

as of July 1

1965-66

$ 4,952,000

$1,292,389

$3.659.611

1966-67 1967-68

5.602.000 6,945,000

1,600.759 2,073,646

4,001.241 4,871,354

1968-69

10,665,000

2,712,867

7,952,133

1969-70===*

11,440,000

3,353,202

8,086,798

*Includes note borrowing which now totals $8,000,000 and will be funded by current borrowing. **Pre1iminary as of June 30, 1970.

On the basis of preliminary figures as of June 30, 1970, Ponce is responsible for 6.90% of the Commonwealth net debt of $460,393,809, or $31,766,436, the only overlapping tax sup-

ported debt burden. This will result in a net direct and overlapping debt of $39,853,234, after the sale of this issue, or 14.23% of assessed valuation, and $254.66 per capita.

15

The debt paying record of Ponce is clear of default or delinquency. There has never been any forced or "managed" refunding of maturing bonds to avoid default. A similar debt record exists for the central government and all municipalities and instrumentalities of Puerto Rico.

Under the provisión of the Acts of Congress and the Constitution and Laws of Puerto Rico now in forcé, the bonds and income therefrom are, in the opinión of Bond Counsel, exempt from Federal, State and Commonwealth of Puerto Rico taxation.

The bonds are legal investments for Savings Banks and Trust Funds in the State of New York.

They are also eligible for deposit by banks in Puerto Rico to secure public funds, and by insurance companies to qualify them as required by law to do business in Puerto Rico.

Savings banks and incorporated insurers in the State of California are legally empowered to invest in bonds and other evidences of indebtedness of the Commonwealth.

Construction work in progress on ihe San Jtian-Ponc& toll road. TIus four ¡ane divided ¡ligltway will sliorten by half,(he Iravel time between the two largest metropoHtan ureas of Puerto Rico.

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Restorcd rcsiilence in ilie olii seciion of Ponce, reftects

¡he preservalion of original Spanish colonial architecture.

The Ponce Museum of Arl hoiises ¡he fines¡ collccíion of orí in Cemral ami Latín América. Designed by Edward Dnrell Stone. (he museiini

incliuies works by Vclazqiiez, Gainsborough, Van Dyke and Reynolds.

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&STRA

ASPERA

13 11 Ponce de Leรณn Avenue, San Juan. Puerto Rico 00908

45 Wall Street. New York. N. Y. 10005