Puerto Rico Highway Authority (june 1968)

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Commonwealth of Puerto Rico

J /}(, Government Development Bank for Puerto Rico San Juan,Puerto Rico

Ki;.S!-:7a 1 iS

VICTOR M. LABIOSA Executive Director

Governing Board FRANCISCO LIZARDI, Chairman Secretary of Public Works JORGE FONT SALDANA

Secretary of the Treasury MIGUEL HERNANDEZ AGOSTO Secretary of Agriculture RAMON GARCIA SANTIAGO

President of the Planning Board JAIME SERRANO DAVILA Mayor of Gurabo

Principal Officers VICTOR M. LABIOSA

DATE DUE

Executive Director

T

GILBERTO LUGO TORRES Assistant Executive Director

HECTOR JIMENEZ JUARBE Special Assistant

HUMBERTO CUEBAS

625.7

Banco Gubeinamental

B213S 1968

de Fomento para P.R. A special report on P.R, Highway Autho-

Controller

EUGENIO CHINEA BONILLA Treasurer DATE

ANGEL LUIS ALLENDE

ISSUED TO

Design Officer

{ 1

ROBERTO LUGO TORRES 1

Construction Officer benjamin JIMENEZ AHORRIO Acting Director—Administration Office

i

PEDRO HERNANDEZ, JR. Public Relations Officer

Consulting Staff Wilbur Smith and Associates,

Traffic Engineers Auditors

Peat Marwick, Mitchell and Co.

!

j

625,7

Banco Gubernamenta|;de

B213S

Fomento para P,R,

| 1968

A special report on P."R, Highway Authority.

ON THE COVER 7 and PR-2 interchange uan hdeiropolitati Area.

/ / COMMONWEALTH OF PUERTO RICO

HIGHWAY AUTHORITY

Puerto Rico

Highway Authority

The Authority has broad powers under the Puerto Rico Highway Authority Act, including among other things: to have perpetual existence as a corporation; to have complete control and supervision of any traffic facUities owned, operated, constructed or ac

quired by it; to have complete control and super vision over the character of and necessity for all of

its expenditures; to sue and be sued; to make con tracts and to execute all instruments necessary or

The Puerto Rico Highway Authority, a body cor

porate and politic constituting a public corporation and governmental instrumentality of the Common wealth of Puerto Rico, was created by Act No. 74

of the Legislature of Puerto Rico, approved June

incidental in the exercise of any of its powers; to

determine, fix, impose, alter and collect tolls or

ferriage, rentals, assessments and other reasonable charges for the use of the traffic facilities owned,

operated, contructed, acquired or financed by the

Prior to this time, the construction of roads and

Authority or for the services rendered thereby; to borrow money for any of its corporate purposes, and

highways had been the responsibility of the Depart

to issue bonds, notes or other obligations of the

23, 1965.

ment of Public Works. The highway program was,

therefore, dependent on annual appropriations from

the Legislature, and was only one of many functions carried out by this department.

As the rate of economic development rose steadily

Authority in evidence of such indebtedness and to secure payment thereon by pledge, or other lien on, all of its properties, revenues or other income and,

subject to the provisions of Section 8 of Article VI of the Constitution of the Commonwealth, to pledge

sulted in a sharp increase in automobile ownership.

for the payment of said bonds and interest thereon, the proceeds of any tax or other funds which may

The increase in economic activity and in the number

be made available to the Authority by the Common

and dispersal of manufacturing plants required vastly improved transportation facilities, especially if in dustry was to spread throughout the Island, and not

refunding, purchasing, paying or discharging any of

in the decade 1956-1965, higher income levels re

be concentrated around the San Juan and Ponce harbor areas.

The Authority was created, therefore, to provide

a separate public agency, whose sole responsibility was directed towards improving vehicular trans

portation facilities. The Authority would have a specific, allocated source of revenues which could be pledged to secure bonds and as a result, financial and long range construction programs could be es tablished.

wealth; to issue bonds for the purpose of funding, its outstanding bonds or obligations; and to do all acts or things necessary or desirable to the carrying out of the powers granted to the Authority by the Act or by any other act of the Legislature of Puerto Rico; provided, however, that neither the Common wealth of Puerto Rico nor any political subdivision thereof shall be liable for the payment of the principal of or interest on any bonds issued by the Authority

and such principal and interest shall be payable only from the funds of the Authority pledged for such payment under the Act. 1

Cloverleaf interchange of Las Americas Freeway and Finero Avenue at the center of San Juan Metropolitan Area.

The Secretary of Public Works is authorized to enter into agreements with the Authority for the study, design, construction, repair, maintenance, ac

highways and public housing development roads serving localized traffic of an intra-regional nature.

The Commonwealth Highway System, prior to the

quisition of properties and easements, and any other

creation of the Authority, has been financed by an nual appropriations from the Commonwealth Gen

matters necessary to carry out the purposes of the Act. The Authority may also enter into agreements

under which the Secretary of Public Works agrees to pay, totally or partially, and with funds of the Commonwealth covered into the Public Treasury,

the repair, maintenance and operation costs of any traffic facilities financed under the provisions of

eral Fund and by Commonwealth bond issues which have included among various purposes, funds for highways and streets. During the eleven-year period 1956-1966 some $291,800,000 has been appropri ated from the General Fund and at the end of 1966 out of total Commonwealth bonds outstanding, ap

the Act.

proximately $121,000,000 of these bonds had been issued for highway and street improvements. These

Existing Commonwealth Highway System The present Puerto Rico Highway System totals 5,800 miles, consisting of 3,700 miles of Common wealth Highway System primary, secondary and municipal highways and public housing develop ment roads, and 2,100 miles of municipal system local city streets and vicinal roads. In the Common wealth Highway System there are 500 miles of primary system highways comprising the more im

bonds consist of a number of issues dating back to

portant routes in terms of inter-regional traffic, 1,200

tion as main arteries over which the industrial, com

miles of secondary system highways serving the needs of intra-regional traffic and 2,000 miles of municipal

mercial and agricultural products of the Common

1950, and constitute an obligation of the Common

wealth payable from General Fund revenues.

Importance of Commonwealth Highway System The Commonwealth Highway System is a vital factor to the well being and economic progress of the Commonwealth. The highways provide for the

intercity movement of persons and goods and func wealth move to market. Most of Puerto Rico s people

highway system. An improved highway system is also important to the movement of tourist traffic to

approved June 23, 1965, increasing the gasoline tax from 8^; to 11 and allocating the revenues from 6/ llths of the net receipts from this tax to the Authority for highway construction or to finance

the resort areas and beaches of the Island. It is

construction.

therefore imperative that the System keep pace with the economic growth of the Island and be sufficient not only to sustain the normal growth but be ade

In 1968 further legislative action was taken to give additional security for monies borrowed by the Authority. Act No. 50 approved May 22, 1968, pro vides that if the proceeds of the gasoline tax presently or in the future allocated to the Authority, are insuffi cient to pay the principal of and interest on the bonds of the Authority and the reserve fund of the Authority is applied to cover any such deficiency,

in their daily commuting, shopping and normal travel will use and benefit from an extended and improved

quate to induce a further expanded growth.

As a result of the growing awareness of the vital necessity of accelerating the highway construction program, the Authority was created and revenues were provided to implement the construction needs.

the amounts used from such reserve fund shall be

reimbursed to the Authority, subject to the provi

Resources Available to the Authority Gasoline Tax. At the same time that the Authority was created, funds were provided for it under Act No. 75, which was passed by the Legislature and

sions of Section 8 of Article VI of the Puerto Rican

Constitution, from the first amounts received by the Commonwealth in the next fiscal year or following

A jour lane divided arterial highway under construction in Metropolitan San Juan. ..

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years which originate from (i) any other taxes which may then be in effect on any other fuel or propellant which is used among other purposes, to propel high way vehicles and (ii) any remaining portion of the total tax which may then be imposed on gasoline.

that it may do so from time to time as may be deemed to be appropriate, on divided, multi-lane, limited access highways as they are constructed, and where existing toll-free roads are adequate to serve

It should be noted that both Act No. 75 of 1965 and Act No. 50 of 1968 are amendments to Article

to enter into any covenants to maintain any toll charges if imposed for any period of time, or at any particular level of rates. It will retain the right to change or to eliminate any such tolls, if imposed, at its discretion, in the best interests of the economy of Puerto Rico. However, any such tolls as may be

83 of Law No. 2, approved January 20, 1956, known as the Excise Law of Puerto Rico, and therefor are part of the basic tax structure of the Commonwealth.

Right-of-way. In the past the Legislature has appropriated certain amounts annually for rightof-way acquisition and appropriation of additional amounts for this purpose will be requested in the

local traffic needs. The Authority does not propose

collected on traffic facilities in and under the Bond

Resolution will be pledged to the payment of any bonds issued thereunder.

future, under the procedure outlined in the following paragraph. Such appropriations totaled $9.25 mil lion, $7.90 million and $6.0 million for the fiscal

years 1965-66, 1966-67 and 1967-68, respectively,

Present Highway User Taxes and Fees In addition to the gasoline tax, highway user taxes

and $9 million has been budgeted for 1968-69.

In the Bond Resolution the Authority covenants that on or before October 1 of each year it will sub

cellaneous motor vehicle fees (such as duplicate licenses, transfers, titling fees, etc.) and various ex

mit to the Planning Board, the Director of the Bureau

cise taxes.

of the Budget, the Secretary of the Treasury, the Fiscal Agent and the Traffic Engineers, a statement

Revenues from registration fees and related charges totaled $15,316,000 and operators'licenses $650,000

setting forth (i) a brief description of the program

for 1966-67. Annual excise tax collections on motor

of traffic facilities to be carried out during the next fiscal year, (ii) its estimate of the total construction

vehicles, parts and accessories have averaged about $27,000,000 for the five years ending June 30, 1967.

cost of such program, (iii) a description of the rightof-way which will be needed to carry out such pro

All revenues from these sources are credited to the General Fund of the Commonwealth, except that in

gram and the respective dates by which they will be needed, and (iv) the estimated costs of such right-of-

each year since 1956 $300,000 has been allocated from registration fees to the municipalities.

way and the amount of general funds of the Com

As stated heretofore, the gasoline tax was in creased in 1965 to ll^z^ from 8^, the tax in effect

monwealth which the Legislature is requested to appropriate for such purpose. The Authority cov

consist of registration fees, operators' licenses, mis

since 1947. The retail price of gasoline is subject

enants that it will, pursuant to Section 14 of the

to control by the Economic Stabilization Administra

Puerto Rico Highway Authority Act, file a copy of such statement with the Legislature prior to its next

tion and is related to the current cost to the retail

regular session.

Federal Aid. The Authority also benefits from

Federal Aid funds for highways on the Federal Aid primary, secondary and urban systems which are distributed to Puerto Rico on the same basis as these funds are apportioned to the States. These funds

must be matched equally by Puerto Rico. Apportion ments have approximated $6,627,000 annually in

dealer. It presently averages 33^ per gallon, tax in cluded, and the price of premium gasoline, which is not subject to control, averages 38^ per gallon, tax also included.

Commonwealth Highway System Needs

The Authority retained the firm of Wilbur Smith and Associates, Traffic Engineers, to conduct a study of the highway needs of the Commonwealth System, to

recent years and are estimated for projection pur poses to average the same amount in future years.

Tolls. The Authority is authorized to levy tolls

recommend a construction program and to estimate revenues available for its implementation.

on facilities constructed by it, and it is expected

a five-year priority improvement program, estimated

4

In the report of the Engineers dated March, 1968,

to require an expenditure of $394,500,000, was recommended. This priority program, which is part

of a present backlog of highway needs estimated at $707,800,000, includes those projects believed by the Engineers and the Authority to represent the most critical needs and those required to bring the

greatest economic benefit to highway users and to the general economy of the Commonwealth.

The reasons for the need for highway improve

ments were identified by the Engineers as:

1. The population of Puerto Rico has increased substantially in the past and is expected to grow

rapidly in the future. In 1960 the population totaled 2.3 million and in 1967 was estimated at

2.7 million, an increase of over 17%, compared to an increase of 11% for the United States. By

1986 the population is expected to total 4.1 million

persons, an increase of 51.9% over 1967.

2. The number of motor vehicles has been in

creasing at a relatively faster rate than population.

In 1960, there were 172,000 registered motor vehicles and in 1967 403,000 were registered, an

A four lane bridge over Manati River under construction on Route PR-2, which will replace a truss bridge btiilt in 1928.

increase of approximately 134% since 1960. By 1986 it is estimated that there will be slightly over

one million registered motor vehicles, more than 2Vi times the 1967 total. Density of motor vehicle

of Puerto Rico and will alleviate traffic congestion,

ownership, which changed from 38.7 persons per

reduce the number and severity of accidents, reduce travel time, and, in general, benefit both the highway

vehicle in 1950 to 6.7 persons in 1967, is expected to become 4.0 persons per vehicle by 1986.

users and the general economy of the Common wealth.

3. Highway travel, which increased by 243% between 1950 and 1960, is expected to total 8.1 billion vehicle-miles by 1986, an increase of

Authority's Operations Since Creation

94.3% over the 4.3 billion for 1967.

These indicators of intensified highway use —

The Authority in its first year of existence, 1965-

population, number of vehicles, and travel — clearly

of $35,772,000; in the fiscal year 1966-1967, 116.7

demonstrate the present and future need for an adequate Commonwealth Highway System.

The five-year priority program includes: those

miles were constructed at a cost of $47,968,000; and in 1967-1968, based on eight months actual and four months estimated, 156.3 miles at a cost of

projects which are presently under construction, projects which are presently planned by the Author ity, and projects which are under study for early improvement as determined from the analysis eon-

$51,600,000.

ducted. The various projects included in the priority

program were selected from the primary, secondary and urban systems. In addition the total program costs include costs for the municipal system, for re construction, and for right-of-way acquisition.

It is believed that this program represents an ex

cellent approach toward satisfying the highway needs

1966, constructed 128.2 miles of highways at a cost

The construction costs to date have been provided

from (xf of the gasoline tax receipts. Commonwealth

appropriations. Federal Aid appropriations and bor rowings under its line of credit with The Chase Manhattan Bank, N. A.

In June, 1968, the Authority proposes to sell

$40,000,000 bonds for the purpose of liquidating current bank borrowings and continuing the con

struction program. The bonds are being issued to

provide funds for the construction of highways and.

subject to Section 8 of Article VI of the Constitu

tion of Puerto Rico, will be secured by a pledge of 6/llths of the net receipts of the gasoline tax im posed by the Commonwealth of Puerto Rico, which have been allocated to the Authority, together with the proceeds of any other taxes, fees or charges which the Legislature of Puerto Rico may allocate to the Authority and authorize the Authority to pledge to the payment of the principal of and interest

on bonds issued by the Authority, and by a pledge of the proceeds of any tolls or other charges which may hereafter be imposed by the Authority for the use of any of its traffic facilities financed by bonds of the Authority issued under the Bond Resolution.

Neither the credit of the Commonwealth of Puerto

Rico nor the credit of any of its political subdivisions is pledged for the payment of the bonds.

In their report the Engineers point out that the projected revenues from currently available sources fall far short of meeting the total cost of this priority program and recommend that: 1. General Fund appropriations be increased

from their proposed $10 million future annual projection to a level sufl&cient for all right-of-way acquisition costs.

2. Bonds be issued in amounts needed for

financing the program to the extent funds are not otherwise provided.

3. By 1971, an additional of gasoline tax revenues be made available to the Authority.

They conclude that the adoption of these recom mendations would ensure the successful implementa tion of the highway improvement program which is so vital to the continued economic growth of the Commonwealth. They further point out that the program represents a substantial undertaking of right-of-way acquisition, design and construction in a relatively short period of time and during the early phases problems associated with accelerated rate of highway construction may present difficulties which might reduce the magnitude of their recommended program. However, the need for highways is great, and every effort should be directed toward even accelerating the program if at all possible.

AUTHORITY'S FUTURE PROGRAM

The Engineers have established a recommended five-year priority construction program costs and estimated available revenue for its implementation, as set forth below:

with estimated annual

Fiscal Year

Item

1968-69

1969-70

1970-71

1971-72

1972-73

Total

(thousands of dollars) Total Costs

$329,400

Construction

$54,800

$62,500

$68,800

$70,500

$72,800

Right-of-way

11,700

12,700

13,300

13,700

13,700

65,100

$66,500

$75,200

$82,100

$84,200

$86,500

$394,500

1,000

1,300

2,300

1,300

49,000 329,400

Subtotal

Less Appropriations of Commonwealth Funds for right-of-way Current-

Proposed Net Funds Required Construction Right-of-way Total Federal Aid Balance to be provided from gasoline tax

revenues and borrowings

5,900

10,000

10,000

10,000

10,000

54,800 1,700 $56,500 6,627

62,500 1,400 $63,900 6,627

68,800 1,000 $69,800 6,627

70,500 2,400 $72,900 6,627

72,800 3,700 $76,500 6,627

$339,600 33,135

$49,873

$57,273

$63,173

$66.273

$69,873

$306,465

9,000--

10,200

While $23,150,000 has been appropriated from 1965-66 to 1967-68, $5,900,000 has been allocated to right-of- way acquisitions for projects to be constructed in fiscal years 1968-69 to 1971-72.

Budgeted 6

Historic and Projected Trends of Gasoline Tax Revenues

Set forth below are actual and projected gasoline tax

revenues and the Authority's allocation as contained in the report of the Engineers.

Authority Allocation

From 6/llths Fiscal Years

Total Net

of Net

Ending

Gasoline

Gasoline

June 30

Tax Revenue

Tax Revenue

..

$14,773,000 17,811,000 20,142,000 22,358,000 31,861,000 34,500,000

$17,388,000

18,822,000

Projected

1969

36,190,000 38,977,000

1970

41,420,000

197 1

43,650,000 45,870,000

1968

1972

19,740,000 21,260,000

22,593,000 23,809,000 25,020,000 26,264,000 27,436,000

1974

48,151,000 50,300,000

1975

52,448,000

28,608,000

1976

54,596,000 56,744,000 58,893,000 61,041,000 63,189,000

29,780,000 30,951,000

1973

1977 1978

1979 1980

65,337,000 67,486,000

32,123,000 33,295,000

Pavement construction operation of a section of Route FR-30 Freeway,

linking Caguas and Humacao.

A major arterial expressway on the South Coast serving the petrochemical development located between Tallaboa and CuavaniUa.

34,467,000 35,638,000 36,810,000

69,634,000 71,782,000

37,982,000

73,930,000

40,325,000

76,078,000

41,497,000 42,669,000

78,226,000 80,374,000

m

39,154,000

43,840,000

82,522.000

45,012,000

84,670,000 86,818,000

46,184,000 47,355,000

88,966,000 91,114,000

48,527,000

93,262,000 95,410,000 97,558,000 99,706,000 101,854,000

50,870,000

49,698,000 52,042,000 53,213,000 54,385,000 55,557,000

(1) Gasoline tax 8r per gallon.

(2) Gasoline tax increased to llf, effective July 1, 1965.

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The longest bridge in Puerto Rico is located at the eastern part of Arecibo on Route PR-2. It is the main access to the city.

Maintenance

Maintenance of the Commonwealth Highway System is the responsibility of the Department of Public Works. The Puerto Rico Highway Authority Act provides that the Authority may enter into agree ments under which the Secretary of Public Works

agrees to pay, totally or partially, the cost of repairs, maintenance, and operation of any traffic facilities financed under the provisions of that Act with funds

MOTOR VEHICLE REGISTRATIONS PERSONS PER VEHICLE PUERTO RICO 1950-1967 (PROJECTED TO 1985)

PERSONS PER VEHICLE

from the Commonwealth General Fund covered into

the public treasury.

Pursuant to that provision the Authority has entered into an agreement with the Secretary of Public Works by which he has agreed to pay the costs of maintaining, repairing and operating all traffic

•VEHICLE REGISTRATIONS-

facilities which are constructed by the Authority and financed in whole or in part by the issuance of bonds of the Authority out of appropriations received from

-

the General Fund of the Commonwealth which are

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made available for such purposes. To provide further assurance with respect to maintenance, the Authority covenants in the Bond Resolution that it will cause

an annual general evaluation to be made by the Traffic Engineers of the level of maintenance of such Traffic Facilities and that such evaluation will be

filed with the Secretary of Public Works and the Secretary of the Treasury. Moreover, the Authority covenants that if and to the extent that maintenance

65

70

75

80

of the highway system is not adequate as set forth in the annual survey to be made by the Engineers, in accordance with the provisions of the Bond Reso lution, the Authority will provide such maintenance costs from unencumbered funds then on deposit in

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

the Construction Fund or from the revenues there

miles wide, having an area of 3,423 square miles

after deposited to the credit of the Construction

and a population of approximately 2,708,000. The topography is characterized by a fertile coastal plain rising to interior mountains which run mostly

Fund.

The level of required maintenance expenditures over the next ten years is estimated to be approxi mately as follows:

8--6 91

from east to west. San Juan, Capital of Puerto Rico lies some 1,690 miles southeast of New York, 314

hours by jet plane, and 1,000 miles southeast of

1968-69. .

$ 7,000,000

1973-74..

1969-70..

7,600,000

1974-75..

10,200,000

Under its compact with the United States, the

1970-71..

8,100,000

1975-76..

10,800,000

1971-72..

8,700,000

1976-77..

11,600,000

Commonwealth of Puerto Rico exercises virtually the same control over its internal affairs, and with

1972-73..

9,000,000

1977-78..

12,400,000

the same general procedures, as do the fifty federated

$ 9,600,000

Miami, 214 hours by jet plane.

States over theirs. It differs from the States primarily

in its relationship to the Federal Government. In 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 MOTOR VEHICLE TRAVEL

but no vote in the House of Representatives. On the other hand. Federal taxes do not apply in Puerto

AND

ANNUAL TRAVEL PER VEHICLE

Rico except by mutual consent, such as social security

PUERTO RICO

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

1950-1967(PROJECTED TO 1986)

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TOT/!iL ANNIUAL TR AVEL

Rican products, such as rum and tobacco, are re turned to the Commonwealth Treasury. This rela

(ALL VEHICLES) 1

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tionship with the Federal Government is defined through the medium of the compact entered into by Congress and the People of Puerto Rico, and is

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further described hereinafter.

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Government History

A NNUAL TRAVE L (PER VEIHICLE)

Puerto Rico came under United States sovereignty

by the Treaty of Paris on December 10, 1898. The Congress of the United States provided for a civil

1

government for the Island in 1900 and provided

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for a Governor, a Cabinet, a Senate and a Supreme Court Judiciary, all appointed by the President of

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1950

55

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1990

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 9

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 Judieial branches re mained under control of Washington through ap pointment by the President.

No further change occurred until 1946 when the President for the first time appointed a Puerto Rican

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 con stitution. The Constitution was drafted by a freely

elected eonstitutional convention, overwhelmingly ap

proved in a speeial referendum, and approved by Congress and the President. It became effective upon

proclamation of the Governor of Puerto Rico on July 25, 1952.

as Governor. In 1947 the Jones Act was amended

to permit Puerto Ricans to elect their own Governor,

The Commonwealth Government

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

The next advance toward complete local govern

The Constitution recognizes and assures a separa

tion of powers among the executive, legislative, and judieial branches as in the Federal Constitution, and

ment occurred in 1950 when, in accordance with the

as in those of the States. Both the Governor and the

wishes of the People of Puerto Rico, the 81st Con gress 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 elec torate of Puerto Rico. It provides that those sections

bicameral legislature are subject to regular election every four years. The Legislature operates under

of the Organic Act which define the political, eco nomic and fiscal relationship between Puerto Rico

taken to the United States Court of Appeals for the First Circuit and to the Supreme Court of the United

and the United States shall remain in full force and

States and writs of error and appeals from judgments

standard parliamentary and legislative rules. Writs of error and appeals from judgments of the District Court of the United States for Puerto Rico may be

Loiza Freeway and the 65th Infantry Ref-iment Expressway interchange in the eastern part of the San Juan Metropolitan Area, serving Puerto Rico International Airport and adjacent industrial and residential developments.

same manner and under the same terms and condi

governor for a four-year term through 1968, and thereby indicated their conviction that the present Commonwealth political status is in the best and

tions as writs of error and appeals may be taken from

enduring interest of both Puerto Rico and the entire

other Federal and State courts.

United States. The smooth transition to a new ad ministration which occurred permitted continuity of

of the Supreme Court of Puerto Rico may be taken to the Supreme Court of the United States, in the

Governmental responsibilities assumed by the Commonwealth are greater than those normally as

the same basic policies under the leadership of the

sumed by a State government. Municipalities which

Popular Democratic Party.

combine both rural and urban areas are the only

There were three other parties represented in the 1964 elections. The Statehood Republican Party,

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.

which favors early attainment of Federated Statehood, received 34.7% of the votes. The Christian Action

Party polled 3.1% and the Independence Party drew

There is, therefore, no other overlapping taxation or bonded indebtedness payable from taxes. The

2.7% of the votes cast.

Commonwealth Government assumes responsibilities for a number of important functions normally per formed by local governments in the Continental United States. Among these are police and fire pro tection, education, all major street construction, and public health programs. In addition, the Common wealth Government supervises municipal fiscal af fairs to a very substantial extent.

Commonwealth and municipal governments are relieved of most of the responsibility for construct ing and financing electric, water and sewer systems by the Water Resources Authority and the Aqueduct and Sewer Authority. Air and seaport facilities are administered by the Ports Authority and major high way construction is financed by the Highway Au thority. The bonded debts of these public corpora tions, with the exception of the Highway Authority, are supported entirely by revenues derived from their operations. Bonds issued by the Highway Authority will be supported by a portion of the

Rico are worthy of mention. There is strong public interest in government affairs and a high degree of

gasoline tax.

Election Procedures The elections of 1964 were another outstanding

milestone in the progress and stability of Puerto

Three factors pertaining to elections in Puerto

voter participation in elections. In the 1964 elec tions, 84% of those eligible to do so registered, and 83.5% of those registered actually voted.

Second, in order to reduce pressure from special interests, Puerto Rican law limits political contribu tions from any one person or corporation to $300

in any one year. Yet, recognizing the need for funds to bring issues to the attention of, and to mform 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 pri

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

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And third, Puerto Rican law provides that if a

minority party receives a substantial vote, but fails to elect candidates to the Legislature, then that body is increased in size by formula to

representation. The Municipal Law (Act No-J 2

approved July 21, I960) also assures niinonty representation in the Municipal Assemblies sine least three members of each of these bodies have to be elected from the minority parties.

Rico.

Former Governor Luis Munoz Marin, the first

elected Governor, who had been re-elected three times as Chief Executive, decided not to run again

for the governorship. Instead he was returned to the Puerto Rican Senate where he had served earlier

in his public career. By an overwhelming majority, 59.5% of the voters elected Roberto Sanchez Vilella,

formerly Secretary of State of Puerto Rico, as their

1967 Plebiscite

In a special plebiscite held July 23, 1967 the peo

ple of Puerto Rico strongly reaffirmed their desire to continue their present Commonwealth form of government permanently associated with the United States. Almost two-thirds (66.3%) of all re^stered

voters participated and a clear expression of the will 11

Major interchange in the northern part of Caguas, connecting highways PR-l, PR-30 and PR-189.

of the majority of the people is shown in the results

status formulas of Commonwealth, Statehood, and

below:

Independence. In response to the petition, the Con gress approved a bill in 1964 providing for the

425,132 (60.4%) voted to continue Commonwealth Status

establishment of a United States-Puerto Rico com

274,312 (39.0%) voted to request Statehood 4,248 ( 0.6%) voted to attain Independence The results of the plebiscite demonstrate two sig nificant factors concerning the political status of

mission to study all the factors involved. The mem bership 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 Repre

Puerto Rico.

sentatives, and six appointed by the Governor of

(1) With Commonwealth attaining 60-40 mar

gin over Statehood there can be no question about the continuation of the favorable climate which has

stimulated strong and consistent economic growth.

(2) With only 4,248 votes in favor of Inde

Puerto Rico. The Commission concluded that the

people of Puerto Rico should decide which status they preferred and, in December, 1966, the Puerto

Rican Legislature passed an act providing for the holding of the plebiscite. Any subsequent plebiscites

pendence out of over 700,000 votes cast, there can not be the slightest doubt that Puerto Rico is an

on the political status of Puerto Rico can be au

integral part of the United States with permanent

Rican Legislature.

thorized only by act of Congress or of the Puerto

American citizenship for Puerto Ricans.

The recent plebiscite had its origin in 1962 in a petition to the Congress of the United States by the

Political stability, one of the prime requisites of

Puerto Rican Legislature requesting a settlement of

a sound, attractive investment climate, is outstand

the future political status of Puerto Rico and pro posing the submission to the vote of the people the

ingly demonstrated in Puerto Rico. Only a declining, and now insignificant, minority party favors inde-

pendence. Both major parties hold maintenance of permanent ties with the United States as a basic principle, and differ only as to the form which that future political relationship should take.

Expansion and Diversification of the Puerto Rican Economy

For seventeen years, economic growth in Puerto Rico has been rapid, continuous and accelerating. Com monwealth gross product has increased over four times, from $755 million in 1950 to $3,360 million in 1967. The net income of Puerto Rico has more

than kept pace. During the same period it rose from $614 million to $2,775 million, registering a 10%

increase in 1967. Net income per capita, after ad justment for price changes, increased at an annual average rate of 4.9% in the decade ending June 30, 1960 and at a 6.4% rate in the seven year period ending June 30, 1967. This growth of the Common wealth's economy places it among the fastest grow ing in the world.

Shipments of goods to the United States and foreign countries have multiplied almost six times

Cloverleaf interchange in the central area of metropolitan San Juan showing Las America's Park and shopping center.

from $235 million in 1950 to $1,321 million in

1967. External purchases—nearly all from the con

and, in 1967, provided $678 million, or 24%, of

tinental United States—have risen from $345 million

Commonwealth net income. Only a very small part of this share came from sugar products; about two-

to $1,799 million.

Puerto Rico occupies first place among Latin

thirds came from new types of manufactured goods.

American customers of the continental United States

The extraordinary growth of the manufacturing sector is due in large part to the industrial develop

and fifth place among worldwide customers.

Diversification of the Commonwealth's economy

ment program initiated in the late 1940s. A major objective of this program is to further industrialize

has been equally impressive, both over-all and with in individual sectors. In 1950, agriculture generated

the Commonwealth by encouraging manufacturers

$149 million or 24% of net income, about half of

in the continental United States to expand and loeate

which came from sugar cane alone. Only $89 million

their new plants in Puerto Rico. Incentives include

or 14% came from manufacturing, and a third of

initial income and property tax exemption, assistance

that was from sugar. Sugar constituted nearly twothirds of exports; other manufactured products, little

in locating and training workers, technical advice and loans. In addition, the Puerto Rico Industrial Development Company constructs, sells, finances,

more than one-fourth. Industrial establishments con

sisted typically of small needlework shops or proces sors of farm products. By 1967, however, although net income from agriculture had increased to $183 million, this sector of the economy accounted for

and leases industrial buildings.

but 6.6% of Commonwealth net income. Of agri culture's share, sugar, still an important crop, pro vided about a third; of exports, less than a tenth.

Manufacturing, having expanded over seven times sinee 1950, now surpasses agriculture in importance

over 16.6% of total net income, employing 87,000

As the direct result of promotions undei this

program by June 1967 about 1,400 new factories were operating in the Commonwealth contributing

persons, and producing petroleum products, apparel,

petrochemicals, electronic products, appliances, air craft parts, abrasives, plastic products and numerous

other items. Shipments of goods from these factories.

mostly to the continental United States, have risen from $33 million in 1950 to $926 million in 1967.

Another 261 factories were established under this

program during fiscal year 1967.

Many of the plants are set up by such firms as solidated Cigar, General Phelps Dodge, Daystrom,

branches or subsidiaries General Electric, Con Cigar, American Can, Carborundum, Sprague Electric, Van Camp Sea Food, General Foods, Van Raalte, Hooker Chemical, B.V.D., Bell & Howell, International Shoe, National Cash Register, Hercules Powder, Stanley Works, Pepsico, W. R. Grace, Ford Motor Co., Phillips Petroleum, Babcock and Wilcox, Cutler-Hammer, Endicott Johnson, Jonathan Logan,

Motorola, RCA and Westinghouse. Large, heavily capitalized manufacturing operations have shown a

significant increase in recent years as compared to those labor-intensive operations promoted during the early part of the industrialization program. These in clude the Union Carbide & Chemical Corp., which

operates a $53 million glycol plant and has recently constructed a $22 million plant to produce alcohol intermediates. Petrochemicals are of greatly increas ing importance to the economy of the Common wealth, a recent development being the addition of a $41 million aromatic plant to Commonwealth Oil

Refining Company's $105 million refinery. A $55 million Corco-Pittsburgh Plate Glass Company olefins plant is scheduled for completion in mid-1969.

Phillips Puerto Rico Core Inc. has already inaugu rated its Guayama plant at a cost of $58 million.

Food processing has also been a significant growth area in recent years. Four large tuna canneries are now in operation. The Island has become one of the leading suppliers of canned fish in the United States

market. A subsidiary of Libby, McNeill and Libby has established a plant for the canning of tomato sauce and juice produced from local crops and Standard Brands, through one of its subsidiaries, has established a plant for the manufacturing of dessert preparations and baking powder. Also, Union Car

bide Food Products Incorporated, a subsidiary of Union Carbide Corporation, will build a $15 million plant at Barceloneta, Puerto Rico for the production of food casings.

A section of Route PR-I49 between Jtiana Ditiz tind VilUilhn, inclncleil in the secondnry hif-hwtiy system, and providin/> service to the agriciiltnrai and industrial areas in the central repittn of Puerto Rico.

Although accounting for a relatively moderate per centage of net income, tourist activity has been ex

panding very rapidly. Some 810,000 persons visited the Commonwealth during 1967 and spent $161.8 million. In this regard, it should be noted that Puerto

Rico has excellent hotels and guest houses, many located in the San Juan Metropolitan Area and others in various municipalities on the Island. With the

completion of San Juan Darlington Hotel, Howard Johnson's and Cecilia's Place hotels, and the enlarg ing of others, the total number of rooms available for

tourists had increased to about 8,000 by June 1967.

The substantial progress registered in the principal sectors of the economy has been matched by cor

responding achievements in the supporting sectors

Interchange of Las Americas Freeway (FR-IS) and Route PR-I in Rio Piedras. This important facility was

recently completed at a cost of $11,000,000.

such as construction, trade, public utilities, finance,

transportation and other services. A network of hardsurfaced roads, including concrete four-lane divided

highways, covers the entire Island.

The city of San Juan, Capital of the Common wealth, is located on an excellent natural harbor on

the northeastern coast. The present population in the San Juan Metropolitan Area, which includes six ad

joining municipalities, is estimated at about 848,000.

San Juan is the center of education, commerce,

finance, industry and sea and air transportation.

Industrial development in San Juan, as well as in

other leading cities including Ponce, Mayaguez, Bayamon, Caguas and Arecibo, has advanced rapidly.

These cities produce, among others, such products as sugar, cement, metallic products, rum, food products and wearing apparel. Important oil refinery and chemical operations have been established near

Philadelphia and Baltimore. The modern Interna tional Airport at Isla Verde, with its 10,000 foot

runway accommodating jet flights, is among the finest of its size in the world. In 1967 it handled

approximately 3,827,000 passengers, compared with 307,000 handled by the old airport in 1950. Another 8,000 foot runway is presently under construction to take care of the expected increase in flights in the coming years.

The Puerto Rican people have benefited signifi

cantly from the substantial economic expansion already achieved. The proportion of compensation of employees to Commonwealth net income has in

Ponce, on the south coast, and near San Juan and

creased from 63% in 1950 to 72% in 1967. Personal income for the average family has multipled more than three times, rising from $1,500 m 1950 to

Arecibo, on the north coast.

$4,816 in 1967.

Ramey Air Force Base, the most important air defense installation of the United States in the Carib

bean, is located near the city of Aguadilla, on the western coast.

Ten steamship companies operate regularly sched uled services to the Atlantic, Pacific and Gulf ports of the United States. Nineteen lines regularly sail for Canada, the Caribbean area, Latin America, Europe and Africa. All major Puerto Rican harbors are being improved.

Puerto Rico is served today by ten regularly scheduled airlines connecting the main cities of the Island with all parts of the world. Among others, direct flights are available to New York, Chicago,

.

As a consequence of economic growth and im

provements in medical science and services the gen eral level of health has risen sharply. The death rate has declined from 10.5 per thousand to 6.1 per

thousand between 1950 and 1967, with a coiTespond

in.r increase in life expectancy from 61 to 70 years.

The birth rate has declined to 26.9 per thousand m 1967 compared with 39.6 per thousand m 1950.

Education has been greatly expanded. Public and

private day school enrollment has increased from 431 000 in 1950 to 733,000 in 1967. University and

college enrollment has grown to 48,000 compared with less than 13,000 in 1950.

It is significant that the Commonwealth Govern-

ment has in recent years directed almost half of its expenditures into education and health.

Puerto Rico's economic growth has been stimulated

by a comprehensive development program sponsored by the Commonwealth Government, affecting all phases of the economy and looking far into the future. While the most important part of this pro gram has been the industrial development program, investment by both continental and local business men has been encouraged in many fields.

As a result, annual direct investment in Puerto Rico from external sources has increased from $10.7 million in 1950 to $205 million in 1967. The cumulative total of such investment in the Common

encouraged with the consequence that continental

investors hold about $921 million in long term obligations of Puerto Rico governmental units and around $930 million in private and public housing obligations. Other investments total approximately $796 million. Total external investments in the Com monwealth were valued at $4,365 million at June 30, 1967.

Stimulated by the accelerating capital inflow, the rate of fixed investment has greatly increased in the Commonwealth during the last decade. Annual in vestment in fixed capital goods such as new construc

wealth as of June 30, 1967 was estimated at $1,718

tion, machinery and equipment has risen from $111 million or 15% of gross product in 1950 to $884 million or 26.3% of gross product in 1967, a level

million. Other types of investments have also been

surpassed by few countries in the world.

STATISTICAL DATA CONCERNING THE ECONOMY OF

THE

COMMONWEALTH OF PUERTO RICO Fiscal Years Ending June 30

Population

1950

1955

2,211,000 2,240,000 2,350,000

Gross product—$ millions ...

Net income—$ millions Exports—$ millions

755 614 235

1,142 960 353

1 686 1 355 522*

33 319 128

132 418 217

380 835 450

270

323

562

51

77

152

28

32

63

14

21

459 1,500

Exports by new factoriesf—

$ millions Bank debits—$ millions Bank loans—$ millions

1963

2,513,000

1964

1966

1965

2,572,000

2,253* 1,912*

2,475* 2,085*

845

918

2,626,000 2,721 2,289 974

1967

2,661,000* 2,713,000 3,038 2,525 1,155

3,360 2,775 1,321

531

580

640

804

926

1,170

1,417

666

844

1,661 1,010

1,893 1,210

2,187 1,220

946

1,133

1,207

1,349

1,556

260

282

298

304

346

90

108

127

141

162

32

33

36

40

44

48

982 2,200

1,643 2,874

2,211 3,675

2,341 3,972

2,503 4,198

2,828 4,494

3,150 4,816

61,000

105,000

180,000

251,000

286,000

319,000

380,000*

421,000

408,000

529,000

573,000

598,000

608,000

626,000

641,000

651,000

36

55

132

174

208

226

240

228

Bank deposits (including govern

mental)—$ millions Private savings accounts—

$ millions Income tax collections—

$ millions Property tax collectionsJ— $ millions Assessed valuation** (real & personal property)—

$ millions Average family income—$ ...

Motor vehicles—number

registered Enrollment in public day

schools Estimated value of building

permits issued—$ millions .

Electricity generated §—millions of kilowatt-hours

Hydro

199

253

200

189

254

163

238

194

Thermal

340

710

1,822

2,745

3,149

3,656

4,192

4,847

* Revised.

** As of January 1 of preceding fiscal year,

t Promoted by the Economic Development Administration. Does not include exports of other new factories. t Commonwealth and Municipal.

§ Includes purchased power.

Source: Puerto Rico Planning Board.

16

PROJECTED

HIGHWAY AUTHORITY REVENUES 1968 TO 1998

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1968

1978

1988

1998

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196!

Wilbur Smith and Associates

CONSTRUCTION _

PROGRAM

UNDER CONSTRUCTION AND F.Y. 1967- 68 F.Y. 1968-69

F.Y. 1969-70 F.Y. 1970- 71

F.Y. 1972- 73 SAN

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?-1973

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