The Weekly Journal - Wednesday, October 27, 2021

Puerto Rico and the Caribbean

www.theweeklyjournal.com

>Carlos Rivera Giusti

Wednesday, October 27 - November 2, 2021 - // no. 131

Trying to Save the Plan of Adjustment P6 Happy Days for Banks P7 Eyes on LUMA, PREPA P8/9

Mixed Outlook on Business Confidence Continuing challenges include electricity service and supply chain problems

A Rosario Fajardo

Halloween Fun is Back P14

rfajardo@wjournalpr.com

@RosarioWJournal

lthough several sectors – tourism, hospitality and retail – are expecting a booming Christmas holiday season for 2021, the outlook for the coming year remains mixed, as continuing challenges continue to be a drag on the Puerto Rico economy. These include the continuing uncertainty on the island’s electrical service and the supply chain problems that is affecting industries worldwide.

Foremost among many local businesses is the reliability of the electrical system, as the rolling, selective blackouts of recent weeks has continued and affected thousands of companies islandwide.

As reported by THE WEEKLY JOURNAL, the problems stem primarily from a lack of generation capability, as several powerplants under the purview of the Puerto Rico Electric Power Authority (PREPA) have not been fully operational.

The president of the United Retailers Association (CUD), Jesús E. Vázquez Rivera, has called on the GO TO PAGE 4

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a week in review Puerto Rico Treasury Collections Exceeded Projections for July and August

>Archive

>Courtesy

>Archive

The Treasury Department reported that the net income of the General Fund for the months of July and August reached $801.1 million and $675 million, respectively, surpassing the projections by $176.9 million. In the case of income taxes from individuals and corporations, the expectation was exceeded by $51.2 million for July and $45.1 million in August Collections from the Sales and Use Tax exceeded projections by $27.1 million, while motor vehicle excise taxes were $32.5 million over what was collected in July and August of 2020 and $40.3 million over what was projected for the current year.

Multi-million Dollar FEMA Allocation for San Juan’s Iconic Parks The Federal Emergency Management Agency (FEMA) assigned a little over $5 million for permanent works in three recreational facilities in San Juan: Parque Central, Hiram Bithorn Stadium and Luis Muñoz Marín Park.

Of the federal share, $3 million is for the San Juan’s Parque Central. This 14-acre park, which was inaugurated in 1979 for the Pan American Games, has 60 employees and receives more than 5,000 visitors a day. The main building, athletic tracks, bleachers, 22 children’s play areas, natatorium (pictured) and tennis courts at the park will be repaired. The process is currently in the bidding and design phase.

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President Salvador Hasbún shasbun@elvocero.com Vp of Marketing and Business Operations Michelle Pérez Miperez@elvocero.com

Liberty Puerto Rico Donates $1M for Socioeconomic Initiatives Liberty Puerto Rico made a special donation of $1 million for initiatives that contribute to the socioeconomic development of Puerto Rico and the U.S. Virgin Islands. The donation was made through the Liberty Foundation. The $1 million grant benefits several initiatives in entrepreneurship, women empowerment, education and environmental protection. Among those benefiting include Grupo Guayacán, the Fundación Sila M. Calderón, the Instituto Nueva Escuela and Para La Naturaleza. Liberty also announced that 2020 Olympic gold medalist Jasmine Camacho-Quinn would be the new ambassador for the company.

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Managing Editor Rosario Fajardo rfajardo@wjournal.com

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Phone: 787-622-2300, 787-721-2300

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Customer Service: 787-622-7480

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CONTINUED FROM PAGE 1 government of Puerto Rico to address “once and for all” the crisis of the electricity system, which has affected so many small and midsize businesses.

“Retailers can no longer endure the energy insecurity that exists. Retailers already live under stress, with the uncertainty of whether they will be able to work or if some equipment will be damaged by the constant power dips. We see an indifference on the part of LUMA and the government that this is resolved. We see that nobody is really seeing the seriousness of the matter, the cost that this represents to the economy and to that is added the high cost of energy in the country,” denounced Vázquez.

He was referring to LUMA Energy, the private company that is in charge of the electricity transmission and distribution system.

The president of CUD stressed that they are joining the call of the average citizen and demanding to have a first-class electricity service, for which residents and businesses alike pay a lot, but the quality of the service has been lacking – for years. In that sense, Vázquez said he is demanding “justice” for the more than 5,000 members CUD Retail sales should have high numbers during the holidays but then drop in 2022, according to experts. members islandwide, which in turn represent >Carlos Rivera Giusti 15,000 businesses in Puerto Rico.

The issue is of primary importance during the great retail sales could close before the start of of maritime transportation, two global issues that holiday shopping season, as so many brick-and2022, in line with consumer behavior. “If people have an impact on Puerto Rico. Vázquez said the mortar stores in Puerto Rico require a reliable used this aid to save and pay debts, there will situation is exacerbated by the labor conflicts at energy system to operate, he probably be an expansion the docks and the truckers’ rate controversy on indicated. until November and December land transportation.

Over the weekend, meanwhile, because there is discretionary Ponce Mayor Luis M. Irizarry money left. But if not, the money Supply chain slowdown Pabón denounced that the will soon run out and what they Clarivette Díaz, president of the Shipowners Mercedita airport in the southern have will be used for essential Association, as well as Hernán Ayala, vice president Over the city, as well as various nearby things,” she said. of the Luis Ayala Colón company, in charge of the weekend, Ponce communities, were without She did not rule out that by operation of the San Juan Pier, reaffirmed that Mayor Luis M. electricity for nearly 30 hours. the beginning of next year retail international and domestic cargo ships continue Irizarry Pabón “There are communities sales will begin to experience to arrive in Puerto Rico on a daily basis. In total, denounced that the that have been without service contraction in all areas. “Retailers between 8,000 and 10,000 containers are being Mercedita airport for more than 27 hours, like have to prepare because it is a received weekly on the island. in the southern the [Mercedita] international global bubble, since the increases However, Ayala acknowledged that due to city, as well as airport, which directly affects the in sales recorded are not the worldwide supply-chain problem, a shortage various nearby population both in their quality sustainable for much longer,” she could be experienced in certain products, with communities, were of life and the economy,” he said, added. household appliances and electronic items topping without electricity adding that about 2,000 clients Although she admitted that the list. for nearly 30 hours. had been affected. there is still a lot of federal money Given the situation, Manuel Reyes, executive Due to the lack of electricity to be disbursed, she understands director of the Food Marketing, Industry and at Mercedita, a plane had to be that it will not have the same Distribution Chamber (MIDA), explained that diverted to the Luis Muñoz Marín impact as the pandemic aid he was aware that it is not necessarily a matter International Airport that serves the San Juan because these funds do not go directly to people, of transportation at the local level, but rather a metro area, while one morning flight was unable but to reconstruction works on the island. shortage of raw materials, which makes a lot of to take off, which entailed additional expenses and Fellow economist José J. Villamil believes that production impossible. arrangements for people. the effect of the federal aid, such as the Pandemic He pointed out that there is a shortage of Unemployment Assistance, could continue to drive aluminum, boxes, food, household appliances retail sales until the end of the year, but projects a Weaker retail sales projected in 2022 and electronics, among others, so retailers have collapse for the year that comes.

Several analysts agreed that the increase in chosen, in order to meet demand, to purchase CUD’s Vázquez agreed with these assessments. retail sales in Puerto Rico will likely began to what is available and do so with the greatest lead “The bubble is going to burst very soon. The deflate in early 2022. The main reason for the time available. money saved [by people] is already diminishing expected drop is that the federal pandemic aid Báez also affirmed that merchandise is and soon they will buy only essential things,” he to residents have already ended. Besides the arriving, but at a slower speed. “Manufacturing said. lingering impact of the COVID-19 pandemic, there and production capacity is not keeping up with He understands that the situation will become is also the issue of inflation, which has led to price demand, which has created a shortage of products more difficult due to the global problem in the increases on many items, from basic groceries, in shelves that limits the entry of an additional supply chain - a consequence of the lack of gasoline, to apparel and shoes. $600 million that could be sold. The problem is not personnel and raw materials - and the problems For economist Chantal Benet, this window of Puerto Rico’s, it is global,” he said.

In fact,

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Manufacturing and production capacity is not keeping up with demand, which has created a shortage of products in shelves that limits the entry of an additional $600 million that could be sold. The problem is not Puerto Rico’s, it is global.

-Manuel Reyes, executive director of MIDA Macroeconomic outlook

U.S. consumer confidence rose in October after three straight declines as the public’s anxiety about the Delta variant of the coronavirus appear to have abated. The Conference Board reported Tuesday that its consumer confidence index rose to a reading of 113.8 in October, up from 109.8 in September.

Consumer spending makes up about 70 percent of all economic activity in the U.S., so economists pay close attention to the numbers for a better idea of what’s to come for the national economy, reported the Associated Press (AP).

Consumers’ views about both the present situation and future expectations both rebounded in October. “Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased,” said Lynn Franco, senior director

A reliable electricity system is of vital importance to small and midsize businesses on the island. >Archive

of Economic Indicators at The Conference Board.

“While short-term inflation concerns rose to a 13year high, the impact on confidence was muted.

The proportion of consumers planning to purchase homes, automobiles and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021.

“Likewise, nearly half of respondents (47.6 percent) said they intend to take a vacation within the next six months—the highest level since February 2020, a reflection of the ongoing

Supply chain problems are a drag on the economy. >AP Seth Wenig file

resurgence in consumers’ willingness to travel and spend on in-person services,” Franco added.

In addition to the Delta variant, consumer concerns about inflation had dragged confidence lower. Earlier this month, the Labor Department reported another jump in consumer prices in September that sent inflation up 5.4 percent from where it was a year ago. That matched the largest increase since 2008 as snarled global supply chains continue to create havoc, AP reported.

The Fed’s view

Federal Reserve Chair Jerome Powell has also said that tangled supply chains and shortages that have hamstrung the U.S. economy since summer have gotten worse and will likely keep inflation elevated well into 2022.

In its latest survey of business conditions around the nation, the Fed said that a majority of its 12 regions viewed consumer spending, the main driving force for the economy, as remaining positive despite the various speed bumps, according to AP. The report noted wide differences in performance, however. It noted that auto sales suffered because of constrained inventories due to problems obtaining critical semiconductor components. Manufacturing, meanwhile, was growing either moderately or robustly depending on which Fed district was reporting.

“Outlook for near-term economic activity remained positive, overall, but some districts noted increased uncertainty and more cautious optimism than in previous months,” the Fed said in the report on business conditions nationwide, known as the beige book.

The October increase in consumer confidence surprised analysts, who broadly expected a fourth straight decline.

- Journalist Ileanexis Vera Rosado contributed to this story.

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Bill Enabling Plan of Adjustment Goes Back to Legislature for a Vote With new language agreed between the Legislature and La Fortaleza, but not the FOMB Yaritza Rivera Clemente, The Weekly Journal

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Editor’s note: This is a developing story. ven with the objections that the Financial Oversight and Management Board (FOMB) has about the most recent changes made to the enabling law on the proposed Plan of Adjustment (POA), the Legislature were scheduled to approve Tuesday the legislation that contains new provisions on the general obligation bonds issue, while a new day of demonstrations against the POA took place on the outskirts of the Capitol.

House Bill 1003 — which creates the Law to End the Bankruptcy of Puerto Rico — would go down to a vote with new language arising from the agreement reached over the weekend between the majority delegations of the Senate and the House of Representatives, together with La Fortaleza. However, the FOMB was not a part of this agreement.

In statements to the press, House Speaker Rafael “Tatito” Hernández said the measure would be approved and the language would be defended in court. Yesterday, the executive director of the FOMB, Natalie Jaresko, described during the urgent meeting summoned by the federal Judge Laura Taylor Swain, that the new amendments to the bill were like a “poisonous pill.”

In response, Hernández said, “We are going to fight it as a government, all with a single message and it will be very difficult for the Board to back down.” He added that he knows the FOMB is

against the new amendments and therefore, he would try to resolve the matter in court.

The House Speaker defended the amendments, arguing that they do not have a fiscal impact on the POA and that this should be emphasized during the mediation process ordered by Judge Swain.

On Monday, the FOMB issued a statement: “After months of discussions with the Puerto Rico Government, the Oversight Board has repeatedly defined, clarified, and reiterated its position on the terms that would be acceptable for the legislation needed to provide for the issuance of the new general obligation bonds as part of the 7th Amended Plan of Adjustment. The Puerto Rico House of Representatives passed House Bill 1003, which was mutually satisfactory.

“The Oversight Board urges the Puerto Rico Senate to pass – and the Governor to sign – House Bill 1003 with the same terms.

Passing the bill with changes that create ambiguities or new obligations will not enable the Oversight Board to agree. The Oversight Board hopes the Senate will take this opportunity to enable the Commonwealth to emerge from bankruptcy and realize the new investment and growth that typically occur when public sector bankruptcies end.

-FOMB

“Passing the bill with changes that create ambiguities or new obligations will not enable the Oversight Board to agree. The Oversight Board hopes the Senate will take this opportunity to enable the Commonwealth to emerge from bankruptcy and realize the new investment and growth that typically occur when public sector bankruptcies end,” the FOMB said.

For the measure to be approved in the House, at least 26 votes are needed, while in the Senate, 14 votes are needed. “The expectation and commitment is to approve [the bill] in both bodies...

The expectation is that, if this is done early, the bill will go out tomorrow (today) to La Fortaleza for the governor to sign,” Hernández stressed.

Substantial changes

The measure underwent several changes, but the most substantial is located in Article 104 on the protection of pensions for government retirees.

“For purposes of clarity, this law will be immediately rendered ineffective and any transaction, issuance or management related to it will be void if it is ordered and proceeds with any cuts to the pensions of government employees in the Adjustment or Restructuring Plan. The validity of this law is conditional on zero cuts in pensions,” states the new amendment.

Meanwhile, Senate President José Luis Dalmau Santiago specified that, although there were doubts with the language included in the past versions of the measure, modifications have been made to obtain the necessary votes in the upper chamber.

“If there are things to improve, then we will work on them. I have not closed doors; if I had closed doors, I would have presented the measure and then we would have defeated it. I left it alive, looking for spaces of convergence,” he said, as he expressed confidence that the Board could be convinced to accept the latest changes.

- Managing Editor Rosario Fajardo contributed to this story.

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Happy Days for Banks

Banco Popular, FirstBank and Oriental report strong Q3 numbers

T Rosario Fajardo

rfajardo@wjournalpr.com

@RosarioWJournal

here is no doubt that these are happy days for banks, as Puerto Rico’s three main commercial banks continue to report strong earnings. The federal government’s financial largesse to residents and businesses alike have helped bank accounts and savings to grow, while reducing the number of bad loans and helping to prop up struggling businesses.

Banco Popular

In announcing its third quarter (Q3) 2021 results, Popular Inc. reported net income of $248.1 million for the quarter ended Sept. 30, 2021, compared to net income of $218.1 million for the previous quarter.

The third quarter’s results include a release in the allowance for credit losses of $61.2 million driven by improving credit quality and the improved macroeconomic outlook, Popular said.

Net Interest income was $489.4 million, an increase of $1.6 million compared to the previous quarter, mainly due to higher average earning assets and higher income from the loans issued under the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP), offset in part by a lower discount amortization of purchased credit deteriorated loans. Net interest margin decreased 14 basis points to 2.77 percent.

Total assets grew by $1.5 billion from the previous quarter, reflecting an increase in deposits across various sectors, principally from the Puerto Rico public sector.

“The third quarter was another strong quarter.

We achieved net income of $248.1 million, driven by a reserve release of $61 million. The release reflects strong credit quality performance as well as a positive economic outlook. We continued to see higher credit and debit card spending, strong auto and mortgage originations as well as higher deposits. During the quarter we also continued to return capital to our shareholders, completing our $350 million accelerated repurchase program,” said Ignacio Álvarez, president and CEO of Popular.

FirstBank

First BanCorp reported net income of $75.7 million for Q3 2021, compared to $70.6 million

for the second quarter of 2021. Provision for credit losses was a net benefit of $12.1 million for Q3 2021, reflecting, among other things, improvements in the outlook of certain macroeconomic variables and lower loans outstanding.

Income before income taxes was $112.7 million for the third quarter of 2021, compared to $110.7 million for Q2 2021, FirstBank reported. Nonperforming assets decreased by $83.2 million to $172.4 million as of Sept. 30, 2021, compared to $255.6 million in the previous quarter.

“Financial benefits of our fully integrated and expanded franchise are well underway as we report strong third quarter results. We generated $75.7 million in net income and a record $103.6 million in pre-tax, pre-provision income for the quarter. Improvements in the economic backdrop within our operating markets continue to drive core performance metrics. Asset quality continued to improve, with non-performing assets reaching a decade low of 0.81 percent of total assets,” said Aurelio Alemán, president and CEO of First BanCorp.

“Loan originations, including refinancings, were healthy at $1.1 billion; however, the loan portfolio decreased largely driven by a $130.9 million reduction in SBA PPP loans and the sale of $52.5 million in nonaccrual residential mortgage loans.

Core deposits, net of brokered and government deposits grew by $288.5 million during the quarter primarily in demand deposit accounts in Puerto

Rico and Florida,” he added.

Oriental

OFG Bancorp reported these highlights for Q3 2021: Total core revenues of $134.7 million compared to $133.3 million in Q2 2021. Total Interest Income of $112.1 million compared to $113.5 million in the second quarter of 2021.

The third quarter of 2021 also reflected mortgage paydowns and PPP loan forgiveness mostly offset by increased income from auto and commercial loans, and investment securities.

Average loan balances for Q3 2021were $6.47 billion compared to $6.60 billion in the previous quarter.

“Results reflect consistently growing recurring net income, our larger scale, our focus on increasing digital utilization and customer service differentiation, and Puerto Rico’s nascent economic and post-pandemic recovery,” said José Rafael Fernández, Oriental’s president and CEO. “Q3 2021 new loan origination remained strong at $556 million. Compared to Q2 2021, loans exPPP increased, cost of funds declined 17 percent, customer deposits increased $154 million, and net interest income continued to steadily grow.

Provision for credit losses was a $5 million net benefit as asset quality continued to trend to levels closer to U.S. peer banks. Total banking and financial service revenues rose 3 percent, and noninterest expenses fell 5 percent, reflecting in part reduced credit related expenses,” he noted.

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CNE Details ‘Complex Arrangement’ Between PREPA and LUMA ‘PREPA’s indictment is not LUMA’s vindication’ THE WEEKLY JOURNAL Staff

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he latest energy analysis from the Center for a New Economy (CNE) outlines what Puerto Rico can expect in the coming years from the Puerto Rico Electric Power Authority (PREPA) and LUMA Energy, as the island continues to grapple with selective blackouts, affecting residents and business alike.

The report, authored by Sergio M. Marxuach, CNE’s Policy Director, explains the nature of the two company’s responsibilities with regard to Puerto Rico’s electricity system. “PREPA is required to provide ‘dependable generation capacity’ in exchange for a monthly payment from LUMA to cover operating and maintenance expenses, as well as approved capital expenditures; while LUMA has absolute control to dispatch generation and manage system load at any given time,” he writes.

“Notice the complex nature of the current arrangement: PREPA is responsible for the operation and maintenance of the generation fleet, while LUMA is in charge of funding PREPA’s operations on a monthly basis and dispatching load into the grid. Given the complicated character of this relationship, we suspect that the recent rolling blackouts are as much a function of (1) a decrepit generation fleet and an unstable transmission and distribution grid as of (2) a series of coordination failures between PREPA and LUMA,” Marxuach states.

However, the situation was not exactly excellent when PREPA was in charge, as “Puerto Rico’s energy woes were years in the making and are the direct result of PREPA’s mismanagement, negligence and corruption. Handing control back to the masters of disaster is not an option,” he adds.

It’s important to point out that “PREPA’s indictment is not LUMA’s vindication. LUMA had about a year to prepare for the takeover of Puerto Rico’s electricity grid and its performance so far has been, in the best case, deficient, and in the worst, dismal. Its management, so far, has utterly failed to deliver on its promises,” he writes.

As per the report, this is what Puerto Rico can expect in the future: • It will take about 10 years to upgrade the transmission and distribution system, with or

Puerto Rico’s energy woes were years in the making and are the direct result of PREPA’s mismanagement, negligence and corruption. Handing control back to the masters of disaster is not an option.

-CNE without LUMA. This task is exceedingly complex and expensive. And there are no shortcuts.

• The modernization of the generation fleet will also take several years, be it with additional natural gas capacity, increased generation from renewable sources, or a combination of both.

• The above means that in the short term, electric service in Puerto Rico will continue to be unreliable and expensive.

• Rising fossil fuel prices (including natural gas), the unavailability of several low-cost generation units to meet base load due to unforeseen breakdowns, and the obligation to eventually start paying debt service on PREPA’s restructured indebtedness, will be the main drivers of the cost of electricity in Puerto Rico.

• Nonetheless, some remedial measures could be implemented in the short term to stabilize the transmission and distribution system and reduce

the dependence on the use of high-cost peaking units. It is up to both PREPA and LUMA to identify those “quick wins” and execute them.

• In addition, the transition to renewable generation must continue. The generation of electricity using renewable sources protects both the environment, by lowering emissions of greenhouse gases, and consumers, by stabilizing the price of electricity. It is not true that electricity from renewable sources is always more expensive than electricity generated with traditional fuels.

The technology for solar and/or wind generation in combination with battery storage has developed significantly during the last few years, in some cases approaching the costs of natural gas generation.

• To properly compare costs between one kind of generation and another, it is necessary to add the cost of the environmental and health damages caused by fossil fuel generation. Adding in the costs of these negative externalities almost always reveals that fossil generation is costlier than initially thought. The imposition of a carbon tax is one of several policy alternatives to force polluters to internalize the cost of these negative externalities they impose on society at large.

• It is imperative that the government agencies in charge of implementing energy policy in Puerto Rico have the necessary resources to execute their respective missions: (1) the PREB [Puerto Rico Energy Bureau] to regulate rates and promote long-term planning for the system; (2) the [PublicPrivate Partnership] P3 Authority to effectively monitor and robustly enforce the O&M [Operation & Maintenance] Agreement with LUMA; and (3) PREPA to adequately coordinate the day-to-day operation of the generation system.

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LUMA Energy Authorized for 38 Projects Costing $652.58 Million IEEFA Calls on Biden to Focus on Renewables for Puerto Rico

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Zoe Landi Fontana, Collaborator

s part of efforts to improve the island’s electricity system, the president of the Puerto Rico Energy Bureau (PREB), Edison Avilés Deliz, announced the authorization of 38 new projects by LUMA Energy.

LUMA presented 38 projects on Oct. 4 that consist of 26 substation projects, 11 transmission projects, and one for telecommunications.

They will cost an estimated $652.58 million, funded by the Federal Emergency Management Agency (FEMA), and form part of the 10year infrastructure plan that was presented by the Puerto Rico Electric Power Authority (PREPA) in December 2020 to reconstruct the energy transmission and distribution systems on the island.

Plans include the repair or replacement of existing substations, repair of transmission lines, and implementation of physical security initiatives. An order-of-magnitude (class 5) estimate of costs for each project was also provided, detailing the materials, construction, labor, engineering, permits and other costs making up the $652.58 million price estimate.

The proposed projects are currently awaiting management approval by FEMA and the Central Office for Recovery, Reconstruction, and Resiliency (COR3). Both LUMA and PREPA have been called to appear at a technical hearing on the operating metrics disclosed by the electricity system operator, which will be held virtually on Nov. 4 at 10 a.m. by PREB. The hearing makes up part of the process to evaluate the electrical system’s operations within the first three months of LUMA’s long-term contract.

However, PREPA and LUMA’s plans to rebuild Puerto Rico’s electric grid were not positively received by members of the Institute for Energy Economics and Financial Analysis (IEEFA). On Oct. 14, in a letter to the Biden Administration titled “Invest FEMA funds in resilient Puerto Rico electric grid,” Tom Sanzillo, director of Financial Analysis at IEEFA, expressed his opposition to the funding of the 38 projects. The billions of dollars available in FEMA funds, according to Sanzillo, would be more effectively used to transition Puerto Rico to renewable energy sources, instead of prolonging the country’s dependence on fossil fuels.

According to IEEFA, Puerto Rico’s best method to create a resilient energy grid would be the rapid implementation of rooftop solar

Puerto Rico’s best method to create a resilient energy grid would be the rapid implementation of rooftop solar and storage, which would lower and stabilize electricity rates and align with the Biden administration’s climate policy goals.

-IEEFA and storage, which would lower and stabilize electricity rates and align with the Biden administration’s climate policy goal of a decarbonized electricity sector by 2035. Over the past few years, PREPA and the Financial Oversight and Management Board (FOMB) have acknowledged

that expanding renewable energy is necessary to move away from the volatile fossil fuel industry that leaves Puerto Rico’s economy open to drastic price spikes and electric rate increases.

Sanzillo writes, “Puerto Rico’s current path of rebuilding the centralized grid and privatizing the island’s power plants will prolong the island’s dependence on fossil fuels, which is the leading cause of rising electric rates. Four years after Hurricane Maria, Puerto Rico continues to generate more than 95 percent of its electricity from fossil fuels; although the transition to renewable energy has been identified in formal budget and energy plans as a central part of the solution, next to no progress has been made.

“The federal funds available in this moment represent the best, and only, opportunity for Puerto Rico to realize this vision. I urge your offices to work together to ensure that this opportunity is not wasted. I have been in and around government programs and finances since the 1970’s. If this plan goes forward in its current form Puerto Rico is guaranteed a newly built, poorly equipped and outdated grid, a permanent fiscal crisis and rising electricity rates,” he said.

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Puerto Rico Moves Into Top 10 Percent of U.S. Travel Destinations

Paradores owners receive incentives to improve image and tourist offerings

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Zoe Landi Fontana, Collaborator

ccording to the U.S. Travel Association, Puerto Rico leads the country as a tourist destination with a huge influx of visitors and travel spending.

Reports by Tourism Economics and Aerostar data show that in September 2021 alone, over 330,000 passengers arrived at the San Juan international airport and annual visitor spending was 23 percent higher than in 2019, despite the national average having decreased by 11 percent.

At the latest Industry Update, Discover Puerto Rico released results from the tourism industry, showing improved growth. Director of Research and Analytics for Discover Puerto Rico, Alisha Valentine, revealed that they are on track to surpass $1 billion in revenues from visitor spending for the first time. Citing statistics from SMARI, a global tourism research firm, which has monitored Puerto Rico’s brand health since 2017, Valentine revealed that the past few years have seen the island move up into the top 10 percent of destinations following investments from Discover Puerto Rico to improve its image and brand it with five key attributes: colorful,

authentic, beautiful, lively and vibrant.

The travel industry is also becoming a more attractive option for building careers. Recovering and growing at record rates, the sector offers promising career growth opportunities and professional development. President and CEO of Destination Analysts, Erin Francis-Cummings, reported that 68.6 percent of workers in Puerto Rico have an improved outlook on employment prospects within the travel, tourism and hospitality sectors and would consider working within them.

Puerto Rico has the highest percentage of people fully vaccinated against the coronavirus in the United States, as of Oct. 19, according to data from the Centers for Disease Control and Prevention (CDC). A healthy 73 percent of Puerto Rico’s total population of 3.3 million are fully inoculated against the virus, according to CDC data. The U.S. territory also has one of the lowest COVID community transmission rates in the U.S.

Promoting Paradores

Located outside the metro area, family-owned and highlighting the gastronomic, historical and cultural diversity of the island, small inns, or paradores, align perfectly with Discover Puerto Rico’s five key attributes. On the occasion of the 48th anniversary of the Puerto Rico Paradores Program, the Puerto Rico Tourism Company (PRTC) announced a new training program for paradores owners. In addition to the monetary support, the plan offers professional development courses

for employees and owners of the endorsed businesses. The training plan is set to begin on Nov. 5, 2021 and will cover the “service steps” in various settings: in lodging rooms, at guest receptions and tableside.

Furthermore, paradores owners received incentives of up to $7,000 each to boost their amenities and guest services. The Paradores Program funds can be used to meet the individual needs of each inn, from providing employees with English and sign language classes, to supporting structural and aesthetic improvements, such as the purchase of necessary articles — towels, curtains and bed linens — to standardize rooms.

Highlighting the importance of maintaining brand health and promoting a new image, owners of the 12 paradores attended talks by Imaris Arocho, the PRTC’s officer of sales and marketing, and Lucienne Gigante, strategist and business developer. The talks covered information related to brand management and the opportunities of a new image, in accordance with the launch of the paradores program’s new logo.

The 12 inns participating in the Paradores Program are the following: el Parador Boquemar in Cabo Rojo; Parador Combate Beach in Cabo Rojo; Parador Palmas de Lucía in Yabucoa; Parador Mauna Caribe in Maunabo; Parador Guánica 1929 in Guánica; Parador El Buen Café in Hatillo; Parador El Faro in Aguadilla; Parador Villa Parguera in Lajas; Parador Villas del Mar Hau in Isabela; Parador Villas Sotomayor in Adjuntas; Parador Yunque Mar in Luquillo and Parador Turtle Bay Inn in Lajas.

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/ Wednesday, October 27, 2021

Omar J. Marrero

Secretary of State and Executive Director of the Puerto Rico Fiscal Agency and Financial Advisory Authority

The Days of the Puerto Rico Bankruptcy are Numbered

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n recent days there has been a public discussion about how long the Oversight Board (FOMB) imposed by Congress through PROMESA will remain in Puerto Rico.

In essence, some sectors — in particular, critics of the Oversight Board and the debt-restructuring process established by PROMESA to get Puerto Rico out of bankruptcy — have argued that the implementation of the Plan of Adjustment that has been negotiated precisely to get Puerto Rico out of bankruptcy will demand that the entity remain in Puerto Rico for decades. They argue that the Board will have to remain in Puerto Rico to ensure compliance with the terms and conditions set out in the Plan of Adjustment.

Recently, the president of the FOMB himself, Professor David Skeel — an authority, a law professor and expert in bankruptcy law, in general, and in PROMESA — has made it crystal clear that these theories about an extended stay of the Oversight Board in Puerto Rico are completely wrong. Professor Skeel is right.

The Oversight Board is in Puerto Rico under the PROMESA Act passed by Congress. That same law also establishes, clearly and unequivocally, how long the Board will remain in effect in Puerto Rico.

Specifically, PROMESA provides that the Board will terminate when two conditions that Congress provided as benchmarks that the Board would have fulfilled its mission are met: (1) that Puerto Rico regains access to capital markets at reasonable interest rates; and (2) that Puerto Rico achieves balanced budgets for four consecutive years.

Now then, for Puerto Rico to regain access to capital markets at reasonable interest rates — which in simple words means Puerto Rico recovering its ability to borrow — it is imperative that Puerto Rico emerge from bankruptcy. For that, it is essential that Puerto Rico restructure its debt. And that is why the Plan of

Adjustment, which is nothing other than a series of agreements to cut by a substantial amount the debt that Puerto Rico owes its creditors, has been negotiated and is pending approval. Once approved, the value instruments authorized by the Plan could be in force for approximately 30 years. That does not mean that Puerto Rico will have to wait three decades to regain access to the capital markets. In fact, we hope that Puerto Rico will be able to access the markets again within a reasonable time after we emerge from bankruptcy. It will be that fact, the return of Puerto Rico to the capital markets, which will mark the fulfillment of the first requirement for the departure of the Oversight Board.

On the other hand, developing balanced budgets for four consecutive years is strictly up to us.

We already reached an important milestone this year when the Board certified the budget approved by the government of Puerto Rico.

Once the Plan of Adjustment is

approved and we know exactly how many resources we will have to allocate to the payment of the debt in each year’s budget, we will have complied with PROMESA. From then on it will be a matter of maintaining the necessary budgetary discipline so that we never spend more resources than we have available. Looking ahead, that will definitely be one of AAFAF’s responsibilities and I’ll talk about that in a future column.

In summary, to satisfy the two conditions established by PROMESA for the departure of the Oversight Board, the Plan of Adjustment needs to be approved first. This requires local legislation that will allow issuing the new bonds that will replace the old ones. It is important that the bill finally approved by our Legislature to this end be prudent and reasonable and does not jeopardize the Plan of Adjustment that has taken so much work to achieve.

Under the Plan of Adjustment, nearly 80% of the central government’s debt will be reduced

from $33 billion to about $7.4 billion.

That’s good business for Puerto Rico, but we weren’t willing to do it if it required cutting the pensions of our public employees. Our determination and perseverance defending Governor Pierluisi’s public policy of zero pension cuts resulted in getting the Oversight Board to eliminate pension cuts from the Adjustment Plan. (Another accomplishment was that the Oversight Board desisted from making additional cuts to the UPR’s annual budget.)

This is a triumph for all — the Administration, the Legislature and society in general — and we must not jeopardize it by demanding greater conditions so that the Legislature approves the legislation required to make the Adjustment Plan viable.

The days of the Puerto Rico bankruptcy are numbered, the FOMB will not remain on the island a minute longer than what PROMESA allows and, from then on, it will be entirely our responsibility to continue driving Puerto Rico forward.

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/ Wednesday, October 27, 2021

Puerto Rico Ponders Race Amid Surprising Results Fewer identifying as white, more identifying with their African descent

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he number of people in Puerto Rico who identified as “white” in the most recent census plummeted almost 80 percent, sparking a conversation about identity on an island breaking away from a past where race was not tracked and seldom debated in public.

The drastic drop surprised many, and theories abound as the U.S. territory’s 3.3 million people begin to reckon with racial identity.

“Puerto Ricans themselves are understanding their whiteness comes with an asterisk,” said Yarimar Bonilla, a political anthropologist and director of the Center for Puerto Rican Studies at Hunter College in New York. “They know they’re not white by U.S. standards, but they’re not Black

by Puerto Rico standards.”

Nearly 50 percent of those represented in the 2020 census — 1.6 million of 3.29 million — identified with “two races or more,” a jump from 3 percent — or some 122,200 of 3.72 million — who chose that option in the 2010 census. Most of them selected “white and some other race.”

Meanwhile, more than 838,000 people identified as “some other race alone,” a nearly 190 percent jump compared with some 289,900 people a decade ago, although Bonilla said Census Bureau officials have yet to release what races they chose.

Experts believe people likely wrote “Puerto Rican,” “Hispanic” or “Latino,” even though federal policy defines those categories as ethnicity, not race.

Among those who changed their response to race was 45-year-old Tamara Texidor, who selected “other” in 2010 and this time opted to identify herself as “Afrodescendent.” She made the decision after talking to her brother, who was a census worker and told her how people he encountered when he went house to house often had trouble with the question about race.

Texidor began reflecting about her ancestry and wanted to honor it since she descended from slaves on her father’s side. “I’m not going to select ‘other,’” she recalled thinking when filling out the census. “I feel I am something.”

Experts are still debating what sparked the significant changes in the 2020 census. Some

>Archive

Dánica Coto, Associated Press

believe several factors are at play, including tweaks in wording and a change in how the Census Bureau processes and codes responses.

Growing awareness of racial identity

Bonilla also thinks a growing awareness of racial identity in Puerto Rico played a part, saying that “extra intense racialization” in the past decade might have contributed. She and other anthropologists argue that change stemmed from anger over what many consider a botched federal response to a U.S. territory struggling to recover from Hurricane Maria and a crippling economic crisis. “They’ve finally understood that they’re treated like second-class citizens,” Bárbara AbadíaRexach, a sociocultural anthropologist, said of Puerto Ricans.

Another critical change in the 2020 census was that only a little over 228,700 identified solely as Black or African American, a nearly 50 percent drop compared with more than 461,000 who did so a decade ago. The decline occurred even as grass-roots organizations in Puerto Rico launched campaigns to urge people to embrace their African heritage and raised awareness about racial disparities, although they said they were encouraged by the increase in the “two or more races” category.

Bonilla noted Puerto Rico currently has no reliable data to determine whether such disparities have occurred during the pandemic, noting that

there is no racial data on coronavirus testing, hospitalizations or fatalities.

The island’s government also does not collect racial data on populations, including those who are homeless or incarcerated, Abadía-Rexach added.

“The denial of the existence of racism renders invisible, criminalizes and dehumanizes many Black people in Puerto Rico.”

The lack of such data could be rooted in Puerto Rico’s history. From 1960 to 2000, the island conducted its own census and never asked about race. “We were supposed to be all mixed and all equal, and race was supposed to be an American thing,” Bonilla said.

Some argued at the time that Puerto Rico should be tracking racial data while others viewed it as a divisive move that would impose or harden racial differences, a view largely embraced in France, which does not collect official data on race or ethnicity.

For Isar Godreau, an anthropologist and professor at the University of Puerto Rico, that type of data is crucial. “Skin color is an important marker that makes people vulnerable to more or less racial discrimination.” The data helps people fight for racial justice and determines the allocation of resources, she said.

The major shift in the 2020 census — especially how only 560,592 people identified as white versus more than 2.8 million in 2010 — comes amid a growing interest in racial identity in Puerto Rico, where even recent surveys about race prompted responses ranging from “members of the human race” to “normal” to “I get along with everyone.”

Informally, people on the island use a wide range of words to describe someone’s skin color, including “coffee with milk.”

That interest is fueled largely by a younger generation: They have signed up for classes of bomba and plena — centuries-old, percussionpowered musical traditions — as well as workshops on how to make or wear headwraps.

More hair salons are specializing in curly hair, eschewing the blow-dried results that long dominated professional settings in the island.

Some legislators have submitted a bill that cites the results of the 2020 census and that if approved would make it illegal to discriminate against someone based on their hair style. Several U.S. states already have similar laws.

As debate continues on what sparked so many changes in the 2020 census, Bonilla said an important question is what the 2030 census results will look like. “Will we see an intensification of this pattern, or will 2020 have been kind of a blip moment?”

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/ Wednesday, October 27, 2021

Halloween Celebrations are Back Halloween chocolate and candy sales are up

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Rosario Fajardo

rfajardo@wjournalpr.com

@RosarioWJournal

is the season to be spooky and it seems that many people are ready to celebrate Halloween again, not just in Puerto Rico but the U.S. mainland as well.

The 2021 Halloween season is full of excitement, as chocolate and candy sales are up and consumers are ready to maximize their fun during the Halloween season, according to the National Confectioners Association (NCA).

Retailers are going strong on their Halloween sets, with about 27 percent more seasonal items per store than in 2020, based on a nationwide survey of 1,500 adults conducted by the NCA.

48 percent over 2020 and nearly 60 percent over 2019.

The survey also found that 80 percent of Americans plan to trick-or-treat this year, while 82 percent said they are confident they will find safe and creative ways to celebrate the Halloween season.

Many people do have a so-called sweet tooth.

Most people in the U.S. enjoy chocolate and candy two to three times per week, averaging about 40 calories per day and just one teaspoon of added sugar per day – this includes seasonal celebrations like Halloween.

“Chocolate and candy sales have come roaring A man dressed as the killer character Michael Myers back during the 2021 Halloween season as (aka The Shape) from the “Halloween” films looks on excitement continues to grow and consumers tell during the premiere of the film “Halloween Kills,” Oct. us they’re ready to celebrate. About 82 percent 12, 2021, at the TCL Chinese Theatre in Los Angeles. of Americans say they plan >AP/Chris Pizzello to celebrate Halloween Consumers are planning to celebrate – including 93 percent of in a big way, including young parents millennial parents,” said John – 93 percent of whom say they plan Downs, NCA president and to celebrate Halloween this year. And Consumers are CEO. sales of chocolate and candy are up planning to celebrate “And retailers are going in a big way, including strong on Halloween displays young parents – 93 this year, with iconic orange percent of whom say and black sets coming back in they plan to celebrate a big way. Up from 80 percent Halloween this year. in 2020, 87 percent of people - National say they will purchase the Confectioners same amount – or more – of Association Halloween candy this year,” he added. “Which all makes sense, because what would the Halloween season be without chocolate and candy?”

However, LendingTree warned consumers not to overspend on Halloween this year, whether it’s for candy and party supplies, outdoor decorations and costumers. “Throughout the pandemic, we’ve heard of people going above and beyond when it comes to holidays and other events to make up for how crummy the last couple of years have been,” said Matt Schulz, LendingTree’s credit card expert.

“Don’t let your big Halloween blowout turn into debt, though. One evening of fun isn’t worth it if it is followed by months of debt.”

In fact,

/ Wednesday, October 27, 2021

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The Electric Wrangler 4XE Arrives in Puerto Rico

Part of Jeep’s global electricvehicle lineup

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THE WEEKLY JOURNAL Staff

any automaker companies are betting on the growing worldwide popularity of electric vehicles. Now, the Jeep brand has introduced its new Wrangler 4xe to Puerto Rico, marking the arrival of the most capable, technically advanced and ecofriendly. The Jeep Renegade 4xe and Compass 4xe models – introduced last year in Geneva – began arriving in Europe this summer.

The new Jeep 4xe models follow the introduction of the Jeep Grand Commander PHEV in China last year.

The Jeep electric vehicle lineup will give consumers a quiet and efficient driving experience with an estimated 50 miles per gallon equivalent (MPGe) on the Wrangler 4xe, but just as fun. In the case of the charging port, it is easy to access and simple to use, located on the front left with LED lights that indicate the status of the charge level.

In addition, it can be conveniently charged with a 120V charger that is included in the purchase of the unit, but 240V is also available.

The Wrangler 4xe’s plug-in hybrid powertrain is capable of up to 21 miles of nearly silent, zeroemission, electric-only propulsion, making it commuter friendly as an all-electric daily driver without range anxiety and the most capable and ecofriendly Jeep vehicle off-road – combined with the open-air freedom that only Jeep Wrangler offers.

Jeep will offer electrification options on each

nameplate in the next few years as it strives to become the leader in ecofriendly premium technology. Electrified Jeep vehicles will carry the 4xe badge. Jeep electric vehicles will be the most efficient and responsible Jeep vehicles ever, taking performance, 4x4 capability and driver confidence to the next level.

“Our Jeep 4xe vehicles will be the most efficient, responsible and capable that the brand has ever created,” said Christian Meunier, global president of Jeep Brand - FCA. “We are committed to make Jeep the greenest SUV brand. The electrification of the Jeep lineup will allow commuters to travel solely on electric power, delivering an efficient and fun on-road experience and offering an ability to enjoy even more Jeep capability off-road in nearly complete silence.”

The Wrangler 4xe’s advanced powertrain provides a unique on- and off-road experience through the combination of two electric motors, a high-voltage battery pack, a high-tech 2.0-liter

turbocharged I-4 engine and robust TorqueFlite eight-speed automatic transmission. The most advanced powertrain ever developed for a Jeep Wrangler maximizes efficiency with its estimated 50 MPGe, while eliminating range anxiety, delivering pure-electric operation for most daily commutes.

Torque from the electric motors in the Wrangler 4xe’s hybrid powertrain arrives instantly on demand from the driver. The powertrain also delivers fuel-saving, seamless, start-stop operation of the engine.

Jeep has demonstrated 4x4 capability leadership for nearly 80 years and were made famous by American soldiers using them during World War II. Jeep vehicles were the first to feature an automatic full-time four-wheel-drive system, first 4:1 transfer case and first electronic front sway-bar disconnect system. According to the company, merging electrification into the product lineup is a natural evolution.

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