Poa’s coNfirmatioN heariNgs are uNderway

Confirmation hearings for POA start in San Juan

They Will Extend for 10 Days

The Weekly Journal Staff

About twenty participants presented their arguments at the first confirmation hearing of the Government of Puerto Rico’s Plan of Adjustment (POA), presided by Judge Laura Taylor Swain, who directed the proceedings from the Federal Court, in Hato Rey.

The hearing lasted for almost eight hours. The parties favoring the confirmation of the POA shared the same conclusion on why they support the plan. They described the plan as “a new beginning,” “an essential and monumental step forward,” “the best possible outcome under the circumstances” and “the resolution of America’s largest municipal debt restructuring.”

On the other hand, opponents of the plan provided varied arguments as to why the POA should not be confirmed, from the alleged special treatment that bondholders will receive compared to retirees, to the claim from teachers so that their pensions do not be frozen. Other opponents of the plan stated that their claims do not have to do directly with the content of the plan, but with the effect that its confirmation will have.

However, a few hours after the hearing began, the Government Development Bank for Puerto Rico’s Debt Recovery Authority —one of the parties that rejected the confirmation of the plan— changed its position after reaching an agreement with the Financial Oversight and Management Board (FOMB). The agreement resolves claims filed by the entity against the government and the Public Buildings Authority for funds historically assigned conditionally to the Puerto Rico Highways and Transportation Authority.

Dispute Over Pensions Freeze

Martin Bienenstock, attorney for the FOMB, began his presentation by highlighting the broad support to the POA. He stated that 51 of 71 classes

of creditors voted in favor, although some of these classes represent bondholders who will see the value of their credit go down with the confirmation of the plan. Other classes —mainly those made up of government retirees— will not be affected in light of the changes incorporated into the POA by Law 53-2021. Bienenstock said that the FOMB tried to increase the returns that creditors would receive with the restructuring plan and argued that it was not possible —under the mandate imposed by the United States Congress through PROMESA— to provide adequate financing for public pensions. Regarding the objection presented by the Puerto Rico Teachers Association (PRTA) on the proposed freeze on educators’ pensions, Bienenstock stressed that the total cost of eliminating this provision would be $5.6 billion throughout the term of the restructuring, until 2051. That projection was challenged by the PRTA’s, José Luis Berríos, who argued that the basis for this calculation is not the current number of participants in the retirement systems —between 24,000 and 26,000— but rather the number Judge Laura Taylor Swain. >Carlos Rivera Giusti of 36,000 participants. According to Berríos, taking into account the actual beneficiaries of the retirement system, the cost figure would be closer to $2,600 million. The lawyer insisted that the FOMB could get the funds required to eliminate the freeze to teachers pensions if it diverted some of the bonds that will be paid to creditors, but stressed that even with those options, teachers will be worse off under the proposed POA.

Argues That Plan Alters Constitutional Payment Order

Opposition to the POA was headed by bondholders Peter Hein and Arthur Samdovitz. Hein, objected to the special treatment given to the payment of pensions, noting that it is unequal and unconstitutional. He based his argument on the Constitution of Puerto Rico, which specifically establishes a priority for payment of interest and principal for securities, something that, he argued, the POA contradicts insofar as it guarantees the full payment of pensions.

Supreme Court weighs in on Puerto Rico´s exclusion from SSI

Mark Sherman, The Associated Press

The Supreme Court appeared reluctant Tuesday to rule for a resident of Puerto Rico who claims it’s unconstitutional to be excluded from a welfare program that’s available in all 50 states and the District of Columbia.

The justices acknowledged that the differential treatment of Puerto Ricans might be problematic, but several suggested that it is up to Congress, not the courts, to act.

Justice Brett Kavanaugh said there are “compelling policy arguments” for including Puerto Rico in the Supplemental Security Income program, which provides benefits to older, disabled and blind Americans. But Kavanaugh said the court had to confront a provision of the Constitution that allows Congress to treat territories and states differently. The Caribbean island has been a U.S. territory since the Spanish American War in 1898.

Jose Luis Vaello-Madero, the Puerto Rico resident at the center of the case, began receiving SSI payments after he suffered a series of strokes while living in New York.

The payments continued to his bank account in New York even after he moved back to Puerto Rico. When he notified the Social Security Administration, the payments stopped and then the government sued to recover more than $28,000 it said he was not entitled to.

Lower courts sided with Vaello-Madero, ruling that the exclusion of Puerto Rico from the SSI program is unconstitutional. In a similar case in Guam, a federal judge ruled recently that residents of that Pacific island also should be able to collect SSI.

Judge Sotomayor Opposes Exclusion

Justice Sonia Sotomayor, whose parents were born in Puerto Rico, was the clearest voice in favor of Vaello-Madero. Sotomayor said it seems irrational to treat poor Americans differently based on where they live.

World’s Top Tourism Destinations Still Need Help

Between 2019 and 2020, Puerto Rico saw the biggest fall in employment rates

Zoe Landi The Weekly Journal

Many vacation hotspots faced financial disaster when COVID-19 brought the world to a halt. With shuttered restaurants, hotels and other venues, as well as canceled flights, the world’s top destinations were plunged into what could be called the tourist industry’s worst nightmare. A newly released study by Next Vacay, an online search system that finds the best flights for its customers, analyzed the pandemic’s effects on various destinations, from Southeast Asia through the Mediterranean, all the way to the Caribbean. Puerto Rico topped the list for job losses among the world’s top destinations. Between 2019 and 2020, the island experienced a 19.83 percent fall in employment. The disappearance of tourists meant that, despite the abundance of attractions and gorgeous natural landscapes, there was less demand for jobs in tourism. The result was 200,000 jobs lost. Interestingly, Puerto Rico simultaneously saw a 4.3 percent rise in visitors, but with lingering concerns over the Delta variant of COVID-19, there is uncertainty for the future. Other Caribbean countries suffered large economic losses as well. Barbados relies on the tourist trade for 36.2 percent of its gross domestic product (GDP). In 2020, COVID-19 cut their average number of visitors in half, and 10.85 percent of Barbados staff are now out of work. It is one of a few islands where visitors can scuba dive every day of the year at Carlisle Bay Marine Park, this, in addition to beaches, caves and historic mansion. Jamaica, boasting its colorful Kingston nightlife and abundant beaches, depends on tourism for 34.7 percent of its GDP. The average 352,827 monthly visitors dropped to 110,806 in 2020. Other iconic destinations, such as Thailand and Macau, lost billions of their annual earnings. Macau, usually receiving 3.28 million tourists a month, only played host to 491,419 each month in 2020. This 85.04 percent decrease decimated local businesses. The situation in Thailand was equally discouraging, or worse. Next Vacay listed the beautiful Southeast Asian country as the worsthit by financial losses. The pre-pandemic average of 3.3 million monthly visitors dropped by 83.15 percent, to 558,415 a month, resulting in an estimated $13.54 billion loss. Taking into account the study’s disheartening numbers, these countries’ tourism industries need help. As the world begins to open up again

The Condado area of San Juan is a major tourist hub in Puerto Rico. >Archive and travel restrictions loosen, there are ways to support the local economy when on holiday, beginning with supporting local businesses.

In fact, “A great deal for you means a great deal more for them,” indicated Founder and CEO of Next Vacay, Naveen Dittakavi. As the world begins to open up again and travel restrictions loosen, there are ways to support the local economy when on holiday, beginning with supporting local businesses. He listed the following tips for travelers to follow while on their next vacation: • Stay in local hotels instead of chains. This benefits the local community and gives the traveler a more authentic experience. • Hire a local tour guide at monuments and attractions to learn things that no one else will know. • Ditch duty-free, and instead buy souvenirs from street vendors. • Eat like the locals. Although it is possible to find familiar chains the world over, independent restaurants offer a glimpse into the country as the locals live it. • A good online review is always welcome. It lets the business know that what they’re doing is right, and encourages new customers to share in the great service.