Puerto Rico Financial Improvement and Bond Guarantee Act of 2015

Summary: Puerto Rico Financial Improvement and Bond Guarantee Act of 2015  This bill expresses the sense of Congress with respect to the current financial distress of the government of Puerto Rico.  The Department of the Treasury may guarantee up to 100% of 30-year bonds issued by the government of Puerto Rico or any of its instrumentalities that are issued solely to finance capital projects or refinance existing debt, but not bonds to finance operational expenses.   A guarantee is only permitted if Treasury determines that there is a reasonable prospect of repayment of the principal and interest on the bond to be guaranteed. Treasury shall:    examine the financial management practices of the government of Puerto Rico and its instrumentalities, and  establish guidelines and recommendations for making improvements in those practices and whether to make a requested guarantee.      Appropriations are made to fund the loan guarantees. Treasury may also provide advice and technical assistance to the government of Puerto Rico. The Federal Reserve Act is amended to empower Federal Reserve banks to buy and sell bonds and notes issued by Puerto Rico in anticipation of the collection of taxes or receipt of assured revenues.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Puerto Rico Financial Improvement 
and Bond Guarantee Act of 2015''.

SEC. 2. PURPOSE AND SENSE OF CONGRESS.

    (a) Purpose.--The purpose of this Act is to empower the Secretary 
of the Treasury to facilitate access of the government of Puerto Rico 
to capital markets for--
            (1) immediate short-term financing needs,
            (2) capital expenditures, and
            (3) debt refinancing,
by guaranteeing the principal and interest payments on bonds issued by 
the government of Puerto Rico upon determination by the Secretary that 
certain conditions relating to financial accountability in Puerto Rico 
have been met.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) Puerto Rico, as a territory, is treated inequitably and 
        inconsistently by Federal law and policy, and that such 
        treatment has contributed significantly to the current 
        financial distress of the government of Puerto Rico;
            (2) consequently, there exists a Federal responsibility and 
        need to help the government of Puerto Rico gain access to the 
        capital markets on reasonable terms;
            (3) stronger financial controls, budgeting processes, and 
        accountability measures should be implemented by the government 
        of Puerto Rico in order to improve its financial standing and 
        creditworthiness; and
            (4) it is in the national interest of the United States to 
        reduce the risk of default by the government of Puerto Rico on 
        its bond payments, to ensure essential public services can be 
        provided in the territory, and to promote economic growth and 
        responsible borrowing in the territory.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Cost.--With respect to a guarantee, the term ``cost'' 
        has the meaning given such term under section 502 of the 
        Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
            (2) Guarantee.--The term ``guarantee''--
                    (A) has the meaning given the term ``loan 
                guarantee'' in section 502 of the Federal Credit Reform 
                Act of 1990 (2 U.S.C. 661a); and
                    (B) includes a loan guarantee commitment (as 
                defined in such section 502).
            (3) Instrumentality thereof.--With respect to Puerto Rico, 
        the term ``instrumentality thereof'' means any political 
        subdivision, instrumentality, or instrumentality of a political 
        subdivision of Puerto Rico.
            (4) Obligation.--The term ``obligation'' means a bond that 
        is guaranteed under this Act.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

   TITLE I--FINANCIAL IMPROVEMENT AND BOND GUARANTEES FOR PUERTO RICO

SEC. 101. BOND GUARANTEES.

    (a) General Authority.--The Secretary of the Treasury is authorized 
to guarantee bonds issued by the government of Puerto Rico or any 
instrumentality thereof that are issued solely for the purpose of 
financing capital projects or refinancing existing debt.
    (b) Limitation.--The authority granted under subsection (a) does 
not extend to bonds issued to finance operational expenses, except with 
respect to tax revenue anticipation notes.

SEC. 102. TERMS AND CONDITIONS.

    (a) In General.--A guarantee made under this Act may guarantee up 
to 100 percent of the principal and interest of the obligation.
    (b) Receipt of Request.--A guarantee may only be made under this 
Act if--
            (1) the Secretary first receives a request for such 
        guarantee, in writing, from the Governor of Puerto Rico, along 
        with the terms, including the purpose and amount, of the bond 
        to be issued for which the guarantee is requested; and
            (2) the Secretary determines, pursuant to section 103(b), 
        that the government of Puerto Rico and, if applicable, any 
        instrumentality thereof, has demonstrated meaningful 
        improvement in the management of its finances.
    (c) Obligation Requirements.--
            (1) Maturity.--An obligation shall require full repayment 
        over a period not to exceed 30 years.
            (2) Interest rate.--An obligation shall bear interest at a 
        rate that does not exceed a level that the Secretary determines 
        appropriate.
    (d) Agreement Document.--
            (1) Minimum requirements.--A guarantee agreement shall be 
        written and executed for any guarantee made under this Act in 
        order that such guarantee may have legal effect, and, at a 
        minimum, shall include appropriate language detailing the terms 
        and conditions set forth in this Act for such guarantee.
            (2) Additional terms and conditions.--A guarantee agreement 
        may include such detailed terms and conditions in addition to 
        those set forth in this section and as the Secretary determines 
        appropriate to protect the interests of the United States in 
        case of default and to ensure repayment.
            (3) Authority of the secretary.--The Secretary is 
        authorized to agree to any modification, amendment, or waiver 
        or any such term or condition as the Secretary deems desirable 
        to protect the interests of the United States.
    (e) Administrative Expenses.--
            (1) In general.--The Secretary shall charge and collect 
        fees for guarantees made under this Act in amounts the 
        Secretary determines are sufficient to cover applicable 
        administrative expenses.
            (2) Availability.--Fees collected under this subsection 
        shall be available to the Secretary, without further 
        appropriation, to pay for the administrative expenses of 
        carrying out this Act.
    (f) Limitation.--A guarantee may be made under this Act only if the 
Secretary determines that there is a reasonable prospect of repayment 
of the principal and interest on the bond to be guaranteed.

SEC. 103. FINANCIAL IMPROVEMENT GUIDELINES AND DETERMINATION.

    (a) Examination, Guidelines, and Recommendations.--
            (1) In general.--Not later than 120 days after the date of 
        the enactment of this Act, the Secretary shall--
                    (A) examine the financial management practices of 
                the government of Puerto Rico and instrumentalities 
                thereof and identify specific areas in such practices 
                that may need improvement; and
                    (B) establish guidelines and recommendations for 
                the government of Puerto Rico and instrumentalities 
                thereof to use as a basis for making improvements in 
                its financial management practices and in determining 
                whether to make a guarantee requested under section 
                102(b).
            (2) Criteria.--The guidelines and recommendations required 
        under paragraph (1) shall address, at a minimum, the following 
        criteria, where applicable:
                    (A) Fiscal stability and operational efficiency.
                    (B) Reduction in deficits and debt.
                    (C) Accuracy in estimating revenues and 
                expenditures.
                    (D) Collection of taxes due.
                    (E) Management of Federal grant monies.
                    (F) Quality of financial controls, statements, and 
                reporting.
                    (G) Use of information technology.
                    (H) Regulations and licensing requirements 
                affecting business establishment, expansion, and 
                operation.
            (3) Revisions.--The Secretary may revise such guidelines 
        and recommendations as the Secretary determines appropriate.
            (4) Transmission and public notice of guidelines and 
        recommendations.--The Secretary shall, within 10 days of 
        establishing or revising guidelines or recommendations under 
        this subsection--
                    (A) transmit such guidelines and recommendations to 
                the Governor of Puerto Rico and the Congress;
                    (B) publish such guidelines and recommendations in 
                the Federal Register; and
                    (C) make such guidelines and recommendations 
                available to the public on the website of the 
                Department of the Treasury.
    (b) Financial Improvement Determination.--
            (1) Determination.--The Secretary shall, for purposes of 
        section 102(b)(2), determine whether the government of Puerto 
        Rico and, if applicable, any instrumentality thereof, has 
        demonstrated meaningful improvement in the management of its 
        finances.
            (2) Basis for determination.--In making a determination 
        under paragraph (1), the Secretary shall take into account the 
        guidelines and recommendations established under subsection (a) 
        and such other criteria as the Secretary determines 
        appropriate.
            (3) Notification.--If, under paragraph (1), the Secretary 
        determines that the government of Puerto Rico and, if 
        applicable, any instrumentality thereof, has not demonstrated 
        meaningful improvement in the management of its finances, the 
        Secretary shall--
                    (A) notify the Governor of Puerto Rico and the 
                Congress, in writing, of the Secretary's decision and 
                the basis for such decision;
                    (B) publish a notice of such determination in the 
                Federal Register;
                    (C) make such notice available to the public on the 
                website of the Department of the Treasury;
                    (D) make recommendations to the Governor of Puerto 
                Rico on specific ways the government of Puerto Rico 
                and, if applicable, any instrumentality thereof, can 
                demonstrate meaningful improvement; and
                    (E) if the Secretary determines it appropriate, 
                make recommendations to--
                            (i) the Congress about specific legislation 
                        that can be enacted to improve the finances, 
                        financial stability, and financial management 
                        practices of the government of Puerto Rico and 
                        that would help the government of Puerto Rico 
                        or any instrumentality thereof demonstrate 
                        meaningful improvement and implement the 
                        recommendations in the areas identified by the 
                        Secretary under subsection (a)(1)(B); and
                            (ii) the heads of Federal departments and 
                        agencies other than the Department of the 
                        Treasury about specific administrative actions 
                        that could be taken to improve the finances, 
                        financial stability, and financial management 
                        practices of the government of Puerto Rico and 
                        that would help the government of Puerto Rico 
                        or any instrumentality thereof demonstrate 
                        meaningful improvement and implement the 
                        recommendations in the areas identified by the 
                        Secretary under subsection (a)(1)(B).

SEC. 104. PUBLIC NOTICE.

    Upon making any guarantee under this Act, the Secretary shall 
publish notice of such action, along with the results of the 
determination made under section 103(b), in the Federal Register and 
make such information available to the public on the website of the 
Department of the Treasury.

SEC. 105. LOAN GUARANTEE FUNDING.

    There are appropriated to the Secretary such sums as may be 
necessary for the cost, as defined in section 502 of the Congressional 
Budget Act of 1974, of bond guarantees made under this title. The 
Secretary may make such bond guarantees notwithstanding subsections (b) 
and (d) of section 504 of the Federal Credit Reform Act of 1990 (2 
U.S.C. 661c).

             TITLE II--TECHNICAL ASSISTANCE FOR PUERTO RICO

SEC. 201. TECHNICAL ASSISTANCE.

    The Secretary is authorized to provide advice and technical 
assistance to the government of Puerto Rico and instrumentalities 
thereof about ways and means to demonstrate meaningful improvement in 
managing its finances (as described under section 103).

           TITLE III--PURCHASE AND SALE OF PUERTO RICO BONDS

SEC. 301. AMENDMENT TO THE FEDERAL RESERVE ACT.

    Section 14(b)(1) of the Federal Reserve Act (12 U.S.C. 355(1)) is 
amended by inserting after ``continental United States'' the following: 
``or Puerto Rico''.