Ley 101-2020 art. 10 — Ley de Responsabilidad en la Emisión de Deuda / Ley de Responsabilidad en la Emisión de  / Art. 10
Artículo 10. Vigencia
Status: in_force

Esta Ley comenzará a regir inmediatamente después de su aprobación. Rev. 15 de abril de 2024 www.ogp.pr.gov Página 7 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] ENGLISH VERSION OF DEBT RESPONSIBILITY ACT STATEMENT OF MOTIVES Puerto Rico is in the midst of an unprecedented fiscal crisis. The fiscal crisis is the result of, among other things, recurring deficits, more than a decade of economic recession and the unsustainable level of debt that the Government and its instrumentalities have accumulated throughout the years. In 2016, the United States approved the federal law known as PROMESA (Puerto Rico Oversight, Management and Economic Stability Act), which established two mechanisms to restructure the debts of Puerto Rico and its instrumentalities. The Government of Puerto Rico, the Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”), the Puerto Rico Public Buildings Authority (“PBA”), the Puerto Rico Highways and Transportation Authority (“HTA”), and the Puerto Rico Electric Power Authority (“PREPA”) are currently in the process of restructuring their debts under Title III of PROMESA. The Puerto Rico Sales Tax Financing Corporation, better known as COFINA, for its Spanish acronym, completed the restructuring of its debt under Title III of PROMESA earlier this year pursuant to the legal framework approved by this Legislative Assembly through Act No. 241-2018. Similarly, Government Development Bank for Puerto Rico completed its debt restructuring process under Title VI of PROMESA last year pursuant to the legal framework approved by this Legislative Assembly through Act No. 109-2017, as amended. The restructuring of the debts of these entities is an essential step to restore economic growth in Puerto Rico and turn the page on the fiscal crisis. However, such restructuring is not enough. It is essential that we establish additional parameters to avoid the same mistakes that led us to where are today. In particular, we should make sure we establish additional parameters for the issuance of debt by the Government and its instrumentalities, since the limit established in the Puerto Rico Constitution has proven to be insufficient to prevent the Government and its instrumentalities from incurring debt that is unsustainable. Therefore, this Legislative Assembly has decided to act responsibly to implement a debt management policy that, among other things, will ensure that the debt issued by the Government and its instrumentalities is sustainable based on the revenues that support such debt. In addition, said debt management policy will provide that debt may only be issued to finance capital improvements for the benefit of the people of Puerto Rico, thereby prohibiting the issuance of debt to finance operating deficits. However, the debt management policy will preserve the ability of the Government to issue debt to respond to damage or destruction caused by hurricanes, natural disasters, pandemics, terrorism or other similar emergencies. On September 27, 2019, the Fiscal Oversight and Management Board for Puerto Rico established under PROMESA (the “FOMB”) filed a plan of adjustment under Title III of PROMESA (as amended from time to time, the “Plan of Adjustment”). The Plan of Adjustment, which is still subject to approval under Title III of PROMESA, would cover the debts of the Government of Puerto Rico, ERS, and PBA. The debts of HTA and PREPA will be subject to separate plans of adjustment. This Legislative Assembly will also do everything in its power to restore Puerto Rico’s credibility and its access to the capital markets under reasonable terms. Rev. 15 de abril de 2024 www.ogp.pr.gov Página 8 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] Precisely for this reason we adopt this act, as well as a responsible and convincing public policy that will set the standard for any future issuing of debt, establishing stricter parameters than those contemplated by the Plan, since they impose restrictions not only on the debt payable from central Government revenues, but also on the debt of most public corporations and instrumentalities. This, within the parameters established by this act, will help restore economic growth while protecting future generations of the mistakes of the past. This Administration’s priority is the well-being of our People and our retirees. As such, we will continue to face the economic situation that the Island is going through in a sensible, responsible and transparent manner. BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF PUERTO RICO: Article 1. — Title. This Act shall be known and may be cited as the “Puerto Rico Debt Responsibility Act.” Article 2. — Definitions. The following terms shall have the meanings stated below: (a) AAFAF: means the Puerto Rico Fiscal Agency and Financial Advisory Authority, a public corporation and instrumentality of the Government created by Act 2-2017. (b) Capital Improvements: means capital improvements and public works of the type identified in the Debt Management Policy. (c) COFINA: means the Puerto Rico Sales Tax Financing Corporation, a public corporation and instrumentality of the Government created by Act No. 91-2006, as amended. (d) Debt: means, collectively, bonds, notes, loans and other evidences of indebtedness for borrowed money. (e) Debt Policy Period: means the period commencing on the first (1st) calendar day immediately following the Effective Date and ending on the date on which there are no New Bonds Outstanding. (f) Debt Policy Revenues: means, collectively, without duplication, (i) revenues derived from taxes, fees, permits, licenses, fines or other charges imposed, approved or authorized by the Legislative Assembly, including, without limitation, any such revenue owned by, or assigned to, COFINA or any other instrumentality of the Government, (ii) all other revenues or monies deposited in the General Fund or any debt service or other governmental fund of the Government, and (iii) all other revenues or funds identified as Debt Policy Revenues in the Debt Management Policy, provided, however, that Debt Policy Revenues shall exclude such revenues and funds excluded from the definition of Debt Policy Revenues pursuant to the Debt Management Policy. (g) Effective Date: means the date on which the Plan becomes effective in accordance with its terms. (h) Entity: means a person, a corporation, a general partnership, a limited partnership, a limited liability company, a limited liability partnership, an association, a joint stock company, a joint venture, an estate, a trust, an unincorporated organization, a governmental unit or any subdivision Rev. 15 de abril de 2024 www.ogp.pr.gov Página 9 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] thereof, including, without limitation, the Government, its public corporations and instrumentalities. (i) General Fund: means the Government’s primary operating fund. (j) Maximum Annual Debt Service: means the maximum scheduled annual debt service (including principal and interest payments due and payable on bonds bearing current interest and, in the case of capital appreciation bonds or similar instruments, the maturity value due and payable on such instruments) for any fiscal year of the Government on Net Tax-Supported Debt; provided, however, that, in the case of variable rate Debt, the calculation shall assume that such Debt bears interest at the maximum annual rate permitted by law; and provided further that, the Debt Management Policy may establish additional provisions or clarifications regarding the calculation of the Maximum Annual Debt Service. (k) Net Tax-Supported Debt: means any Tax-Supported Debt, excluding any (i) Debt issued by any Entity (other than the Government) and guaranteed by the good faith, credit and taxing power of the Government that is not payable from or secured by Debt Policy Revenues and that satisfies such other requirements established in the Debt Management Policy, (ii) Debt being refinanced through the proceeds of the proposed Debt issuance and (iii) any other Debt excluded from the definition of Tax-Supported Debt pursuant to the Debt Management Policy. (l) New Bonds: means, collectively, the general obligation bonds to be issued by the Government pursuant to the Plan on the Effective Date and for the payment of which the Government has pledged its full faith, credit and taxing power. (m) Outstanding: means Debt that (i) has not been paid in full in accordance with its terms or (ii) has not been legally defeased in accordance with the defeasance requirements set forth in the applicable definitive issuance documents. (n) Oversight Board: means the Financial Oversight and Management Board for Puerto Rico established pursuant to PROMESA. (o) Plan: means the Joint Plan of Adjustment of the Commonwealth of Puerto Rico, the Employee Retirement System of the Government of the Commonwealth of Puerto Rico, and the Puerto Rico Public Buildings Authority approved under Title III of PROMESA, including, the exhibits and schedules thereto, as the same is amended, supplemented, or modified from time to time. (p) PROMESA: means the Puerto Rico Oversight, Management, and Economic Stability Act, Pub. L. No. 114-187, 130 Stat. 549 (2016), 48 U.S.C. §2101, et. seq., as it may be amended or modified. (q) Tax-Supported Debt: means, collectively, without duplication, (i) direct Debt of the Government for the payment of which the good faith, credit and taxing power of the Government has been pledged (including the New Bonds), (ii) Debt issued by any Entity and guaranteed by the good faith, credit and taxing power of the Government, (iii) Debt issued by any Entity, whether or not guaranteed by the Government, that is secured by or payable from (a) Debt Policy Revenues or (b) lease or other agreements with the Government or any agency thereof, whether or not subject to annual or periodic legislative appropriations, and (iv) any other Debt identified as Tax- Supported Debt in the Debt Management Policy; provided, however, that the following shall not be considered Tax Supported Debt: (1) tax and revenue anticipation notes with a final maturity occurring within the same fiscal year of their issuance, (2) Debt issued to respond directly to damage or destruction and associated risks to the health, safety and welfare of the people of the Government caused by hurricanes, earthquakes or other natural disasters, pandemics, terrorism Rev. 15 de abril de 2024 www.ogp.pr.gov Página 10 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] and similar emergencies, and (3) any other Debt excluded from the definition of Tax-Supported Debt pursuant to the Debt Management Policy; and, provided further, that the Debt Management Policy may contain additional provisions and clarifications regarding which Debts are considered Tax-Supported Debt. Article 3. — Adoption of Debt Management Policy. On or prior to the Effective Date, AAFAF shall adopt and maintain a Debt Management Policy applicable to the Government, its public corporations and instrumentalities. The Debt Management Policy shall (a) impose, at a minimum, the restrictions on the issuance of Debt established in Articles 4 through 6 of this Act and (b) be consistent with and the Plan. The Debt Management Policy shall be in effect during the Debt Policy Period, and may be amended, supplemented or modified from time to time in accordance with the Plan; provided that nothing contained herein shall prohibit AAFAF from adopting, maintaining and complying with a Debt Management Policy that is more restrictive than the requirements set forth in this Act. Article 4. — Comprehensive Cap on All Net Tax-Supported Debt. The Debt Management Policy shall include a comprehensive cap on the Maximum Annual Debt Service payable on Net Tax-Supported Debt (the “Comprehensive Cap”), which shall apply in addition to the limit on the Government’s incurrence of public Debt established in Article VI, Section 2 of the Puerto Rico Constitution. During the Debt Policy Period, the Government and its instrumentalities, including COFINA, shall not incur additional Net Tax-Supported Debt if the proposed issuance thereof would cause the ratio of (a) Maximum Annual Debt Service due in any future fiscal year of the Government on all Net Tax-Supported Debt Outstanding to (b) the average of the annual Debt Policy Revenues during immediately preceding two (2) fiscal years of the Government, in each case, as certified by the Secretary of the Treasury, to exceed the limits specified in the Comprehensive Cap. The Secretary of Treasury’s certification of compliance with the limit on Net Tax-Supported Debt pursuant to this Article 4 shall be conclusive and binding absent manifest error; provided, however, that, in issuing such certification, with respect to the calculation of any revenues of public corporations or instrumentalities included as Debt Policy Revenues, the Secretary of Treasury may rely on certifications from officers of such Entities. Article 5. — Additional Restrictions on the Issuance of Tax-Supported Debt. (a) Any issuance of Tax Supported Debt must be approved by AAFAF, in its role as fiscal agent, prior to its issuance. (b) The Debt Management Policy shall establish, at a minimum, the following additional restrictions on the issuance of Debt by the Government, its public corporations and instrumentalities: (i) Long-Term Borrowing for Capital Improvements Only: Tax-Supported Debt issued after the Effective Date may only be incurred to finance Capital Improvements, as determined by the issuer of such Debt and approved by AAFAF, or to refinance Tax- Rev. 15 de abril de 2024 www.ogp.pr.gov Página 11 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] Supported Debt in accordance with the terms and provisions of Article 5(iv) of this Act. Proceeds derived from any such issuance may be used to cover any and all direct and indirect expenses that, in the issuer’s reasonable discretion, are necessary to carry out such Capital Improvements, including, without limitation, any and all expenses incurred in connection with the issuance itself. (ii) Maturity Limitation on Tax-Supported Debt: No Tax-Supported Debt issued on or after the Effective Date may have a legal final maturity later than thirty (30) years from the date of its original issuance, and no such Debt may be refinanced by any Debt extending such legal final maturity date beyond such original maturity date limitation; provided, however, that, the foregoing shall not apply to (a) Tax-Supported Debt issued to finance public housing facilities, subject to the limitation established in the Puerto Rico Constitution or (b) Tax-Supported Debt issued to refinance Debt that was Outstanding prior to the Effective Date and had a legal maturity of more than thirty (30) years, subject to terms and provisions of Article 5(iv) of this Act. (iii) Mandatory Principal Amortization: No Tax-Supported Debt may be issued unless its principal commences to amortize within two (2) years of its original issuance date, or such other period not to exceed five (5) years from original issuance as may be permitted under the U.S. Internal Revenue Code for tax exempt financings of new construction or reconstruction of Capital Improvements, and continues amortizing in each and every year until such Debt is no longer Outstanding. (iv) Refinancings Permitted only for Cash Flow Savings in Every Fiscal Year: Refinancings of Tax-Supported Debt are permitted only if (a) there is no increase in the amount of principal and interest payable in any fiscal year and (b) such refinancing produces positive present value savings, after taking into consideration transaction expenses, at the levels specified in Debt Management Policy; provided, however, that, refinancings with dissavings in some fiscal years of the Government are permitted if the refinancing is completed in direct response to a hurricane, earthquake, pandemic, terrorism or other natural disaster and similar emergencies and the debt service due in any future fiscal year does not increase by more than ten percent (10%) and the financing is required by its terms to be repaid in full within ten (10) years. Article 6. — Restrictions on the Issuance of Debt by Public Corporations The Debt Administration Policy shall establish, at a minimum, the following additional restrictions on the issuance of Debt by public corporations and instrumentalities of the Government (regardless of whether said Debt is Tax-Supported Debt), except for the public corporations identified in item (d) of this Article 6. (a) Borrowing for Capital Improvements Only: The public corporations and instrumentalities of the Government may only issue debt after the Effective Date to (i) finance Capital Improvements aimed at improving the services provided by the public corporation or instrumentality, as determined by the issuer of such Debt and approved by AAFAF, (ii) refinance Debt in accordance with the terms and provisions of Article 6(b) of this Act, or (iii) restructure debt issued prior to the enactment of this Act. Proceeds derived from any such issuance may be used to cover any and all direct and indirect expenses that, in the issuer’s reasonable discretion, are necessary to carry out Rev. 15 de abril de 2024 www.ogp.pr.gov Página 12 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] such Capital Improvements, including, without limitation, any and all expenses incurred in connection with the issuance itself. (b) Refinancings Permitted only for Cash Flow Savings in Every Fiscal Year: Refinancings of Debt by any public corporation or instrumentality are permitted only if (i) there is no increase in the amount of principal and interest payable in any fiscal year and (ii) such refinancing produces positive present value savings, after taking into consideration transaction expenses, at the levels specified in Debt Management Policy; provided, however, that, refinancings with dissavings in some fiscal years of the Government are permitted if the refinancing is completed in direct response to a hurricane, earthquake, pandemic, terrorism or other natural disaster and similar emergencies and the debt service due in any future fiscal year does not increase by more than ten percent (10%) and the financing is required by its terms to be repaid in full within ten (10) years. (c) AAFAF Approval. All issuances of Debt by a public corporation or instrumentality shall have the prior approval of AAFAF, in its role as fiscal agent to such entities. (d) Exception for certain Public Corporations. The restrictions established in this Article 6 shall not be applicable to the Puerto Rico Electric Power Authority, the Puerto Rico Aqueduct and Sewer Authority or the Puerto Rico Highways and Transportation Authority. Article 7. Severability. If any clause, paragraph, subparagraph, sentence, word, letter, article, provision, section, subsection, title, chapter, subchapter, heading, or part of this Act, were to be annulled or declared unconstitutional, the order to such effect will neither affect nor invalidate the remainder of this Act. The effect of such an order shall be limited to the clause, paragraph, subparagraph, sentence, word, letter, article, provision, section, subsection, title, chapter, subchapter, heading, or part of this Act so annulled or declared unconstitutional. If the application to a person or circumstance of any clause, paragraph, subparagraph, sentence, word, letter, article, provision, section, subsection, title, chapter, subchapter, heading, or part of this Act, were to be annulled or declared unconstitutional, the order to such effect will neither affect nor invalidate the application of the remainder of this Act to such persons or circumstances to which it may be validly applied. It is the express and unequivocal intent of this Legislative Assembly that the courts of law enforce the provisions and application of this Act even if any of its parts is annulled, invalidated, affected or declared unconstitutional, or even if the application thereof to any Person or circumstance is annulled, invalidated or declared unconstitutional. Article 8. — Language Conflict. This Act shall be adopted both in English and Spanish. If in the interpretation or application of this Act any conflict arises as between the English and Spanish texts, the English text shall govern. Article 9. — Supremacy. The provisions of this Act shall prevail over any other general or specific provisions of any law or regulation of the Government of Puerto Rico that is inconsistent with this Act. Rev. 15 de abril de 2024 www.ogp.pr.gov Página 13 de 14 “Ley de Responsabilidad en la Emisión de Deuda” [Ley 101-2020] “Puerto Rico Debt Responsibility Act” [Act 101-2020] Article 10. — Effectiveness. This Act shall take effect immediately upon enactment. Note. This compilation was prepared by the Puerto Rico Office of Management and Budget staff who have striven to ensure it is complete and accurate. However, this is not an official compilation and may not be completely free of error. It contains all amendments incorporated for reading purposes only. For accuracy and exactitude please refer to the act original text and the collection of Laws of Puerto Rico Annotated LPRA. The state links acts are property of Legislative Services Office of Puerto Rico. The fecodigoderal links acts are property of US Government Publishing Office GPO. Compiled by the Office of Management and Budget Library. Nota. Este documento fue compilado por personal de la Oficina de Gerencia y Presupuesto del Gobierno de Puerto Rico, como un medio de alertar a los usuarios de nuestra Biblioteca de las últimas enmiendas aprobadas para esta Ley. Aunque hemos puesto todo nuestro esfuerzo en la preparación del mismo, este no es una compilación oficial y podría no estar completamente libre de errores inadvertidos; los cuales al ser tomados en conocimiento son corregidos de inmediato (email: biblioteca OGP). En el mismo se han incorporado todas las enmiendas hechas a la Ley a fin de facilitar su consulta. Para exactitud y precisión, refiérase a los textos originales de dicha ley y a la colección de Leyes de Puerto Rico Anotadas L.P.R.A.. Las anotaciones en letra cursiva y entre corchetes añadidas al texto, no forman parte de la Ley; las mismas solo se incluyen para el caso en que alguna ley fue derogada y ha sido sustituida por otra que está vigente. Los enlaces al Internet solo se dirigen a fuentes gubernamentales. Los enlaces a las leyes enmendatorias pertenecen a la página web de la Oficina de Servicios Legislativos de la Asamblea Legislativa de Puerto Rico. Los enlaces a las leyes federales pertenecen a la página web de la US Government Publishing Office GPO de los Estados Unidos de Norteamérica. Los enlaces a los Reglamentos y Ordenes Ejecutivas del Gobernador, pertenecen a la página web del Departamento de Estado del Gobierno de Puerto Rico. Compilado por la Biblioteca de la Oficina de Gerencia y Presupuesto. Véase además la Versión Original de esta Ley, tal como fue aprobada por la Legislatura de Puerto Rico. ⇒⇒⇒ Verifique en la Biblioteca Virtual de OGP la Última Copia Revisada (Rev.) para esta compilación. Ir a: www.ogp.pr.gov ⇒ Biblioteca Virtual ⇒ Leyes de Referencia—DEUDA PÚBLICA. Rev. 15 de abril de 2024 www.ogp.pr.gov Página 14 de 14