I 

114TH CONGRESS 

1ST SESSION H. R. 3725 

To authorize the Secretary of the Treasury to guarantee principal and interest 

payments on bonds issued by the government of the U.S. territory 

of Puerto Rico, including its public corporations and instrumentalities, 

on the condition that the government of the territory demonstrates meaningful improvement in the management of its public finances, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 8, 2015 

Mr. PIERLUISI introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To authorize the Secretary of the Treasury to guarantee 

principal and interest payments on bonds issued by the 

government of the U.S. territory of Puerto Rico, including its public corporations and instrumentalities, on the 

condition that the government of the territory demonstrates meaningful improvement in the management 

of its public finances, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Puerto Rico Financial 

3 Improvement and Bond Guarantee Act of 2015’’. 

4 SEC. 2. PURPOSE AND SENSE OF CONGRESS. 

5 (a) PURPOSE.—The purpose of this Act is to em6 power the Secretary of the Treasury to facilitate access 

7 of the government of Puerto Rico to capital markets for— 

8 (1) immediate short-term financing needs, 

9 (2) capital expenditures, and 

10 (3) debt refinancing, 

11 by guaranteeing the principal and interest payments on 

12 bonds issued by the government of Puerto Rico upon de13 termination by the Secretary that certain conditions relat14 ing to financial accountability in Puerto Rico have been 

15 met. 

16 (b) SENSE OF CONGRESS.—It is the sense of Con17 gress that— 

18 (1) Puerto Rico, as a territory, is treated in19 equitably and inconsistently by Federal law and pol20 icy, and that such treatment has contributed signifi21 cantly to the current financial distress of the govern22 ment of Puerto Rico; 

23 (2) consequently, there exists a Federal respon24 sibility and need to help the government of Puerto 

25 Rico gain access to the capital markets on reason26 able terms; 


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1 (3) stronger financial controls, budgeting proc2 esses, and accountability measures should be imple3 mented by the government of Puerto Rico in order 

4 to improve its financial standing and creditworthi5 ness; and 

6 (4) it is in the national interest of the United 

7 States to reduce the risk of default by the govern8 ment of Puerto Rico on its bond payments, to en9 sure essential public services can be provided in the 

10 territory, and to promote economic growth and re11 sponsible borrowing in the territory. 

12 SEC. 3. DEFINITIONS. 

13 For purposes of this Act: 

14 (1) COST.—With respect to a guarantee, the 

15 term ‘‘cost’’ has the meaning given such term under 

16 section 502 of the Federal Credit Reform Act of 

17 1990 (2 U.S.C. 661a). 

18 (2) GUARANTEE.—The term ‘‘guarantee’’— 

19 (A) has the meaning given the term ‘‘loan 

20 guarantee’’ in section 502 of the Federal Credit 

21 Reform Act of 1990 (2 U.S.C. 661a); and 

22 (B) includes a loan guarantee commitment 

23 (as defined in such section 502). 

24 (3) INSTRUMENTALITY THEREOF.—With re25 spect to Puerto Rico, the term ‘‘instrumentality 


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1 thereof’’ means any political subdivision, instrumen2 tality, or instrumentality of a political subdivision of 

3 Puerto Rico. 

4 (4) OBLIGATION.—The term ‘‘obligation’’ 

5 means a bond that is guaranteed under this Act. 

6 (5) SECRETARY.—The term ‘‘Secretary’’ means 

7 the Secretary of the Treasury. 

8 TITLE I—FINANCIAL IMPROVE9 MENT AND BOND GUARAN10 TEES FOR PUERTO RICO 

11 SEC. 101. BOND GUARANTEES. 

12 (a) GENERAL AUTHORITY.—The Secretary of the 

13 Treasury is authorized to guarantee bonds issued by the 

14 government of Puerto Rico or any instrumentality thereof 

15 that are issued solely for the purpose of financing capital 

16 projects or refinancing existing debt. 

17 (b) LIMITATION.—The authority granted under sub18 section (a) does not extend to bonds issued to finance 

19 operational expenses, except with respect to tax revenue 

20 anticipation notes. 

21 SEC. 102. TERMS AND CONDITIONS. 

22 (a) IN GENERAL.—A guarantee made under this Act 

23 may guarantee up to 100 percent of the principal and in24 terest of the obligation. 


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1 (b) RECEIPT OF REQUEST.—A guarantee may only 

2 be made under this Act if— 

3 (1) the Secretary first receives a request for 

4 such guarantee, in writing, from the Governor of 

5 Puerto Rico, along with the terms, including the 

6 purpose and amount, of the bond to be issued for 

7 which the guarantee is requested; and 

8 (2) the Secretary determines, pursuant to sec9 tion 103(b), that the government of Puerto Rico 

10 and, if applicable, any instrumentality thereof, has 

11 demonstrated meaningful improvement in the man12 agement of its finances. 

13 (c) OBLIGATION REQUIREMENTS.— 

14 (1) MATURITY.—An obligation shall require full 

15 repayment over a period not to exceed 30 years. 

16 (2) INTEREST RATE.—An obligation shall bear 

17 interest at a rate that does not exceed a level that 

18 the Secretary determines appropriate. 

19 (d) AGREEMENT DOCUMENT.— 

20 (1) MINIMUM REQUIREMENTS.—A guarantee 

21 agreement shall be written and executed for any 

22 guarantee made under this Act in order that such 

23 guarantee may have legal effect, and, at a minimum, 

24 shall include appropriate language detailing the 


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1 terms and conditions set forth in this Act for such 

2 guarantee. 

3 (2) ADDITIONAL TERMS AND CONDITIONS.—A 

4 guarantee agreement may include such detailed 

5 terms and conditions in addition to those set forth 

6 in this section and as the Secretary determines ap7 propriate to protect the interests of the United 

8 States in case of default and to ensure repayment. 

9 (3) AUTHORITY OF THE SECRETARY.—The Sec10 retary is authorized to agree to any modification, 

11 amendment, or waiver or any such term or condition 

12 as the Secretary deems desirable to protect the in13 terests of the United States. 

14 (e) ADMINISTRATIVE EXPENSES.— 

15 (1) IN GENERAL.—The Secretary shall charge 

16 and collect fees for guarantees made under this Act 

17 in amounts the Secretary determines are sufficient 

18 to cover applicable administrative expenses. 

19 (2) AVAILABILITY.—Fees collected under this 

20 subsection shall be available to the Secretary, with21 out further appropriation, to pay for the administra22 tive expenses of carrying out this Act. 

23 (f) LIMITATION.—A guarantee may be made under 

24 this Act only if the Secretary determines that there is a 


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1 reasonable prospect of repayment of the principal and in2 terest on the bond to be guaranteed. 

3 SEC. 103. FINANCIAL IMPROVEMENT GUIDELINES AND DE4 TERMINATION. 

5 (a) EXAMINATION, GUIDELINES, AND RECOMMENDA6 TIONS.— 

7 (1) IN GENERAL.—Not later than 120 days 

8 after the date of the enactment of this Act, the Sec9 retary shall— 

10 (A) examine the financial management 

11 practices of the government of Puerto Rico and 

12 instrumentalities thereof and identify specific 

13 areas in such practices that may need improve14 ment; and 

15 (B) establish guidelines and recommenda16 tions for the government of Puerto Rico and in17 strumentalities thereof to use as a basis for 

18 making improvements in its financial manage19 ment practices and in determining whether to 

20 make a guarantee requested under section 

21 102(b). 

22 (2) CRITERIA.—The guidelines and rec23 ommendations required under paragraph (1) shall 

24 address, at a minimum, the following criteria, where 

25 applicable: 


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1 (A) Fiscal stability and operational effi2 ciency. 

3 (B) Reduction in deficits and debt. 

4 (C) Accuracy in estimating revenues and 

5 expenditures. 

6 (D) Collection of taxes due. 

7 (E) Management of Federal grant monies. 

8 (F) Quality of financial controls, state9 ments, and reporting. 

10 (G) Use of information technology. 

11 (H) Regulations and licensing require12 ments affecting business establishment, expan13 sion, and operation. 

14 (3) REVISIONS.—The Secretary may revise such 

15 guidelines and recommendations as the Secretary de16 termines appropriate. 

17 (4) TRANSMISSION AND PUBLIC NOTICE OF

18 GUIDELINES AND RECOMMENDATIONS.—The Sec19 retary shall, within 10 days of establishing or revis20 ing guidelines or recommendations under this sub21 section— 

22 (A) transmit such guidelines and rec23 ommendations to the Governor of Puerto Rico 

24 and the Congress; 


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1 (B) publish such guidelines and rec2 ommendations in the Federal Register; and 

3 (C) make such guidelines and rec4 ommendations available to the public on the 

5 website of the Department of the Treasury. 

6 (b) FINANCIAL IMPROVEMENT DETERMINATION.— 

7 (1) DETERMINATION.—The Secretary shall, for 

8 purposes of section 102(b)(2), determine whether 

9 the government of Puerto Rico and, if applicable, 

10 any instrumentality thereof, has demonstrated 

11 meaningful improvement in the management of its 

12 finances. 

13 (2) BASIS FOR DETERMINATION.—In making a 

14 determination under paragraph (1), the Secretary 

15 shall take into account the guidelines and rec16 ommendations established under subsection (a) and 

17 such other criteria as the Secretary determines ap18 propriate. 

19 (3) NOTIFICATION.—If, under paragraph (1), 

20 the Secretary determines that the government of 

21 Puerto Rico and, if applicable, any instrumentality 

22 thereof, has not demonstrated meaningful improve23 ment in the management of its finances, the Sec24 retary shall— 


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1 (A) notify the Governor of Puerto Rico and 

2 the Congress, in writing, of the Secretary’s de3 cision and the basis for such decision; 

4 (B) publish a notice of such determination 

5 in the Federal Register; 

6 (C) make such notice available to the pub7 lic on the website of the Department of the 

8 Treasury; 

9 (D) make recommendations to the Gov10 ernor of Puerto Rico on specific ways the gov11 ernment of Puerto Rico and, if applicable, any 

12 instrumentality thereof, can demonstrate mean13 ingful improvement; and 

14 (E) if the Secretary determines it appro15 priate, make recommendations to— 

16 (i) the Congress about specific legisla17 tion that can be enacted to improve the fi18 nances, financial stability, and financial 

19 management practices of the government 

20 of Puerto Rico and that would help the 

21 government of Puerto Rico or any instru22 mentality thereof demonstrate meaningful 

23 improvement and implement the rec24 ommendations in the areas identified by 


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1 the Secretary under subsection (a)(1)(B); 

2 and 

3 (ii) the heads of Federal departments 

4 and agencies other than the Department of 

5 the Treasury about specific administrative 

6 actions that could be taken to improve the 

7 finances, financial stability, and financial 

8 management practices of the government 

9 of Puerto Rico and that would help the 

10 government of Puerto Rico or any instru11 mentality thereof demonstrate meaningful 

12 improvement and implement the rec13 ommendations in the areas identified by 

14 the Secretary under subsection (a)(1)(B). 

15 SEC. 104. PUBLIC NOTICE. 

16 Upon making any guarantee under this Act, the Sec17 retary shall publish notice of such action, along with the 

18 results of the determination made under section 103(b), 

19 in the Federal Register and make such information avail20 able to the public on the website of the Department of 

21 the Treasury. 

22 SEC. 105. LOAN GUARANTEE FUNDING. 

23 There are appropriated to the Secretary such sums 

24 as may be necessary for the cost, as defined in section 

25 502 of the Congressional Budget Act of 1974, of bond 


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1 guarantees made under this title. The Secretary may make 

2 such bond guarantees notwithstanding subsections (b) and 

3 (d) of section 504 of the Federal Credit Reform Act of 

4 1990 (2 U.S.C. 661c). 

5 TITLE II—TECHNICAL 

6 ASSISTANCE FOR PUERTO RICO 

7 SEC. 201. TECHNICAL ASSISTANCE. 

8 The Secretary is authorized to provide advice and 

9 technical assistance to the government of Puerto Rico and 

10 instrumentalities thereof about ways and means to dem11 onstrate meaningful improvement in managing its fi12 nances (as described under section 103). 

13 TITLE III—PURCHASE AND SALE 

14 OF PUERTO RICO BONDS 

15 SEC. 301. AMENDMENT TO THE FEDERAL RESERVE ACT. 

16 Section 14(b)(1) of the Federal Reserve Act (12 

17 U.S.C. 355(1)) is amended by inserting after ‘‘continental 

18 United States’’ the following: ‘‘or Puerto Rico’’. 

Æ 


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