EXHIBIT B

(HTA Fiscal Plan)

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Exhibit B Page 1 of 58
PRHTA Fiscal Plan 2017 - 2026 Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 2 of 58
Disclaimer

2

A final fiscal plan is subject to the approval of the Board of Directors of the Puerto Rico Highway and Transportation Authority as per Law 74 June 23, 1965

as amended and the PRHTA Bylaws.

The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), the Puerto Rico Highway and Transportation Authority (the “PRHTA”), the

Government of Puerto Rico (the “Government”), and each of their respective officers, directors, employees, agents, attorneys, advisors, members, partners

or affiliates (collectively, with AAFAF, PRHTA and the Government instrumentalities the “Parties”) make no representation or warranty, express or implied,

to any third party with respect to the information contained herein and all Parties expressly disclaim any such representations or warranties.

The Parties do not owe or accept any duty or responsibility to any reader or recipient of this presentation, whether in contract or tort, and shall not be

liable for or in respect of any loss, damage (including without limitation consequential damages or lost profits) or expense of whatsoever nature of such

third party that may be caused by, or alleged to be caused by, the use of this presentation or that is otherwise consequent upon the gaining of access to

this document by such third party.

This document does not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls or

other attestation or review services in accordance with standards established by the American Institute of Certified Public Accountants or any other

organization. Accordingly, the Parties do not express an opinion or any other form of assurance on the financial statements or any financial or other

information or the internal controls of the Government and the information contained herein.

Any statements and assumptions contained in this document, whether forward-looking or historical, are not guarantees of future performance and involve

certain risks, uncertainties, estimates and other assumptions made in this document. The economic and financial condition of the Government and its

instrumentalities is affected by various financial, social, economic, environmental and political factors. These factors can be very complex, may vary from

one fiscal year to the next and are frequently the result of actions taken or not taken, not only by the Government and its agencies and instrumentalities,

but also by entities such as the government of the United States. Because of the uncertainty and unpredictability of these factors, their impact cannot be

included in the assumptions contained in this document. Future events and actual results may differ materially from any estimates, projections, or

statements contained herein. Nothing in this document should be considered as an express or implied commitment to do or take, or to refrain from taking,

any action by AAFAF, the PRHTA, the Government, or any government instrumentality in the Government or an admission of any fact or future event.

Nothing in this document shall be considered a solicitation, recommendation or advice to any person to participate, pursue or support a particular course

of action or transaction, to purchase or sell any security, or to make any investment decision.

By accepting this document, the recipient shall be deemed to have acknowledged and agreed to the terms of these limitations.

This document may contain capitalized terms that are not defined herein, or may contain terms that are discussed in other documents or that are

commonly understood. You should make no assumptions about the meaning of capitalized terms that are not defined, and you should consult with advisors

of AAFAF should clarification be required.

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Exhibit B Page 3 of 58
Table of Contents

3

I. Executive Summary

II. Description of PRHTA

III. Infrastructure Agenda 

IV. Current Situation with Baseline Financial Projection

V. Fiscal Measures with Financial Projections

VI. Debt Sustainability

VII. Liquidity Situation

VIII. Implementation Plan

IX. Appendix: PRHTA’s Mass Transit Operations Overview (including “Tren Urbano”)

X. Appendix: Financial Projections Notes on Base Case Scenario

XI. Appendix: Additional Information

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Exhibit B Page 4 of 58
I. Executive Summary

4

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Exhibit B Page 5 of 58
Executive Summary

5

• The Puerto Rico Highway and Transportation Authority (PRHTA) is a public corporation responsible for developing, operating and 

maintaining Puerto Rico’s toll road network, major highways and mass transportation facilities. The current Administration has 

developed an aggressive plan to obligate $135 million annually from Federal Highway Administration (FHWA) and $20 million from 

Federal Transit Administration (FTA) for projects meeting four key objectives including: (a) transit security and safety projects, (b) 

improvement of existing transportation infrastructure, (c) complete highway systems, and (d) congestion mitigation. Although this 

has not been the norm of the agency, PRHTA had difficulties in obligating and deploying federal funds during the last 3 years.

• In order to maximize the infrastructure development in Puerto Rico, PRHTA is revamping its operations and streamlining its project 

delivery process. With this in mind, A Memorandum of Understanding was signed in February 2016 between Secretary of the 

Federal Department of Transportation and the Government of Puerto Rico geared at improving PRHTA’s operational effectiveness 

through several key initiatives, some of which are already in progress. 

• PRHTA’s current fiscal situation reflects a $4.49 financial gap for the next 10 year mostly impacted by the clawback provision which 

redirects 74%, or about $4.57 billion, of its operating revenues to the Central Government. Bondholders of the PRHTA are expected 

to cease receiving money for debt repayment by July 2017, when the reserve funds that have been used until now run out. In light of 

this financial reality and in accordance with the current Administration’s public policy, PRHTA will implement several measures 

geared at optimizing its operations with fiscal measures with an impact representing $616 million during the 10 year, or 14%, of the 

current financial gap.

• A default of PRHTA with any of its obligations may trigger questions as to its financial capacity, a key requirement to receiving 

applicable grants from the FHWA and FTA. Furthermore, in the case of FTA, the reimbursement of previous funds may be requested 

if the use of an asset, previously federally funded, is discontinued. PROMESA establishes a process for the restructuring of debt 

(voluntary or involuntary) towards sustainable levels but not before the certification of its Fiscal Plan by the Oversight Board, among 

other requirements. The Government of Puerto Rico and its instrumentalities (including PRHTA) expect to continue this process in

order to strengthen its financial capacity. PRHTA will also continue to work with all the federal agencies (including FTA & FHWA) as 

Partners throughout this process in order to achieve our common financial and operational objectives.

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Exhibit B Page 6 of 58
II. DESCRIPTION OF PRHTA

6

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Exhibit B Page 7 of 58
Puerto Rico Highway and Transportation Authority

7

• The Puerto Rico Highway and Transportation Authority is a public corporation founded with the purpose of continuing the government’s effort of 

providing the public with the best highways, easing the flow of vehicles and minimizing the risks and inconveniences that traffic congestions may cause.

• PRHTA is charged with constructing, operating, and maintaining Puerto Rico’s toll road network, major highways and mass transportation facilities, which 

are financed by revenue bonds, federal grants and specified tax revenues.

• The Puerto Rico State Highway System consists of a total of 4,814 miles:

Lead Puerto Rico towards economic development through an efficient 

transportation system, safely and in accord with the environment, while 

procuring the delivery of excellent service

Source: http://www.dtop.gov.pr/historia.asp

About PRHTA

Primary Roads – 650 miles

Secondary Roads – 1,000 miles

Tertiary Roads – 3,164 miles

Mission Vision

Develop and promote an integrated transportation system that, along 

with a highway infrastructure and service delivery, will facilitate the 

economic development of Puerto Rico in harmony with the environment

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Exhibit B Page 8 of 58
PRHTA: An Evolving Mission

Source: http://www.dtop.gov.pr/carretera/det_content.asp?cn_id=217 8

1965

Creation of the 

Puerto Rico 

Highway Authority

1968

• Highway Authority was 

amended (Act No. 112)

• The first project: Bridge 

over Rio Grande de 

Manatí is completed.

• Establishment of New 

Project’s Bid Board

• The construction of the 

first toll highway 

Autopista Las Americas, 

PR-52

1971

• PRHTA falls under DTOP’s 

umbrella through the 

Reorganization Plan Num

6, conceding its powers 

and duties to the 

Secretary

• Integration of the mass 

transportation sector 

through the successful 

establishment of 

exclusive lanes project for 

AMA buses is put in place

1991

The Secretary of DTOP grants the 

name Highway and Transportation 

Authority through Law 1, becoming 

the principal promotor and 

administrator of mass transportation 

public policies

1994

The construction of Teodoro 

Moscoso Bridge is completed, 

becoming the first highway 

privatization project in PR and 

the US with an investment of 

$126M

1990

Through Law 4, the Authority is 

empowered to implement P3 contracts 

with private entities for the construction, 

operation and maintenance of highways, 

bridges, avenues and any other traffic 

installation

1998

PRHTA approved resolution 98-06 

which included a change in the 

definition and name of “Traffic 

Facilities” to “Transportation 

Facilities.” Under this new definition, 

Tren Urbano and other transit 

facilities are included

2000

Law 207 vests the Authority with 

the power to directly invest in the 

development of parcels around 

train stations or any special district

2016

• Puerto Rico Oversight 

Management and 

Economic Stability ACT 

(PROMESA) becomes 

effective

• Memorandum of 

Understanding (MOU) is 

signed by the PR 

governor and US Dept. of 

Transportation

2015

Beginning of Puerto 

Rico’s bond revenue 

clawbacks

2014

• Toll Credits where implemented to benefit PRHTA by 

using the credits to substitute the required local share 

on future Federally aided projects

• Law 41-2014 amended the Organic Act of PRHTA to 

vest its powers in a Board of Directors

2011

Concession Agreement granted to Autopista

Metropolitana de PR, LLC to operate and maintain 

highways PR-5 and PR-22

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Exhibit B Page 9 of 58
Current organization has a total head count of 1,485 as of February 2017

9

Oficina del 

Secretario

Directoría de 

Infraestructura

Oficina del 

Director 

Ejecutivo

Directoría de 

Tránsito y 

Autopistas

Directoría de 

RH y Asuntos 

Laborales

Directoría de 

Administración 

y Finanzas

Directoría 

Alternativa 

de 

Transporte 

Integrado

Oficinas de 

Estimados y 

Subastas

Oficinas de 

Pruebas de 

Materiales

Oficinas de 

Asuntos 

Laborales

Oficinas de 

Inventario de 

Puentes

Oficinas de 

Diseño de 

Puentes y 

Estructuras

Oficinas de 

Coordinación 

Federal

Oficinas de 

Enlace 

Federal

Oficinas de 

Seguridad 

Interna

Oficinas de 

Servicios al 

Ciudadano

Oficinas de 

Autoexpreso

Oficinas de 

Administración 

de Propiedades

Oficinas de 

Comunicaciones

Oficinas de 

Derechos 

Civiles

Oficinas de 

Asesoría 

Legal

Oficinas de 

Auditoría 

Interna

Áreas de 

Tecnologías 

de 

Información

Área de 

Finanzas

Área de 

Administración

Área de 

Recursos 

Humanos

Área de 

Ingeniería de 

Transito y 

Operaciones

Área de 

Autopistas

Área de 

Programación 

y Estudios 

Especiales

Área de 

Diseño

Área de 

Adquisiciones 

de 

Propiedades

Área de 

Construcción

Subdirector 

Ejecutivo

Special relation between administrative and finance phases

Special relation between advisory offices that directly report to the Secretary and, at the 

same time, provide services and advice to the Executive Director

Special relationship of counseling and coordination between offices or areas

Source: PRTHA Management

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Exhibit B Page 10 of 58
PRHTA as a grantee of the Federal Government

PRHTA receives federal funds from two agencies, Federal Transit Administration (FTA) and Federal Highway Administration (FHWA). This 

funding requires that the grantee demonstrates specific and well defined technical, financial and organizational capabilities. If the grantee 

does not meet these capabilities, federal funds will not be allocated.

10

Description

Compliance

Requirements

Risks of noncompliance

FHWA FTA

Provides financial and technical assistance to local public 

transit systems, including buses, subways, light rail, commuter 

rail, trolleys and ferries. The FTA also oversees safety measures 

and helps develop next-generation technology research.

To become a grantee of FTA Funding, PRHTA is required to meet 

the following minimum criteria:

• Legal Capacity

• Technical Capacity 

• Proven Financial Capacity 

• Disadvantage Business Enterprise 

• American with Disabilities Act Compliance 

• Title IV (Civil Rights) 48 U.S.C §5301 et seq.

The default of PRHTA with any of its obligations (mainly bond 

debt) may trigger questions as to its financial capacity leading to 

a potential loss of federal funds.

If, during the useful life of the property, the recipient 

unreasonably delayed or failed to use the federally assisted 

property for its originally intended purpose, recipients may be 

required to return the entire amount of federal assistance 

spent on the Award or federally assisted property.

Federal Agency within the U.S Department of Transportation responsible for 

administering the federal-aid highway program and highway transportation 

programs of the Department of Transportation.

According to 23 U.S.C. § 302 and Title 23 of the Code of Federal Regulations, any 

state needs to be suitably equipped and organized to discharge to the 

satisfaction of the Secretary the duties required by this title. In the following 

areas: 

• Payment procedures- Chapter 1, subchapter 8

• Planning/Environmental- Section 135, Chapter I, Subchapter E

• Design- Highway Standard/ Design Criteria- Section 109, Chapter I, 

Subchapter G

• Construction and Contracting Procedures- Chapter I, Subchapter G

• Transportation Infrastructure Management- Chapter I, Subchapter F

• Maintenance- Properly Maintenance all Roads- Section 116

• Highway Safety- Section 402, Chapter I, Subchapter II

• Right of Way and Environment- Chapter I, Subchapter H

Non compliance with federal laws and regulations or diversion of highway 

revenues may result in:

• Suspension of Funding

• Lack of Maintenance and essential services that will cause highways to 

deteriorate

• Transportation of goods and emergency services will be hindered

Max Available 

Funding

$150 million/year* $20 million/year*

Source: USC 23; Title 23 CFR; PRHTA Management Assessment

* May not equal that of obligated funds and/or actual expenditures

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Exhibit B Page 11 of 58
III. INFRASTRUCTURE AGENDA

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Exhibit B Page 12 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Funds: Projects:

• Obligate as much Federal Funds 

as possible to support economic 

growth 

• Current Federal match 

percentage is 80% of project 

costs for eligible projects, with 

state match being set at 20%

• Currently, PRHTA uses toll credits 

for its state match percentage.

• Future initiatives to increase 

federal funding include:

• Congress approval to begin 

contributing to Highway Trust 

Fund

• Decrease current penalties

Focus:

Planned projects for the next four 

years will mainly focus on:

• Highway Safety Projects

• Improvement of existing 

transportation 

infrastructure

• Complete Highway Systems

• Congestion Mitigation

Infrastructure Agenda

PRHTA has established an aggressive infrastructure agenda to maximize federal funds obligated from FHWA1 and FTA1, as can be seen in the 

Capital Improvement Plan (CIP), which includes active and programmed projects. This infrastructure plan follows a structured approach aimed 

at maximizing the impact of available resources to support economic growth.

12

1 Total available FTA & FWHA funding may not equal that of obligated funds and/or actual expenditures

Source: CIP 2017-2020; PRHTA Management Assessment

Strategy:

• Continue aggressive plan to 

maximize funds and develop 

best in class infrastructure

• Utilize P3’s and outsourcing as 

strategies to achieve a more 

efficient and modern 

infrastructure, in accordance 

with Puerto Rico’s government 

public policies

• Expedite project delivery 

through:

• Engage expedited design 

services to accelerate 

preliminary designs and 

obligate funds

• Increase Project supervision 

through additional qualified 

resources

• Pursue Puerto Rico’s new 

infrastructure reform, when 

applicable

• The FY 2017 CIP emphasizes highway 

reconstruction projects with a Data Driven 

Approach focusing on high crash locations and 

critical condition roadways with emphasis in 

segments in the National Highway System,

Total allocated funds

$ millions

$340

$274

FY 2018 FY 2019

$135

FY 2020

$404

FY 2017

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Exhibit B Page 13 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Infrastructure Agenda: Fund Allocation Profile

13 Source: CIP April 2017 

$27

$68

$1 $14

$135

$3 $27

$105

$135

$3

$105 $68

$1 $14 $53 $53

$16 $34

$269

$46 $8 $46

$152 $220

$205

$9 $51

$144

$206

$20

$67

$1

Allocated FHWA Funds

$ millions

Construction Design ROW

$340

$274

FY 2018 FY 2019

$135

FY 2020

$404

FY 2017

PRHTA is currently working on an aggressive capital improvement plan which includes active and planned projects with a total investment 

amount of $1.1 billion in a 4 year period.

ACTIVE Projects

PLANNED Projects

TOTAL Projects

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Exhibit B Page 14 of 58
Infrastructure Agenda: Strategic Projects

14

• Extension of PR-22 from 

Hatillo to Aguadilla 

(Northwest Corridor)1

• PR-5 Extension Toa 

Alta- Bayamón

• Reversible Overpasses 

with Dynamic Tolling -

Efficient Peak Period 

Congestion Relief in 

Critical Intersections

• Reconstruction and 

Maintenance of 

Primary Highway 

Network (PR-52, 

PR-2, PR-20, PR-53, 

PR-66) based on 

PPPP

$500 $15/year

$170 $8/year

$250 - based on 

10 intersections at 

$25 per 

intersection

$15/year

• $300-

Reconstruction

• $10/year -

Maintenance

$4/year with 

3% annual 

growth

Project Cost

 $ millions

Project Revenues

$ millions

Key Projects

Strategic Projects

1 Numbers revised as per Northwestern Corridor: Desirability and Convenience Final Report, April 2016, where 

study suggests construction of Hatillo to Quebradilla and Aguadilla By Pass, both with toll revenues

Source: STIP 2017-2020; PRHTA Management Assessment

Strategic Projects to be incorporated in future FY STIP 

emphasize new toll roads, dynamic toll lanes/flyovers 

and reconstruction and maintenance of existing toll 

roads which will include new revenues to enhance 

private sector participation through P3, APP-P or 

Outsourcing

General Strategy on Key Projects

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Exhibit B Page 15 of 58
IV. CURRENT SITUATION WITH BASELINE FINANCIAL 

PROJECTION

15

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Exhibit B Page 16 of 58
PRHTA’s current fiscal situation with clawback provision impact

16

1 As stated in the Puerto Rico Constitution, Article VI, Section 2 “The Secretary of the Treasury may be required to apply the 

available revenues including surplus to the payment of interest on the public debt and the amortization thereof in any case 

provided for by Section 8 of this Article VI at the suit of any holder of bonds or notes issued in evidence thereof.”

Current fiscal situation continues to be dire for PRHTA and was recently aggravated by the need of the Government 

of Puerto Rico to clawback revenues1 pledged to the Authority. These revenues are now used within the Government 

of Puerto Rico. Government of Puerto Rico has collected $310 million as of June 30, 2016 under this clawback

provision.

Source: 2016 PRHTA Unaudited Financial Statements

Statement of 2016 2015 2014 2013 2012

Revenues and Expenses UNAUDITED UNAUDITED AUDITED AUDITED AUDITED

Total operating revenues $ 210.8 $ 268.9 $ 213.7 $ 184.9 $ 201.6

Total operating expenses (186.3) (227.5) (391.5) (314.4) (275.1)

Depreciation and amortization (451.8) (448.7) (448.0) (432.0) (438.2)

Operating loss (427.3) (407.3) (625.8) (561.5) (511.8)

Non-operating revenues 478.2 518.2 531.9 292.6 292.6

Non-operating expenses (329.0) (419.4) (324.7) (294.3) (528.3)

Loss before capital contribution (278.0) (308.6) (418.6) (563.2) (747.5)

Transfers and Capital 

contributions 58.4 358.7 228.4 428.9 306.5

Change in net position (219.6) 50.1 (190.2) (134.3) (441.0)

Net position at beginning of year 3,027.6 2,977.5 3,167.7 3,302.0 3,742.9

Net position at end of year $ 2,807.9 $ 3,027.6 $ 2,977.5 $ 3,167.7 $ 3,302.0

June 30

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Exhibit B Page 17 of 58
PRHTA’s current operational situation and MOU Objectives

Following years of operational and organizational challenges to effectively and efficiently deploy federal funds in 

compliance for with Federal requirements, PRTHA and FHWA signed a Memorandum of Understanding1 on 

February 29th 2016 geared at revamping PRTHA’s Project and Program Delivery capabilities.

17

PRHTA Challenges MOU between PRHTA and FHWA

 More than $400 million in available funding is

not deployed due to delayed processes for

project advancement, project completion and

provider payments

Outdated and non-standard documentation and

requirements

 Lack of communication and feedback

integration between planning and construction

departments

 Increased project costs and overruns from

original budgets

 Misalignment of current capabilities with

needed core competencies

 Establishes procedures, systems and project

delivery objectives for the Puerto Rico Highway

Program

 Identifies roles , responsibilities and actions for

the PRHTA and the FHWA to accelerate the

funding, planning, design and construction of

various highway, bridge and transportation

improvement projects

 Improves the economic vitality of the

Government of Puerto Rico and serves as a

catalyst for sustainable job growth associated

with highway construction in Puerto Rico

1 MOU signed by the government of Puerto Rico and Federal Highway Administration

Source: Signed Memorandum of Understanding MOU-PR2016-02-29-094734

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Exhibit B Page 18 of 58
MOU requirements and currents status of initiatives

18

Toll Credits

Organizational 

Capacity 

Development

Expediting 

Project Delivery

Description Status

• Revise and submit to FHWA its billing process to ensure prompt payment to contractors as 

follow:

− Paying all contractors by EFT

− Paying all contractors within 40 days of receipt of invoices

− Tracking status of payments using electronic method acceptable to FHWA

− Paying all contractors on the first business day after funds are received from FHWA 

• Validate that PRHTA’s existing toll credit balance complies with current FHWA guidance (the 

current guidance at the time of execution of this Agreement is “Interim Guidance- Toll Credit 

for non-federal Share, Nov 20, 2015)

• Identify that amount of toll credits available for use by PRHTA, and

• Identify modifications that PRHTA must make to its processes for approving, tracking and 

reconciling toll credit usage

• Engage a management consultant to assist the PRHTA to review and develop plans, guidelines, 

SOP’s and recommendations for PRHTA’s project billing, project delivery process, contracts, 

training, planning programs and quality assurance process

• Procure services to improve systems such as email communication, electronic project 

monitoring system, improvements to financial billing system in order to reduce the PRHTA’s 

obligated but unexpected balances.

• Submit to the FHWA a report identifying the reasons for the delay of every project that the 

PRHTA has obligated, but for which less than 5% of funds have been expended since the date a 

recorded obligation existed

• Develop and Submit to the FHWA a schedule with milestones to accelerate obligation of its 

annual Federal-aid allocation to ensure all funds are properly obligated before redistribution of 

Federal-aid obligation limitation

E-Business Suite contract is being 

undertaken using sole sourcing 

strategy and professional services 

hiring to expedite its 

implementation.

Notice to Proceed provided on 

3/31

Consultant has begun with 

preliminary interviews and data 

gathering

The email migration started on 12-

12-16 and was completed in 

February 2017

The PMIS was signed and approved 

while E-Bid System is waiting for 

approval based on new 

requirements of PR Law 03-2017

Source: Signed Memorandum of Understanding MOU-PR2016-02-29-094734 Not Started In Process Completed

Initiative

Federal Aid 

Billing 

Procedures

Since inception only $91M in toll 

credits have been claimed, there 

is an outstanding balance of 

$665M waiting validation for 

future federally aided projects.

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Exhibit B Page 19 of 58
MOU initiatives encompass all elements needed to create an effective 

organization

Source: Signed Memorandum of Understanding MOU-PR2016-02-29-094734 19

Federal Aid Billing Procedures Toll Credits Organizational Capacity Development 

(LEAN) Expediting Project Delivery

• Develop an efficient billing 

process with specific goals to 

ensure on-time payment to 

contractors

• Ensure best practices and 

guarantee financial accuracy and 

consistency 

• Identify improvements for 

the approval, tracking and 

reconciling of toll credit usage

• Implement a LEAN Project delivery 

and billing process that will result in 

higher quality projects, faster project 

completion and more efficient 

delivery

• Establish processes to provide 

continuous visibility to under 

performance projects and allow 

for effective development of 

action plans

• Develop capacity analysis to 

correctly size the needed 

organization to support the process

• Establish measurable goals tied 

to the development of the 

agency’s goals and objectives

• Tracking the status of payments 

with electronic methods

• Establish measurable performance 

levels and KPI’s to improve process 

visibility and track whether projects 

are achieving targets

• Develop an effective method for 

capturing voice of the client to 

support performance measurement 

and strategic decision making

• Establish critical KPI’s that 

are essential for auditing

and validating compliance 

with FHWA guidance

• Promote collaborative culture

and communication

• Establish agenda for workshops 

and trainings to develop core 

competencies and deliver 

business value 

• Implementation of systems for 

email and electronic 

monitoring to increase visibility 

and communication between 

areas

• Train personnel on toll 

audit process to ensure 

compliance

Processes

Organization

Infrastructure

Culture

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Exhibit B Page 20 of 58
Financial Sustainability, Federal Agencies & PROMESA

Bondholders of the PRHTA would cease to receive money for debt repayment by July 2017, when the reserve funds 

that have been used until now run out. Although PRHTA stopped remitting payments to the trust, the trustee has 

been using a reserve fund to comply with bondholder payments. 

20

 PRHTA receives about $155 millions per year from FTA and FHWA. This funding requires that the grantee

demonstrates specific and well defined technical, financial and organizational capabilities. If the grantee does not

meet these capabilities, there is a substantial risk that federal funds will not be allocated. A default of PRHTA

with any of its obligations may trigger questions as to its financial capacity. Furthermore, in the case of FTA, the

reimbursement of previous funds may be requested if the transportation use is discontinued.

 The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) establishes a process for the

restructuring of debt (voluntary or involuntary) towards sustainable levels but not before the certification of its

Fiscal Plan by the Oversight Board, among other requirements. The Government of Puerto Rico and its

instrumentalities (including PRHTA) expect to continue this process in order to strengthen its financial capacity.

We will continue to work with all the federal agencies (including FTA & FHWA) as Partners throughout this

process in order to achieve our common objectives.

Source: Puerto Rico Oversight, Management and Economic Stability Act (PROMESA)

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 21 of 58
Overview of PRHTA’s Projected Financial Gap over 10 years

21

$2,088

$4,572

$3,469

$4,975

-$4,490

74%

$2,162 $8,444

$6,282

$1,392

$1,193

$1,100

Clawback Includes:

• Gasoline Tax

• Diesel Tax

• Petroleum products tax

• Vehicle license fees

• Cigarette tax

Financial Gap Pre-Measures after Clawback & Debt Service

$ millions

Total Fin. 

Gap

Total 

Revenues

* Clawback Revenues amount to 74% of Operating Revenues 

Source: Jorge F. Freyre, PHD Projections analysis, PRHTA Management Estimates 

Operating 

Revenues

FHWA and 

FTA 

Funding

Construction 

& Operating

Expenses

Total Debt 

Service

Transfer 

from 

Gov’t. of 

PR

Revenues

• Toll revenues

• Gas/Diesel/Petroleum Products tax

• Cigarettes taxes

• Motor Vehicle License Fees

• Transit Revenues and Toll Fines

• FHWA Funding

• FTA Funding

Expenses

• Construction costs associated with 

project deployment as per STIP

• Toll highways administration and 

maintenance

• Train operation and maintenance

• Integrated transportation system 

operation and maintenance

• General administration

Clawback

To Cent

Gov.

Gap 

before 

Clawback

*

Bonds 

Principal

Bonds 

Interests

Revenues

Expenses

Gap

Clawback

Debt Service

GDB 

Interests

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 22 of 58
PRHTA Baseline projections results in a $4.5 billion financial gap after debt 

service for the next 10 years*

22

* Additional notes and assumptions on page 51

**Revenue streams included on Government Clawback

***Only interest payments are considered in the projections 

Source: Operational revenue information based on Jorge F. Freyre, PHD analysis on long term revenue projection. Federal funding, 

expenses and debt servicing information where provided by PRHTA.

2016-17 P 2017-18 P 2018-19 P 2019-20 P 2020-21 P 2021-22 P 2022-23 P 2023-24 P 2024-25 P 2025-26 P 5 Yr 10 Yr

Revenues

Toll fares (1)(2) $ 136,195 $ 137,363 $ 138,547 $ 139,747 $ 139,188 $ 139,606 $ 141,002 $ 143,258 $ 146,266 $ 150,069 $ 691,041 $ 1,411,242

Gasoline Tax**(1) 151,242 146,447 144,677 145,931 147,906 143,357 138,760 133,958 129,315 125,623 736,204 1,407,217

Diesel Tax** (1) 12,500 12,500 12,500 12,500 12,500 12,116 11,727 11,321 10,929 10,617 62,500 119,209

Petroleum Products Tax** (1) 254,567 185,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 185,000 994,567 1,919,567

Cigarettes taxes** (1) 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 100,000 200,000

Motor Vehicle License Fees** (1)(3) 32,651 32,651 32,651 32,651 32,651 32,651 32,651 32,651 32,651 32,651 163,253 326,507

Act 30 - Licenses Fees Transferred to Act** (1)(3) 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 300,000 600,000

Transit Revenues (4) 10,200 10,200 10,404 10,612 10,612 10,612 10,612 10,612 10,612 10,612 52,028 105,088

Electronic Toll Fines (4) 10,600 10,600 10,600 10,600 10,558 10,589 10,695 10,866 11,094 11,383 52,958 107,586

Other income (4)

 8,400 8,400 8,400 8,400 8,366 8,391 8,475 8,611 8,792 9,020 41,966 85,257

Total Revenues $ 696,355 $ 623,161 $ 622,778 $ 625,441 $ 626,781 $ 622,322 $ 618,923 $ 616,277 $ 614,659 $ 614,975 $ 3,194,516 $ 6,281,671

Active Obligated Funds 67,118 206,199 204,814 268,816 - - - - - - 746,947 746,947

STIP Obligated funds 67,500 67,500 135,000 135,000 135,000 135,000 135,000 135,000 135,000 135,000 540,000 1,215,000

Federeal Aid - FHWA & Earmarked Projects 134,618 273,699 339,814 403,816 135,000 135,000 135,000 135,000 135,000 135,000 1,286,947 1,961,947

Federal Aid-FTA (Sec. 5307 & Sec. 5309) 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 100,000 200,000

Capital Contributions $ 154,618 $ 293,699 $ 359,814 $ 423,816 $ 155,000 $ 155,000 $ 155,000 $ 155,000 $ 155,000 $ 155,000 $ 1,386,947 $ 2,161,947

Total Revenues After Federal Fund Transfers $ 850,972 $ 916,860 $ 982,592 $ 1,049,257 $ 781,781 $ 777,322 $ 773,923 $ 771,277 $ 769,659 $ 769,975 $ 4,581,463 $ 8,443,618

Expenses

Right of Way $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (31,000) $ (155,000) $ (310,000)

Design (23,000) (23,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (76,000) (126,000)

Contruction Local (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (50,000) (100,000)

 -

Active Obligated Funds (67,118) (206,199) (204,814) (268,816) - - - - - - (746,947) (746,947)

STIP Obligated funds (67,500) (67,500) (135,000) (135,000) (135,000) (135,000) (135,000) (135,000) (135,000) (135,000) (540,000) (1,215,000)

Construction Federal (FHWA & EARMARKED) (134,618) (273,699) (339,814) (403,816) (135,000) (135,000) (135,000) (135,000) (135,000) (135,000) (1,286,947) (1,961,947)

 -

Salaries and related benefits (47,837) (48,425) (49,393) (50,381) (50,381) (50,381) (50,381) (50,381) (50,381) (50,381) (246,417) (498,322)

Litigation Reserve (8,160) (8,160) (5,863) (3,520) (3,520) (3,520) (3,520) (3,520) (3,520) (3,520) (29,223) (46,823)

Right of Way Payments (16,960) (16,960) (15,299) (13,605) (13,605) (13,605) (13,605) (13,605) (13,605) (13,605) (76,429) (144,454)

Other program expenses (3,596) (3,596) (3,667) (3,741) (3,741) (3,741) (3,741) (3,741) (3,741) (3,741) (18,341) (37,046)

Total Construction (6) $ (275,171) $ (414,840) $ (465,036) $ (526,063) $ (257,247) $ (257,247) $ (257,247) $ (257,247) $ (257,247) $ (257,247) $ (1,938,357) $ (3,224,592)

Salaries and related benefits (44,740) (43,958) (43,714) (44,589) (44,636) (44,613) (44,733) (44,847) (44,902) (44,890) (221,637) (445,622)

Toll highways administration and maintenance (33,358) (33,358) (34,025) (34,706) (34,706) (34,706) (34,706) (34,706) (34,706) (34,706) (170,153) (343,683)

Train operating and maintenance costs (65,360) (66,478) (68,090) (69,733) (69,733) (69,733) (69,733) (69,733) (69,733) (69,733) (339,394) (688,059)

Integrated transportation system (14,076) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (70,376) (140,751)

Other operating expenses (12,817) (12,817) (13,074) (13,335) (13,335) (13,335) (13,335) (13,335) (13,335) (13,335) (65,378) (132,053)

Total operating expenses (5) $ (170,351) $ (170,686) $ (172,978) $ (176,438) $ (176,485) $ (176,462) $ (176,582) $ (176,696) $ (176,751) $ (176,739) $ (866,938) $ (1,750,168) $ -

Total expenses $ (445,522) $ (585,526) $ (638,014) $ (702,501) $ (433,732) $ (433,709) $ (433,829) $ (433,943) $ (433,998) $ (433,986) $ (2,805,295) $ (4,974,760)

Total Fin. Gap Pre-Measures before Clawback & Gov. Funding $ 405,450 $ 331,334 $ 344,578 $ 346,756 $ 348,049 $ 343,613 $ 340,094 $ 337,334 $ 335,661 $ 335,989 $ 1,776,168 $ 3,468,858

Clawback to Central Government (7) $ (530,959) $ (456,598) $ (454,828) $ (456,082) $ (458,057) $ (453,123) $ (448,138) $ (442,930) $ (437,894) $ (433,890) $ (2,356,524) $ (4,572,499)

Transfer from Government of PR (9) 119,340 119,340 119,340 119,340 119,340 119,340 119,340 119,340 119,340 119,340 596,700 1,193,400

Total Fin. Gap Pre-Measures after Clawback & Gov. Funding $ (6,169) $ (5,924) $ 9,091 $ 10,014 $ 9,332 $ 9,830 $ 11,295 $ 13,744 $ 17,107 $ 21,439 $ 16,344 $ 89,759

Debt Service (8)

Principal $ (113,355) $ (116,723) $ (120,488) $ (124,510) $ (129,652) $ (162,568) $ (153,750) $ (149,800) $ (156,754) $ (164,034) $ (604,728) $ (1,391,634)

Interest (234,088) (229,507) (224,560) (219,408) (213,891) (207,510) (201,300) (193,636) (185,774) (178,397) (1,121,454) (2,088,070)

Total debt due to Bonds $ (347,443) $ (346,230) $ (345,048) $ (343,919) $ (343,543) $ (370,078) $ (355,050) $ (343,436) $ (342,528) $ (342,431) $ (1,726,182) $ (3,479,704)

Interest on GDB Line of Credit $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (110,000) $ (550,000) $ (1,100,000)

Total debt $ (457,443) $ (456,230) $ (455,048) $ (453,919) $ (453,543) $ (480,078) $ (465,050) $ (453,436) $ (452,528) $ (452,431) $ (2,276,182) $ (4,579,704)

Total Fin. Gap Pre-Measures after Debt Service & Clawback $ (463,612) $ (462,154) $ (445,957) $ (443,904) $ (444,210) $ (470,248) $ (453,754) $ (439,692) $ (435,421) $ (430,992) $ (2,259,838) $ (4,489,946)

Total

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 23 of 58
V. FISCAL MEASURES WITH FINANCIAL PROJECTIONS

23

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 24 of 58
Our goal is to transform PRTHA’s towards a best-in-class infrastructure developer 

and operator

As previously mentioned, PRHTA is responsible of constructing, operating, and maintaining Puerto Rico’s toll road network, major

highways and mass transportation facilities. To properly meet its duty, the measures in this plan follow two main philosophies:

24

A streamlined project delivery process by engaging the best 

resources available

An effective organization focused in gaining synergies and 

carrying out the specific goals of PRHTA

• Organize PRHTA into a world class infrastructure developer and 

operator moving it towards a contract management model, 

such as it is currently done today for design, land acquisition, 

construction and mass transit operations. Expect PRHTA to 

manage third party contracts engaged through competitive 

bidding for each service required.

PRHTA envisioned structure

• Competitiveness will be maintained by constantly evaluating 

current contracts and its performance and re-bidding to assure 

accurate market value of service provided.

Project Delivery Phases

• Establish best-in-class Project Delivery Process to assure federal 

compliance and efficiently deployment of resources available to 

maximize the infrastructure developed and maintained.

• The streamlined process will be complemented by having the 

adequately sized resources, visibility of important metrics to 

allow for accurate and timely decision making, as well as the 

correct people with the right motivators and capabilities. 

• Project delivery methods will include Value Engineering analysis 

and innovative contract approaches1 early in the planning phase 

to maximize the value of each project

• Skilled teams in the management of design and construction 

activities will assure to meet objectives of reducing average 

change orders from 30% to 15%2

*For illustration purposes only

1 Case study of PR-18 & PR-66 procurement approach to be used as guideline for applicable projects. See Appendix: Additional 

Information

2 Federal funded projects budget allows for a maximum of 15% increase to projects

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 25 of 58
Organizational Transformation Fiscal Measure (1/2)

25

 Organize PRHTA into a world class infrastructure developer and 

manager moving towards a contract management business model, 

such as done today for different functions.

Results

$ millions, Full year impact

 Transform organization from an in-house infrastructure 

developer to contract management leveraging the Labor 

Transformation and Flexibility Act of 20171 and through a 

normal attrition rate

66.5 59.5 53.4 42.2 46.8 35.6 27.9 19.9 11.6 0.0

3.9 4.4 5.1 6.3 7.2 8.4 9.1 0.0 1.5 2.1

2017p 2018p 2019p 2020p 2021p 2022p 2023p 2024p 2025p 2026p

Transform organization from an in-house 

infrastructure developer to contract management

2019p 2026p

67.4

2025p

62.3

2024p

57.3

2023p

52.2

2022p

48.2

2021p

40.6

2020p

32.8 22.7

2018p

13.3

2017p

0.0

1 Assumes Labor Transformation and Flexibility Act of 2017 applies to PRHTA and resources can be relocated appropriately

2 PRHTA submitted Pre-retirement Plan to Office of Management and Budget (OMB) on December 2016 for approval

Source: Analysis and Labor need by PRHTA ; Pre retirement analysis by PRHTA; Operating budget 2016

1

1a Organization Transformation

 Application of Voluntary Pre-Retirement Program Act2

 187 candidates opted for the plan on the first year adding to 

$58.1M in savings the 10 year period

1b Pre-Retirement Program Act

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 26 of 58
Organizational Transformation Fiscal Measure (2/2)

26

Measures Results

$ millions, Full year impact

-17.5 -20.0 -10.5

-25.0 -15.7 -7.3

0.0

-22.5

-4.4 -13.3

2020p

1.3

2024p

1.0 1.3

2026p

1.3

2023p 2025p

1.0 1.0

2018p 2019p 2022p

0.0 1.0

2017p 2021p

1.0 1.3

Source: Analysis and Labor need by PRHTA ; Pre retirement analysis by PRHTA; Operating budget 2016

0.0 3.5 12.7 7.0 10.4 15.3 15.3 15.3 15.3 15.3

 Additional operational expenses savings due organizational 

transformation which include utilities expenses such as 

energy, water, etc. for the 10 year period

1c Overhead Savings 

 Incremental costs associated with increasing contract 

management

1d Outsourcing Costs

 Rent reduction due to a decrease in organization size

1e Rent Reduction

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 27 of 58
Optimization of Outsourced Operations and Development of 

Real Estate Program Fiscal Measures

27

 As presented in the current CIP, on 2018, PRHTA will begin the 

implementation of a DTL on PR-52 and PR-18 with expected operation 

start date on 2020

3 Revenues from new Dynamic Toll Lanes (DTL)

1 Tren Urbano Operations are completely outsourced 

Source: Operating budget 2016; Operational Analysis by PRHTA

0.0 0.0 0.0 3.0 6.0 6.0 6.0 6.0 6.0 6.0

 Reactivation of the Joint Development Program which provides for residential 

and commercial projects in the Tren Urbano corridor. Currently two initiatives 

are underway with additional $2.0 M in revenues to the PRHTA in the first year 

and over $80 M private investment.

 The development of a noncore real estate asset disposition program that can 

represent additional income of approximately $1.5M per year.

 Toll Concessions Advertisement and ATM services agreement which is 

estimated at $275K in the 10 year period.

 Implementation of Specific Service Signs in Toll Highway Concessions 

approximately $250K per year. Additional income if implemented in nonconcession toll highways.

5 Additional Revenue Initiatives

 PRHTA believes it can obtain additional savings in their Transit Services.

2 Optimization of Outsourcing Operations

12.7

0.0 0.0 10.4 15.3 15.3 15.3 15.3 3.5 7.0

Results

$ millions, Full year impact

Measures

 An update of toll hardware and software will result in an increase in 

revenues by an amount of 2% of collected revenues per toll updated

 Tolls will be updated at 5 per year and revenues are seen on next fiscal 

year

 Updates will start on most profitable tolls that cover over 45% of total 

revenues for the 2nd year, 65% the 3rd , 85% the 4th and 100% onwards

 Ponce and Caguas Norte tolls will be made bi-directional which will 

increase 10% of its toll revenues

4 Toll Collection Optimization

5.9 6.7 7.5 8.0 8.0 8.1 8.2 8.4 8.6 0.0

2019p 2020p

1.8

2017p

0.0

2026p

1.8

2025p

1.8

2024p

1.8

2023p

1.8

2022p

1.8

2021p

1.8 1.8

2018p

3.8

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 28 of 58
Financial Gap after measures and Debt Service

28

• PRHTA Fiscal Measures of $616 MM are expected in the next ten years

• Without the assumption of continued transfers from the Government of Puerto Rico totaling $1,193 million, PRHTA has a funding gap after 

clawback before Government funding of $ 1,103 million before measures

• PRHTA fiscal measures of $616 million are expected to reduce the funding gap to $487 million after measures before Government funding and 

before debt service. Once the Central Government confirms that the impact of such measures have been fully realized, then they will proceed 

to make the necessary adjustments to “Transfers from Government of PR”

Source: PRHTA Management Assessment ; Pre-retirement Plan submitted to OMB; Operating budget 2016

Projected Financial Gap over the 10 year period

$ thousands

Summary of Results

2016-17 P 2017-18 P 2018-19 P 2019-20 P 2020-21 P 2021-22 P 2022-23 P 2023-24 P 2024-25 P 2025-26 P 5 Yr 10 Yr

Total Fin. Gap Pre-Measures after Clawback $ (6,169) $ (5,924) $ 9,091 $ 10,014 $ 9,332 $ 9,830 $ 11,295 $ 13,744 $ 17,107 $ 21,439 $ 16,344 $ 89,759

Less: Transfer from Government of PR (9) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (119,340) $ (596,700) $ (1,193,400)

Total Fin. Gap Pre-Measures before Gov. Funding $ (125,509) $ (125,264) $ (110,249) $ (109,326) $ (110,008) $ (109,510) $ (108,045) $ (105,596) $ (102,233) $ (97,901) $ (580,356) $ (1,103,641)

Measures

Meas. aimed at a Organizational Transformation

Organization Transformation $ - $ 11,633 $ 19,938 $ 27,883 $ 35,639 $ 42,220 $ 46,756 $ 53,353 $ 59,480 $ 66,465 $ 95,094 $ 363,368

Pre-Retirement program Act - 1,540 2,119 3,936 4,406 5,127 6,257 7,161 8,449 9,089 12,001 48,085

Overhead Savings - 3,475 6,950 10,425 12,741 15,290 15,290 15,290 15,290 15,290 33,591 110,041

Outsourcing Costs - (4,360) (7,301) (10,532) (13,255) (15,672) (17,547) (20,030) (22,484) (25,008) (35,449) (136,191)

Rent Reduction - 950 950 950 950 1,045 1,254 1,254 1,254 1,254 3,800 9,861

Total Organizational Transformation $ - $ 13,238 $ 22,656 $ 32,662 $ 40,481 $ 48,010 $ 52,010 $ 57,028 $ 61,988 $ 67,090 $ 109,038 $ 395,164

Meas. aimed at Mass Transportation Optimization

Optimization of Outsourcing Operations $ - $ - $ 3,475 $ 6,950 $ 10,425 $ 12,741 $ 15,290 $ 15,290 $ 15,290 $ 15,290 $ 20,850 $ 94,751

Revenues from DTL - - - 3,000 6,000 6,000 6,000 6,000 6,000 6,000 9,000 39,000

Ponce Sur and Caguas Norte Bidirectionality - 4,223 4,259 4,296 4,279 4,292 4,334 4,404 4,496 4,613 17,056 39,195

Increase vehicle classification - 432 624 816 960 960 960 960 960 960 2,832 7,632

Toll Leakage Minimization - 1,236 1,801 2,376 2,784 2,792 2,820 2,865 2,925 3,001 8,197 22,601

Toll Collection Optimization $ - $ 5,891 $ 6,684 $ 7,488 $ 8,022 $ 8,044 $ 8,114 $ 8,229 $ 8,382 $ 8,575 $ 28,085 $ 69,428

Additional Revenue Initiatives $ 3,778 $ 1,778 $ 1,778 $ 1,778 $ 1,778 $ 1,778 $ 1,778 $ 1,778 $ 1,778 $ 9,111 $ 17,998

Total Measures $ - $ 22,907 $ 34,592 $ 51,878 $ 66,706 $ 76,572 $ 83,192 $ 88,325 $ 93,438 $ 98,732 $ 176,083 $ 616,341

Total Fin. Gap after Measures before Gov. Funding $ (125,509) $ (102,357) $ (75,657) $ (57,448) $ (43,301) $ (32,938) $ (24,853) $ (17,271) $ (8,796) $ 831 $ (311,701) $ (487,300)

Total

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 29 of 58
Pursue guiding principles to address the financial gap and re-focus PRHTA 

towards its objectives

29

Obtain an 

efficient 

organization

• Obtain organization with the necessary resources to meet objectives and provide the services required

• Have a properly sized organization according to active project need

• Engage the best resources available to move PRHTA agenda forward 

Strengthen 

partnership 

with federal 

agencies

• Maintain strong communication with FHWA & FTA

• Comply with FHWA MOU and move forward towards full compliance

• Communicate Fiscal Plan to Federal Agencies and work together towards a sustainable solution

• Discuss support from FHWA & FTA to help re-position PRHTA’s as a first class Federal Grantee and infrastructure developer

Improve 

project 

delivery 

effectiveness

Improve 

infrastructure 

towards new 

standards

Create a 

sustainable 

debt structure

• Set-up processes and organization to streamline project delivery and improve average project times from planning to 

completion (MOU Project to achieve this)

• Implement new contracting practices, such as CHICA1 Contracts

• Maintain close communication with Federal Agencies and improve internal controls and feedback loops

1 CHICA contracts are hybrid contracts with contingencies and acceleration clauses 

• Focus infrastructure program on improvements to current Highway system, finishing interstate system, congestion 

mitigation and safety projects

• Implement data driven process for project selection based on asset ROI

• Maximize deployment of federal funds 

• Obtain a sustainable debt structure to allow for provision of services and realistic economic growth infrastructure

• Evaluate new structures used in other jurisdictions

Adhere to 

Financial 

Control Reform

• Assure measures from Fiscal Plan are budgeted, as well as all expenses associated with core services

• Establish a zero-based budget approach and the culture required to sustain it

• Implement procurement process reform as established in the Government of Puerto Rico’s Fiscal Plan

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 30 of 58
VI. DEBT SUSTAINABILITY

30

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 31 of 58
PRHTA Debt Structure

31

Expired GDB Line of Credit

1,247,730

Net Bond Premium

6,348,913

352,362

251,105

1,830,145

Other1

24,462

425,135

1,812,979

404,995

FY 2016

Resolution 68-18

Resolution 98-06

• 24 expired lines of credits with GDB @ 6.00%

• Serial Bonds maturing through 2034 with interest ranging from 3.30% to 6.50%

• Term Bonds maturing through 2039 with interest ranging from 4.00% to 6.00%

• Capital Appreciation Bonds maturing through 2026 with interest ranging from 4.36% to 4.58%

• Serial Bonds maturing through 2037 with interest ranging from 2.25% to 5.75%

• Term Bonds maturing through 2046 with interest ranging from 2.25% to 5.75%

• Variable Rate Bonds - USD SIFMA swap index less a spread of 0.5%

Source: Draft PRHTA Unaudited Financial Statements FY2015 

Current Debt Structure

$ thousands

1 Other Includes: $200MM in Variable Rate Bonds - USD SIFMA swap index less a spread of 0.5%, $57MM in CPI based interest-rate 

bonds, reset monthly on CPI changes, $.7MM in LIBOR based interest rate bonds maturing through 2045, $93MM in Capital 

Appreciation Bonds maturing through 2026 with interest ranging from 4.47% to 5.08%

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 32 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Debt Sustainability

32

Government of Puerto Rico tax revenues conditionally pledged to support PRHTA obligations are excluded from PRHTA

revenues and are included in the Government of Puerto Rico’s Fiscal Plan, while system toll revenue is assumed to be

collected by PRHTA and applied to system expenses

1

2

1

Includes federal aid. Excludes revenue subject to clawback, measures and transfers to HTA from the Commonwealth

As a result of the clawback of certain revenues to the Government of Puerto Rico, PRHTA has insufficient cash flows to 

service its debt 

After accounting for the clawback, PRHTA does not have sufficient positive cash flows to support its expenses and debt 

service, requiring support from the Government of Puerto Rico to maintain essential operations 

Even after accounting for the incremental positive cash flows of fiscal plan measures, PRHTA will require support from 

the Government of Puerto Rico to maintain essential operations and expenses 

1

2

Cash flow available for debt service ($ in millions)

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 5 Yr 10 Yr

Total Revenues After Federal Fund Transfers1 $851.0 $916.9 $982.6 $1,049.3 $781.8 $777.3 $773.9 $771.3 $769.7 $770.0 $4,581.5 $8,443.6

Clawback to Central Government ($531.0) ($456.6) ($454.8) ($456.1) ($458.1) ($453.1) ($448.1) ($442.9) ($437.9) ($433.9) ($2,356.5) ($4,572.5)

Revenues net of Clawback $320.0 $460.3 $527.8 $593.2 $323.7 $324.2 $325.8 $328.3 $331.8 $336.1 $2,224.9 $3,871.1

Total expenses ($445.5) ($585.5) ($638.0) ($702.5) ($433.7) ($433.7) ($433.8) ($433.9) ($434.0) ($434.0) ($2,805.3) ($4,974.8)

Cash Flow available for Debt Service (pre-measures) ($125.5) ($125.3) ($110.2) ($109.3) ($110.0) ($109.5) ($108.0) ($105.6) ($102.2) ($97.9) ($580.4) ($1,103.6)

Total Measures $0.0 $22.9 $34.6 $51.9 $66.7 $76.6 $83.2 $88.3 $93.4 $98.7 $176.1 $616.3

Cash Flow available for Debt Service (post-measures) ($125.5) ($102.4) ($75.7) ($57.4) ($43.3) ($32.9) ($24.9) ($17.3) ($8.8) $0.8 ($404.3) ($487.3)

Total

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 33 of 58
VII. Liquidity Situation

33

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 34 of 58
13-week Cash Flow Projection

34

Cash Positions before Measures

$ thousands

1 $2.5 millons – Barrio Obrero transfer to AAA

2 $2.0 millons R/W, $600 thousand legal fee, $400 thousand reserve

3 $2.2 millons States certifications , $405 thousands arbitral award ACI

4 Utilities, Insurance, Rentals and others operating costs

Source: PRHTA Management Estimates

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL

14-Apr 21-Apr 28-Apr 5-May 12-May 19-May 26-May 2-Jun 9-Jun 16-Jun 23-Jun 30-Jun

1 Toll fares $ 2,200 $ 2,650 $ 1,700 $ 3,400 $ 2,200 $ 2,650 $ 1,700 $ 3,400 $ 2,200 $ 2,650 $ 1,700 $ 2,650 $ 29,100

2 Transit Revenues (Non-Cash) - - - - - - - - - - 812 - 812

3 Electronic Toll Fines 227 227 227 227 227 227 227 227 227 227 227 227 2,718

4 Other Income 106 106 106 108 108 108 108 108 108 108 15,108 108 16,289

5 Transfer from Government of PR - - 10,925 - - - 9,945 - - - - 10,625 31,495

6 Subtotal - Operating Inflows $ 2,533 $ 2,983 $ 12,958 $ 3,734 $ 2,534 $ 2,984 $ 11,979 $ 3,734 $ 2,534 $ 2,984 $ 17,846 $ 13,609 $ 80,414

7 Gasoline Tax $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

8 Diesel Tax - - - - - - - - - - - - -

9 Petroleum Products Tax - - - - - - - - - - - - -

10 Cigarettes taxes - - - - - - - - - - - - -

11 Motor Vehicle License Fees - - - - - - - - - - - - -

12 Act 30 - Licenses Fees Transferred to Act - - - - - - - - - - - - -

13 Subtotal - Non Operating Inflows $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

14 Federeal Aid - FHWA & Earmarked Projects $ 1,822 $ 1,822 $ 1,822 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 1,818 $ 21,828

15 Federal Aid-FTA (Sec. 5307 & Sec. 5309) - - 1,667 - 1,667 - 1,667 - - - 1,667 - 6,668

16 Subtotal - Fedral Funding $ 1,822 $ 1,822 $ 3,489 $ 1,818 $ 3,485 $ 1,818 $ 3,485 $ 1,818 $ 1,818 $ 1,818 $ 3,485 $ 1,818 $ 28,496 17

18 Total Inflows $ 4,355 $ 4,805 $ 16,447 $ 5,552 $ 6,019 $ 4,802 $ 15,464 $ 5,552 $ 4,352 $ 4,802 $ 21,331 $ 15,427 $ 108,910

19 Salaries and Benefits $ 3,601 $ - $ 3,601 $ - $ 3,601 $ - $ 3,601 $ - $ 3,601 $ - $ 3,601 $ - $ 21,606

20 Toll and Highway Administration - 2,026 - 2,026 - 2,026 - 2,026 - 2,026 2,026 12,156

21 Tren Urbano - - 3,400 - 3,400 3,400 - - - 4,212 7,712 22,124

22 First Transit - - 2,438 - 2,438 - 1,219 - 1,219 - 1,219 - 8,533

23 Construction Project Expense and Related1 1,972 3,072 1,972 1,968 1,968 2,868 1,968 2,182 2,182 2,982 3,417 4,682 31,231

24 Litigation Reserve2 - - 3,200 - - - 3,200 - - - 3,200 - 9,600

25 AP Prior Year3 - 833 2,500 - 833 585 2,500 833 - 1,216 2,500 11,800

26

Additional investment required to appropriate federal 

funds - - 260 - - - 1,050 - - - 1,160 - 2,470

27 Other Operating Expenses4 - - 3,972 - - 3,972 - - - 3,972 - - 11,916

28 Total Outflows $ 5,573 $ 5,931 $ 21,343 $ 3,994 $ 12,240 $ 9,451 $ 16,938 $ 4,208 $ 7,835 $ 8,980 $ 18,025 $ 16,920 $ 131,436 29

30 Net Cashflow Excluding Measures & Clawback $ (1,218) $ (1,126) $ (4,896) $ 1,558 $ (6,221) $ (4,649) $ (1,474) $ 1,345 $ (3,482) $ (4,177) $ 3,307 $ (1,492) $ (22,527)

31

32 Cash Position, Beginning $ 28,983 $ 27,765 $ 26,638 $ 21,742 $ 23,300 $ 17,080 $ 12,431 $ 10,957 $ 12,302 $ 8,820 $ 4,642 $ 7,949 $ 28,983 33

34 Cash position, Ending $ 27,765 $ 26,638 $ 21,742 $ 23,300 $ 17,080 $ 12,431 $ 10,957 $ 12,302 $ 8,820 $ 4,642 $ 7,949 $ 6,456 $ 6,456

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 35 of 58
VIII. Implementation Plan

35

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 36 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Strong governance at both the entity and project level will ensure implementation 

compliance of Fiscal Plan 

36

Entity Level -

Management 

& Performance 

Indicators

• The Authority's staff are government employees subject to the merit principle. As such they are not subject in general

to changes in political cycles. Senior management is composed of “trust positions” appointed by the Board and the

Executive Director. As a result of the current financial crisis, most of the trust positions have been filled with current

employees. This has the adding benefit of reducing salary costs and employee benefits while maintaining the

knowledge toward the future with employees that will continue in the agency independent of the political cycle.

• Together with the Statistics Institute, the Authority will design and implement a new set of standard indicators that

will be followed and monitored to determined the level of performance being achieved.

Entity LevelGovernance

• Puerto Rico Act 74-1965, as amended, which creates the Puerto Rico Highway and Transportation Authority, provides

for a Board of Directors composed of seven members, three of which are to be appointed by the governor with the

consent and advice of the Senate for (4) year term. One of them is required to be a licensed engineer, one must have

ample knowledge and experience in the field of finance, and one is to be selected from a list to be provided by

professional and non-governmental organizations. The other members of the board are the Secretary of

Transportation and Public Works, the Executive Director of FAFAA, the President of the Planning Board and the

Secretary of the Treasury.

• The Board composition described above provides the necessary balance between the government interest with

respect to the implementation of public policy and the members appointed based on their merit and professional

knowledge and experience. It is management belief that in order to enhance continuity and knowledge transfer

between political cycles, terms of the three members from the private sector be increased from 4 to 6 years

ensuring a more stable and independent corporate leadership.

• The Board has approved bylaws through resolution 2014-17 that clearly define the role and responsibilities of the

Board. In summary, the Board is responsible for the governance of the Authority, the appointment of an Executive

Director that in turns manages the operations and reports to the Board, the approval of the budget, overseeing

compliance, approving major contracts beyond the delegations allowed to the Executive Director, monitoring the

auditing process and ensuring the Authority performs according to its purpose and outline objectives.

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 37 of 58
At a project level, PRHTA will establish a Project Management Office (PMO) to 

effectively implement PRHTA’s critical projects

37

Governance

Strategy

Risk and 

Audit 

Monitoring 

& Reporting

Effective 

PMO

•Ensure PMO implements effective and 

comprehensive oversight and 

monitoring through adequate 

performance metrics, to the correct 

audience in the needed timeframe

•Ensure PMO has visibility and credibility 

by participating in all decision making 

forums (PRHTA and Central 

Government)

•Make sure the PMO goals are aligned 

with PRHTA strategic objectives and 

that projects are correctly prioritized.

•Assure PMO identifies risks, their 

probability and implications 

through validated procedures 

while ensuring quality and 

adherence to PRHTA as well as 

with Central government key 

strategies

Main Elements of the PMO

PRHTA will establish a PMO with the required organization and processes to assure it can effectively implement the fiscal measures, MOU 

initiatives and the reforms proposed by the Central Government’s fiscal plan

Primary Initiatives

I. Fiscal Measures:

1) Transform organization from an inhouse infrastructure developer to 

contract management

2) Optimize Outsourced Operations

3) Develop non-core Real Estate 

Program

II. MOU Initiatives

III. Financial Reform

1) Budget

2) Procurement

3) Disbursement 

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 38 of 58
PMO guiding principle and actions definition

Source: Signed Memorandum of Understanding MOU-PR2016-02-29-094734 38

• Define PMO strategy and objectives

• Define projects to prioritize based on organization’s strategy, such as 

Fiscal Measure and MOU initiatives

• Standardize methodologies, procedures and templates for projects 

PMO Element Guiding Principle Action Step

Strategy • Alignment between PMO governance and 

business strategy

Governance

• Visibility and Credibility assurance and 

centralize decision making

Risk & Audit

• Assurance on effective internal controls and 

risk mitigation 

• Implement tools for risk assessment, such as a risk probability 

matrix

• Set up an Internal auditing committee to guide actions

• Strengthen requirements for continuous monitoring of risks

• Enhance transparency and competition in contractor selection 

process

• Enable recording and tracking of issues and action plans

• Develop appropriate Key Performance Indicators (KPIs) with the 

adequate frequency and audience

• Implement reporting tools to allow for proper visibility, such as 

visual boards

Monitoring & Reporting

• Oversight and monitoring through adequate 

performance metrics 

• Place PMO to directly report to Executive Director’s office or 

Steering Committee 

• Coordinate and allocate skilled resources to deliver, monitor and 

control any governance initiatives

• Provide a structure through which project objectives are set and the 

means of attaining those objectives are met

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 39 of 58
PMO Organizational Structure

 Executive director

 Deputy Executive Director

 Legal counsel

 Deputy Executive Director for 

Finance & Administration

 HR Director

 Infrastructure Director

 Deputy Director for Integrated 

Transportation Alternative

PMO Work Team

 Will include key decision 

making members from 

impacted areas and the 

needed project managers

Executive Sponsor

Project Coordinators

• Assigned as per project 

scope and requirements

Steering Committee

Focus Areas

The Steering Committee will be 

ultimately responsible for the 

project, which includes 

validating objectives, 

facilitating resources, approving 

designs and making all final 

decisions.

The Project Coordinators serve 

as the main contact persons to 

facilitate scheduling and 

communication.

The Work Team is 

responsible for the day-today activities of the 

project, including analyses, 

delivery of work products, 

communication of project 

status and coordination of 

meetings with the Steering 

Committee.

39

Pre-Construction Construction 

Management

Mass Transit 

Management Other Department

1 2 3 4

FOR ILLUSTRATION PURPOSES

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 40 of 58
Project Management General Timeline 

40

Time 6 weeks 6 weeks On going

PMO Creation Refine Project Plans Implementation & Execution

Activities • Setting up project 

selection and 

prioritization process

• Defining PMO’s areas of 

responsibility , 

hierarchical position 

and competencies

• Establish needed roles 

and organization to 

support initiatives

• Define general work 

plan

• Creation of team charters, milestones 

and work plans

• Perform Stakeholder analysis

• Establish risk matrix mitigation plan

• Development of Key Performance 

Metrics (KPI’s)

• Development and implementation of master 

plans

• Execution, monitoring and project control

• Structuring of project interaction processes

• Implementation of standards and reporting tools

• Implementation of project management process 

improvements 

• Integration of PRHTA resources to project 

management support team

To be discussed in detail 

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 41 of 58
Implementation plan for Key Initiatives (2017 – 2020)

Source: Signed Memorandum of Understanding MOU-PR2016-02-29-094734 41

2017 2018 2019 2020

Toll Credits

03/01/2017 - 12/31/2019

Expediting Project Delivery

Organizational Capacity Development

10/29/2017

Optimization of Outsourcing Operations

Budget

Other Revenue Initiatives

Organizational Transformation

Revenues from new Dynamic Toll Lanes (DTL)

Toll Collection Optimization 

MOU Initiatives

03/31/2017

04/01/2017 - 02/29/2020

Procurement

Federal Aid Billing Procedures

10/01/2017 - ongoing

Fiscal Initiatives

Disbursement

Begin Operation

Fiscal Reform

Año

06/01/2017 - 03/03/2018

01/01/2018 - 05/03/2018

NTP Final Report w/ Implementation Plan

Design Construction

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 42 of 58
Fiscal Measures Implementation Timeline

42

2017 2018

May. Jun. Jul. Ago. Sept. Oct. Nov. Dic. Ene. Feb. Mar. Abr.

08/01/2017

Optimize resources through Transformation 

& Flexibility Act of 2017 and/or outsourcing when appropriate

11/01/2017

Perform Capacity Analysis and Design from OCD initiative

Additional Revenues Initiatives

Toll Collection Optimization

Pre-Retirement Program Act Approval from OMB 

(evaluate additional waves of employees)

Organization Transformation

12/31/2017 - 03/31/2018

Fiscal Measures

Establish required physical space and determine rent impact

01/28/2018 – on going*

04/01/2017 - 12/31/2017

Establish roadmap to effective organization

Dynamic Toll Lane 

10/15/2017

Develop requirements and publish RFP

Develop implementation plan and timeline

Optimization of Outsourcing Operations

08/01/2017 – on going

1

2

3

* As per Financial Projections in Fiscal Plan, measures will be implemented through the 10 years 

Future waves of employees may occur)

4

5

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 43 of 58
Financial Reform Implementation Timeline

43

2017 2018

May. Jun. Jul. Ago. Sept. Oct. Nov. Dic. Ene. Feb. Mar. Abr. May.

Priority payment protocol based on Core Services Definition

07/02/2017 - ongoing

01/01/2018 - 03/03/2018

Implementation of Rolling 13-week forecast and weekly reporting

12/31/2017 - 03/01/2018

Implementation of a Zero-based Budget

11/01/2017 - 12/31/2017

Budget

Fiscal Reform

10/01/2017 - 12/30/2017

12/31/2017 - 03/09/2018

Creation of PMO Office

06/01/2017 - 10/28/2017

Establishment of Disbursement Authorization Group 

Review procurement contracts

Procurement

Definition of Core Services

Disbursement

Inclusion of tracking mechanisms

Categorize goods and services

07/01/2017 – ongoing

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 44 of 58
MOU Initiatives Implementation Timeline

44

2017 2018

May. Jun. Jul. Ago. Sept. Oct. Nov. Dic. Ene. Feb. Mar. Abr. May.

06/01/2017 - 07/31/2017

III. Organizational Capacity Development

Project Development Process Diagnostic of Current Situation

Improve email communication system through

Identify & Validate existing balance of toll credits

MOU Initiatives

Report reason & action plan for projects with less than 5% of expended funds

04/01/2017 - 05/31/2017

II. Toll Credits

Billing Process Diagnostic of Current Situation

02/24/2017 - 02/23/2023

Design & Implement changes to the approval, tracking & reconciliation processes 

04/01/2017 - 06/30/2017

Billing Process Design & Recommendations

07/01/2017 - 10/20/2017

I. Federal –aid Billing Procedures

Implement 100% EFT to contractors

On going

Project Development Process Design & Recommendations

On going

Achieve next day payment after fund receipt

Upgrade Billing electronic tracking system

July 2017 – July 2018

Improve Project Management System (PMIS)

Develop & Submit schedule to accelerate obligation of allocated funds

On going

July 2017 – July 2018

Achieve 40 days lead time for contractor payment

IV. Expediting Project Delivery

Email migration completed on Feb 2017

Completed1

1Action items from MOU completed; however, efforts still remain in assuring sustainability of those efforts

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 45 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

IX. APPENDIX: PRHTA’s MASS TRANSIT OPERATION 

OVERVIEW (INCLUDING TREN URBANO OPERATION)

45

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 46 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Tren Urbano is the first rapid transit system in the Caribbean and one of the 

most modern in the United States

46

• The Tren Urbano is the heavy rail

component of the metropolitan

transportation system. It encompasses a 16

stations alignment along 10.7 miles across

the cities of Bayamón, Guaynabo and San

Juan that serves as the spinal cord of the

multimodal public transportation

• The Tren Urbano complements other forms

of public transportation services in the San

Juan metropolitan area such as the

Metropolitan Bus Authority, Cataño Ferry,

taxis and shuttles

• Currently underperforming its original

ridership projections, it provide service to

approximately 30,000 passengers daily with

increase ridership during special events

Source: http://www.dtop.gov.pr/historia.asp

About Tren Urbano

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 47 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Ridership increased from the 8-9MM range to the 10-11MM range when prices 

were reduced from $1.50 to $0.75, negatively impacting revenue levels

Source: PRTHA 47

Fare System

• Regular $1.50

• Medicare Participants $0.75 

• Golden Age (60 a 74 años) $0.75

• Handicapped Citizens $0.75

• Students $0.75

• Elderly (above 75 y/o) Free

• Children (< 6 y/o) Free

• Unlimited Use

– Day: $5.00

– Week: $15.00

– Month : $50.00 

– 3 Months: $90.00 

Historic Trends Tren Urbano: Ridership & Revenue

Fare prices were reduced from $1.50 

to $0.75 on April 2010 and raised

back to $1.50 on October 2014 

11,500,000

10,500,000

9,500,000

4,500,000

5,500,000

5,000,000

7,000,000

4,000,000

8,500,000

7,500,000

6,500,000

10,000,000

9,000,000

11,000,000

8,000,000

6,000,000

10,399,180

10,731,482

8,958,243

10,562,510

FY06 FY10 FY11 FY15

8,251,210

FY07 FY09 FY13 FY14 FY16

10,877,223

8,020,030

FY08 FY12

7,955,001

11,056,644 10,909,438

9,530,458

Ridership

Train Revenue in $

Note: TU started revenue service in June 6, 2005

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 48 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

48

• The Metrobus routes (E10 and T3 routes) run and extend

through the heavy transited corridor between Tren Urbano

Sagrado Corazón Station and the Covadonga Bus Terminal

in Old San Juan

• TU Conexión service consists of four (4) fixed route bus

service provided with smaller vehicles in areas where

regular bus vehicles cannot be use due to geometrical

limitations on the street network, or where travel demand

cannot justify the use of regular transit buses in the vicinity

of selected Tren Urbano Stations (Sagrado Corazón and

Piñero).

• Metro Urbano is an express commuter type service, with

stops only at the end points of the route, the CampanillasToa Baja Park-and-Ride Station and the Tren Urbano

Bayamon Station.

Source: http://www.dtop.gov.pr/historia.asp

First Transit Network-3

rd Party Provider

PRHTA manages a series of mass transit bus systems servicing customers in the 

Metro Area 

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 49 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

10-Year Projected Financial GAP for PRHTA’s mass transit operation

49

$141

$688

$12

$317

$200

$105 $12 $117

-$524

Financial Gap Pre-Measures 

$ millions

Total Fin. 

Gap

Total 

Revenues

Transit 

Revenues

Other 

Income

Federal 

Funds-FTA

Integrated 

Transporta

tion 

System

Total 

Revenues 

after 

Federal 

Fund 

Transfers

*

Train 

Operating 

& Maint. 

Costs

Revenues

Federal Funds

Revenues + Fed Funds

Expenses

GAP

Salaries & 

Benefits

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 50 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Baseline projections for PRHTA’s mass transit operation results in a $524 million 

financial gap for the next ten years

50

1) Same assumptions as used in PRHTA Fiscal Plan (Section V, p. 34)

2) Other Income includes revenues from $600k from Metrobus ridership and about $600K coming from Advertising

3) Salaries and benefits assumed to continue at same rate as in FY2016 & FY2017 

Projected Financial Gap over the 10 year period

$ thousands

2016-17 P 2017-18 P 2018-19 P 2019-20 P 2020-21 P 2021-22 P 2022-23 P 2023-24 P 2024-25 P 2025-26 P 5 Yr 10 Yr

Revenues

Transit Revenues (1) 10,200 10,200 10,404 10,612 10,612 10,612 10,612 10,612 10,612 10,612 52,028 105,088

Other income (2) 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 6,000 12,000

Total Revenues $ 11,400 $ 11,400 $ 11,604 $ 11,812 $ 11,812 $ 11,812 $ 11,812 $ 11,812 $ 11,812 $ 11,812 $ 58,028 $ 117,088

Federal Aid-FTA (Sec. 5307 & Sec. 5309) (1) 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 100,000 200,000

Total Revenues After Federal Fund Transfers $ 31,400 $ 31,400 $ 31,604 $ 31,812 $ 31,812 $ 31,812 $ 31,812 $ 31,812 $ 31,812 $ 31,812 $ 158,028 $ 317,088

Expenses

 -

Salaries and related benefits (3) (1,200) (1,200) (1,200) (1,200) (1,200) (1,200) (1,200) (1,200) (1,200) (1,200) (6,000) (12,000)

Train operating and maintenance costs (1) (65,360) (66,478) (68,090) (69,733) (69,733) (69,733) (69,733) (69,733) (69,733) (69,733) (339,394) (688,059)

Integrated transportation system (1) (14,076) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (14,075) (70,376) (140,751)

Total operating expenses $ (79,436) $ (80,553) $ (82,165) $ (83,808) $ (83,808) $ (83,808) $ (83,808) $ (83,808) $ (83,808) $ (83,808) $ (415,770) $ (840,810) $ -

Total Fin. Gap Pre-Measures $ (48,036) $ (49,153) $ (50,561) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (251,742) $ (523,722)

Total

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 51 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

Some measures included in Section V, will have a direct impact on PRHTA Mass 

Transit Operation (including Tren Urbano)

51

 Organize PRHTA into a world class infrastructure developer and 

manager moving towards a contract management business model, 

such as done today for different functions. Impact includes net savings 

from Organizational Transformation, Pre-Retirement Program, 

Overhead Savings, Additional Outsourcing costs and Rent Reduction

Results

$ millions, Full year impact

Transform organization from an in-house 

infrastructure developer to contract management

0.0 0.1 0.1 0.5 2.0 2.0 2.0

0.2

0.0 0.0

1 Assumes Labor Transformation and Flexibility Act of 2017 applies to PRHTA and resources can be relocated appropriately

2 PRHTA submitted Pre-retirement Plan to Office of Management and Budget (OMB) on December 2016 for approval

Source: Analysis and Labor need by PRHTA ; Pre retirement analysis by PRHTA; Operating budget 2016

1

 PRHTA believes it can obtain additional savings in their Transit Services 

by promote more competition in the acquisition of equipment and 

services to guarantee the best possible prices 

2 Optimization of Outsourcing Operations

2019p 2023p 2024p 2025p

15.3 15.3

0.0 0.0

2017p 2018p

3.5

2026p

7.0 10.4 12.7 15.3 15.3

2020p 2021p 2022p

 Generate additional revenues from Advertising & Filming Rights

 Participate in Competitive Grants to procure additional Federal Funding

 Increase Safety Programs and Measures to reduce at a minimum patron 

claims

 Implement additional digital surveillance to reduce vandalism and 

perimeter breaches in so doing reducing costs associated to this activities

3 Additional Measures to Reduce Transit Losses

3 Commercial Real Estate Development

 The Tren Urbano Alignment posses a considerable amount of 

currently unused Commercial Retail Space. An initiative is underway 

market and lease those spaces. This initiative will represent additional 

revenue and will enhance the experience of users of the system as 

increase ridership will make stations not only points of access to the 

rail system and its surroundings, but also destinations themselves.

Initiative is under management evaluation/analysis. 

Current expectation is to generate incremental revenues

of $25K per year starting with FY 2018 

Initiative is under management evaluation/analysis. Initial

expectation is to generate incremental revenues of $400K 

at peak levels

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 52 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

52

• PRHTA’s mass transit operation Fiscal Measures of $101 MM are expected in the next ten years

• Funding gap expected to be reduced from $524MM to $423MM after measures

• Management is assessing additional measures to close the GAP even further

• Management to complete PRITA (Puerto Rico Integrated Transit Authority) integration in order to enable further 

significant savings and revenue enhancements opportunities

Source: PRHTA Management Assessment ; Pre-retirement Plan submitted to OMB; Operating budget 2016

Projected Financial Gap over the 10 year period

$ thousands

Summary of Results

Financial Gap after measures

2016-17 P 2017-18 P 2018-19 P 2019-20 P 2020-21 P 2021-22 P 2022-23 P 2023-24 P 2024-25 P 2025-26 P 5 Yr 10 Yr

Total Fin. Gap Pre-Measures $ (48,036) $ (49,153) $ (50,561) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (51,996) $ (251,742) $ (523,722)

Measures

 Organizational Transformation (1) $ - $ - $ (232) $ 30 $ 77 $ 124 $ 546 $ 1,957 $ 1,957 $ 1,957 $ (125) $ 6,416

Optimization of Outsourcing Operations (1) $ - $ - $ 3,475 $ 6,950 $ 10,425 $ 12,741 $ 15,290 $ 15,290 $ 15,290 $ 15,290 $ 20,850 $ 94,751

Total Impact from Measures $ - $ - $ 3,243 $ 6,980 $ 10,502 $ 12,865 $ 15,836 $ 17,247 $ 17,247 $ 17,247 $ 20,725 $ 101,167

Total Financial Gap after Measures $ (48,036) $ (49,153) $ (47,318) $ (45,016) $ (41,494) $ (39,131) $ (36,160) $ (34,749) $ (34,749) $ (34,749) $ (231,017) $ (422,555)

Total

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 53 of 58
Pre-Decisional | Privileged & Confidential Draft | Analysis Subject to Material Change

A way forward for all Mass Transit operations (within PRHTA) including 

Tren Urbano

53

What is 

PRITA?

• The Puerto Rico Integrated Transportation Authority (PRITA) was created by Act 123-2014 to integrate 

the different transportation programs under one single entity. A requirement prior to the full 

integration within PRITA was acquiring Federal Grantee Status (currently the Tren Urbano project falls 

under the Puerto Rico Highway and Transportation Authority as Grantee of the Federal Transit 

Administration)

• The PRHTA new executive team is diligently working in partnership with PRITA and the FTA to complete 

all pending requirements to obtain the Grantee Status. The law provides that once the grantee status 

is granted to PRITA, PRHTA will fully transfer the TU Project to PRITA who will in turn, consolidate the 

administration, finance, human resources and other management overhead of the current 

Metropolitan Bus Authority, the Maritime Transportation Authority and the Tren Urbano Project. 

Obtain 

Grantee 

Status & 

Consolidate

• Just like the PRHTA, PRITA is subject to the Public Policy established by the Department of 

Transportation and Public Works but with this separation, the Tren Urbano can develop new ways to 

enhance its profitability by integrating with the other transportation components, maximizing savings 

opportunities, focusing on the development of additional sources of revenue while establishing a 

governance structure that guarantees stability throughout political cycles

Achieve 

Planned 

Synergies

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 54 of 58
54

X. APPENDIX: FINANCIAL PROJECTIONS NOTES ON BASE 

CASE SCENARIO 

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 55 of 58
Financial Projections Assumptions and Notes on Base Case 

Scenario 

55

(1) Revenues from Tolls, Gasoline taxes, Diesel taxes, Petroleum Products taxes, Cigarette taxes and Vehicle License 

Fees are projected in a span of ten years using values from the Government of Puerto Rico Certified Fiscal Plan

(2) No change in toll tariffs is considered

(3) Revenues due to vehicle license fees are projected to remain constant per year

(4) Other income (impact fees, advertisement, etc.) revenue line was provided by PRHTA management

(5) All operational expenses were based on operational budget 2016

(6) All Construction expenses are PRHTA management estimates

(7) Clawback values are taken to be equal to the amount of revenues coming from Gasoline taxes, Diesel taxes, 

Petroleum Products taxes, Cigarette taxes and Vehicle License Fees 

(8) Debt Service information was provided by PRHTA management

(9) Reflects estimated amounts to maintain necessary operating expenses before debt service

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 56 of 58
56

XI. APPENDIX: Additional information

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 57 of 58
PR-18 Value Engineering Example

57

Express Lanes Project - Las Américas Expressway (PR-18)

Original Proposal: Construction of a 950 meter bridge Estimated cost: $30.9M

New Proposal: Construction levelled with current lanes Estimated Cost: $15.9M 

Source: “Infraestructura Vial de Puerto Rico: Retos y Soluciones” Presentation by Eng. Carlos Contreras

Case:17-03283-LTS Doc#:240-2 Filed:05/31/17 Entered:05/31/17 17:37:19 Desc:

Exhibit B Page 58 of 58