2023 Laws of Puerto Rico › TITLE TWENTY-ONE - Municipalities (§§ 1-4 — 6756) › Subtitle 7 - Municipal Property Tax (§§ 5001 — 6756) › PART III (§§ 5901 — 6756) › Chapter 264 - Municipal Administration Fund Act (§§ 6741 — 6745) › § 6742 - Purpose of the Fund

(a) Beginning on July 1, 2014, the funds transferred to the MAF as provided in § 6741 of this title shall be distributed to the municipalities in the manner provided below. Such distribution shall be made automatically without the need for further action by the GDB.
(1) An amount equal to forty percent (40%) of the zero point five percent (0.5%) of the State IVU deposited in the MAF shall be transferred to the Municipal Development Fund of each municipality and distributed in accordance with § 32127 of Title 13. Notwithstanding the foregoing, in the case of those municipalities that have availed themselves of the exception provided in § 6743 of this title and have permanently waived the Municipal Development Fund distribution corresponding to them as provided in § 32127 of Title 13, the Municipal Development Fund distribution corresponding to such municipality shall be redistributed among those municipalities that have not availed themselves of the exception provided in § 6743 of this title.
(2) An amount equal to forty percent (40%) of the zero point five percent (0.5%) of the State IVU deposited in the MAF shall be transferred to the Municipal Redemption Fund of each municipality and distributed in accordance with § 32128 of Title 13. Notwithstanding the foregoing, in the case of those municipalities that have not availed themselves of the exception provided in § 6743 of this title and have not permanently waived the Municipal Development Fund distribution corresponding to them as provided in § 32127 of Title 13, the amount corresponding to their Municipal Redemption Fund shall be deposited directly into their general fund as received. At their discretion, and if they deem so convenient, any portion of the funds corresponding to municipalities may also be transferred to their general fund to contribute such amount to their Municipal Redemption Fund, in accordance with § 32128 of Title 13. Thus, they can increase their credit capacity and/or cover any deficiency in the Redemption Fund to service municipal debts, provided that such municipalities deposit at least ninety percent (90%) of the Municipal IVU in their general fund. Such transfer shall be made as provided in the regulations to be adopted by the GDB.
(3) An amount equal to twenty percent (20%) of the zero point five percent (0.5%) of the State IVU deposited in the MAF shall be transferred to the Municipal Improvement Fund of each municipality and distributed in accordance with § 32129 of Title 13. If, as a result of an insufficiency in municipal tax revenues for any fiscal year, the “Municipal Finance Corporation” (COFIM, Spanish acronym) debt service exceeds: (a) the product of (X) the amount of Municipal IVU collected during the preceding fiscal year multiplied by (Y) a fraction whose numerator shall be zero point three percent (0.03%) and whose denominator shall be the Municipal IVU rate (COFIM’s deficiency), the funds deposited in the MAF to be allocated to the Municipal Improvement Fund shall be reduced by COFIM’s deficiency, and such deficiency shall be distributed in favor of municipalities according to the proportion of total revenues represented by the portion collected by each municipality. The total funds remaining in the Municipal Improvement Fund after deducting the portion used to cover the Deficiency shall be distributed by means of legislation as provided in § 32129 of Title 13.
(b) Notwithstanding subsection (a) of this section and any other applicable law, the distribution from the Redemption Fund and/or the Municipal Development Fund corresponding to any municipality shall be reduced as provided below:
(1) First, with regards to all municipalities, if there are any outstanding advances made in accordance with the Enabling Act of COFIM, such outstanding advances corresponding to a municipality shall first be reimbursed to the GDB, and
(2) once the outstanding advances are reimbursed to the GDB, municipalities that have not availed themselves of the exception provided in § 6743 of this title and have not permanently waived the Development Fund distribution corresponding to them, as provided in § 32127 of Title 13, shall have the amount corresponding to them reduced by an amount equal to the debt servicing of such municipality transferred to, and refinanced by, COFIM that is in excess of such municipality’s contribution from their Municipal IVU to pay COFIM’s debt service (“Municipal Deficiency”). The amount deducted from any municipality as a result of a Municipal Deficiency, if any, shall, for any period in question, be distributed and deposited as provided below:
(A) first, in the general fund of municipalities that have not availed themselves of the exception provided in § 6743 of this title, whose Municipal IVU contribution to pay COFIM’s debt service was in excess of the debt service of such municipalities transferred to, and refinanced by COFIM, and that have not been otherwise compensated by COFIM and this chapter; and
(B) if there were an excess after such compensation, in the general fund of municipalities whose Municipal Deficiency has been covered by COFIM and this chapter, in proportion to their Municipal IVU revenues.
History —Jan. 24, 2014, No. 18, § 1.3, eff. Feb. 1, 2014.