2023 Laws of Puerto Rico › TITLE TWENTY-ONE - Municipalities (§§ 1-4 — 6756) › Subtitle 7 - Municipal Property Tax (§§ 5001 — 6756) › PART III (§§ 5901 — 6756) › Chapter 261 - Municipal Financing Act of 1996 (§§ 6001 — 6029) › § 6002 - Definitions

For the purposes of this chapter, the following words and phrases shall have the meaning stated below, except when it is otherwise construed from the text:
(a) Mayor.— Shall have the same meaning as the term “mayor” is defined in §§ 4001 et seq. of this title, or in any subsequent municipal enabling act.
(b) Legislature.— Shall have the same meaning as the term “legislature” is defined in §§ 4001 et seq. of this title, or any subsequent municipal enabling act.
(c) Government Bank.— Shall mean the Government Development Bank for Puerto Rico, organized under §§ 551 et seq. of Title 7.
(d) Special obligation bonds, notes or instruments.— Shall mean those bonds, notes, notes in advance of bonds or any other credit instruments which evidence the obligations of a municipality for the prompt payment of which only the revenues or resources derived from one or more specific sources of income authorized by this chapter or by any other laws of the Commonwealth of Puerto Rico or of the United States of America, including, but without being limited to the basic taxes; any special tax on real or personal property within the municipal territory, except the special surtax and the special tax; the remittances of operating funds made by the Center pursuant to § 5816(e) of this title; appropriations or grants from any agency, instrumentality or body of the Government of the Commonwealth of Puerto Rico or the Government of the United States of America; and compensations of certain public corporations of the Commonwealth of Puerto Rico, have been encumbered.
(e) Municipal general obligation bonds or notes.— Shall mean those bonds, notes, or notes in advance of bond which evidence the obligations of a municipality for the prompt payment of which the good faith, credit and unlimited taxing power of the municipality have been encumbered.
(f) Refinancing bonds, notes or instruments.— Shall mean those bonds, notes or notes in advance of bonds or any other instruments which evidence the obligations of a municipality incurred by a municipality to provide the full or partial payment of the remaining principal and/or interest on outstanding bonds, notes, notes in advance of bonds, or other instruments.
(g) Revenue bonds.— Shall mean those bonds which evidence the obligations of a municipality, issued by the municipality for the prompt payment of which the revenues of a revenue generating project have been encumbered or pledged.
(h) Center.— Shall mean the Municipal Revenue Collection Center, established by virtue of §§ 5801 et seq. of this title.
(i) Surtax.— Means the special additional property tax that the municipalities are authorized to impose by § 5002 of this title, and that the municipalities shall impose pursuant to § 6016 of this title in order to pay, first and foremost, the principal and interest on obligations evidenced by general obligation municipal bonds or notes and the interest on obligations evidenced by general obligation municipal notes in advance of bonds that the municipalities may incur. In the case of the portion that constitutes “excess in the redemption fund” it can be used for the purposes authorized in subsection (n) of this section.
(j) Basic tax.— Shall mean the basic tax on property that the municipalities are authorized to impose pursuant to § 5001 of this title.
(k) Special tax.— Shall mean the special tax on property imposed pursuant to § 5002 of this title, for the payment of principal and interest on the general obligations of the Commonwealth of Puerto Rico.
(l) Cost.— Shall mean the cost of acquiring, developing and/or constructing public works or the revenue generating projects, and those costs incidental to such an acquisition, development or construction, including, but not limited to the following:
(1) Purchase price and/or financing of the purchase of equipment;
(2) obligations incurred with contractors, developers, suppliers or other persons for work performed, and/or the acquisition of supplies related to the construction of the public work or the revenue generating project;
(3) purchase price, when said purchase is necessary, including the price or any purchase option, or the compensation to be paid as a result, be it judicial or extrajudicial, of the procedure to acquire through eminent domain property, rights of way, or other real rights on all or part of urban or rural lands that are necessary and convenient for the development and construction of the public work or revenue generating project;
(4) compensation for any damages for which the municipality is legally liable caused by the development or construction of the public work or revenue generating project;
(5) fees and expenses of the fiscal agent and/or the paying agent; attorney’s fees and expenses, consultant’s fees and expenses; finance charges; expenses incurred for the preparation and issuing of bonds, notes or notes in advance of bonds to finance the public work or revenue generating project; premiums or other expenses that must be incurred to acquire and keep in effect any insurance or warranty related to the bonds, notes, or notes in advance of bonds issued to finance said public work or revenue generating project;
(6) fees and expenses of architects and engineers related to the preparation of surveys, research and tests needed for the preparation of plans, specifications and the supervision of the construction, as well as any other expense of said nature related to the design or construction of the public work or revenue generating project;
(7) insurance or bond premiums related to the public work or revenue generating project during the construction period;
(8) interest on financing to be paid during the construction or development of the public work or revenue generating project and during any additional period determined by the municipality through an ordinance or resolution to such effects;
(9) administrative expenses that can reasonably be charged to said public work or revenue generating project and all other expenses that have not otherwise been specified in this definition which are incidental to the acquisition, development or construction of the public work or revenue generating project, and
(10) any obligation or expense incurred by the municipality and any advance or contribution made by the municipality, the Commonwealth of Puerto Rico, or any of its agencies or instrumentalities, the Goverriment of the United States of America, or any of its agencies or instrumentalities or any other source, for any of the purposes indicated in this definition.
(m) State of emergency.— Shall mean a state of emergency decreed by the Governor of the Commonwealth of Puerto Rico.
(n) Excess in the redemption fund.— Means that portion of the annual yield of the surtax and deposits in the Municipal Public Debt Redemption Fund that is not directly encumbered for the servicing of the general obligation municipal bonds or notes in effect and which for said reason is available for early redemption of general obligation municipal bonds or notes that could be issued by the municipality, and in [the] second instance, for the payment of any statutory debt, or debt with the Municipal Revenues Collection Center and, in the case that the municipality has provided for the payment of said debts, for any other municipal purpose.
(o) SGELF.— Shall mean the Special Government Entities Loan Fund established by virtue of § 121 of Title 15, and which is under the management and custody of the Government Bank.
(p) Redemption Fund.— Shall mean the trust known as the Municipal Public Debt Redemption Fund established by the Center with the Government Bank. This trust has an account for each municipality in which the Center deposits the entire product of the special surtax imposed by each municipality, and any other resource from other sources, as established in § 6016 of this title, which is needed to service the obligations evidenced by municipal general obligation bonds or notes, or notes in advance of general obligation bonds of each municipality. Every quarter, the Bank shall remit to the municipalities the interest generated by the deposits to their accounts in the Redemption Fund.
(q) Governor.— Shall mean the Governor of the Commonwealth of Puerto Rico.
(r) Municipal retail sale and use tax.— Means the retail sale and use tax levied by municipalities and collected by the Secretary of the Treasury, deposited in the Government Development Bank for Puerto Rico into the Municipal Development Fund and the Municipal Redemption Fund established and defined in Sections 2707 and 2708, respectively, of Act No. 120 of October 31, 1994 known as the “Puerto Rico Internal Revenue Code of 1994”, available for the granting of loans pursuant to what is set forth in said provisions.
(s) Instrument or credit instrument.— Shall mean any obligation to pay back borrowed money which is not evidenced by a bond or note. The Government Bank shall establish, through regulations, the credit instruments that shall be subject to the provisions of this chapter.
(t) Bidding Board.— Shall mean the Bidding Board constituted by each municipality whose main responsibility is to adjudicate the bids for, among other things, the purchase of goods, lease contracts for real and personal property, and nonprofessional services contracts.
(u) Municipality.— Shall have the same meaning as the term “municipality” is defined in § 4001 of this title or any succeeding municipal enabling act.
(v) Notes in advance of bonds.— Shall mean those notes which evidence municipal obligations, the principal of which shall be paid from the product of the bond issue.
(w) Notes or instruments in advance of taxes and revenues.— Shall mean those notes or any other instruments that evidence obligations incurred by the municipality in advance of the collection of the basic tax or other operating revenues to be collected or received after the date of said notes or instruments, and for the prompt payment of which all or part of said tax or said operating revenues of the municipality are encumbered.
(x) Revenue generating projects.— Shall mean any work, structure or project, including equipment, that the municipality is legally authorized to acquire, develop or construct, and which shall become a source of revenue for the municipality.
(y) Refinancing.— Shall mean the payment of any obligations with the product of new obligations, when or before they mature.
(z) Secretary.— Shall mean, as the case may be, the person or persons who hold the positions of Secretary of the municipality, Secretary of the Assembly, or Secretary of the Bidding Board.
(aa) Service.— Shall mean the periodic payment of principal and interest on an obligation according to the terms established in the title that constitutes the obligation.
History —July 3, 1996, No. 64, § 3; Aug. 12, 1997, No. 75, § 2; May 4, 2001, No. 28, § 1; July 29, 2007, No. 81, § 2.