The Fiscal Agency & Financial Advisory Authority (FAFAA) expects to renegotiate part of the debt of the Puerto Rico Infrastructure Financing Authority (PRIFA) and the Puerto Rico Industrial Development Company (PRIDCO) before the end of the year.
In the same period, FAFAA will also decide whether the Electric Power Authority's (PREPA) Restructuring Agreement (RSA) is appropriate, the agency will work on a plan B if it does not prevail in litigation over Law 29 - that would reduce the burden on municipalities -, and will seek interaction with the Oversight Board before the federal entity files the government's adjustment plan to federal judge Laura Taylor Swain.
These are some of Omar Marrero's top priorities, who just a month ago became FAFAA's third executive director in less than three years.
Yesterday, in an interview with El Nuevo Día, Marrero said he was "on Puerto Rico's side" when asked if he considers himself part of the group of agency heads that "survived" the political crisis triggered by former Governor Ricardo Rosselló Nevares, and his closest collaborators, or as part of the new administration that Governor Wanda Vázquez Garced has tried to project.
During the interview, the former director of the Public-Private Partnerships Authority (P3A) and the Central Recovery and Reconstruction Office (COR3) sought to dispel doubts in certain financial circles over his work, and acknowledged that, at best, he has 14 months to achieve concrete results in light of the requirements of PROMESA and the Board.
Building bridges with the Board
Aware of the little time left before general elections, Marrero explained that Vázquez Garced's administration will not go into unnecessary controversies with the Board and that the government will seek to be part of the mediation process in Title III cases ordered by Judge Swain.
"We are going to try to intercede because, at the end of the day, it costs us less," Marrero said, revealing that he has already communicated Vázquez Garced's position to Judge Barbara Houser.
The judge presiding the bankruptcy court in the Northern District of Texas heads the team of mediation judges that Swain appointed two years ago to resolve controversies associated with PROMESA Title III cases.
The mediation process resumed this week, El Nuevo Día learned.
Marrero indicated that although the government's adjustment plan is an exclusive responsibility of the Board, he told Houser and the federal entity about the need for the government to be able to participate in the process.
"We hope to be part of this process and to find an opening. We want to be optimistic without being candid," Marrero said.
During last July's general hearing, amid corruption scandals and the leaked Telegram chat, Swain asked the government, the Board and creditors to reactivate the mediation process.
However, he made it clear that the government's conciliatory position before the Board does not mean there will be no differences. "There is greater openness. We can all recognize that circumstances have changed and that more detachment is required. Yes, we are going to have a working relationship, but, as my old man would say, politeness does not take away the brave, and there will be things on which we are not going to agree," he stressed.
El Nuevo Día asked whether Vázquez Garced will pay the Christmas bonus and reject pension cuts agreed between the Board and the Official Retirees Committee, two issues on which Rosselló Nevares drew the line.
"There are different public policy issues under review. Everything is being re-evaluated to make sure there will be an informed decision," Marrero added, explaining that both he and the government representative to the Board, Elí Díaz Atienza, have decided to examine part of what their predecessors did.
The aim is for the governor to receive enough information, either to reaffirm Rosselló Nevares' public policies on fiscal matters or to adjust them, if necessary, and the agreement to restructure PREPA is part of that evaluation.
Marrero does not plan to modify the terms of the public corporation's RSA, but he does plan to ensure that this is in line with the privatization of the transmission and distribution network and conversations to allocate federal funds to its infrastructure.
According to Marrero, one of the main concerns is to ensure pension payments over time, and for this reason, Vázquez Garced called the Retirement Systems Administration head (ASR, Spanish acronym), Luis Collazo Rodríguez, into the fiscal team.
In essence, the government needs to find an alternative for the government itself or for municipalities, after Law 29 was approved this year. The statute exempted municipalities from contributing to the Health Reform and the "PayGo" system, making the payment of pensions an exclusive obligation of the General Fund.
"As for Law 29, the position will be to defend it (in court) because at least 40 municipalities are in a really bad situation," Marrero said.
"We are evaluating alternatives to Law 29 to mitigate the impact if it does not prevail in court. We are preparing for the worst," he said.
WIPR and the Supreme Court
Although for Marrero it is necessary to review positions taken in fiscal matters, some things will not change. These include the privatization of the Public Broadcasting Corporation (WIPR) recommended by the Board and the outsourcing of public services to the private sector.
Vázquez Garced's administration will not change the government's position in the litigation seeking to invalidate the actions the Board took over the last three years after the Boston First Circuit Court of Appeals declared the federal entity unconstitutional. While more than a dozen organizations and political figures have filed amicus curiae briefs insisting on invalidating the Board´s actions, the government has favored the "de facto officer" doctrine that established the First Circuit Court of Appeals and has allowed the federal entity to continue in office.
"You have to be pragmatic," Marrero said, suggesting that if the Board's actions were to be invalidated, the debt adjustments already achieved - that total about $22 billion, or about half of the debt under PROMESA Title III - would also be invalidated.
"We understand that our position is the right one, not only because it validates the actions that have been taken, but because it has the best interests of Puerto Rico in mind," Marrero said.
"The effect would be bad," the attorney added, indicating that while the goal "is to end the Board and get out of PROMESA," while the statute is in force, it is necessary to try to fulfill its objectives.