December 26-28, 2014
The San Juan Daily Star
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December 26-28, 2014
The San Juan Daily Star has exclusive New York Times News Service in English in Puerto Rico
Guaynabo Special Community
Residents Breathe Easier with
Expropriations Derailed
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judge’s recent determination to dismiss an expropriation process initiated by Guaynabo to
obtain land in the Vietnam Special Community of that municipality has given the residents back
their hopes after a nearly decade-long fight to defend
their right to remain in their homes, which are located in an area of high socio-economic development
potential.
San Juan Superior Court Judge Leticia Ortiz
Feliciano’s determination is a blow to Guaynabo Mayor Héctor O’Neill’s longtime dream of converting
the area into the Guaynabo City Waterfront, a project
he has been trying to start for over seven years now
and which he insists he is doing in a way that will
ultimately improve the lives of Vietnam residents.
The development would have included
everything from a hotel, an oceanfront boardwalk,
an acoustic band shell, million-dollar homes, beachfront stores, restaurants and a yacht club. All this
would have been constructed in the only oceanfront
area in Guaynabo.
But Ortiz Feliciano concluded that the municipality did not comply with the legal requirements
established to conduct an expropriation process at a
special community.
The area was designated as a Special Community in 2001 by former Gov. Sila Calderón, and residents living in special communities have since been
protected from having their homes expropriated.
One of the amendments made to the Special
Communities Law was the inclusion of Article 232,
which states that for a town to be able to expropriate
the homes in a special community, 75 percent of its
residents must agree with the expropriation.
“This lawsuit began in 2007 when the Guaynabo
mayor [O’Neill] sued the Special Communities Oﬃce and asked the court to leave without applying the
special communities designation for the communities in Guaynabo, because a designation implies that
they are protected not only by Law 1 of the Special
Communities but by the amendments,” Puerto Rico
Legal Services and Vietnam Community attorney
Hadassa Santini said. “For many years, Guaynabo
has wanted to develop in those communities; in this
case they want to develop in Vietnam and Corea, since they overlook the San Juan Bay. The town wants
these communities because they are prime real estate
properties.”
According to the lawsuit, the expropriation
process began in 2009, when Guaynabo came to an
agreement with a Vietnam home owner. However,
the municipality did not include third parties in the
negotiation process.
“The municipality lacked the necessary legal
powers to acquire the properties through a forceful expropriation process,” reads the judge’s ruling,
about which
O’Neill has not issued an oﬃcial statement.
Vietnam Community Vice President Víctor Cerda said the ruling “is a great achievement for our
community.”
“We are just so relieved. … We can finally sleep
calmly,” Vietnam resident Jerry Morales added.
For years the residents have been awakened
by the sounds of machines demolishing homes or
streets, or knocks on the door by municipal staﬀ
trying to convince them to sell their properties.
Santini said that since 2009 the municipality
has expropriated more than 200 homes.
There are 364 families still living in the Vietnam
Special Community, down from the original 600.
Some Vietnam residents have lived in the seafront area most of their lives.
Some were born there, others have been there
since their parents helped establish the area in the
1960s and ‘70s. They have raised their children there,
and many of those children now are raising the next
generation in this poor yet beautiful seafront community.
Guaynabo is a financially stable municipality
known for its beautiful landscapes and mountains.
Expensive homes can be seen across the town, but
numerous low-income sectors, special communities and public housing projects also inhabit this
northeastern town that forms part of the San Juan
metro area.
Continues on Page 4
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From Page 3
Vietnam residents began to notice
something was up in 2006b when municipal workers began arriving and entering
properties – allegedly without owners’
consent – and taking measurements. Several weeks later they would receive a letter
stating that their home had been appraised
and their check was available at Guaynabo
City Hall.
However, most residents didn’t sell
their homes to the municipality because
they were aware that after the area was designated as a Special Community in 2001
by Calderón, they were protected from expropriation.
Ángel Herrera, who has lived in Vietnam for the past 50 years, said justice has
finally been done for Vietnam residents.
“They would have had to take me out
with the bulldozer,” Herrera said. “I would
have never given in.”
“The Guaynabo municipality has already engaged in forceful expropriations,
this was proven in the court documents,
and that aﬀected the health of the elderly
people in my community,” Herrera said.
“We are talking about old people, who if
taken out of their environment, would
have died. … Vietnam is all they know.”
Guaynabo had successfully expro-
The San Juan Daily Star
December 26-28, 2014
priated many residents by the time the
court issued its determination and empty lots, filled with debris, piles of dirt
and cement, are more common than homes now. More than 100 homes were demolished in 2007. Santini said those residents were forced out of their homes.
“They received letters stating that
their homes were going to be expropriated, but they didn’t really understand
what was going on,” Santini said. “Then
one morning the trucks were outside
and they were told to take what they
could and get out because they were there to demolish the homes. Some of them
moved to Villa Concepción, a complex
O’Neill built for this community so he
could build the Guaynabo Waterfront.”
Half of the homes on Street N have
been demolished, but Santini said that
those owners did in fact sell their properties to the municipality.
Some residents were willing to sell
their home if the municipality gave them
another one that fits their needs, with the
same amount of space and number of bedrooms and bathrooms.
The homes on Street B are the most
valuable ones because of their waterfront
location and spacious yards. Several of the
houses contain up to five bedrooms and
three bathrooms. Large kitchens, dining
rooms, living rooms and large backyards
filled with fruit trees and vegetable gardens are not uncommon, with palm trees
and wooden decks that extend out into
the bay. The view from those backyards,
beyond the bay, is of Condado, the Puerto
Rico Convention Center in Miramar and
the Capitol building in Puerta de Tierra.
Some even have fishing boats moored just
yards oﬀshore from their homes.
Javier Rodríguez, one of the homeowners on Street B, said the mayor went to see
him about two years ago to try and convince him to sell his property.
“The mayor said that I was the reason that his project was being delayed, because I never conceded,” Rodríguez said.
“And I told him that I wasn’t the only one;
that this is an entire community, and the
ones who are leaving are doing so because
they fear they will be left with nothing in
the end. We are protected by the law and
they can’t force us out. That’s why I can’t
understand why some residents fear the
worst.”
Before the court’s decision O’Neill defended his vision and said that he planned
to improve the residents’ quality of life.
He said that rather than building a
big public housing project like Llorens Torres in Isla Verde, he prefers building small
complexes, with controlled access that
helps lower criminal activity, where the
residents can unite in groups and serve as
an example to showcase the services of the
municipal government.
“My plan for the area is a process
that will take eight to nine years, which
includes having them leave their home
and move into to a new one we made for
them,” O’Neill said several months ago.
“I believe in helping the less privileged
and that’s what I’m doing by taking care
of those whom every single government
has forgotten to take care of. These people
are living in subhuman conditions that are
prone to rain, flooding and contamination.
I am trying to help them. It’s my responsibility.”
The Guaynabo mayor added that
there was a serious social problem in the
Vietnam sector, where two and three families live in the same house. That is why
he wanted to build each family their own
home.
He said that in the early 1960s, before
the first residents began to build homes in
the Vietnam sector, the area was just a natural mangrove swamp that was filled in
with cement to accommodate a booming
population.
He added that the sector had an inadequate sewage system that frequently
floods.
“All I want to do is make their lives
easier by giving them nice homes near
where they grew up,” O’Neill said.
The Guaynabo Waterfront would have
been O’Neill’s most ambitious project yet,
complete with a fishing wharf and market,
boardwalk, boxing gym and concert venue
against the San Juan Bay backdrop.
But now, the Guaynabo mayor must
put that dream aside, as the Vietnam residents finally won their legal battle against
the municipality. They hope that the residents that did leave, come back and start
their lives over once again where they
were born and raised.
The San Juan Daily Star
December 26-28, 2014
5
Gov’t to Appeal Ruling in Doral Tax Deal Case
By EVA LLORENS VELEZ
[email protected]
P
uerto Rico Justice Secretary César Miranda said that on or before Jan. 2, the agency will appeal
the recent ruling that validated a 2012
closing agreement in which the commonwealth government pledged to
pay a refund of almost $230 million to
Doral Bank.
The appeal comes days after federal authorities raided the bank in
search of documents related to the
2011 slaying of Doral Executive Vice
President Maurice Spagnoletti. It also
comes as the bank faces financial struggles as it is undercapitalized and
threats to be removed from the stock
market.
“Justice will appeal the ruling on
Doral on or before the expiration of the
term set for January 2,” Miranda said
in written statements released by the
press office.
With that statement, the agency
put an end to speculation that the government might try to negotiate a payment plan with Doral and that it would
not appeal the ruling.
Still, experts believe the government will lose the case as it will be unable to prove that the bank misrepresented data.
As previously reported by the
Star, last October, Superior Court Judge Laureana Pérez Pérez declared valid an agreement in which the island
Treasury Department pledged to pay
the island’s largest mortgage lender
a refund of $229.8 million. The judge,
who issued a detailed 50-page ruling,
said the evidence showed that the bank
did not make any false representations
to the agency and that Treasury voluntarily agreed to grant the refund.
Although Treasury argued that the
Internal Revenue Code does not allow
a refund if an overpayment of taxes has
not been made, the agency was unable
to prove that Doral did not pay more
than its due share of taxes.
Pérez Pérez in a decision noted
the testimony of the now Secretary of
the Treasury, Juan Zaragoza, who said
it was not illegal for the agency to convert a “deferred tax asset” into a refund
if the secretary authorizes it.
Although the government hopes
to challenge the payment of the refund,
the law requires payment plans against
the government to be scheduled over
long periods of time in order to support
efforts to achieve fiscal stability.
The 2012 closing agreement says
the payment plan is for five years in
five installments.
Meanwhile, Doral Bank is waiting
for the Federal Deposit Insurance Corp.
(FDIC) to approve a revised restoration
of capital and contingency plan after
rejecting its initial plan in October. Doral does not have sufficient tier-one capital.
6
The San Juan Daily Star
December 26-28, 2014
SJ Schools in School Improvement Program Show Advances
By MARIA MIRANDA SIERRA
[email protected]
E
ducation Secretary Rafael Román recently met with the directors of various
schools that are under the School Improvement Grant (SIG) Program in the San
Juan Educational Region to discuss proposals to improve student academic achievement and retention, and to transform their
respective school environments.
The schools represented at the meeting -- part of a series of meetings Román
is holding to address the transformation of
the educational system and the ongoing administrative restructuring of the Education
Department -- by their respective directors
were Arturo Morales Carrión Second Region, Emilio Huyke High School, Manuel
Cuevas Bacener, Rosalina Martínez and Dr.
Facundo Bueso.
“The schools participating in the SIG
program have demonstrated a positive
change in terms of their school environment, the staﬀ’s professional development,
the integration of technology in their academic curriculum and community initiatives,” Román said.
Román added that in order to contribute and for this change to continue, “we
discussed some proposals aimed at supporting the administrative and disciplinary
processes in their schools, in a way that they
can continue with the school’s transformation in all educational communities.”
Last September the federal Education
Department re-endorsed the SIG Program,
which is registered under the local Edu-
cation Department’s School Improvement
Oﬃce (OME by its Spanish acronym), for
“showing significant progress” in its implementation.
The OME oﬀers technical assistance
to school directors, in addition to orientation workshops to improve school environments and the coordination of eﬀorts with
the School Districts.
“About 95 percent of the schools in
the SIG Program have demonstrated positive results on the Puerto Rican Achievements Tests (PPAAs by the Spanish acronym), improving from basic and pre-basic to
proficient and advanced scores in the tests’
basic subjects,” said OME Director Lisandra Fradera.
“A positive change was demonstrated
at all of the schools in terms of the school
environment, staﬀ professional develop-
ment, the technological integration in the
academic curriculum and community initiatives,” she said. “I addition, the majority
of the schools reported an increase in their
enrollment this school year, showing transformation and progress.”
As part of the transformation strategies of the schools in the SIG Program,
Fradera noted that school directors analyzed the results of the PPAAs to identify
which subjects are the most significant at
the schools they direct and which subjects
reflected the most progress.
In addition, the school directors designed the strategies they will implement
this year to increase student academic
achievement and retention and to improve
the school environment.
In addition to the analysis, the directors completed a Comprehensive Authentic
School Plan to ensure that the federal Education Department awards Title 1 Part A
funding.
Currently, 22 schools in the SIG Program oﬀer extended school hours that
include reinforcing basic classes and enrichment activities for the integration of
technology into coursework, with funding
at $23 million. Last year, 97 schools SIG
schools reached 39,138 students at a cost of
$138 million.
The selection of the SIG Program
schools began in 2012, in accordance with
the federal Education Department’s requirements.
The 22 schools currently in the SIG
Program will remain in the program for the
next two years, and will continue receiving
the services from the providers, following
federal regulations. These schools, all under the Transformation Model, participate
in the SIG Program for a three-year period,
until achieving a level of sustainability once
the services culminate.
“Last February, the SIG Program received a routine monitor visit by a group
of federal Education workers. As part of
the agenda of these workers, they visited
an Educational Region and four schools,”
Fradera said. “They also interviewed three
service providers. During the visits to the
schools, the federal workers observed how
classes were conducted and interviewed
students, teachers, school staﬀ, parents
and guardians. During the visit, the federal
workers congratulated the local agency for
demonstrating significant progress in SIG
Program implementation.”
Police Chief Looking into Possible Silent Overtime Protest by Agents
By MARIA MIRANDA SIERRA
[email protected]
P
olice Superintendent José Caldero said he is investigating police
agents who have intentionally removed the insignias from their hats as
part of an alleged protest of nonpayment
of overtime, and for being assigned to
work shifts during the Christmas holidays.
The alleged protest by police oﬃcers
has been evident during oﬃcial activities
in which Caldero has been participating,
and where several agents have been
caught by photojournalists’ cameras not
wearing their “titles” on their hats.
Although high-ranking police oﬃcials that have been present at diﬀerent
activities with Caldero over the past
week, they apparently haven’t noticed
the agents’ “incomplete uniforms.” But
the photographs taken by the press at
these events clearly show the oﬃcers
standing behind the superintendent without their corresponding insignias.
“We have to investigate and
analyze the cases, because that is an
irregularity,”Caldero said. “I had no
knowledge of this, but we are going to
work on the issue.”
In addition, some police oﬃcers
have failed to show up to work during
the Christmas holidays and Caldero said
the Police Department will be “energetic” if it is found out that there has been a
concerted plan by oﬃcers to miss work.
“I trust on my police. Nevertheless,
we are monitoring this and the people of
Puerto Rico can be sure that if we find
out that there is pattern of oﬃcers calling in sick, we will be energetic on this
issue,” Caldero said adding that he guarantees that citizens will be safe during
the holidays.
Caldero confirmed that last weekend (Dec. 19-Dec. 21), 545 police called
in sick. He said some 275 agents called in
sick for Saturday’s 4 a.m. shift , while 413
agents working the noon shift called in
sick on Saturday as well.
The San Juan Daily Star
December 26-28, 2014
7
8
The San Juan Daily Star
December 26-28, 2014
Feds to Develop ‘Energy Action Plan’ for PR
By MARIA MIRANDA SIERRA
[email protected]
P
uerto Rico Resident Commissioner Pedro Pierluisi announced that the comprehensive
federal spending bill for Fiscal Year
2015, which was signed into law
this week, includes a provision that
he endorsed requiring the federal
government to develop an “energy
action plan” for Puerto Rico and the
four other U.S. territories, with the
goal of helping to reduce the cost of
electricity in each of these island jurisdictions.
In June 2013, Pierluisi testified
in support of this provision at a hearing before the Senate Committee on
Energy and Natural Resources.
As of October 2014, the average
cost of electricity in Puerto Rico was
about 26.7 cents per kilowatt-hour
(kWh) for households and 27.1 cents
per kWh for businesses, which is extraordinarily high when compared to
electricity costs in the mainland U.S.
“Section 9 of this new law requires the Secretary of the U.S. Department of the Interior -- within 180
days -- to appoint a team of technical,
policy and financial experts to develop an energy action plan for Puerto
Rico and to help the government of
Puerto Rico implement this plan,”
Pierluisi said.
“Pursuant to the new law, the
action plan must contain concrete recommendations to help Puerto Rico
reduce its reliance on fuel shipped
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from foreign countries, to better utilize domestic U.S. energy sources,
and to improve the reliability and
eﬃciency of the electrical grid in
Puerto Rico,” he added.
The team of experts is required
to establish a schedule for the implementation of the recommendations
contained in the energy action plan,
as well as to create a financial and
engineering plan to carry out specific energy projects. The team will
have to provide reports to the secretary of the Interior and to Congress
detailing its progress.
“The high cost of electricity in
Puerto Rico strains family budgets
and is regularly cited as the most
burdensome factor for current and
prospective island businesses,” Pierluisi said. “The federal action plan
will provide a blueprint to help the
government of Puerto Rico diversify
its energy portfolio and reduce electricity rates, thereby improving the
environment, bringing financial relief to consumers, and strengthening
the local economy.”
In another major energy-related achievement for Puerto Rico
within the past two years, the U.S.
Department of Health and Human
Services (HHS), following a request
by Pierliuisi, took administrative
action to increase the amount of federal funding it provides to Puerto
Rico under the Low Income Home
Energy Assistance Program (LIHEAP), which helps households pay
their electricity bills. In Fiscal Year
2013, Puerto Rico received less than
$4 million annually under LIHEAP,
which is administered by the Puerto Rico Family Department. Puerto
Rico now receives about $15 million
a year, an $11 million increase. Over
the next decade, this will represent
an increase in federal funding for
Puerto Rico families of approximately $110 million.
Under the old federal funding
formula, some 250,000 individuals
in Puerto Rico received assistance
under LIHEAP. With the increase
in funding, it should be possible to
provide assistance to hundreds of
thousands of additional island residents.
“Although Puerto Rico is still
treated unequally under LIHEAP
compared to the states, we are treated much better than we were before, and this additional funding will
help many hard-working families in
Puerto Rico aﬀord their electricity
bills,” Pierluisi added.
The San Juan Daily Star
December 26-28, 2014
9
New Law Diversifies IRAs, 401(k)s as Investment Tools
By EVA LLORENS VELEZ
[email protected]
G
ov. Alejandro García Padilla has
signed into law a measure that
allows for flexible use of capital invested in individual retirement accounts
(IRAs) and 401(k)s, thus diversifying their
performance and promoting other types
of investments.
According to La Fortaleza, the bill
was authored by Popular Democratic Party Sen. Ángel Rosa as part of a package
of measures to stimulate the use of Puerto
Rican capital as a source of economic development and job creation.
The new law allows money from
IRAs and 401(k)s to qualify to be invested
through mutual funds and investment
trusts that are enabled in the Investment
Company Act of 2013 (Act 93-2013), also
authored by Sen. Rosa.
“I thank the governor for his endorsement of this legislation as part of strategies to put Puerto Rico on the path to
economic growth and job creation,” the
senator said in written remarks. “Now
the money from IRAs and 401(k)s may be
invested, if the owners wish, in the Puerto Rican economy. This new possibility
would increase the performance of these accounts, and at the same time it adds
another source of capital for Puerto Rican
entrepreneurs with good business ideas.”
During the legislative process, the
bill had the support of the Oﬃce of the
Commissioner of Financial Institutions
(FICO), the Association of Commonwealth
Employees, Universal Life Insurance and
Popular Inc. The latter three firms make
up 60 percent of the investments made in
IRAs in Puerto Rico.
Rosa said the new law is part of the
eﬀort to replace with local capital money
that was lost to the economy following
the repeal of Section 936 tax incentives
of the U.S. Internal Revenue Code. The
economy of Puerto Rico will not move
forward if it only depends on foreign capital, he said.
“We need local capital sources and
are determined to stimulate them,” Rosa
said. “With this law, IRA investors who
want a higher return on their money may
choose instruments that were previously
unavailable in that market.”
Prominent Asset Manager/Underwriter Urges Avoidance of PR Bonds
By EVA LLORENS VELEZ
[email protected]
I
nvestors should avoid buying municipal
bonds from Puerto Rico because of concerns that certain public corporations
may not meet their payment obligations,
the president and CEO of Lebenthal Holdings told CNBC this week.
The Puerto Rico Electric Power Authority (PREPA) has to make a payment of
$214 million to bondholders on Jan. 1 and
around $34 million to a special fund, sources say. The utility also has to pay bondholders sometime after March around $650
million as part of a forbearance agreement
brokered in August.
“Run fast away from Puerto Rico,”
Alexandra Lebenthal said in an interview.
“I have been saying that for a long time. The
Puerto Rico Electric Power Authority has
been the big issue that people have been fo-
cusing on for a long, long time.”
The big uncertainty is whether PREPA will be able to make its January payment, she said.
“One little ray of hope is that the price of oil going down could be helpful,” she
said, “but it’s a bad situation.”
Earlier this year, there were concerns
that tough times in Puerto Rico might destabilize the entire municipal bond market.
“That has proven to be untrue,” Le-
benthal said.
So far, Puerto Rico has met all of its
obligations to bondholders.
PREPA oﬃcials have said that a restructuring plan slated to be submitted in
March will pave the way for payment to
bondholders a well as the restructuring of
the agency. By mid-January, creditors can
exit the forbearance agreement but oﬃcials
are confident they will fulfill the agreement.
Special Communities Book Chronicles Neglect of Ex-Governor’s Pet Project
By The STAR Staﬀ
A
n extensive and well documented book
which summarizes the original proposal and the later development of the
Special Communities Project begun in 2001 by
then-Gov. Sila María Calderón is newly on the
market.
The book was first presented publicly at
the headquarters of the Foundation the former
chief executive created in Río Piedras.
Written by the acclaimed economist and
sociologist Marcia Rivera, the book “El Vuelo
de la Esperanza” (The Flight of Hope) is available in bookstores, libraries and at the foundation.
“The memory of Special Communities
should be known by all generations of Puerto Ricans committed to justice and human
rights along with life quality and equal opportunities in all its dimensions, and especially, peace,” said the author in her introduction.
“[The Project] lit a flame in the community residents which will not be extinguished,” said the former governor.
Several community leaders spoke at the
presentations, representing Estancias del Sol,
in Río Grande, which worked to get itself in
the program after the mayor failed, El Vigía,
in Arecibo, whose spokesperson stressed the
importance of community involvement, and
Callejón de los Buenos, in Juana Díaz.
The presentation was not supported
by the present administration, except for San
Juan Sen. José Nadal Power.
Rivera said there is a clear “before and
after” of the Special Communities Program.
It allowed people who have more to dialogue with those who have less, it allowed us
to look at their faces and understand that if we
don’t contribute to create a society in which
everyonë has freedom of opportunities and
rights, Puerto Rico has no future as a society,”
she said.
Rivera, who is also a recognized political analyst, called the fact that the program
has not continued with the same ímpetus as it
did under Calderón a “national tragedy.”
The first director of the program, Linda
Colón, received a standing ovation, after Rivera noted that she had been indicted but never
charged for some of her actions.
Calderón said the book is “an extraordinary memory of a “great contribution,” which
began many years ago and which aimed to
“do justice to the most needy people.”
The former governor thanked the community leaders for their support for the past
25 years.
“You changed my life since the first time
I visited Cantera,” she said. “It has been an honor to have walked with you and to continue
to walk this road with you.”