Sec. 322. Certifications by Authority
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Not later than 1 year after the date of enactment of this Act and annually thereafter, the Authority shall certify whether any public corporation— does not have sufficient revenue to meet the debt obligations of the public corporation; has defaulted with respect to any loan, bond, note, or other form of borrowing; is unable to meet the payroll of the public corporation for any pay period; has a cash deficit at the end of any quarter of the fiscal year equal to or greater than the difference between— the estimated revenues of the public corporation during the remainder of the fiscal year; and the estimated expenditures of the public corporation (including repayments of temporary borrowing) during the remainder of the fiscal year; and fails to make any required payments relating to pensions and benefits for current and former employees of the public corporation.
If the Authority certifies that a public corporation is unable to meet any of the requirements under paragraph (1), a control period shall be initiated for the public corporation in accordance with section 323. A control period for a public corporation initiated under this subsection terminates on the date on which the Authority certifies that— the public corporation has adequate access to short-term and long-term credit markets at reasonable interest rates to meet the borrowing needs of the public corporation; and for 2 consecutive years after the initiation of a control period, the expenditures made by the public corporation during each fiscal year did not exceed the revenues of the public corporation during that year, as determined in accordance with generally accepted accounting principles.
In making a certification under this subsection, the Authority shall consult with the Government Development Bank of Puerto Rico. If, during a control period for a public corporation, the Authority certifies that over the course of 2 consecutive quarters the expenditures made by a public corporation exceed the revenues of that public corporation in violation of the financial plan and budget required under section 323, the Authority may appoint an emergency manager for the public corporation.
The emergency manager shall exercise all authorities previously exercised by the board of directors and officers of the public corporation under the charter, bylaws, or organic statute of the public corporation or the applicable laws of the Commonwealth. In addition to the authority under clause (i), the emergency manager may propose increases in, decreases in, or other changes to any rates, fees, taxes, or other charges that the public corporation has the power to impose on people or property within the Commonwealth.
An increase, decrease, or change proposed under subclause
(I)shall be accompanied by a demonstration of the reasonable necessity of the increase, decrease, or change to maintain— the operation, property, physical plant and equipment, or financial condition of the public corporation; or the ability of the public corporation to obtain unsecured credit on the capital markets at a reasonable interest rate. An increase, decrease, or change proposed under subclause
(I)shall be subject to review by any commission, authority, agency, or governmental body with authority to review the rates, fees, taxes, or other charges imposed by the public corporation. If a commission, authority, agency, or governmental body fails to approve and implement or disapprove the proposed increase, decrease, or change by the date that is 120 days after the date on which the increase, decrease, or change is submitted to the commission, authority, agency, or governmental body, the proposed increase, decrease, or change shall be deemed approved by the commission, authority, agency, or governmental body. The public corporation shall be responsible for paying the salary and any other compensation of the emergency manager. Not later than 2 years after the date of enactment of this Act and annually thereafter, the Authority shall certify whether the Commonwealth government— does not have sufficient revenue to meet debt obligations of the Commonwealth government; has defaulted with respect to any loan, bond, note, or other form of borrowing; is unable to meet the payroll of the Commonwealth government for any pay period; has a cash deficit at the end of any quarter of the fiscal year equal to or greater than the difference between— the estimated revenues of the Commonwealth government during the remainder of the fiscal year; and the estimated expenditures of the Commonwealth government (including repayments of temporary borrowing) during the remainder of the fiscal year; and fails to make any required payments relating to pensions and benefits for current and former employees of the Commonwealth government. If the Authority certifies that the Commonwealth government is unable to meet any of the requirements under paragraph (1), a control period for the Commonwealth government is initiated in accordance with section 324. A control period for the Commonwealth government initiated under this subsection terminates on the date on which the Authority certifies that— the Commonwealth government has adequate access to short-term and long-term credit markets at reasonable interest rates to meet the borrowing needs of the Commonwealth government; and for 4 consecutive years after the initiation of a control period for the Commonwealth government, the expenditures made by the Commonwealth government during each fiscal year did not exceed the revenues of the Commonwealth government during that year, as determined in accordance with the generally accepted accounting principles contained in the comprehensive annual financial report for the Commonwealth. In making a certification under this subsection, the Authority shall consult with the Government Development Bank of Puerto Rico.