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Controversy over Puerto Rico’s Bahia Urbana

Governor Pierluisi announced that the Puerto Rico Convention Center District Authority would be working with private companies to develop Bahia Urbana, a dockyard in Old San Juan. With $118 million in private funding, the project would create a new entertainment district with an amphitheater, bars, restaurants, a market targeted towards tourists, an urban forest (a tree-focused greenspace), and more. Bicycle rentals and water tours will provide environment-friendly access to other parts of the city.

“Goals of the project are to stimulate growth that is economically, socially, and environmentally sustainable; and to create an inviting and eclectic gathering place loved by the residents of San Juan, Puerto Rico, and visitors,” says a statement on the designer’s website. The project is expected to create hundreds of new jobs.

It should also provide much-needed revenue for Puerto Rico, since the contract with the developers specifies $100,000 per year as rent and 3% of total revenue, estimated at about $7 million per year,

FOMB puts on the brakes

Although plans for the development of Bahia Urbana have been around since the 1980s and some parts of the development have already been completed, the PROMESA Fiscal Oversight and Management Board (FOMB) has questioned the new contract.

“It has come to our attention,” the Board wrote in a letter to the Convention Center District Authority, “that the Government of Puerto Rico has announced the commencement of a project known as ‘La Nueva Bahía Urbana’, with the aim of developing an entertainment area in docks 6,7, and 8 in Old San Juan.”

The letter references the financial terms of the agreement as described above, and continues, “news articles report that this contract was awarded without a competitive procurement process and instead stems from an unsolicited proposal by the developers.”

The letter goes on to remind the Authority that large contracts must be reviewed by the FOMB to make sure that they “promote market competition” and “are not inconsistent with the approved fiscal plan.”

The contract, they conclude, will not be officially binding until the Board has reviewed it.

Red tape

FOMB has not forbidden the Bahia Urbana project, but it is likely that the approval process will delay it.

The Government Accountability Office has reported in the past that red tape has delayed Puerto Rico’s recovery from Hurricane Maria, a situation that has been exacerbated by the global pandemic of COVID-19.

The requirement that the Board approve any recovery project over $10 million, referenced in the letter from the Board to the Convention Center District Authority, is one of the examples in the report.

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