caribbeanbusinesspr.com THURSDAY, SEPTEMBER 2, 2010 WEEKLY $2.00 ©2010 CASIANO COMMUNICATIONS INC. Fortuño’s administration pushes innovative incentives to help consumers acquire homes By José L. Carmona pages 18-25

To p St o r y In si d e Sp e c i a l Re p o r t Yarotek negotiating Land Administration aiming to spark to build island’s million-dollar developments page 43 largest solar plant page 2 Vía Verde project rallies supporters and opponents page 44 Despite challenges, Méndez continues to believe in dinars page 10

For up-to-the-minute local, national, international and economic news in English, go to caribbeanbusinesspr.com now on 18 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 GOVERNMENT 43 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 Land Administration aiming to spark million-dollar developments Agency looks to partner with private sector to spur tourism and industrial projects BY JOHN MARINO have to make sure the projects are good for Puerto Government land is also playing a key role in Housing-stimulus bill could spur the sale of [email protected] Rico and the developers have the required exper- the development of a new generation of renew- tise and track record.” able wind and solar energy, with many projects he Land Administration and Land Authority The mammoth $555 million proposed tourism depending on it for success. 10,000 new and existing units Tare putting portions of their vast holdings project in Guánica approved last month by the The Land Administration is also collaborating to work for the private sector to help spur eco- Planning Board is just one of several projects with the Puerto Rico Industrial Development nomic development, Frederick Muhlach, the making use of Land Administration and Land Corporation to develop industrial and commercial Housing Secretary-designate Miguel Hernández-Vivoni touts initiative newly appointed head of both entities, told Authority assets. The project, which will create projects. These include the proposed Americas as the most aggressive effort presented over the past few years CARIBBEAN BUSINESS. some 5,000 jobs, would be developed on the old Technological Park in Moca, a quarry in Vieques, The entities will sometimes actively pursue a grounds of the Guánica Central sugar mill, which a new industrial area in Caguas and a new mall particular development, but in other cases private closed in 1981. in Yabucoa. There are also 3,000 acres spread fi rms needing land for a particular project will Other projects under analysis include a parador across the island available for lease for different approach the government with a proposal. at Punta Santiago, Humacao; a hotel at Playa agricultural activities. “We want to make agreements that create eco- Lucía, Yabucoa; the development of a tourism The Land Administration is also working with nomic development,” Muhlach said. “We just recreation area at El Túnel de Guajataca and the island cities and towns to lease lands to assist development of an amusement park in Luquillo, in downtown revitalization, housing and com- according to agency presentations. mercial projects. The projects are located in THE NEW YELLOW PAGES Land Administration offi cials note the entity is a Luquillo, Isabela, Aibonito, Culebra, Ponce, part of the Department of Economic Development Juncos, Coamo and other towns. It is also leas- EASY 2 READ & Commerce, and in keeping with its mission, it ing 15 acres in Comerío for the development of a is pushing economic development projects in the municipal sports complex, including a coliseum Join us: 787-625-0555 tourism and commercial areas. and athletic track. Ⅲ Small Business Success Special Report in the CARIBBEAN BUSINESS issue of September 16, 2010

CARIBBEAN BUSINESS provides a report on the industry leaders running Puerto Rico’s small businesses. Our more than 100,000 readers will discover a new entrepreneurial class forging a path to success, along with reports on new fi nancial aid programs available to small businesses, effective outsourcing strategies and key pointers to secure BY JOSÉ L. CARMONA help them acquire new or existing paying interest for 10 years. It can new home between Sept. 1 and June business loans. We will also share successful business [email protected] homes. What’s more, for the fi rst be combined with a bonus to cover 30, 2011 will pay nothing for stamps stories, divulging survival strategies in tough times. time, one of the programs is aimed closing costs of up to $10,000 or and internal revenue vouchers, Don’t miss this essential report. abeling it a “supersized Combo” at incentivizing the rental market as 5% of the property’s cost, hence the which represent a signifi cant chunk Reserve your space today! Lin reference to the government’s well as the commercial real estate name “Combo.” The bonus program of closing costs. existing Combo housing-stimulus sector. It is good for residents and to cover closing costs recently Those who buy an existing Call your advertising agency or Enid Rivera, V.P. Sales 787-728-3000, ext. 2230 program, Gov. Luis Fortuño un- nonresidents as well, proponents received an additional $30 million residence, or commercial property at or email: veiled four new programs Aug. 18 say. allocation to extend it to December of up to $3 million, will only pay [email protected] to be part of this Special Report. aimed at “rescuing and spurring” The new program started Sept. 1 of this year. half of what they currently would the island’s tepid housing market. and will end June 30, 2011. pay in stamps and vouchers. The new initiatives, announced The Combo program put in place THE STIMULUS PROGRAM In a typical new home worth by the governor during the 18th by these administration early last AT A GLANCE $300,000, the savings from waived Our readers are leaders. Housing Congress and packaged in year includes a second mortgage Under the new program, called stamps and vouchers could add up Senate Bill 1720, include incentives loan of up to $25,000, on which “Impulso Vivienda 2011” (2011 to $5,000, the governor indicated PUBLICATION DATE: SEPTEMBER 16, 2010 • SPACE RESERVATION: SEPT. 8 • DIGITAL MATERIAL: SEPT. 10 aimed directly at consumers to the homeowner is waived from Housing Stimulus), anyone buying a Continued on next page FRONT PAGE GOVERNMENT 42 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 19 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 PPPA selects four more projects for potential development Continued from previous page improvements and buy furniture, and existing housing units. It’s a decor and appliances. That is a direct combination of what the market Vieques and Culebra transportation, Urban Train development, during the program’s unveiling. economic impact any way you look was projecting to sell plus the ones high-tech traffi c control and minimum-security prison to be considered In addition, those who sell an at it,” Hernández-Vivoni said. we are incentivizing with the new existing property during this period stimulus plan,” he said. BY JOHN MARINO PPPA. Such deals are common in the U.S., Canada also will be exempt from paying HOUSING SECTOR IMPACTED The Housing secretary-designate [email protected] and across Europe and other countries. additional stamps and vouchers to BY ECONOMIC RECESSION said Puerto Ricans treasure the “One role of the PPPA is to continue to look cancel their mortgage. No one can deny that the island’s notion of having their own home and he Public-Private Partnership Authority (PPPA) for solutions for challenges and problems that Owners of new property acquired fi ve-year old, self-infl icted criollo the administration is going to work Tagreed to study four more strategic projects affect daily life. The new projects we are studying between Sept. 1 and June 30, recession has impacted all sectors hard to help them achieve that goal. for possible development, including an effort to favor citizens and the government and show that 2011 will be exempt for fi ve years of the economy, especially the “We are very excited and happy improve transportation between Fajardo and the the PPPA not only is analyzing large-magnitude from paying property taxes to the construction industry. Representing with this initiative, because we municipalities of Vieques and Culebra. projects but also those that have a large regional Municipal Revenue Collections approximately 60% of the island’s believe we’re going to achieve The other projects are: the establishment of a impact,” Álvarez said. Center, including the special surtax construction activity, new residential our goal, which is to fulfi ll our high-tech traffi c control and driving violation over- The PPPA board of directors comprises fi ve mem- that expires next year. sales have dwindled considerably commitment that everyone in Puerto sight system, the redevelopment of areas adjacent bers: Government Development Bank President In addition, those who acquire a over the past two years. Revitalizing Rico gets to own a safe home,” to Urban Train stations and construction of a min- Carlos García, Treasury Secretary Juan Carlos residential property (whether new or the housing sector would certainly added Hernández-Vivoni. “This imum-security prison. Puig, Planning Board President Héctor Morales, existing) or a commercial property jumpstart the construction industry, housing-stimulus program will help “As part of the function of continuing to develop David Álvarez, executive director of the former San Juan Mayor Hernán Padilla and Luis worth up to $3 million, with a capital considered a backbone of the local move the inventory, as it applies to important infrastructure projects and services for Public-Private Partnership Alliance Berríos Amadeo. The latter two members represent gain from such a sale, will pay zero economy. new and existing properties as well the citizenry, the PPPA is interested in exploring the public interest and they were recommended taxes on the capital gain. In the case It was precisely through increased as residents and nonresidents. It’s a concrete solutions to problems that affect resi- feasibility study will provide us important infor- by House Speaker Jenniffer González and Senate of an existing home, they would only construction investment that the big push for all housing in Puerto dents’ daily life,” said PPPA Executive Director mation on available opportunities.” President Thomas Rivera Schatz and approved by pay 50% on the capital gain. island was able to dig itself out of Rico.” David Álvarez in announcing the PPPA Board Álvarez said the feasibility study might look at a the governor. The “Impulso Vivienda 2011” Housing Secretary-designate recessions during the 1980s and decision made at its most recent meeting Aug. 20. proposed bridge to Vieques as one alternative, but The PPPA is gathering data and market prece- (Stimulus for Housing 2011) program Miguel Hernández-Vivoni ’90s. PROFESSIONAL GROUPS, MAYORS Álvarez said the projects chosen are of high pub- emphasis will be placed on a short- and midterm dents to provide job and investment estimates. also increases to $5,000, from the From the 2,920 new residential BACK STIMULUS PLAN lic interest because they respond to a demonstrated solution for transportation. The same is true for Earlier this year, the PPPA approved feasibility current $1,000, the available credit or existing, will pay zero taxes for 10 units sold during the second quarter Local trade associations represent- need to improve infrastructure conditions or qual- other nonmaritime options. studies for fi ve projects expected to contribute $3 taxpayers can claim against their years on the net rental income. This (2Q) of 2008, the number dropped ing developers and contractors as ity of service, have the capacity to spur economic “We are interested in facilitating improvements billion to the island economy in new investment capital-gain losses if the sale of program takes effect Jan. 1, 2011 for to 1,314 units in 2Q 2009 and to just well as individual appraisers, real- development through the creation of jobs, improve and investment in a short- and midterm solution and create more than 50,000 jobs. their home is completed within the existing landlords. 817 new residential units sold in 2Q tors and even government offi cials the island’s competitiveness and require funding where the government can share the risks with the The projects are: the concession, modernization program’s timeframe. The credit can 2010. The extremely low absorption and mayors have been quick to rally the government doesn’t have available. private sector. Other nonmaritime options may not and extension of Puerto Rico’s main toll roads; be claimed annually until the loss is A SUPERSIZED COMBO rate of residential units is further behind the new housing-stimulus Of the projects, the initiative to improve trans- fulfi ll these requirements,” Álvarez said. an islandwide modernization of Puerto Rico’s covered. “The new measures presented by compounded by the excess inventory bill. The groups include the Puerto portation service between Fajardo and the island High-tech traffi c control and violation oversight public schools; the establishment and opera- The second program announced by the governor to stimulate the hous- of unsold new and existing units. Rico Home Builders Association, towns of Vieques and Culebra is the priority and projects are quite common in Europe and are being tion of a remote water-meter reading system for the governor, “Mi Seguro Hipote- ing sector are among the most ag- It is estimated there are approxi- the local chapter of the Associated will be analyzed fi rst, Álvarez said. The PPPA is more frequently implemented in the U.S., accord- the Puerto Rico Aqueduct & Sewer Authority; cario” (My Mortgage Insurance), is gressive presented in the past few mately 10,776 newly constructed General Contractors of America, already working with the Maritime Transportation ing to the PPPA. Using cameras and computers, the the retrofi t of the Puerto Rico Electric Power aimed at new and existing residen- years,” Miguel Hernández-Vivoni, units plus another 9,065 un-built the Puerto Rico Bankers Associa- Authority (MTA) to develop a project that strength- system would “electronically” capture violations Authority Costa Sur plant to burn natural gas; tial properties worth up to $300,000. Housing secretary-designate, told units with approved fi nancing in the tion and the Puerto Rico Chamber ens the reliability of the service and paves the way as they occur and allow the government to col- and the concession to operate the Luis Muñoz Under this program, the mortgage CARIBBEAN BUSINESS. “I be- local market, for a total of 19,841 of Commerce. for investment in the ferry port’s infrastructure, lect millions of dollars each year it looses through Marín International Airport. bank can fi nance up to 105% of the lieve this program will have a tre- residential units. Prior to the an- including terminals and related areas. unregistered or poorly management infractions. The $750 million school-improvement project, home’s sale price and the mortgage mendous impact.” nouncement of the housing-stimulus HOME BUILDERS ASSOCIATION: Álvarez said private participation in maritime This, along with a system to redirect traffi c and which will get underway this fall, is expected to insurance would cover 17% of the Hernández-Vivoni said the bill, the housing sales projection for ‘WE NEED TO RECOGNIZE WE’VE port projects and delivery of ferry services is com- improve vehicle fl ow, will increase road safety, create 7,000 jobs during initial construction, which risk, while the mortgage bank would housing-stimulus program is aimed this year was at fewer than 4,000 REACHED BOTTOM’ mon worldwide, and pointed to the ferry service in offi cials said. should last 10 to 12 months, and 14,000 in all dur- assume the remaining risk of up to specifi cally at consumers who, as new units, which would have rep- “These programs are extremely New York City as one prominent example. The PPPA also wants to revitalize urban areas, ing the project’s fi rst phase in all 78 municipalities. 88%. a result of market conditions, are a resented a 20% drop from the 4,986 important because, all of a sudden, Before the PPPA approves a project, it must many of which are currently neglected, surround- In addition, fi ve new schools are expected to be The upfront commission would be little skittish about buying a property new units sold last year and way be- we have a system that recognizes undergo a feasibility study to determine whether ing the Urban Train to both improve city life built in the municipalities of Barranquitas, Toa paid by the bank, developer or seller, right now. low the annual historical average of the diversity of our housing market, the proposed alliance will be recommended. and increase the use of the train and other mass- Alta, Gurabo, Canóvanas and Coamo. so the buyer won’t have to make any “It is a way of telling them this is 11,000 new units sold. from new and existing homes to All studies are published on the PPPA website transit systems such as the existing bus service. By 2013, the PPPA intends to close 13 PPP proj- cash disbursements at the time of the time to do it,” he said. rental housing,” said Hans Moll, to ensure transparency in the process, Álvarez The PPPA said potential projects include parking ects with an investment of $4.537 billion and 21 purchase. By purchasing available properties, STIMULUS COULD president of the Puerto Rico Home added. areas, commercial services, housing and other projects will continue to 2017 for a total cumula- The third program, “Mi Nuevo the Housing secretary-designate said, MOVE 10,000 UNITS Builders Association. “These new Transportation Secretary Rubén Hernández improvements. tive investment of $6.214 billion and the creation Hogar” (My New Home), will consumers will begin to make real An initial estimate of around 8,000 programs will be key for the return Gregorat, who oversees the MTA, said recent dis- For the minimum-security prison, the PPPA is of 99,735 jobs. provide a subsidized contribution estate transactions, which will help new and existing housing units for of the move-up market and reversing ruptions in ferry transportation due to vessel and looking for a Design-Build-Operate contract in The Fortuño administration created the PPPA for social-interest housing through reduce the excess housing inventory sale that could benefi t from the new the decline in home values. I believe other equipment failures are largely resolved, and which a group would handle the entire develop- and a law to govern the transactions because vouchers equivalent to 5% of the sale in the market. This, in turn, will help stimulus plan based on current market we need to recognize that we have there will be four ferries offering service between ment of the project, including fi nancing, and then “PPPs represent the best chance to accelerate the price or appraised value, within the local banks reduce their construction trends has been increased to 10,000 reached bottom.” Fajardo and the two island towns and two more operate the complex and provide maintenance to development of much-needed infrastructure and parameters of the Federal Housing loan portfolios. That would increase units. Nonetheless, Hernández- With the new measures, Moll said, reserve ferries to provide service. it once it is established. increase the island’s production capacity,” the Administration. the banks’ liquidity, which they could Vivoni said, the administration will there is nothing more that can be done “We want to evaluate other options that can con- The project aims to improve the prison for governor has said. Through the fourth program, then use to fi nance new projects and spur the sale of “as many units as with available resources to revive tinue to improve maritime transportation because inmates and would allow for the consolidation of Potential investors have hailed the PPPA and the “Estímulo al Mercado de Alquiler” individual clients, he said. possible.” and spur the local housing market. our main priority is for residents of Vieques several aging locations into a single new building, ground rules established by the legislation and said (Stimulus for the Rental Market), “When someone buys a residential “If we can sell all of them, so be The sooner the existing inventory of and Culebra to have punctual, reliable and safe resulting in signifi cant savings for the Department the local regulations should serve as a guide to owners who make their property property, they usually invest it. But the new projection is based nearly 10,000 new homes gets sold, transportation,” he added. “We are confi dent the of Correction & Rehabilitation, according to the other jurisdictions across the U.S. Ⅲ available for renters, whether new additional money to make home on approximately 10,000 new Continued on page 20 FRONT PAGE 20 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 GOVERNMENT 41 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 Continued from page 19 CNE: Pension ‘time bomb’ is everybody’s problem the sooner home values will spring back and developers can begin to Fix will require sacrifi ces by all: Reduced benefi ts, increased contributions and a special tax build new ones. BY JOHN MARINO Moll stressed the potential of the [email protected] stimulus plan for restoring value to residential properties, the main uerto Rico’s $17 billion unfunded government savings and investment vehicle for Ppension problem is one of the most complex most local families. and serious problems facing the island and will Pointing out that the housing require sacrifi ces from every sector of society. market is one of supply and demand, That’s because the problem affects not just Moll said the 10,000 units available, government retirees, workers and the central combined with other factors, have government, but all of Puerto Rico, according led to reduced property values in to the Center for the New Economy (CNE), an some housing sectors. independent think tank. “As inventory is reduced and “This affects the whole country, and the recent balance is restored in the supply report by Moody’s makes that clear,” said CNE and demand, I have no doubt that President Miguel Soto-Class, referring to the the stimulus bill will have a positive rating agency’s recent decision to emit a nega- impact on the recovery of local real tive outlook on Puerto Rico’s credit because of estate values,” he said. the pension problem. “The system is in such bad For developer Adolfo “Tito” shape, there is almost nothing that can be done.” González, president of Desarrollos Arturo Carrión, Gisela Castro, Brendalí Sierra, The CNE discussed the issue as a special com- Urbanos, the proposed stimulus vice president president president mission appointed by Gov. Luis Fortuño last package for the housing industry is Puerto Rico Bankers Association Tiri Real Estate Brendalí Sierra & Associates February prepares to deliver a set of recommen- CNE President Miguel Soto-Class CNE Policy Director Sergio Marxuach a step in the right direction. dations next month on how to fi x the pension “It will help provide a spark to “It gives families a little breather, process,” chamber president Raúl including the new surcharge. She problem. CNE offi cials said a real solution would $17 billion and growing. That’s because cur- salary of the last three years, multiplied by the incentivize the housing market,” he which combined with the savings Gayá indicated last week. “This said it is a very attractive proposition, likely require that both employees and the gov- rent contributions amount to only 59.7% of the retiree’s years of government service. said. “We need this package to be from the conversion to natural project represents a novel solution as these factors were impeding the ernment contribute more to the system, along actuarial required contribution. Current system In 2000, an even more drastic step was taken enacted in addition to further ag- gas for electric generation, should to the profound economic crisis the credit qualifi cations of many buyers with cutbacks in benefi ts and some type of special administrators expected this unfunded liability by shutting the door to the defi ned retirement gressive economic-stimulus mea- provide local families with some island is facing, which has impacted who now will be able to qualify. tax required for all taxpayers. to “grow indefi nitely into the future instead of plan for government employees. Instead, all sures across the entire economy to extra money that they can use for all sectors of the local economy. As “That was one of the things holding “It’s going to take sacrifi ces by everyone,” CNE being amortized” and future scheduled contribu- employees hired after Jan. 1, 2000 have an indi- get it moving. We desperately need other economic activities,” added a consequence of this crisis, the up potential buyers facing fi nancial Policy Director Sergio Marxuach said. tions “will not be adequate to accumulate suf- vidual annuity or retirement account funded by to create positive synergy among all the local AGC president. construction industry, along with diffi culties,” she said. “In addition, Puerto Rico is not alone in its pension problems. fi cient assets to make future benefi t payments his or her own 8.275% contribution. Whatever sectors of our economy, and these the real estate and banking sectors, residents and nonresidents will not A recent study by the Pew Center on the States when due.” investment earnings have accumulated when the measures will have a positive effect BANKERS ASSOCIATION, remains at a standstill.” have to pay capital gains on the sale found a nearly $1 trillion defi cit between state By 2014, even if the fund meets its expected employee retires is all the government will have on motivating consumers, reducing CHAMBER OF COMMERCE: JOB 1 of a new property, or only 50% on pension fund assets and pledged benefi ts, but the 7.5% annual return, the fund will run out of to pay out. overhead inventory and strengthen- IS REDUCING HOUSING INVENTORY STIMULUS PROGRAM WILL HELP an existing one, if purchased during island is ranked the lowest or near the lowest in money, according to the CNE. The plan’s $17 billion unfunded liability, then, ing our banking system.” Arturo Carrión, vice president of RESTORE CONSUMERS’ TRUST the window of opportunity. That’s most aspects examined in the report. Despite the alarming fi nances, the government is really owed to the 95,240 current government the Puerto Rico Bankers Association, Gisela Castro, president of Tiri Real going to attract a large clientele from Fortuño announced the initiative to fi x the “pen- has been increasing benefi ts to island retirees, employees hired before Jan. 1, 2000 and the GENERAL CONTRACTORS stated emphatically that it was Estate, said the new housing stimulus outside of Puerto Rico wanting to sion time bomb” during a government credit con- according to the CNE. From 2006 to 2008, the 75,697 government pensioners. ASSOCIATION: STIMULUS SIGNALS necessary to reduce the inventory of bill is sorely needed because people come here to buy.” ference for Puerto Rico bond investors. Earlier following increases were granted: the minimum “This means that collectively, Puerto Rico as ‘IT IS TIME TO BUY’ unsold homes to help developers pay have lost their confi dence in the real The provision in the stimulus bill this month, Moody’s Investor Services reaffi rmed monthly pension benefi t increased from $300 to a society owes nearly 30% of its wealth to 5% Edris Méndez, local chapter off their construction loans. These estate market due to the loss in value that provides a 105% loan to value the A3 rating for Puerto Rico’s general obligation $400, all pensions were increased by 3%, and of its population,” Marxuach said. “Transfers of president of the Associated General in turn, he said, will help reactivate and are undecided whether to buy is going to help those buyers who bonds, but lowered its outlook on the credit from Christmas bonuses to retirees increased from wealth of this magnitude do not occur without Contractors of America (AGC), said the local economy through the now or not—even with historically might not have the cash for a down- stable to negative because of the challenges of the $500 to $600. political consequences.” he felt these programs would certainly construction of new home projects. low interest rates. payment, but enjoy a good credit funding situation for the island’s Commonwealth The retirement system has been in trouble since Soto-Class said the problem “has been with help, as the brake on local housing “As long as the housing inventory “When people see a stimulus of score of 600 or more and needed Employee Retirement System. its enactment in 1951 because government offi - us since the time of the founding fathers to the sales needed to be released. remains high, it will be very diffi cult this magnitude, what’s going to that extra “push” to buy a property, “While we acknowledge the commonwealth cials failed to make “actuarially required contribu- present” and “no particular administration can be “These programs will be a great to reactivate construction in all happen is, they are going to get their she said. is working on a plan to address the retirement- tions on a consistent basis” and new benefi ts and blamed.” He added that the current fi scal crisis stimulus for everyone to get the sectors,” said Carrión. “It seems to confi dence back, as they’re going to The experienced realtor noted system problems and that the current manage- cost of living increases have been granted over the fund faces is like “a shipwreck that changed economy going, since they signal it me that the purpose of this project is realize developers will be able to sell that homes priced below $300,000 ment has proactively and successfully addressed time without properly analyzing their fi nancial the rules of the game.” is time to buy. These measures aren’t to reduce the housing inventory so their new projects completely, which continue to have the greatest many diffi cult fi nancial decisions in the past 18 impact, Marxuach said. From the beginning, the The most likely solution, Marxuach said, would permanent, so anyone who was that we can reactivate the fi nancing will allow properties to retain more demand, but lately she has seen months, we believe that at this time there are a employee contribution has remained at 8.275% be to reduce recently legislated benefi ts, increase thinking about buying a home, the of projects and, therefore, begin new of their value,” Castro said. “In the an improvement in the market for limited number of options the commonwealth has of salary, while the government contribution has contributions by employees and the government time to do so is now,” said Méndez. construction where needed.” case of existing homes, these now homes priced between $500,000 and to improve the funded ratio given the common- remained at 9.275%. and create a special tax that all residents would Méndez said the housing stimulus Meanwhile, the Puerto Rico have extraordinary advantages under $600,000, as these were originally wealth’s relatively weak fi nances and economy “The real problem was that for 40 years, noth- have to pay. bill will at least help reduce the Chamber of Commerce expressed the new stimulus plan.” priced between $800,000 and and high debt,” Moody’s reported. ing was done to fi x the situation,” he added. “Addressing the problem raises issues of inventory of unsold homes, which its support of the housing stimulus Castro noted those who buy a $900,000 before the local recession For the past two decades, offi cials have been It was not until 1990 that steps were taken to extraordinary fi nancial, political, legal and moral should ultimately translate into bill. property during the program’s began in 2006. sounding the alarm about the pension fund. Its control the fi nancial hemorrhaging of the sys- complexity,” he said. “An obligation of this size more housing developments—not “By supporting this important window—between Sept. 1 and June unfunded liability, the amount needed to pay all tem by increasing the retirement age to 65 from cannot be fulfi lled with accounting gimmicks or immediately—but in the near future, project, we reserve the right to submit 30, 2011—will not have to pay benefi ciaries if they sought benefi ts at once, is 55 and reducing benefi ts to 1.5% of the average fi nancial engineering tricks.” Ⅲ he indicated. amendments during the legislative real property taxes for fi ve years, Continued on next page SPECIAL FEATURE CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 FRONT PAGE 40 21 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 Continued from previous page need homes. In other words, we no longer have the housing demand we EFFECT OF STIMULUS PROGRAM used to have to absorb the housing ON VALUES NEEDS TO BE inventory,” Alameda said. “You MEASURED provide all these incentives to reduce General Contractors Association Convention Program For local appraiser Brendali the transactional costs for a certain THURSDAY, SEPTEMBER 2 3:00 p.m.-6:00 p.m. “Rum Swizzle” Hotel Vestibule Sierra, president of Brendali Sierra period of time, but these buyers will 7:30 a.m.-10:00 a.m. Registration for AGC Convention Plan Summit Río Mar Ballroom 3-4 3:00 p.m.-6:00 p.m. Product & Heavy Equipment Exhibition Ballroom Foyer & Outside & Associates, the housing stimulus probably not have the capacity to pay 7:30 a.m.-9:00 a.m. Registration for 16th Construction Industry Summit Area bill is a good initiative that will the mortgage and property taxes in Río Mar Ballroom 3-4 3:00 p.m.-6:00 p.m. AGC Bar Caribbean Ballroom help move the island’s housing fi ve years.” 8:45 a.m.-5:00 p.m. 16th Summit 8:00 p.m.-Midnight Grand Welcoming Party Río Mar Ballroom 5-10 inventory. However, she contends With 20,000 unsold homes, Río Mar Ballroom 5-10 Music: Cuenta Regresiva / Attire: Casual 8:45 a.m. Welcome: Organization Presidents the government should evaluate the Alameda said it is estimated the 8:30 p.m.-Midnight Teen Disco Party Morro I-II program’s success and how home market will take between eight and 9:00 a.m. Dr. José Antonio Estrada Fernández: “Investing in Infrastructure during Midnight-2:00 a.m. “After Party” AGC Bar; Caribbean Ballroom values are being impacted in six 10 years to absorb these units. And Lean Times” months, so that the program can be that’s without any new homes being SATURDAY, SEPTEMBER 4 tweaked and improved. built during the period. 7:30 a.m.-10:30 a.m. Breakfast Buffet Río Mar Ballroom 5 and 6 10:00 a.m. Work Groups “We must bear in mind that many Another local economist, who CAAPPR Competitiveness 9:00 a.m.-6:00 p.m. Product & Heavy Equipment Exhibition Ballroom Foyer & Outside ACH Finance & Investment Area newly built residential properties asked to remain anonymous, said that Troy Wright, President of the Bankers Association; George Joyner, 9:00 a.m.-6:00 p.m. Community Outreach Bazaar Yunque Landing & Yunque are competing with nearby existing if the intention of the new housing Executive Director of the Housing Finance Authority; Humberto Marrero, Foyer homes and even with repossessed stimulus bill is to move the inventory Director of the Infrastructure Financing Authority (AFI); Francisco 9:30 a.m.-11:30 a.m. Seminar: Using Concrete-related Technology to Optimize Construction homes, so the impact of the program of new homes, it will succeed at the Rodriguez Castro, Director of UBS Projects, Sponsored by Essroc Río Mar Ballroom 1-3 needs to be evaluated six months expense of the inventory of existing San Juan Cement AGC AGC Blueprint 10:00 a.m.-11:30 a.m. Seminar: Crisis Management: How to Avoid the Implosion of Your following its implementation. That Economist homes. But if the purpose of the David Álvarez, Executive Director Puerto Rico Public-Private Partnerships Reputation, By: Frances Ríos Communications Morro I-II way there’s enough time to make the Guaynabo Mayor Héctor O’Neill, José Alameda program is to propel new housing Authority (APP); Héctor Morales, President Planning Board; Miguel necessary changes and make it more president of the Puerto Rico construction, it will fail miserably, Hernández, Secretary of the Housing Department; Fernando Batlle, Vice 10:00 a.m.-11:00 a.m. Seminar: Comprehensive Health for Women effective,” Sierra said. Mayors Federation he warned. President of the Government Development Bank for Puerto Rico Sponsored by: Mapfre Egret “Developers will pay their pending MOST MAYORS SUPPORT BILL so the effect is nil. properties get sold through the construction loans, but will not CIAPR Labor Reform, Tax Reform 10:00 a.m.–4:00 p.m. Health Clinic program. Kevin Acevedo, Assistant Secretary of the Economic Development & Sponsored by: Triple-S Salud Río Mar Ballroom 7-10 Guaynabo Mayor Héctor O’Neill, “The vast majority of mayors build new housing projects,” said Commerce Department president of the New Progressive support the bill, because these “100% of zero is zero,” said the economist, pointing to what Noon-2:00 p.m. Annual Meeting, Awards & Resolutions Río Mar Ballroom 1-4 Party’s Mayors Federation, endorsed properties in their municipalities Hernández-Vivoni. happened with the housing incentives Noon Lunch 1:30 p.m.–2:30 p.m. Seminar: Maccaferri Controlling the real estate stimulus plan “without remain unsold. So they are not It must be noted that Treasury program implemented during the Cost Erosion Morro I-II reservations,” as he has been trying collecting any taxes on these homes Secretary Juan Carlos Puig, Gov- Acevedo Vilá administration. AGC Presentations: “Government Program Status;” “Government Actions 2:00 p.m.-3:00 p.m. Meeting of the Board of Directors and Director-Elects Board Room anyway,” Hernández-Vivoni said. ernment Development Bank Presi- & Past Initiatives;” “Effects on the Economy from Unemployment in the 2:00 p.m.-6:00 p.m. AGC Bar Caribbean Ballroom to implement a similar program in In 2008, the government approved Construction Industry” 2:00 p.m.-2:30 p.m. Power Flame Presentation by Tropigas Outside Exhibition Area his municipality. “By allowing these to be sold through dent & Chairman Carlos García and a housing incentive program with Preliminary Conclusions 2:30 p.m.-4:00 p.m. Youth Committee Cocktail Outside Exhibition Area “This is a tremendous push for the this program, the mayors will be Economic Development & Com- vouchers that cost the government AFI Project Awards 7:30 p.m.-Midnight Alejandro S. Herrero Award Dinner & Gala Río Mar Ballroom 5-10 economy,” he said. “The housing able to push forward other projects merce Secretary José Pérez-Riera $225 million in public funds, which Message from the Puerto Rico Governor by the Secretary of the Interior Music: Limite XXI / Attire: Black Tie, White or Black Suit market has been one of the most they want to move ahead and have expressed their full support of the was promoted as a stimulus for affected by the scourge of economic not been able because they have housing stimulus program during new housing construction once the 2:00 p.m. Work Groups 9:00 p.m.-Midnight Teen Disco Party Morro I-II Senate hearings last week, insisting CAAPPR Competitiveness Midnight-2:00 a.m. After Party AGC Bar Caribbean Ballroom stagnation in Puerto Rico.” not found developers or fi nancing. available inventory was sold. ACH Finance & Investment The veteran Guaynabo mayor This is going to help them. It will it will reduce the island’s housing “The result? Housing construc- Troy Wright, President of the Bankers Association; George Joyner, SUNDAY, SEPTEMBER 5 characterized the stimulus package as bring patentes [business licenses] inventory, reactivate the local econ- tion did not recover in 2009. Home Executive Director of the Housing Finance Authority; Humberto Marrero, 7:30 a.m.-10:30 a.m. Breakfast Buffet Río Mar Ballroom 5-6 “well conceived and well organized and construction impact fees to the omy and create jobs. prices plummeted. The $225 million Director of the Infrastructure Financing Authority (AFI); Francisco 9:00 a.m.-3:00 p.m. Product & Heavy Equipment Exhibition Ballroom Foyer & Outside in its aim of moving the inventory of municipalities, so there’s a general reduced government revenue, there- Rodriguez Castro, Director of UBS Area new and existing homes.” impact.” CONCERNS RAISED OVER fore forcing more layoffs from Law 9:00 a.m.-5:00 p.m. AGC Bar Caribbean Ballroom PROGRAM’S TRUE IMPACT AGC AGC Blueprint 10:00 a.m.-11:00 a.m. Religious Service Río Mar Ballroom 1-4 While most island mayors are Since his appointment by Gov. 7,” he said. David Álvarez, Executive Director Puerto Rico Public-Private Partnerships 11:00 a.m.-2:00 p.m. Women’s Activity Río Mar Ballroom 7-10 supporting Senate Bill 1720, a small Fortuño Aug. 11, Hernández-Vivoni Local economist José Alameda The economist noted the number Authority (APP); Héctor Morales, President of the Planning Board; Miguel 11:00 a.m.-Noon Seminar: How to Compete in PR: Implications for the group of these, mostly from the said he has so far met with four said the intention of the housing of unsold homes is not altered Hernández, Secretary of the Housing Department; Fernando Batlle, Vice Construction Industry: By Manuel Maldonado; Lcdo. Hiram Morales; Popular Democratic Party’s Mayors mayors—of Guaynabo, Toa Baja, stimulus bill is a good one, but he because someone moves from an President of the Government Development Bank for Puerto Rico Dr. Coco Morales; Arq. Pablo Figueroa Río Mar Ballroom 1-4 Association, have expressed their Aguada and Gurabo. fears the local economy is in such existing home and into a new one, CIAPR Labor Reform, Tax Reform opposition to the housing stimulus “I have a meeting scheduled with bad shape that it won’t be able to but rather it is demographic changes Kevin Acevedo, Assistant Secretary of the Economic Development & 2:00 p.m.–3:00 p.m. Postseminar Cocktail: AGC Bar Caribbean Ballroom Commerce Department program, especially the provision the mayor of Salinas; I want to meet create the demand needed to get the that will foster the construction 7:30 p.m.-Midnight Theme Party Río Mar Ballroom 5-10 that exempts homebuyers from with all the mayors,” he said. “The housing inventory down, despite the of new homes. He said that since 4:30 p.m. XVI Summit Conclusions Music: Melina León and Never Too Late / Attire: Casual or ’60s paying real property taxes for fi ve doors of the department are wide incentives offered. the housing stimulus bill does not years. open if they want to discuss the “Our economy is in a very take into account that more children 5:05 p.m.-6:00 p.m. Summit Cocktail: AGC Bar Caribbean Ballroom 8:30 p.m.-Midnight Teen Disco Party Morro I-II With respect to the few mayors that measure.” prolonged recession. And the are living with their parents, it will Midnight-2:00 a.m. After Party AGC Bar Caribbean Ballroom 8:00 p.m.-11:00 p.m. Pro Fondos Community Outreach Committee are against the bill, housing secretary- Reiterating that the vast majority of problem I see here is that our not signifi cantly alter the total Activity; Río Mar Ballroom 6, Attire: Lace and Jeans designate Hernández-Vivoni said mayors support the housing stimulus economy has shrunk. Some 10,000 demand for housing, but simply MONDAY, SEPTEMBER 6 establishments have closed. There is 8:00 a.m.-1:00 p.m. Exhibit Dismantling: 25 to 47 that while the measure will impact bill, the housing secretary-designate displace it from existing homes to FRIDAY, SEPTEMBER 3 9:00 a.m.-Noon End-of-Party Brunch Río Mar Ballroom 5-6 what the municipalities receive from said he understood the mayors’ less production capacity, therefore new ones. 7:00 a.m.-8:00 a.m. Registration and Breakfast—AGC Gold Tournament Club House 9:00 a.m.-10:00 a.m. Breakfast Río Mar Ballroom 5-6 the Municipal Revenue Collection concerns with respect to the possible fewer jobs. People are earning less, “The housing construction sector 8:00 a.m.-7:00 p.m. Individual Ticket Sales Pelican 10:00 a.m.-11:30 a.m. Raffl e Río Mar Ballroom 5-6 Center (CRIM) for fi ve years, that’s loss of revenue from CRIM, but said with infl ation growing more than will recover when the current inven- 8:00 a.m.-2:30 p.m. AGC Golf Tournament Río Mar Golf Course 1:00 p.m.-5:00 p.m. Hotel Check-out Hotel Vestibule their income. Some 52,000 families 3:00 p.m.-10:00 p.m. AGC Convention Registration & Hotel Check-in Yunque Landing the same amount of time CRIM takes they will have a greater impact on tory is completely absorbed, both 1:00 p.m.-5:00 p.m. Exhibit Dismantling: 8 to 24 to appraise a new property anyway, their municipalities if these unsold have emigrated, who will no longer new and existing,” he added. Ⅲ FRONT PAGE CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 39 SPECIAL FEATURE 22 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010

Incentives in housing-stimulus bill include exemptions from capital gains tax, property tax Marsh Saldaña leads the way with its products for renewable energy projects BY JAMES FERRÉ its people and reputation with both clients and “Puerto Rico’s insurance industry is very and internal revenue stamps and vouchers partner fi rms. developed, but there is always space for creativity arsh Saldana Inc., with an eye on the future, and new products,” said del Nido who enjoys Mis expanding its line of risk management the industry’s dynamics and problem-solving and insurance solutions for renewable energy aspects. “It gives me the opportunity to learn BY MARIO SANTANA [email protected] projects. “As a business leader it’s something new every day. I believe that’s what In 2003 Saldaña & Associates merged with important to maintain high keeps people young.” Marsh Inc., the world’s leading risk and insurance Marsh Saldaña encourages this attitude of he La Fortaleza housing-stimu- services fi rm, forming Marsh Saldaña Inc. morale and optimism, not only constantly reinforcing one’s knowledge, offering lus bill—House Bill 2814/Sen- T “This union is what gives Marsh Saldaña seminars to its employees on the industry’s ate Bill 1720—creates 11 incentives resources that go above and beyond what our with your employees, but also changing environment. meant to spur buying, selling and competitors can offer,” says Manuel del Nido, “This allows Marsh Saldaña to better serve renting of real estate properties. with your clients, colleagues, vice president of Marsh Saldaña. “One such current clients and attract new ones,” said del To qualify for one or more of the offering is our expertise in renewable energy family and friends.” Nido. incentives, properties must be: projects. Marsh gives us the resources to advise He went on to say that thanks in part to its • A newly built housing unit suit- our current and prospective clients interested in knowledge-reinforcing program, Marsh Saldaña able to accommodate a family, renewable energy projects about risk management —Manuel del Nido, vice president of Marsh Saldaña has surpassed its year-to-date goals and expects including: and insurance solutions. This includes solar, wind to close the year well above last year’s results. • Reinforced concrete predesigned and waste-to-energy projects among others.” Proud of Marsh Saldaña’s performance this year, homes and prefabricated homes, Marsh, established in 1871, is a leader in risk Del Nido, a 28-year veteran of the insurance del Nido stressed the importance of maintaining as long as their blueprints had and insurance services. It is a subsidiary of Marsh industry, is proud to be part of the Marsh Saldaña a positive attitude. been approved by last Dec. 30 & McLennan Cos. (MMC), a premier global team. He obtained a bachelor’s degree in business “As a business leader it’s important to maintain and construction begins between professional services fi rm providing advice and administration from Universidad del Sagrado high morale and optimism, not only with your Sept. 1 and June 30, 2011 and solutions in risk, strategy and human capital. Corazón in Santurce, and later specialized in employees, but also with your clients, colleagues, ends by March 31, 2012; or Apart from the union with Marsh, del Nido risk management and insurance at the College family and friends,” said del Nido, who said he • A “qualifying property” that is believes Marsh Saldaña’s greatest strengths are of Insurance in New York. expects Puerto Rico’s economy to improve. Ⅲ either: a professional organization); • An existing housing unit suitable • Owners of newly built housing to accommodate a family, or units purchased between Sept. • A commercial or other type of 1 and June 30, 2011 will be ex- nonresidential real estate proper- empt from property taxes for fi ve ty with a selling price of no more years; Puerto Rico to hold UHY 2011 Americas Region Conference than $3 million. • Owners of newly built housing BY JAMES FERRÉ with tax-exempt grants, business reorganization trends and standards, it now is offering Inter- The incentives are the following: units purchased between Sept. 1 and tax planning. national Financial Reporting Standards (IFRS) • Rental income from all residential and June 30, 2011 will be exempt HY Del Valle & Nieves PSC is proud to UHY Del Valle & Nieves started as HTR-Del services and joined the Forum of Firms (FOF). properties will be exempt from in- from Law 7’s special state tax on Uannounce Puerto Rico will be the summit Valle & Nieves PSC (HTR Group) and joined IFRS are the principle-based standards, inter- come taxes from Jan. 1, 2011 to nonexempt real estate property; location of UHY International’s 2011 America Urbach Hacker Young International (UHY) last pretations and frameworks adopted by the Inter- Dec. 31, 2020; • All parties involved in the purchase Region Conference. “This activity will allow us year to offer a wider, globalized array of services. national Accounting Standards Board (IASB). • Capital gains of qualifying proper- of a newly built housing unit be- to promote Puerto Rico’s investment incentives UHY is a world leader in accounting and con- FOF is a global association of accounting ties sold between Sept. 1 and June tween Sept. 1 and June 30, 2011 and tourism industry,” said Rafael Del Valle- sulting services with 242 offi ces in 76 countries fi rms that perform audits of fi nancial statements 30, 2011 will enjoy a 100% tax will be 100% exempt from paying Vega, partner & tax director at UHY Del Valle around the world. that may be used internationally. Members of exemption; for stamps, vouchers and charges & Nieves. “The business partnership between UHY Del FOF must meet set requirements. FOF has con- • Capital gains of newly built hous- resulting from issuing and register- The 2011 Americas Region Conference to be Valle & Nieves and UHY International combines tributed to raising standards in the international ing units bought by the sellers be- ing the following deeds: purchase held next June will host more than 60 delegates the advantages of a powerful global network with practice of auditing. tween Sept. 1 and June 30, 2011 and sale deeds, rental deeds, con- from Latin America, the U.S. and Canada. personalized service and local expertise,” Del Another way UHY Del Valle & Nieves is help- will enjoy a 100% tax exemption; stitution of mortgage deeds, or can- • Sellers of qualifying properties the issuing and registering of UHY Del Valle & Nieves is a CPA fi rm that Valle-Vega highlighted. “It has allowed us to ing its clients is through its new CR Outsourcing • Capital gains of qualifying proper- cellation of mortgage deeds (the is- sold between Sept. 1 and June 30, the purchase and sale deeds and offers professional services in the fi elds of audit- assist various international fi rms operating in Services Inc. “This new entity operates separately ties bought by the sellers between suance and registration of cancel- 2011 will be 100% exempt from the constitution of mortgage ing, tax, accounting, litigation support and man- Puerto Rico as well as advise our local clients from UHY Del Valle & Nieves to assist its clients Sept. 1 and June 30, 2011 will en- lation of mortgage deeds can take paying for stamps, vouchers and deeds; agement consulting. It serves the construction on developing export strategies.” with external accounting and consulting services joy a 50% income tax exemption; place after June 30, 2011); charges resulting from the issuing The bill’s tax exemptions applying and development, retail and wholesale, services, “For more than 20 years, we have shared our while reducing operational costs and increasing • Up to $5,000 of capital losses re- • Sellers of qualifying properties and registering of cancellation of to rental income and capital gains manufacturing and stevedoring and shipping clients’ aspirations for effi cient operations. That effi ciency.” said Carlos F. Nieves-Vega, partner sulting from the sale of a qualifying sold between Sept. 1 and June 30, mortgage deeds; will be available for nonresidents of industries. is why our clients have constantly relied on us & audit director of UHY Del Valle & Nieves. property between Sept. 1 and June 2011 will be exempt from paying • Buyers of qualifying properties Puerto Rico, but not for those sell- Its services include audit, review and compila- to deliver customized timely advice to help them “Without a doubt, our two decades of experi- 30, 2011 can be deducted from 50% of the stamps, vouchers and sold between Sept. 1 and June ers and buyers who are personally tion, management advisory services, litigation make the right business decisions,” Del Valle- ence, timely quality services and integrity are our taxes without any limit on years to charges resulting from the issuing 30, 2011 will be 50% exempt from related as defi ned by Section 1024 support, preparation of tax returns, assistance Vega explained. best tools to continue to help our clients reach use the deduction (limited to tax- and registering of the purchase and paying for the stamps, vouch- (b) of the Puerto Rico Internal Rev- with revenue agent examinations, interpretation With the intent of keeping UHY Del Valle & their goals and surpass the current economic situ- payers that are not a corporation or sale deeds; ers and charges resulting from enue Code. Ⅲ of existing tax law and their effect, compliance Nieves’ clients on top with the latest business ation,” Nieves-Vega said. Ⅲ SPECIAL FEATURE 38 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 FRONT PAGE 23 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 New Housing secretary-designate set on agency’s mission Empire Gas promotes its ‘Todo Gas’ solution to lower energy costs Hernández-Vivoni plans to work more closely with other government agencies to help island’s social interest population achieve dream of owning a home BY JAMES FERRÉ 23, 2009 article in the Huffi ngton Post. The Pickens Plan is an energy-policy proposal to ounded more than four decades ago, Empire reduce U.S. dependency on foreign oil. Locally, BY JOSÉ L. CARMONA as the Family Department, Police Puerto Rico has his or her own safe FGas is Puerto Rico’s leading liquefi ed natural González believes the use of propane can lower [email protected] Department, Health Department home,” he said. gas (LPG) wholesaler. With its new “Todo Gas” electric demand as well as Puerto Rico Electric and the Department of Economic Hernández-Vivoni noted that the (All gas) concept, it wants to offer contractors Power Authority’s dependence on foreign oil. ousing Secretary-designate Development & Commerce. Housing Department has many as well as their end customers, the Puerto Rican González believes Empire Gas’ mission is not HMiguel Hernández-Vivoni is “I’m going to take all the programs to help individuals obtain people, a safe and cost-effective way to decrease only to its clients but also to Puerto Rico. He set on continuing the government components and the tools available a safe home, such as Section 8 their energy costs. “Todo Gas” is a one-stop shop states its products offer energy cost savings of agency’s mission to foster the de- at my disposal to help our social (federal rental subsidy for families), that offers a complete array of propane products 30% to 40%. To take this message and educate velopment of social interest housing interest population achieve their Law 173 (rental subsidy for the for the construction industry, including power- Puerto Ricans about the benefi ts of propane use, so that every Puerto Rican has his dreams,” he added. “Puerto Ricans elderly) and the Housing Finance plants, tank and tankless water heaters, refrigera- Empire Gas offers seminars and conferences or her own safe home. treasure having their own home. Authority’s HOME program tors, ovens and stoves. Empire Gas Vice Presi- throughout the year at different trade shows and “I have an additional interest in The fortune of every Puerto Rican (which helps in the development dent Ramón González has found that the option conventions. the social aspect of the agency’s lies in having his or her own home, and acquisition of social interest to use propane in a construction project, whether Further proof of its social responsibility and mission. To me it is extremely and we’re going to work hard to housing). commercial or residential, can help set it apart commitment to Puerto Rico is its belief that important that everyone, especially make it happen.” Plus there’s also the existing from the rest, adding value to the contractor as Empire Gas Vice President Ramón González as a truly Puerto Rican company Empire Gas those who live in our public Hernández-Vivoni said his agency “Combo” program, which provides well as the end customer. reviews blueprints must reinvest in the company and in Puerto housing projects, develop a sense is working aggressively to award a second mortgage of up to $25,000 González, also an attorney, believes what sets Rico. González describes this strategy as of home ownership, because when property title certifi cates to those that is exempt from interest his company apart from the competition is its another reason that has allowed it to become the you own something you tend to who live on land lots. Currently the payments for the fi rst 10 years, plus commitment to service. Empire Gas is on call Empire Gas’ commitment to service is what has leader in the industry. A recent example of its protect it,” Hernández-Vivoni told Housing Department has an agenda a bonus to cover closing costs of up 24/7 for maintenance and service requests. allowed it to pursue an aggressive growth strategy leadership is its investment of $150,000 in the CARIBBEAN BUSINESS during to hand out property title certifi cates to $10,000, or 5% of the property’s With its network of more than 400 distributors in recent years. Consolidating the LPG market, it 2010 Central American & Caribbean Games held an exclusive interview. “Also, self- in San Juan, Mayagüez and Arecibo, cost. around the island, Empire Gas is able to meet has successfully targeted clients who are unhappy in Mayagüez. employment is extremely important but the goal is to distribute them in Hernández-Vivoni began as a clients’ supply needs. Furthermore, it has a about competitors’ service. González states that González describes Empire Gas not only as an to me—having micro-businesses in all towns and municipalities where La Fortaleza advisor in January support staff dedicated to serving contractors on the company now has a 70% market share. LPG business but also as an energy business with our public housing projects to help the laws allow the title transfer of 2008. Prior to that, he worked as a engineering, architectural, as well as government The use of propane has been endorsed on its current product being LPG. With this in mind, our low-income families, to give these parcels of land, he said. Housing Secretary-designate junior partner at Martínez, Odell & permits related to the installation and safe use of a national level by T. Boone Pickens as an he feels Empire Gas is ready for whatever energy them the tools so they can develop The Housing appointee, a Miguel Hernández-Vivoni Calabria law fi rm in the real estate, Ⅲ propane. “important part” of the Pickens Plan in his June sources the future brings. and achieve their dreams.” legislative advisor to Gov. Fortuño, construction and commerce loan In that sense, the Housing was nominated by the governor Aug. this initiative, because we believe department. He has also worked as secretary-designate said people 11, a week before the new housing- we will be able to reach our goal, a legislative advisor in the Senate. will see him working more with stimulus program was unveiled. which is, like I said earlier, to fulfi ll He earned a law degree from Thermoplastics is the future of roofi ng other government agencies such “We are excited and happy with our commitment that everyone in Universidad Interamericana. Ⅲ BY JAMES FERRE Green Building Council (USGBC). The LEED subcontractors,” Rodríguez explained. “We certifi cation indicates a building is designed and know that effective management of roof assets he future of roofi ng is thermoplastics, not built considering stewardship of resources and for commercial, industrial and public buildings Tthe current torch-installed products, assures environmental impact. They are more energy- and is a primary goal. We can help you protect your Gilberto Rodríguez, president of R&T Roofi ng. water-effi cient, produce less CO2 emissions and company’s capital investments and ensure its Thermoplastic products are easy to install, du- have improved indoor environmental quality. continued productivity within the building.” rable, solar refl ective, environmentally friendly R&T Roofi ng is a bonded and insured “R&T Roofi ng specializes in built-up roofi ng and recyclable since they are Leadership in En- professional roofi ng contractor founded in 1999 (BUR), elastomeric systems, modifi ed bitumen ergy & Environmental Design (LEED)-certifi ed by Rodríguez. The Toa Baja-based company systems, below-grade waterproofi ng, traffi c sys- systems. offers its clients experienced personnel and tems, single- & multi-ply membranes, insulation, Thermoplastics are plastics that soften when quality services in the roofi ng industry. lightweight insulating concrete, waterproofi ng, heated and harden again when cooled. They Having worked in every aspect of the roofi ng decking systems, architectural standing seams, already form part of our daily life in such products industry from installer to project manager for a green roofi ng systems, clear concrete seals, park- as Tefl on, Acrylic, Nylon, so it is only natural that local roofi ng contractor, Rodríguez established ing-lot restoration, wall coatings and photovoltaic they represent the future of roofi ng. R&T Roofi ng with the goal of building and panel installations,” Rodríguez highlighted. As a steward of the environment, R&T Roofi ng maintaining relationships with its clients. “To do R&T Roofi ng’s past projects include the is proud to offer thermoplastic roofi ng as one of this, we provide R&T Roofi ng clients unparalleled North Coast Shopping Center, Las Américas many options to its clients, Rodríguez said. “We service and quality,” Rodríguez said. Professional building, University of Puerto Rico are concerned about our environmental impact “We work according to manufacturers’ Nursing Building, UMET Aguadilla, Tres Ríos and that of our projects. We have the expertise and specifi cations to provide the highest-quality Offi ces, Westernbank Plaza, Carolina Mall, Red know-how to follow the LEED guidelines.” fi nished products and maintain manufacturers’ Palace in Old San Juan, Mercedita Airport, Merck LEED is an internationally recognized building- warranties on roofi ng materials. We know in Barceloneta and Vocational High School in certifi cation system developed by the U.S. it is important to have confi dence in your Guayama. Ⅲ FRONT PAGE CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 SPECIAL FEATURE 24 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 37

Contractors cautiously believe things will get better Industry remains resilient despite the loss of 60,000 jobs in eight years, Servimetal Inc. launches roll-forming division 64% reduction in private-sector construction since 2000 BY JAMES FERRÉ Rico and its future, said Emilio M. range from multinational conglomer- -Z galvanized-structural sections in a Ortiz, Servimetal president & CEO. ates to small businesses. It also is a wide range of sizes and gauges. Ser- ith the goal of serving the pres- “This expansion represents another Puerto Rico Industrial Development vimetal’s experienced sales team is BY JOSÉ L. CARMONA When Méndez took the reins of of Transportation & Public Works [email protected] Went and future needs of the important growth step for our compa- Co.-promoted industry and certifi ed available for consultation about its the local AGC six months ago, and the Ports Authority, as well as Puerto Rican construction industry, ny, which now will have three opera- as a National Minority Business products and their installation. Ⅲ he said contractors had begun the other agencies, due to the fi nancial Servimetal expanded its operations tional divisions: fl at rolled, roll form- Enterprise. ithout a doubt, one of the eco- year with a lot of enthusiasm, hop- problems they have been carrying with its new roll-forming division, ing and Perry Products. Therefore, Galvalume is 55% aluminum-zinc Wnomic sectors hit hardest in ing that public- and private-sector from past administrations,” the lo- which started operating July 30. we are now able to offer a wide range alloy-coated sheet steel. It is licensed the fi ve-year old local recession has construction investment would cal AGC president said. “This is With this addition, Servimetal of- of services and fl at-rolled products by BIEC International Inc., a wholly “This expansion been the construction industry. Once continue. creating problems with payments fers Galvalume-based prepainted to Original Equipment Manufactur- owned subsidiary of BlueScope Steel considered the backbone of Puerto “Private-sector investment has to subcontractors.” and mill-fi nished panels as well as ers (OEMs); roll forming to the con- Ltd. represents another Rico’s economy with an annual eco- continued to decline, while public- Méndez indicated there are building components to cover and struction industry in general and fl ow The roll-forming division will of- nomic impact of nearly $6.5 billion sector investment has not fallen as several contractors who allege fi nish industrial and commercial products to the pharmaceutical, oil fer Servimetal clients type-E and –R, important growth in 2005, the island’s total construc- dramatically as the private sector,” that government agencies owe structures. & gas, water and food & beverage 24- and 26-gauge prepainted Gal- step for our tion investment in 2009 amounted he said. them more than 17 certifi cations The new division entails a $3 mil- industries,” Ortiz explained. valume panels in a variety of colors to $4.4 billion. Méndez acknowledged efforts by [work orders] on several projects. lion investment between the machin- Servimetal is the largest proces- including dark blue, light blue, ter- company.” Edris Méndez, local chapter presi- the current administration to jump- These orders are over 120 days due, ery, installation and expansion of the sor, distributor and manufacturer of racotta, dark green and white as well dent of the Associated General Con- start the construction industry, such which creates a serious problem —Emilio M. Ortiz, Servimetal existing location to accommodate the fl at metal products in the Caribbean as mill fi nished. Servimetal also of- president & CEO tractors of America (AGC), said the as the approval of the Public-Pri- for local contractors’ cash fl ow, he new equipment. Furthermore, the in- Basin. Headquartered in Caguas, fers type-B decking panels in 22, 20 biggest impact has been on private- vate Partnership law, of which is- added. vestment demonstrates Servimetal’s it operates from a 120,000-square- and 18 gauges. In addition, the new sector construction. In 2000, private- land contractors are just starting to “We feel optimistic that the is- faith and long-term vision in Puerto foot state-of-the-art plant. Its clients division will manufacture type-C and sector construction represented $4.25 feel the effects through the school land’s situation should begin to im- billion, and last year it amounted to modernization program and the prove. We’re already seeing some Edris Méndez, local chapter just $2.7 billion, a whopping 64% planned natural gas pipeline project activity and there’s certainly more president of the Associated General drop. Meanwhile, public-sector con- to be undertaken by the Puerto Rico enthusiasm among members,” said Contractors of America (AGC) struction investment is now $2.3 bil- Electric Power Authority. Méndez. “We see a fi ghting spirit of lion versus $2.6 billion in 2000. While there have been some en- not wanting to give up, that we’re That decline in construction in- “Where we have taken the biggest couraging signs that the island’s still in the fi ght, believing things vestment translates into the loss of hit is in private-sector housing con- economy might be stabilizing, Mé- will improve.” 60,000 jobs, or 40%, over the past struction investment and construc- ndez pointed out there’s still more Méndez said the AGC has more eight years, Méndez noted. At its tion of offi ce buildings and com- to be done. participants in this year’s AGC golf peak, the local construction indus- mercial establishments—the type of “We still see that at banks, access tournament than last year, despite try generated over 120,000 direct projects that were being routinely to credit remains critical. In fact, the having a slightly lower number of jobs and four indirect jobs per each developed a few years back,” said government has several agencies in room reservations for this year’s direct job. Méndez. syndication, such as the Department annual convention. Ⅲ

Para coordinar una visita y órdenes de compra favor comunicarse con: Alexis Toro 787-567-7648 Ramón Santana 787-640-9156 SPECIAL FEATURE 36 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 FRONT PAGE 25 CARIBBEAN BUSINESS THURSDAY, SEPTEMBER 2, 2010 Housing-stimulus slated to clear both the Senate and House earlier in the week AFCO introduces Tropix Cold Asphalt Important amendments introduced: One to grant a 10-year income-tax exemption to all BY JAMES FERRÉ industry,” said Arturo F. Díaz, president and “Tropix Cold Asphalt is the best alternative owner of AFCO. “Using only the best raw for the repair of potholes, cracks and other residential rentals, another to compensate P.R. Legal Aid Society’s income losses sphaltic Futures Corporation (AFCO) has materials and following the strictest standards in imperfections in the pavement or asphalt Adeveloped and manufactured Tropix Cold its manufacturing, AFCO has created Tropix Cold surfaces because it can be applied under any BY MARIO SANTANA Asphalt, a cold asphalt mix specifi cally designed Asphalt. Specifi cally designed for the climate in weather condition, even rain, as it is 100% water [email protected] for Puerto Rico’s tropical climate. Puerto Rico, Tropix Cold Asphalt represents a resistant,” said Díaz. “Furthermore, it does not

a Fortaleza’s bill to spur Puerto LRico’s housing market was on track to clear the House and the Sen- ate earlier this week and to be signed into law by Gov. Luis Fortuño. The measure—Senate Bill 1720— was slated to clear both chambers on Monday, but the Senate and House leadership decided to suspend that day’s session shortly before it began due to the weather conditions caused by Hurricane Earl’s approach to the island. Senate Urban & Infrastructure Affairs The Senate rescheduled the session Senate President House Majority Leader Committee Chairman for Tuesday, Senate President Thomas Rivera Schatz Rolando Crespo Larry Seilhamer Thomas Rivera Schatz announced AFCO, headquartered in Trujillo Alto, has spe- fast, effective, effi cient and easy-to-use alternative require the use of heavy machinery or large in a press release. House Majority cialized for the last 15 years in the manufacturing to hot asphalt or other materials.” manpower and has no heavy odors.” Jan. 1 and ending Dec. 31, 2020. cancellations. Senate Urban & will be largely compensated by the Leader Rolando Crespo said that a and distribution of cold asphalt in Puerto Rico. Tropix’s cold mix gives it the versatility of not AFCO has plans to distribute Tropix Cold Another key amendment limits to Infrastructure Affairs Committee economic activity such sales will session on Tuesday depended on the “Being the only manufacturer of cold asphalt on losing its usefulness over time, contrary to what Asphalt by the ton or in their transportable 30 days the Treasury Department’s Chairman Larry Seilhamer said the generate. weather conditions. the island has given AFCO the unique opportunity happens to a hot asphalt mix as it cools. Tropix 50-pound yellow bags for small jobs. Ⅲ dateline to certify that a property society already has received over Municipal Revenue Collection The bill’s approval capped a to establish itself as a leader in the cold asphalt can even be stored for over a year. qualifi es for the bill’s capital gain $500,000 from stamps cancelled Center (CRIM by its Spanish strenuous week of public hearings tax exemptions. since the beginning of the fi scal acronym) Executive Director and meetings for both the House Another amendment addressed year and that, together with the $3.5 Gloria E. Santos Rosado employed Treasury and the Senate Urban & a major concern regarding the million, should be enough to cover a similar argument when endorsing Infrastructure Affairs committees. measure during the public hearings any loss of income. the bill. She said the loss of income On Saturday, both committees period: the Puerto Rico Legal Aid “This is $1 million more than they would be compensated for by the agreed on the amendments to be Society’s loss of income as a result received last year,” said Seilhamer. increase in sales & use tax (IVU by introduced into the bill. of the bill’s exemption from paying “The Legal Aid Society strengthens its Spanish acronym) collections With the amendments, the bill’s for stamps for purchase and sale and itself with this.” from the newly sold homes and by benefi ts are available for buyers and other deeds. Part of the income of the The amendment also orders the economic jumpstart these sales sellers of reinforced concrete-built Legal Aid Society, whose lawyers OGP to allocate $1 million to the would produce. predesigned homes and prefabri- defend people who are charged with Justice Department special fund to Lawmakers’ aim was to have the cated homes, as long as the Regu- a crime but cannot afford to hire a modernize and mechanize Property bill ready for the governor’s signature lations & Permits Administration private attorney, comes from the Registry operations. before the tax exemption and other (ARPE by its Spanish acronym) has cancellation of its stamps on several The last amendment orders the benefi ts began yesterday. approved their blueprints by last deeds. For example, purchase and Treasury secretary to report the However, before the legislation’s Dec. 30 and the construction begins sale deeds cancel $5 of the Legal Aid economic impact of the bill to the incentives can be available, the between Sept. 1 and June 30 and Society’s stamps for each $50,000 Legislature next March and July. Treasury Department must issue ends by March 31, 2012. of the real estate’s selling price. The Mayors Association, which rules pertaining to the bill’s initia- Another important amendment The labor union that represents the groups Popular Democratic Party tives. Seilhamer said Treasury Sec- extends the tax exemption on rental society’s lawyers projected that the mayors, also expressed concerns retary Juan Carlos Puig promised income to all residential property bill may cut 25% to 30% of the over the loss of municipal income to have the rules ready by the time rentals, regardless if the rental society’s budget. resulting from the bill’s fi ve-year Fortuño signs the incentives into began before the bill’s enactment The amendment orders the island’s exemption from property taxes for law. or will begin after June 30, 2011, Management & Budget Offi ce owners of new homes. The group’s La Fortaleza fi led the bill Aug. which is the deadline for most of (OGP by its Spanish acronym) to New Progressive Party counterpart, 19. Five days later the Treasury the other benefi ts in the bill. The allocate $3.5 million to the Legal the Mayors Federation, strongly and Urban & Infrastructure Affairs tax exemption rental income will be Aid Society to compensate for backed the bill, however, saying that committees began to hold public available for 10 years, starting next its loss of income from stamp the loss of property tax collections hearings. Ⅲ