A similar mistake was made recently in the U.S. capital. An event, intended to raise political funds for the statehood party in Puerto Rico (PNP), rolled out invitations as “New Party for Progress”, instead of “New Progressive Party.

Ms. González Colón, PNP leader, will probably stay lost in translation.

AFTER WINNING PRIMARY

Loud Silence: Statehood Gubernatorial Candidate Jenniffer González goes MIA on LUMA

Representative Jenniffer González Colón, the island’s non voting member of Congress' sympathized with voters’ frustration with LUMA Energy, the main company in charge of power transmission on the island, and even called for the government to cancel its contract with the power company.

After Tropical Storm Ernesto recently brought heavy rain and strong some winds, half of Puerto Rico was left dark, as did González Colón attacks towards the power company. 

Tropical Storm Ernesto was minor in comparison to other storms that have impacted Puerto Rico in recent years. Despite this, half of the island's 1.5 million customers were left without power.

"We have not found any catastrophic damage to the grid that would need repairing," Juan Saca, CEO of LUMA Energy said in a news conference. Locals are upset because nearly a week after the storm, 30,000 are still waiting for their electricity to be reinstated.

“When this contract [for operating the island’s electricity transmission and distribution system] was awarded, it was done knowing the conditions of the system, the environmental conditions, and the probability of hurricanes on the island. And every time there is a public controversy, a way to solve it arises in which a new charge is imposed,” said González Colón during her campaign. 

After the election, González Colón has remained silent, never called out LUMA Energy's sluggish restoration efforts and stayed away from public appearances. 

Carlos Eduardo Diaz Olivo is a Puerto Rican attorney, professor of law, former politician, and political analyst said González Colon's comfortable win allows her to be silent. 

"By not speaking or stirring the political movements, she avoids any fatal slip. In Puerto Rican political practice, what is important is not what matters. In the superficial media world in which we live, it is enough to be an influencer and look cool," said Diaz Olivo.

Diaz Olivo also warns that minority party leaders such as Juan Dalmau of the Independence Party (PIP) and Javier Jiménez from the Proyecto Dignidad (PD) could provoke a political shake-up. 

The attorney said the Popular Democratic Party (PPD) is encountering an heavy decrease in popularity while newer parties, like the Citizen Victory Movement (MVC in spanish), whose leaders rallied younger voters in support of addressing liberal social and economic problems, have become stronger.

Another up-and-coming party, Proyecto Dignidad (Project Dignity), whose candidates favor conservative social issues, resonate with Christian conservatives.

OUTAGES IN THE AFTERMATH

Nearly a Week After Ernesto, Thousands in Puerto Rico are Still Without Power

A large proportion of Puerto Rico's municipalities suffered extensive power outages last week, affecting every neighborhood during or following Tropical Storm Ernesto. 

The storm barely touched the Island, maintaining a distance of around 35 to 40 miles north of San Juan, but at least 34 municipalities, of the 78 in total, plunged into darkness triggered by Ernesto.

The majority of the impacted towns were located in the western or southwestern regions, where the storm's winds were barely felt, Puerto Rico's Center for Investigative Journalism outlined.

Almost a week after the event, LUMA Energy, the private company responsible for the transmission and distribution of electricity in Puerto Rico, has yet to reveal the reasons behind such widespread power failures brought about by Tropical Storm Ernesto, which carried its way over the Atlantic Ocean with winds around 55 miles per hour. 

Approximately 96% of consumers have reported having their power restored after the storm, but around 30,000 are still waiting for their electricity to be reinstated.

During its peak, nearly 700,000 households were left without power last Wednesday. 

Puerto Rico Mayors Association President Luis Javier Hernández Ortiz shared on Thursday that the electrical system in Villalba, his own municipality, was completely shut down before the storm even arrived. "At 5 a.m. on Tuesday, we were left without service," he said. "It wasn't due to a tree falling on the lines." Ortiz also revealed that mayors in municipalities like Isabela, Cayey, Aguada, and others reported minimal damage to power lines, which was not sufficient to prevent over half a million customers in Puerto Rico from losing electricity. 

"We are essentially discussing the entire nation," said Ortiz. "As in past instances, our primary concern remains the health and well-being of the sick and elderly." Showing the weak state of the island’s power grid.

PRICE FIXING

Lawsuit Exposes Puerto Rico's “Steel Cartel” Illicit Profit

A lawsuit filed at the federal level suggests that a steel cartel was established in Puerto Rico between 2015 and 2022, involving at least three companies dealing in rebar and construction materials. 

The objective of this cartel was to rig prices and make astronomical profits, especially during the rebuilding efforts after the 2017 hurricanes, exceeding the true cost of these materials, El Nuevo Día reported.

The construction company Tiger Group, LLC sued these three companies, claiming up to $500 million in damages. Juan C. Aponte Tolentino is in charge of one of those companies and on August 7 pleaded guilty to conspiring with others to fix steel prices.

In the plea agreement, Aponte admitted that his company, Aceros de America, made at least $100 million in sales.

“By pleading guilty, this dealer admits that, for nearly a decade, he fixed steel prices, which is an essential part of the supply chain for rebuilding Puerto Rico after the 2017 hurricanes″, Manish Kumar, associate U.S. Attorney for the federal Department of Justice’s Anti-Money Laundering Division, said in a press release. “This guilty plea demonstrates that the Antitrust Division is committed to prosecuting individuals who raised prices in the rebuilding process, hurting businesses and consumers in Puerto Rico.”

The other defendant companies are Carolina Building Materials, Inc., Carolina Building, LLC, Steel Services and Supplies, Inc. and their owners.

Traders agreed to increase the price of steel by 116%, from $25 to $54 per unit, according to the plea agreement.

The island received about $23 billion in funds to recover from the 2017 hurricanes and from earthquakes in 2019 and 2020.

“Between 2015 and 2022, including the rebuilding period following Hurricanes Irma and Maria in 2017, Aponte conspired with his competitors and individuals to eliminate that competition by fixing prices on steel products, including rebar that were distributed to hardware stores, contractors, and other dealers and individuals in Puerto Rico, resulting in significant profits for the conspirators,” the federal Department of Justice press release states.

BEFORE YOU HIT THE BEACH

Education

NASA Backs 2 University of Puerto Rico Research Projects in $600K Funding: A 3D printing application in space and health monitor of astronauts headline the projects.

Environment

$3.1M Fine on AES Puerto Rico: The coal-fired power plant in Guayama reached a settlement with The U.S. Environmental Protection Agency (EPA) after violating the Clean Air Act.

Tourism

After $150 Million Investment, Ritz-Carlton in Isla Verde Will Reopen Next April: The luxurious resort will also reopen its casino, about 205 slot machines and 16 gaming tables

LAST BUT NOT LEAST

• Damage caused to Puerto Rico's Agriculture sector by Ernesto estimated at $23.5 Million

• Conventions and activities generated over $192.3 million in sales in fiscal year 2024

• ASK US ANYTHING! - Our goal is to provide useful information and create useful connections to the island. Do you have any specific questions? Feel free to shoot us a comment or email and we’ll get back to you in a future newsletter.

But every party needs a pooper… who invited Ernesto anyway?

TROPICAL STORM WARNING:

Ernesto is coming – here’s 3 things you need to know

Although Tropical Storm Ernesto is continuing to churn its way north to in the Atlantic, forecasters warned the indirect impact of the storm will bring floods and landslides in Puerto Rico, Vieques and Culebra. 

Therefore the start of public and some private school classes has been postponed until further notice.

“We cannot let our guard down,” Nino Correa, Puerto Rico's emergency management commissioner, said at a news conference. 

1. Ernesto will bring lots of rain, flooding

The National Weather Service in San Juan, estimated between six to eight inches of rain are expected, with higher amounts in isolated areas. 

They also warned of hurricane-strength wind gusts as the storm is expected to hit northeast Puerto Rico Wednesday, with winds that range between 39 and 57 miles per hour (mph), according to the Hurricane Center.

Officials urged people to prepare and stay alert, given ongoing uncertainties over the approaching system. “This trajectory is not written in stone and will be changing,” they said. 

2. National Guard Activated

If things worsen, Puerto Rico Governor Pedro Pierluisi said more than 340 shelters across the island would be available if necessary and that more than 200 personnel with the National Guard were activated. 

Pierluisi also said he requested access to the $1.3 billion Emergency Fund from the Fiscal Oversight Board (FOMB).

3. Expect power outages

Officials also warned the tropical storm would cause widespread power outages, given the fragile state of the power grid, which crews are still rebuilding after Hurricane Maria struck the island in September 2017 as a Category 4 storm. 

“That's a reality,” said Juan Saca, president of LUMA Energy, the private company that operates the transmission and distribution of power in Puerto Rico.

BEACH EROSION

Coastal Lands Are At Risk of Disappearing Due to the Rising Sea Levels

One of Puerto Rico's oceanfront municipalities most impacted by rising sea levels, beach erosion, and coastal flooding is Arecibo (50 miles from San Juan), according to the Puerto Rico Coastal Research and Planning Institute (CoRePI) at the University of Puerto Rico's Graduate School of Planning. These issues have gotten worse since Hurricane Maria in 2017.

Maggie Colón lives there and constantly experiences threats from coastal erosion. The threat Maggie perceives has also become a reality for Liliana Acabá Cruz in the nearby Islote neighborhood. In March 2019, the 38-year-old returned home to find a wave surge that reached the road, she told the Center for Investigative Journalism.

Oceanographer Aurelio Mercado, Puerto Rico saw an annual rise in sea level of six millimeters between 2010 and 2017. The Caribbean Sea Level Center predicts that by the middle of the century, the sea level will rise an additional 12 inches, and by the end of the century, it could rise as much as eight feet.

After four years of planning, the $36 million Hazard Mitigation Grant Program of the Federal Emergency Management Agency (FEMA) was used to finance the installation of two breakwaters as a potential remedy. The breakwaters, which are 1,700 feet long for Barrio Obrero and 2,700 feet long in front of the Radioville community, are still in the design stage and could take years to complete due to a lengthy list of studies.

Based on data from the 2020 Census, 60% of Puerto Rico's 3.2 million citizens reside in its 44 coastal towns.

Arecibo is distinct in that it is among the top five coastal municipalities at risk of coastal flooding because of the loss of sand dunes, coral reefs, and beaches. It also ranked third in shoreline mobility.

PRO-WORKER RULINGS

New Labor Regulations Soon-to-be Laws, Flying Under the Radar in Puerto Rico

Local labor and employment lawyer Alfredo Hopgood noted that recent federal court rulings in the United States will have a significant impact on Puerto Rico's employers. 

“These developments have taken place during the summer, when we are immersed in other topics, such as political campaigns, etc., but already there have been countless lawsuits in the U.S.”, Hopgood said in an interview with News is my Business.

One of the ruling Hopgood refers to was on June 28: The U.S. Supreme Court cut back the power of federal agencies to interpret the laws they administer, ruling that courts should rely on their own interpretation of ambiguous laws. 

By a vote of 6-3, the justices overruled a landmark 1984 decision in Chevron v. Natural Resources Defense Council, which gave rise to the Chevron doctrine or Chevron deference. 

"As an attorney, I think this is comparable to the overturn of Roe v. Wade.” The ruling has triggered an avalanche of lawsuits involving labor and employment law, with various employers and groups attacking the validity of federal regulations established under the Chevron doctrine. 

Overall Hopgood said there are three key rulings of concern for employers: the new workplace guidance by the Equal Employment Opportunity Commission (EEOC), a final rule in the EEOC’s Pregnant Workers Fairness Act, and a change in the Fair Labor Standards Act by the U.S. Department of Labor. 

In March, the U.S. Department of Labor (DOL) announced a final rule providing guidance on when an employee may be considered an independent contractor, under the Fair Labor Standards Act (FLSA). The rule, known as the 2024 Rule, implements Independent Contractor Test to address employee misclassification.

“Before this, a person who was classified as an independent contractor — that same person, with that same relationship with that organization — could now be classified as an employee,” he said, adding that the 2024 Rule will take precedence over Puerto Rico’s Act of 2017 labor reform.

The Labor Transformation and Flexibility Act of 2017 was put into effect to attract new business to the island while facilitating operations for existing enterprises. The act includes provisions for probationary periods, vacation and sick leave, meal periods, bonuses, statute of limitations and employment contracts. 

“This can have significant economic consequences to the employer. There are many in this situation, and over many years the risk for the employer can be monumental. We’re talking about a lot of money.”

BEFORE YOU HIT THE BEACH GROCERY STORE

Sustainability Challenges

Call for proposals! Community to determine Puerto Rico's El Yunque National Forest: Public meetings will be held to address access, recreational infrastructure of the tropical rainforest.

Transportation

“Checkout-free” technology to arrive in Luis Muñoz Marín International Airport (SJU): Soon you'll be able to grab “empanadillas”, sushi and other food options without waiting in any line.

LAST BUT NOT LEAST

• Liberty Puerto Rico reports 12% YoY revenue drop in 2Q, after AT&T Acquisition.

• Technology services provider C3 Complete, Opens New Office in San Juan.

• ASK US ANYTHING - Our goal is to provide useful information and create useful connections to the island, do you have any specific questions? Shoot us a comment or email and we’ll get back to you in a future newsletter.
  

Puerto Rico has doubled rooftop solar energy in less than two years. With an electrical distribution circuit so fragile, LUMA says the injection of additional power could destabilize the grid. Who knew transitioning to renewable energy would be so unfavorable? Let's tap into other people's fears.

DISASTER FUNDS CLAWBACK?

Financial Oversight and Management Board Admits Fear of Trump Presidency

Robert Mujica, the executive director of the Financial Oversight and Management Board (FOMB), expressed the board's concern that Republican presidential candidate Donald Trump might take back federal funds that Puerto Rico has received, but not yet used to address its natural disasters if elected.

"It is something that we all have to be concerned about because if not, you are going to be very surprised.", said Mojica on influencer's Jay Fonseca's YouTube channel.

Mujica continued by emphasizing the significance of allocating and using the funds now. In the most recent interview, he stated that "If the money has been allocated, you don’t have to worry about the president, Congress can act. But, if they are not, it is something that is of our concern.”

Mujica emphasized the need to utilize federal funds more quickly. Mujica stated that although the COVID-19 pandemic, Hurricane Maria in 2017, and earthquakes in January 2020 slowed down the reconstruction and the distribution of federal funds, it is now time to step up efforts. He stated, in response to a query, that "I have conversations [about] the possibility of a clawback of federal funds.". As he stated, "It is a real concern when I have gone to Washington and expressed that."

From 2017 to 2021, President Trump's administration limited Puerto Rico's ability to use federal Community Development Block Grant disaster funds. The Central Office for Recovery, Reconstruction, and Resiliency reveals that only $9.8 billion of the estimated $40.11 billion allotted to Puerto Rico for its disasters has been disbursed, out of an estimated $36.8 billion in obligations. 

Mujica was recently appointed executive director of the FOMB with an annual salary of $625,000. He previously served as the state budget director since 2016, initially working for the former governor Andrew Cuomo at $216,186 annually.

NEW DELIVERY HUB 

Puerto Rico to Experience The "Amazon Effect"

The e-commerce giant Amazon just began the construction of its first delivery hub in the Caribbean, on a 37.9-acre site in Dorado city, about 20 miles west of San Juan.

According to News is my Business, the massive project will cost between $40 million and $50 million to complete. The AMZL Puerto Rico corporation purchased the property on May 6 for $18.58 million.

Amazon's distribution and logistics center (AMZL) hopes to create more than 100 full and part-time jobs, as well as more than 200 new driver opportunities through its Delivery Service Partners (DSP). This means that in Puerto Rico, many Amazon orders will no longer be delivered by the U.S. Postal Service letter carriers or UPS drivers, but by drivers hired by those delivery partners in the DSP program. 

Vice President of Public Policy at Amazon, Ashleigh de la Torre, said "Puerto Rico is an ideal place to do business and our new delivery center will give us the opportunity to serve our customers more efficiently and fast."

The online retailer revealed that the minimum hourly wage will be $20.50. By mid-2025, construction should be finished.

This new delivery center will tackle “the last mile” of the Amazon purchasing process. This means that at first, it will be the primary location where Amazon packages that arrive via plane are kept until they are delivered to customers.

Though Secretary of the Department of Economic Development and Commerce (DDEC), Manuel Cidre, stated on Thursday that Amazon might open additional “smaller” warehouses in other parts of Puerto Rico, it is unclear if the Dorado facility will eventually include a sorting and order fulfillment component.

"Amazon's entry into Puerto Rico validates what has happened in the past three years, the confidence of the sectors and the importance of the Puerto Rican market for this company,” said Cidre.

LOW SALES

June Marks the Lowest Point for Puerto Rico's Manufacturing Index.

June saw the lowest score recorded in 2024 for the Puerto Rico Purchasing Managers' Index for the Manufacturing Sector (PRM-PMI), which dropped to 47.3. 8 points have been lost from the record score of 55 points9 points that was achieved in May of 2024. 

Delivery to suppliers was the only sub-index that rose to 56.7 from the previous month, according to the report produced in partnership with the Puerto Rico Manufacturers Association (PRMA) and the Institute of Statistics. 

After staying at or above the threshold for six straight months, new orders fell to 46.7. Similarly, after topping the threshold for four straight months, the manufacturing PMI fell to 36.77 in June. 

While inventories owned dropped to 46.7 from the previous month's threshold, employment fell to 50.0, staying at or above the threshold for three consecutive months. 

A supplementary survey of manufacturing establishments revealed that last month's top issues faced by businesses were shortages of raw materials (8%), costs (8%), supply chain logistics (15%), and sales (23%). Similarly, employment represented another challenge in the human resources domain, accounting for 23%, and turnover, for 8%. 

Conversely, expensive energy expenses and subpar material quality were also emphasized, accounting for 15% and 8% of the total. In the 169 months since the survey was conducted, the PRM-PMI has been at or above the threshold, which is noteworthy.

BEFORE YOU HIT THE BEACH

Oversight Board

Mayors want to be exempt from the "pay as you go": About 20 municipalities on the island face imminent insolvency beginning in January.

Public Transportation

Puerto Rico Metropolitan Bus Authority (AMA) operations paralyzed: The tanks supplying the buses' diesel fuel contained water.

LAST BUT NOT LEAST

• A $30 million grant is given to PSI to expand its economic mobility programs in San Juan.

• Caguas will host the Caribe Franchises Expo in August. 23–24.

• ASK US ANYTHING - Our goal is to provide useful information and create useful connections to the island, do you have any specific questions? Shoot us a comment or email and we’ll get back to you in a future newsletter.

This led to a usage spike by 26%, but free fares have not gotten everyone out of their cars because it's unreliable and dated. Consumers turn to Uber instead, known to be the most convenient transportation method to get around. That dominance may soon change.

On Your Mark, Get Set, WUJU Go!

Uber Puerto Rico Is No Longer Alone in the Ridesharing Race

After more than 8 years of riding solo, Uber Puerto Rico faces a native competitor looking to enter the market.

The WUJU app, a 100% Puerto Rican technology platform presented itself recently as the best alternative for the locals to get around and fit their daily needs.

During its initial phase, the app will offer three main services: buy/sell site, WUJU Ride and towing. 

“WUJU will revolutionize the way we work and live. We have managed to bring together in one comprehensive platform more than 12 business categories from which users will have the opportunity to request services and products from small, medium and big corporations in Puerto Rico,” said Orengo, it’s founder and CEO.

WUJU Ride intends to expand its ridesharing service to the entire island. Until then, the coverage will be limited to the metropolitan area. 

Ambitious Takeover Goals

Orengo admitted that its direct rival is Uber. He went on to say that the difference between Uber and WUJU is the fact that the service fee is much more affordable and its drivers will earn up to 25% more than what they currently earn with Uber.

Orengo said the service has 150 registered drivers and they expect to hire another 1,000 in the upcoming weeks. 

The idea for WUJU came when Orengo went back to his hometown of Yauco, a town in the southern region of the island, (about 88 miles from the metropolitan area) and couldn't get delivery services there. He went on to say that he noticed that there was no app that could assist him in the things he needed to do every day. 

He then conducted research and noticed that practically 70% of the regions outside San Juan were also encountering an absence of openness to on-demand delivery apps.

Orengo estimates WUJU will have close to 5,000 active and registered drivers and a thousand active businesses on the platform within the next three years. 

It took Uber 8 years to reach that milestone on the island, already available in urban areas and popular destinations like San Juan, Ponce, and Mayagüez.

Rideshare and consumer Trends for 2023

The on-demand delivery market on the island is big. In 2023, Medalla, a light beer produced in Puerto Rico, ranked as the top item ordered through Uber Eats in convenience stores. 

Luis Muñoz Marín International Airport was the destination with the highest number of ride requests. This, according to Uber, who revealed its usage trends from Puerto Ricans in 2023, in mobility and orders. 

About 1,700 restaurants and convenience stores make up Uber Eats in Puerto Rico. 

Although the ridesharing market is wide open in Puerto Rico, there are a few food delivery apps established. Dame Un Bite is one of them. The delivery platform, also 100% boricua made, connects Puerto Ricans with restaurants and other businesses in their area. 

Dame Un Bite, began operations in 2015 in Mayaguez and in 2017 in San Juan. Now it has more than 800 businesses on its platform that covers cities like Arecibo, Aguadilla, Cataño, San Juan, Guaynabo, Caguas, Bayamón, Gurabo, Trujillo Alto , Carolina, Levittown, Ponce, Dorado and Mayaguez.

Other local apps like Doordash and Uva!, also compete in the delivery local market.  

POLITICAL SHAKEUP

Puerto Rico's Pro-Commonwealth Party Show Early Signs of Deflation

For the past elections, PPD positioned itself neck and neck with the pro-statehood New Progressive Party (PNP). In a recent poll, however, its following have fallen.

New poll shows PNP's leader, Jennifer González, growing Appeal Among voters for the gubernatorial seat. Her main opponent? Juan Dalmau, the candidate for the Puerto Rican Independence Party (PIP).

Gonzalez defeated Gov. Pedro Pierluisi in a surprise upset during the primary election held last June. Since then, she has maintained a wide dominance in the latest polls. Gonzalez leads 43% to 24% from Juan Dalmau. Jesús Manuel Ortiz, PPD's contender, was just shy of 14%.

The Popular Democratic Party of Puerto Rico (Partido Popular Democrático, PPD) was established in 1938 by Luis Muñoz Marín and promotes the continuing of the Commonwealth of the United States with self-governance and often promotes policies on the center-left.

The PIP's rise to the top has not been alone. The Citizens’ Victory Movement (MVC by its Spanish initials) and the PIP formed an alliance called La Alianza. 

The MVC and PIP agreed that the gubernatorial candidate of the alliance is going to be Juan Dalmau. 

"We are calling on everybody to vote for Juan Dalmau, but the law forces us to have a candidate for the MVC. We have a candidate for governor, Javier Cordova. But he’s telling people, don’t vote for me, vote for Dalmau, who is the candidate of the alliance", Rafael Bernabe, a MVC’s senator at-large said in an interview.

The idea behind La Alliaza came after the 2020 elections, where the MVC candidate for governor got 14% of the votes and Dalmau, the PIP candidate, got 14%. The two minority leftist parties added to 28%. 

The current governor of the island, Pedro Pierluisi won the governor’s race with 33% of the vote. 

PPD and PNP leaders, meanwhile, said the alliance is a deception and a trick.

SMALL BUSINESS SURVEY

The 5 Most Common Reasons Why Small Businesses Fail in Puerto Rico 

“Not having access to startup funds” (29.3%), “Starting a business without any training” (26.8%) and “Loss and damage from the effects of climate change” (24.4%), were the main reasons why small businesses didn't prevail last year in Puerto Rico.

The list continues with “Not achieving enough sales” (17.1%) and “Did not meet their business lifestyle expectations” (12.2%).

These findings were gathered from a report published by Colmena66, an entity of the Puerto Rico Science, Innovation and Exploration Trust, known for connecting business visionaries with the "ideal asset brilliantly" through its Organization of Business venture Backing Associations. 

The study titled "State of the Entrepreneurial Community in Puerto Rico", surveyed 711 entrepreneurs across the island to portray Puerto Rico's entrepreneurial diversity.

The study also pointed out that small businesses used $146.6 million in capital to run their company in 2023, a 62% increase from 2022. 

These businesses also faced a number of obstacles, including a “Lack of maintaining a healthy contingency fund” (84.3%), “Too much dependence on personal savings” (85.9%), “Completing government regulations” (47.9%), and “Had difficulties recruiting employees” (37%).

Additionally, participants were asked about ecosystem gaps, such as the requirement for exporting their goods. 

Despite the fact that 45.6% of business owners said they are interested in reaching international and U.S. markets, 66.7% are unaware of the export incentives available. Additionally, despite their desire, 34.5% of business support organizations are unable to address export issues.

According to the Puerto Rico Planning Board’s Economic Report to the Governor for 2022, the total consumers owe to lenders was $27,958.8 million during fiscal year 2022, an increase of $3,486.3 million, or 14.2%, relative to fiscal year 2021.

BEFORE YOU HIT THE BEACH

Oversight Board

FOMB filed a complaint against Governor Pedro R. Pierluisi: The Financial Oversight and Management Board (FOMB) for Puerto Rico seeks to regulate net metering and petitioned to nullify Act 10-2024, so the PR Energy Bureau operates free from political influence.

Gov Pierluisi responded: “In the end, the important thing is for us to continue to promote the installation of solar panels and batteries all over Puerto Rico."

Politics

PNP candidate for governor surpasses $1.6 million for campaign: Jenniffer González Colón, the candidate for governor for the New Progressive Party (PNP) informed on Tuesday, the amount of $1.6 million in electoral funds. In the month of June alone, her campaign raised $911,000.

Energy

U.S. First Circuit to reconsider ruling that PREPA bondholders had secured claim:  The U.S. First Circuit Court of Appeals has decided to review its prior ruling that holders of Puerto Rico Electric Power Authority (PREPA) bonds have a secured claim of $8.5 billion against the utility’s current and future net revenues.

The appeals court’s July 22 decision came after the FOMB had asked for a reconsideration of the ruling as part of PREPA’s bankruptcy case.

The First Circuit’s decision could affect bondholder recoveries and the confirmation of PREPA’s debt adjustment, which Judge Laura Taylor Swain is currently considering. The decision will also have implications for the broader municipal bond markets. The FOMB had anticipated it was going to seek a reconsideration of the Appeals Court ruling.

Q2 Update on PR Banks

Q2 Update on PR Banks: Oriental Bank's financial holding company, OFG Bancorp, reported results for the second quarter of 2024 that included core revenue of $179.4 million, up from $170.5 million in the previous year's quarter. 

The most recent results were compared to the $174.2 million recorded for the first quarter of the year by the San Juan-based financial institution, News Is My Business (NIMB) reported.

Additionally, Popular Inc., the parent company of Banco Popular de Puerto Rico, also saw quarter-over-quarter growth. Popular told NIMB that its net income for this quarter ended $177.8 million, compared to net income of $151.1 million during the same quarter in 2023, representing a $26.7 million year-over-year jump.

Finally, First BanCorp., the bank holding company for FirstBank Puerto Rico, reported a net income of $75.8 million, or $0.46 per diluted share, for the second quarter of 2024. This compares to $73.5 million, or $0.44 per diluted share, for the first quarter of 2024, and $70.7 million, or $0.39 per diluted share, for the second quarter of 2023. 

LAST BUT NOT LEAST

• 2024 Puerto Rican Status Referendum: Described as “inconsequential”, the $1.3 million referendum scheduled for the Nov. 5 general elections will feature three choices: independence with free association; statehood and independence.

• USDA' Sees Puerto Rico's Agricultural Production Growing by 1.4%

• Puerto Rico bans discrimination against people wearing Afros, curls, locs, twists, braids and other hairstyles

• ASK US ANYTHING - Our goal is to provide useful information and create useful connections to the island, do you have any specific questions? Shoot us a comment or email and we’ll get back to you in a future newsletter.

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If you're only seeing blue caps on the fresh milk section of the grocery store, get used to it. Dairy giant Tres Monjitas is taking over the milk industry, as the red caps competitor Suiza Dairy approaches a near total halt. 

NEW MONOPOLY ALERT

Suiza Dairy Evaporating Quickly

What once started as good faith bargaining 38 days ago, over expanding worker's health care coverage, was just the tip of the iceberg for Suiza Dairy, after more than 80 years of operation.  

How it started

From the end of the 70s and the beginning of the 80s there was such fierce competition in the milk industry in Puerto Rico. The two leading milk and dairy products brands were Suiza Dairy and Tres Monjitas. Both companies were tiptoeing one another, expanding its market by offering new milk derivatives products or diversifying existing ones.

Now, similar to many other places, Puerto Rico has experienced a decrease in the consumption of milk. Evolving consumer behavior between plant-based milk alternatives and other competing beverages lead to a decline in milk consumption.

Suiza Dairy reported it lost more than $30 million in the last year on its operation on the island.  As a result, the company laid off 483 employees last month. The dairy brand said these layoffs were due to the economic situation and the determination not to continue business with 900 small local companies to which Suiza distributed its products.

The layoffs happened just as the Central General Workers' Union (CGT) resumed negotiations with Suiza Dairy about healthcare benefits. The workforce signed a collective bargaining agreement with the dairy company, back in 2013. But the section of the company’s contributions to the medical plan were left pending to be negotiated later. 

When the workers resumed these negotiations this past month, Suiza stepped back and refused to negotiate in good faith. So since then, the union has been picketing daily in front of the plant. Therefore, the company stopped delivering fresh milk, especially to the most distant and mountainous places. 

What’s at stake?

Puerto Rico's primary agricultural industry is dairy farming. The dairy industry in Puerto Rico represents 25% of the island's total agricultural-related income, which translates to $215 million dollars annually.

Suiza Dairy's capability was to produce 500,000 quarts of milk daily. Therefore, the labor dispute resulted in the takeover by Tres Monjitas of the entire milk distribution on the island.

A gallon of whole milk in Puerto Rico costs just under $7. That compares with the U.S. average price of about $4.26 a gallon, according to USDA. 

Who benefits?

Tres Monjitas president and CEO, Jaime Fonalledas, said that his company continues to focus on responding to the consumers' demands, but remained silent about a possible acquisition of Suiza Dairy.

Along with the main plant in Rio Piedras, Suiza also has the DFM facility in Aguadilla, which produces juice and milk, and three distribution centers in Juncos, Ponce, and Hatillo.

Amidst the strike, Tres Monjitas will also assume the supply of fresh milk to all school meals that make up of nearly 250,000 students.

What’s next?

There are no signs of a labor-management agreement. 

"If the strike matter isn't resolved this week, I fear that Suiza Dairy will cease to exist", said Héctor Iván Cordero, the president of the Puerto Rico Farmers Association.

If this is true, Tres Monjitas will be the only company capable of conducting such business in the island. This will result in the birth of another local monopoly, alongside Puerto Rico Aqueduct and Sewer Authority (PRASA) and LUMA, formerly associated with PREPA, the territory’s bankrupt power monopoly.

The Empresas Fonalledas is a huge roleplayer in Puerto Rico's economy. In addition to Tres Monjitas, its assets include Puerto Rico's two main shopping centers, Plaza Las Americas (San Juan) and Plaza del Caribe (Ponce); the company that operates Starbucks stores in the island, and soft-serve premium ice cream retail chain, Soft & Creamy.

EN ROUTE TO THE SUPREME COURT?

Companies Do Not Sit Idly with Minimum Wage Increase

A group of businessmen is making a second attempt to invalidate the recent $10.50 salary increase in Puerto Rico by seeking to have the case heard in the Supreme Court. 

The group, consisting of six organizations, filed two appeals before the High Court. One appeal requested a Writ of Jurisdiction and the other appealed for an oral hearing, both seeking to suspend the implementation of the new minimum wage. 

The appeals come in just as Judge Anthony Cuevas of the Court of First Instance dismissed the initial lawsuit after a hearing stating that the increase scheduled for July 1, 2024, was supported by the law. However, the attorney for the business group, Jaime L. Sanabria, believes that this decision was "erroneous" and "not legally grounded."

With these appeals, the businessmen aim to gain clarity on the current state minimum wage and its enforceability. They also demand an urgent determination of the state minimum wage to be paid by July 15, emphasizing the need for an oral hearing to express their positions. They believe that holding an oral hearing will assist the Court in making a well-informed decision based on the arguments presented by all parties.

$4 MILLION LOSS

LUMA's Reputation Left In The Dark as it Sparks Community Tension 

LUMA, the private administrator of the island's electric control transmission, announced that the transformer delivered to Santa Isabel at a cost of more than $4 million has malfunctioned.

In response, the power company said that it will replace the transformer from another one in a substation at Maunabo, a municipality located in southeast Puerto Rico. The process could take four to six weeks, said LUMA. 

Upon the announcement, a blockade was put in place at the site by hundreds of residents and its Mayor, Angel Lafuente Amaro, who said its transformer will stay untouched.  LUMA assures that the transformer in Maunabo is not in use and its move would not affect the community, but residents remain skeptical, especially due to the hurricane season ahead and the need to have a concrete backup plan before removing the transformer.

“The transformer in Maunabo is not connected to the grid and is not essential for the continuity of service in the municipality. The electrical service of Maunabo residents will not be impacted,” LUMA said in a written statement issued Friday.

Meanwhile, thousands of clients in Santa Isabel, Coamo and Aibonito are plagued by blackouts causing permanent damage to their appliances, due to outages and voltage fluctuations the transformer's supposed to mitigate.

Coamo Mayor Juan Carlos García Padilla has requested that Gov. Pedro Pierluisi, the Puerto Rico Energy Bureau, LUMA, and PREPA work together to resolve the situation as soon as possible.

“The president of LUMA [reported] that the transformer did not pass the specified tests which it'll be vital to bring another transformer from Maunabo. This will take six more weeks of anguish for our inhabitants and we are not willing to acknowledge it,” the leader demanded. “We can't take it any longer, Coamo is the town most influenced by the voltage varieties that have affected everybody. I am requesting that you just come together and act mindfully so that this situation is settled. We are not getting to hold up six more weeks. Usually unacceptable.”

BEFORE YOU HIT THE BEACH

Cost of Living

The High Price of Paradise: It is 2.3% more expensive to live in urban areas of Puerto Rico than in the US, a study revealed.

In fact, Tokyo is cheaper to live in than San Juan, according to another global survey.

How much more expensive is it to live on the island? Compare City Costs and Salaries. Use this cost of living and salary calculator to find out the standard living cost between U.S. cities and Puerto Rico.

Politics

PIP Party Calls for Island Supreme Court to Hold Nov. 5 Referendum: The Puerto Rican Independence Party (PIP) described the plebiscite as “unconstitutional, misleading and fraudulent.”

Consumer

Auto Sales up 3% in June Versus SPLY: The United Automobile Importers Group (GUIA, in Spanish), an organization that represents the automotive industry in Puerto Rico, revealed that the month of June ended with a total of 10,772 units sold in Puerto Rico compared to the Same Period Last Year of 10,458, representing an increase of 3%.

The sport and sport premium had a huge spike in June with an increase of 138%, compared to the same month last year, followed by the sedan crossovers and premium sub-compacts with an increase of 15.11%. 

YTD sales, on the other hand, reflected a decrease of 1.62%, through June 2024, sales reached 61,026 units versus the 62,032 units sold in the same period of 2023.

LAST BUT NOT LEAST

• Passenger Traffic Increase of 11.6% at Luis Muñoz Marín Airport (SJU)

• Hurry! The Energy Support 2.0 $50k Incentive, Department of Economic Development and Commerce (DDEC, in Spanish) Extended Their Application Period

• Hoops Over Grammys: Top Reggaeton Players Lead Basketball boom in Puerto Rico 

• We want to be useful! Reply to us or leave us comments about your questions about Puerto Rico you want answered. What are the island’s political parties? What sustains the island’s economy? Where should I go for good pizza? All goes, we’ll be happy to be your connection.

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Grab your flip-flops (or leave them on) and a bathing suit to hit the beach instead, or stop by a local panadería and sip some freshly brewed, locally sourced Puerto Rican coffee. But beware: Your daily breakfast may soon cost more. Here's why.

COST OF LIVING

Yet Again, Electricity Prices Soar 

Inflation has hit a new ceiling in Puerto Rico as the increase in essential services such as water and electricity has gone up once again on the island. 

Since July 1, consumers will see a 4.7% increase in their monthly electricity bills after the Puerto Rico Energy Bureau approved the most recent rate adjustment for the service, solicited by LUMA. 

In a release, the agency confirmed the increase in the cost per 800kWh will be 23.779 cents for the quarter, compared to 22.72 cents per kWh for the previous quarter.

In dollars and cents, this means that a residential customer who paid $230.59 for their monthly electricity bill during the current quarter will pay $10.84 more, or $241.43, for the same monthly consumption.

LUMA said the price increase was called for to cover cost factors including fuel and energy purchases, and fuel subsidies. 

The new energy fee comes just as Puerto Rico Aqueduct & Sewer Authority (PRASA) also set an adjustment in the base charge monthly fee at 2%. 

No More Plastic Forks?

Moreover, a single-use plastic ban came into effect this past July 1, forcing businesses across the island to switch to compostable or biodegradable materials. 

The ban on single-use plastic will have a bigger impact on fast food chains and restaurants as it includes knives, plastic cups, forks, spoons and straws, as well as plastic plates, foam trays and bowls.

Business owners have already confirmed that switching to sustainable packaging has represented about 3% increase in the cost of production.  

Medical and health institutions are exempt from the ban on single-use plastics. 

The price surge on basic necessities came just as Puerto Rico's minimum wage was recently increased from $9.50 to $10.50 per hour.

FOMB GREENLIGHT 

$33.3 Billion 2025 Budget for Puerto Rico, What's In It?

The Financial Oversight and Management Board for Puerto Rico (FOMBPR) approved a budget that consists ofthe general fund budget of $13.1 billion, the special revenue fund budget of $4.9 billion, and the federal fund budget of $15.3 billion. 

Compared to the previous fiscal year, the general fund budget reflects a 3% increase in total spending. It allocates additional funding for social programs, including support for aging adults, mental health assistance, early childhood resources, and violence prevention plans. Moreover, the budget provides funding for crucial services such as education, health, public safety, social welfare, and economic development. 

The newly appointed executive director of the oversight board, According to Robert F. Mujica Jr., said the fiscal year 2025 budget makes significant investments in education, health, and infrastructure.

Additionally, the budget incorporates measures to control government spending outside of the budget process. It requires that spending bills or laws clearly outline how the government intends to cover their costs. Mujica emphasizes the importance of a balanced budget, stating that it is not only essential at the beginning of the year but must also be maintained throughout the fiscal year. He highlights the government's history of enacting spending bills in previous fiscal years that were inconsistent with the budget and exceeded its limits.

David Skeel Stepped Down

Former Chairman of FOMB, David Skeel, announced Wednesday that he will not run for a third term, after serving in the entity for almost eight years. Skeel informed President Joe Biden and Sen. Mitch McConnell that his term will end when a successor is named. 

“When I was nominated by Senator Mitch McConnell and appointed by President Barack Obama to the Oversight Board, I knew the task would be demanding, complicated and rewarding,” Skeel said in a written statement. “The challenges have been formidable in ways I could not have anticipated in the summer of 2016, but, in the end, our work has been equally rewarding.”

REAL ESTATE

Is Flipping Houses in Puerto Rico Still a Good Idea?

Finding a property to flip is quickly becoming one of the hardest things to accomplish on the island. In the best scenario, homeowners who are interested in selling their dilapidated properties often do so due to financial constraints or the inability to make necessary repairs. Additionally, many of these properties are inherited homes.

“It’s the kind of business that has to be a ‘win-win.’ Everyone has to win. The homeowners who are interested in getting rid of it because it’s in bad condition, maybe they have a financial situation and they can’t fix it, and many times it’s a house they inherited.” The expert explained that many people inherit homes in disrepair, which no one in the family is interested in, motivating them to sell quickly.

However, Fernando Rodríguez-Esteban, president of San Juan-based Aresta Group LLC, which specializes in property flipping investments, said that in recent cases the island lacks a transparent, efficient process for municipalities to take possession and dispose of potential properties that can be transformed into profitable flips.

The economic problems in Puerto Rico have resulted in numerous abandoned houses due to the lack of a transparent and efficient process for municipalities to acquire and dispose of these properties. 

Currently, Puerto Rico relies on the public nuisance concept, where municipalities attempt to compel owners to sell the properties. However, this concept is complicated and unclear, Fernando says. In contrast, the U.S. mainland has more straightforward processes, such as tax liens and tax deeds, which allow third parties to pay property taxes and eventually take ownership if the original owner defaults. 

Additionally, as the cost of living has gone up, so does labor and material cost. Houses that used to cost $120,000 post-flip, with initial purchase prices around $60,000 to $70,000 and $25,000 in improvements are costing significantly more.

BEFORE YOU HIT THE BEACH

Investment

• $1.3 million investment | Infosys BPM to expand in Aguadilla: Lockheed Martin, which has had a presence in Puerto Rico since 2007, announced it will add 225 jobs to its current payroll of 245 employees. The company received support from the Department of Economic Development and Commerce’s (DDEC, in Spanish) Puerto Rico Economic Incentives Fund.

• USACE unveils $252M plan to mitigate coastal storm risk in Ocean Park, Rincón: The plan aims to reduce the risk of damage from coastal storms. The overall estimated project cost is split between $112.6 million for Ocean Park and $139.7 million for Rincón, with 65% of the funding coming from federal ($97.2 million) and 35% from non-federal ($155.1 million) sources.

• CSL allocates $24M on donation centers, salaries, support in Puerto Rico: The investment will target its three plasma donation and collections centers in Toa Baja, Loíza and Ponce. The centers contribute about $4 million or more in economic activity to the communities in which they operate.

Tourism and Transportation

• Directly linking Puerto Rico and Spain: Iberia to increase seat capacity to Puerto Rico by 30% with daily flights and a new agreement. 

• Gov. commissions new $5.2M barge to boost cargo capacity to Vieques, Culebra: Texas-based Conrad Shipyard will build a new cargo barge, as part of the $2.8 million allocation of federal funds through the U.S. Maritime Transportation Department’s (MARAD). 

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LAST BUT NOT LEAST

• Puerto Rico Pathology opens $1.5M clinical lab in San Juan

• Census: Puerto Rico’s 65+ population doubles 15-and-under group

• In The South, Puerto Rico's First Economic Development District designated by the U.S. Department of Commerce

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