Buenos días. Don't run any government-related errands this Friday. Offices will be closed for the rest of the week as Gov. Pedro Pierluisi granted vacation leave to government employees for July 5th and 26th.
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).
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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