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21 March 20172 minute read

Public-Private Partnerships in Puerto Rico

DLA Piper's handbook

Historically, there has been vigorous debate among the residents of Puerto Rico for and against the privatization of public property and public services. The public-private partnership (P3 or P3s) model established by the Public-Private Partnership Act of 2009, as amended, and its regulation are gaining acceptance as a tool for meeting Puerto Rico's infrastructure needs.

Several factors have strengthened this growing acceptance: not least, Puerto Rico's current liquidity crunch and lack of market access to finance its activities, coupled with the fact that P3s in Puerto Rico are typically structured not as an outright sale but as long-term leases or concessions, at the end of which the use of the asset is returned to the government. In seeking to finance infrastructure projects and provide multiple public services, the Government of Puerto Rico currently regards P3s as a sensible alternative.

Furthermore, the Puerto Rico Oversight, Management and Economic Stability Act, adopted by the US Congress and signed into law by President Barack Obama on June 30, 2016, has strengthened the call for P3s on the island. The new administration of Governor Ricardo Rosselló has also made it clear that it will prioritize P3 projects. In fact, the first law enacted by the Rosselló administration was to amend the P3 Act to expand both the options available to submit proposals and participation in P3s.

It appears, in sum, that a number of P3 projects are on the horizon for Puerto Rico. For those considering participating in such projects this handbook provides an updated summary of the applicable legal framework governing P3s in Puerto Rico and discusses why Puerto Rico is a favorable jurisdiction for entering into P3s.