TOWARDS NEW DEVELOPMENT: RECOMMENDATIONS FROM FINANCE AGENCIES THE COUNCIL OF DEVELOPMENT

Transcription

1 TOWARDS NEW DEVELOPMENT: RECOMMENDATIONS FROM THE COUNCIL OF DEVELOPMENT FINANCE AGENCIES 9 May, 2018 El Foro de Alcaldes, Centro Comunal Yolanda Guerrero, Guaynabo, Puerto Rico Presenter: David Southgate, consultor

2 KEY AREA OF FOCUS

3 KEY AREA OF FOCUS

4 TODAY S PRESENTATION InterAgency Workgroups 15 November, January to 1 February, 2018 About Council of Development Finance Agencies Recommendations for finance development David Southgate david.southgate@cclr.org tel.:

5 INTERAGENCY WORKGROUP (IAWG) Objective: Bring together state and federal agencies, as well as key private sector partners to implement infrastructure recovery/resilience and land revitalization projects. Output: Offer targeted knowledge about: Technical assistance State and federal loans and grants Other economic development finance tools to Municipalities and other entities. Collaborators plan the meetings for Municipalities: Center for Creative Land Recycling The US EPA Desarrollo Integral del Sur, Inc. Environmental Sustainability Inc. Intake form Projects with a plan and early success Needing additional $ for execution

6 INTERAGENCY WORKGROUP 15 NOVEMBER, 2017 Autoridad para el Financiamiento de la Infraestructura del Gobierno de PR Department of Economic Development and Commerce de Puerto Rico Desarrollo Integral del Sur, Inc. US Department of Homeland Security, National Protection and Programs Directorate US Economic Development Administration Environmental Development and Sustainability, Inc. Federal Highway Administration Fortaleza Municipality of Penuelas Municipality of Ponce USDA Rural Development Instituto de Cultura Puertorriqueña de PR Junta de Calidad Ambiental de Puerto Rico Municipio de Guayanilla Municipio de Peñuelas Office of Congresswoman Jenniffer Gonzalez Oficina de Gerencia de Permisos Pieri Architects Puerto Rico Ports Authority U.S. Dept. of Housing & Urban Development (HUD) U.S. Environmental Protection Agency UPR-Mayaguez (INESI)

7 INTERAGENCY WORKGROUP 30 JANUARY TO 1 FEBRUARY, 2018 Agencies/Organizations Desarrollo Integral del Sur, Inc. (DISUR) Empire Gas Environmental Development & Sustainability Falcon BioPro Fortaleza FPV & Galindez IFCO Recycling Mayor of Guayanilla Office Municipality of Penuelas Municipality of Ponce Agencies/Organizations National Development Council Puerto Rico Aqueduct and Sewer Authority Puerto Rico Electric Power Authority Puerto Rico Environmental Quality Board Puerto Rico Highway Transportation Authority Puerto Rico Planning Board Puerto Rico Ports Authority Smart Electric Power Alliance U.S. Department of Homeland Security U.S. Environmental Protection Agency U.S. Federal Emergency Management Administration

8 ABOUT THE COUNCIL OF DEVELOPMENT FINANCE AGENCIES Council of Development Finance Agencies (CDFA) National association of development finance leaders from 500entities focused on municipal finance and development finance. Client: Desarrollo Integral del Sur, Inc. (DISUR) & Puerto Rico Department of Economic Development & Commerce (DDEC) The local sponsors: Desarrollo Integral del Sur, Inc. (DISUR) Environmental Development & Sustainability, Inc. Department of Commerce and Economic Development Center for Creative Land Recycling

9 ROADMAP TO REDEVELOPMENT

10 INFRASTRUCTURE AREAS OF FOCUS Areas of Development Finance focus for the CDFA Response Team State highways Bridges need repair and restoration; Narrow highways do not adequately accommodate heavy industrial traffic; Industrial roads cross through residential areas (creating environmental justice issues related to poor air quality. Zero emissions strategies should be considered); Electricity Problems connecting new industries to the electric grid due to insufficient electric capacity; Water Insufficient water supply for industrial and potable water; A complete lack of sewer and storm-water management in the entire area; Proposed changes to the incentive code to support land acquisition by state agency or through a Public-Private Partnership.

11 SUGGESTED STRATEGIES I. Assessing the Environmental Contamination throughout PR 127 Corridor II. Identifying Cleanup Funding III. Financing Infrastructure Improvements IV. Attracting Industry and Leveraging Private Investment

12 RECOMMENDATIONS Assessing the Environmental Contamination i. Complete Phase II Assessments Puerto Rico Environmental Quality Board (EQB) or U.S. EPA should compel the owners, under RCRA or CERCLA or their state equivalents, to perform the necessary sampling, or to perform the work itself. The post-hurricane resiliency efforts and momentum being gained for redevelopment of the Corridor should encourage EQB to be aggressive in enforcing cleanup of high-priority properties. DISUR could request a portion of FEMA proceeds to establish a fund for assessing properties in the PR 127 Corridor. ii. Publicize RCRA Corrective Action Reports on Properties Three properties under RCRA Facility Investigation Publicizing this information will demonstrate a transparent enforcement process to the public and to nearby property owners and should encourage them to comply with assessment and remediation efforts.

13 RECOMMENDATIONS Identifying Cleanup Funding i. Establish a Revolving Loan Fund for Cleanup DISUR has applied for an EPA Revolving Loan Fund (RLF) in the amount of $1.2M which ii. Make Subgrants Available to Transformative Redevelopment Projects Ratio of subgrants from revolving loan fund, strategically awarded to catalytic redevelopment projects for the PR 127 Corridor. iii. Investigate Cost Recovery from Former Site Owners Insurance policies may cover the costs of environmental remediation. DISUR or DDEC should consider legally pursuing the former polluting site owners to compel them to remediate the properties.

14 PART III: FINANCING INFRASTRUCTURE IMPROVEMENTS General Recommendations i. Land Redevelopment Authority to Coordinate Redevelopment Efforts Recognize PR 127 as a special project area and give authority to a single management group or redevelopment authority with enabling legislation. ii. Build Map of Existing Infrastructure Assets Inventory existing water infrastructure and electrical power systems to support decisions about what, if any, industries can be accommodated presently and what future improvements are necessary. iii. Evaluate Potential for Revolving Loan Fund (RLF) for High-Priority Infrastructure Projects Identify public source for capitalization of Revolving Loan Fund, combined with other sources. State and local governments capitalization of an RLF: Tax set asides General obligation bonds Direct appropriations from the state legislature Annual dues from participating counties or municipalities Funds directed from the state lottery. Federal sources for capitalization of an RFL: Portion of the FEMA funds Housing and Urban Development (via Community Development Block Grants) Department of Commerce (via the Economic Development Administration)

15 PART III: FINANCING INFRASTRUCTURE IMPROVEMENTS Water Infrastructure i. Create a Public-Private Partnership (P3) for the PR 127 Corridor for needed water and wastewater infrastructure improvements PR127 Corridor as a separate water district (3500 acres) PPP can limit its operation to a manageable area. Government (or PRASA)issued an RFP to solicit interest from appropriate parties. ii. Consider Issuance of Bonds Using Credit Enhancement Via portion of the FEMA disaster resiliency funds. Over time, the Commonwealth can improve its credit worthiness and may recover to an investment grade rating.

16 PART III: FINANCING INFRASTRUCTURE IMPROVEMENTS Roadway infrastructure financing i. Petition PRHTA to Be Included in Long-Range Transportation Plan Mayors of Peñuelas and Guayanilla prioritize PR127 roadway improvements throughout Corridor with Metropolitan Planning Organizaiton. ii. Consider Future Utilization of Tax Increment Financing (TIF) Create a TIF district in the PR-127 Corridor Establish TIF district while base values are low to maximize the revenue capture Use funds to invest in infrastructure and other improvements Pay for them by capturing the increase in property tax revenues generated by the enhancements.

17 PART IV: ATTRACTING INDUSTRY AND LEVERAGING PRIVATE INVESTMENT If incentives processes were streamlined, more companies would invest in the PR 127 Corridor. i. Utilize New Markets Tax Credits (NMTC) DDEC identify Community Development Entities (CDEs) whose mission (e.g., industrial, renewable energy, resiliency, and/or bioeconomy projects) and geographic footprint are a match with the PR 127 Corridor. ii. Market PR 127 Corridor as a Qualified Opportunity Zone The new QO Funds will democratize economic development allow a broad array of investors throughout the USA to pool resources and mitigate risk, increasing the scale of investments going into underserved areas. iii. Maximize Use of State and Local Tax Incentives Puerto Rico attractive incentives include various tax exemptions and special deductions for certain businesses. These include a fixed corporate income tax rate (4 or 8 percent) one of the lowest in comparison with any U.S. jurisdiction Municipalities can grant additional incentives such as exemptions on real property, personal property, construction, and sales tax. iv. Issue a Request for Proposals (RFP) for Shovel Ready Sites DDEC should consider issuing an RFP for sites that have little to no contamination and are ready to transfer ownership. The reuse plan for the Eco-Industrial Zone should guide RFP decisions. Opportunistic proposals should be considered for their potential to generate economic activity and catalyze redevelopment efforts, without harming overarching goals of the community plan.