P.R. Laws tit. 13, § 32128
(a) Creation of the Fund.— A “Municipal Redemption Fund” is hereby created under the custody of the Bank:
(1) For periods before July 1, 2014, the Municipal Redemption Fund shall be nourished from a special fund to be created by the Commonwealth of Puerto Rico; and
(2) For periods beginning after July 1, 2014, the Municipal Redemption Fund shall be nourished in accordance with the provisions, terms, and other conditions set forth in the Municipal Administration Fund Act and the provisions regarding the increase in the State IVU established in §§ 32021 and 32022 of this title.
(b) Purpose of the Municipal Redemption Fund.— The moneys deposited in the Municipal Redemption Fund shall be used by the Bank exclusively to grant loans in favor of the municipalities. Said loans shall be granted using as a basis the sums of money collected in each of the municipalities and deposited in the Municipal Redemption Fund pursuant to the authorization established in § 6753(b) of Title 21, and § 32126(c)(2) of this title. In accordance with the foregoing, the municipalities interested in obtaining said loans are hereby authorized to contribute to the Municipal Redemption Fund an amount equivalent to up to one hundred percent (100%) of the share of the municipality in the Municipal Development Fund, pursuant to § 32127 of this title, in order to increase their credit capacity. Notwithstanding the foregoing, in the case of municipalities that are not interested in obtaining or making said loans, they may withdraw from the Municipal Redemption Fund the available amounts corresponding to their municipality. The municipality may use said funds to take on loans in any other financial institution under the same conditions and limitations contained in this section, subject to the condition that the financing terms offered by private financial institutions be better than those offered by the Bank. Loans obtained in this manner from private financial institutions shall not be subject to the limitations on credit capacity contained in §§ 6001 et seq. of Title 21, known as the “Puerto Rico Municipal Financing Act of 1996”.
(c) Responsibility of the Municipal Redemption Fund.— The President of the Bank shall be the official responsible for implementing all the procedures to be followed in the administration of the Municipal Redemption Fund, as well as the granting the loans authorized by this section, including the imposition of interests and fees, and the repayment terms. If there are funds corresponding to any fiscal year after Fiscal Year 2013-2014, whose municipality of origin cannot be reasonably determined by the Secretary, upon certification to such effect at the time of transferring the funds to the Bank, the Bank shall be authorized, for purposes of depositing the same in the Municipal Redemption Fund and of distributing or using such funds pursuant to this section, to accumulate the same in a special account and allocate such unidentified funds to the municipalities in the same proportion identified funds were distributed in the Municipal Redemption Fund during said fiscal year within one hundred and twenty (120) days after the end of the corresponding fiscal year.
(d) Use of the moneys from awarded loans chargeable to the Municipal Redemption Fund.— The moneys proceeding from the Municipal Redemption Fund made available to the municipalities through loans shall be used for solid waste collection and recycling programs; the construction of capital works and improvements; health and safety, including payroll and related expenses, such as employer contribution or payroll taxes; and in any activity or project within the sound public administration of the municipality, including the amortization of operational deficits and the payment of debts, except for payroll and related expenses in such programs or projects.
(e) Audit.— The President of the Bank shall direct that an annual external audit be conducted to evaluate the accuracy and propriety of the amounts deposited in the Municipal Redemption Fund, as well as of all matters related to the loans granted to the municipalities in accordance with this section, and on the amounts withdrawn by the municipalities that choose not to make said loans with the Bank, including a special certification expressing an opinion on such respect. A copy of said audit, as well as of the special certification issued for such purposes, shall be sent to the Legislative Assembly and to OCAM within a term of thirty (30) days after the same have been concluded or issued, as it may correspond. In this respect, OCAM shall furnish said information to the municipalities that request it within a term of five (5) business days.
History —Jan. 31, 2011, No. 1, § 4050.08; Dec. 16, 2011, No. 258, § 1; June 30, 2013, No. 40, § 48; Nov. 27, 2013, No. 139, § 2; Jan. 24, 2014, No. 19, § 9.