P.R. Laws tit. 21, § 6015
(a) Municipal general obligation bonds or notes.— No municipality shall incur an obligation evidenced by municipal general obligation bonds or notes for a total principal sum that, together with the principal to be paid for all other obligations evidenced by municipal general obligation bonds or notes of the municipality in effect at that time, exceeds ten percent (10%) of the total appraised value of the property located in the municipality.
In determining the loan margin of a municipality, the principal to be paid for obligations evidenced by municipal general obligation bonds or notes in effect at that time, shall be reduced by that part of the deposits in the municipality’s account in the Redemption Fund that is not encumbered for the payment of interest accrued, but not yet paid, on said obligations. The Government Development Bank for Puerto Rico shall establish, through regulations, the formula to determine the loan margin. It is thus clarified that for the purpose of determining the loan margin of a municipality, the Government Bank shall use the total appraised value of the property located in the municipality as said appraisal values are determined by the Municipal Revenues Collection Center pursuant to the provisions of § 5051 of this title.
(b) Notes in advance of municipal general obligation bonds.— No municipality shall incur an obligation to be evidenced by notes in advance of municipal general obligation bonds which requires a total payment of interest that, together with the principal to be paid for all other obligations evidenced by outstanding municipal general obligation bonds and notes of the municipality, and the interest to be paid on all obligations evidenced by notes in advance of bonds of the municipality outstanding at that time, exceeds ten percent (10%) of the total appraisal value of property within the municipality. This limitation shall not be applicable to the issue of notes in advance of municipal general obligation bonds when the interest on said notes is paid from the proceeds of the municipal general obligation bond issue.
(c) Special obligation bonds, notes or instruments.— No municipality shall incur an obligation evidenced by bonds, notes or instruments if the annual payment of the principal and interest on said bonds, notes or instruments, together with the annual payment of the principal and the interest on all other obligations evidenced by special obligations bonds, notes or instruments of the municipality outstanding at that time, exceeds ten percent (10%) of the average recurrent operating income of the municipality of the two (2) fiscal years immediately preceding the current fiscal year.
(d) Notes or instruments in advance of taxes and revenues.— No municipality shall incur an obligation evidenced by notes or instruments in advance of taxes and revenues if the payment of the interest on said notes or instruments, together with annual payment of the principal and the interest on all obligations evidenced by special [obligation] bonds, notes or instruments of the municipality outstanding at that time, exceeds ten percent (10%) of the average recurrent operating income of the municipality of the two (2) fiscal years immediately preceding the current fiscal year.
The funds obtained by the municipality from these notes or instruments in advance of taxes and revenues shall only be used to make appropriations for the budget of the fiscal years for which they are authorized. The funds obtained by the municipality from these notes or instruments shall not be used to readjust the operating budget of the municipality. No municipal tax or revenue corresponding to a fiscal year which follows the fiscal year in which advanced taxes or revenues are issued or used to contract the notes and instruments may be used to pay for said notes or instruments.
History —July 3, 1996, No. 64, § 16, renumbered as § 19 and amended on Aug. 12, 1997, No. 75, § 18; Aug. 18, 2005, No. 55, § 1; Mar. 9, 2009, No. 7, § 67.