Puerto Rico embraces public-private funding.

Despite efforts by the Reagan and Bush administrations to encourage privatization (see pp. 19 and 54), federal efforts have all but fallen by the wayside, leaving states and local governments to fend for themselves.

“There has been no champion to get in front of privatization and hold out a carrot,” says William Allen, a principal in Dewberry and Davis, a Fairfax, Va.-based engineering firm. “We are seeing a quantum shift of responsibility and empowerment to the states and local government.”

It is a shift the Commonwealth of Puerto Rico has embraced enthusiastically for many years as a means of transforming a provider government to a facilitating one.

Under Gov. Pedro Rosello’s administration, the Commonwealth established a program, identifying areas where private investment frees public-sector resources for various infrastructure developments.

The Commonwealth is also trying to sell other functions that are not run efficiently by government, says Allen St. Claire Finch, intergovernmental affairs officer. For example, the Puerto Rico Sugar Corp. is in debt, and the administration has received several bids on it. Other governmental operations targeted for sale are the Puerto Rico Pineapple Co. and several government-owned tourist facilities. The National Council for Public-Private Partnerships in Washington, D.C., recently reported that in each of these three major commonwealth areas – healthcare, education and economic development the government has forged new public-private partnership programs.

In the city of Guaynabo, Mayor Hector O’Neill has been credited with virtually institutionalizing a culture of public-private partnerships that many observers believe will serve as a model for other cities and perhaps even the central government.

With less than two years in office, he has 10 municipal-government projects in the works under lease-and-buy-back agreements including the city’s first health service network.

But the commonwealth’s most visible symbol of privatization is the Teodoro Moscoso Bridge, which was built in 1994 at a guaranteed maximum price of $83 million. It was 90 percent financed by $17 million in tax-exempt special revenue bonds issued by the Puerto Rico Highway and Transportation Authority and 10 percent with private capital from the Autopistas de Puerto Rico (APR). APR is a partnership of local and foreign firms including Dragados y Construcciones, S. A., one of Europe’s largest construction firms, and Raxach Construction Co., Puerto Rico’s largest contractor. The bonds are to be repaid from toll revenues.