P.R. Laws tit. 21, § 6751
(a) A public corporation and instrumentality of the Commonwealth of Puerto Rico (“Commonwealth”) that constitutes a body corporate and politic independent and separate from the Commonwealth to be known as the “Municipal Finance Corporation “COFIM” (Spanish acronym) is hereby created.
(b) COFIM is hereby created for the purposes of issuing bonds and using other financing mechanisms to pay or refinance, directly or indirectly, in whole or in part, the debts of the municipalities of the Commonwealth payable or backed by the municipal sales and use tax.
(c) The repayment source of COFIM’s bonds shall be the portion of the municipal sales and use tax deposited in COFIM’s Redemption Fund, as such fund is defined below, under the provisions of § 6752(a) of this title. The Board of Directors of COFIM shall not authorize any COFIM bond issue, unless the President of COFIM, or an official designated by him/her, certifies that the principal of and interests on COFIM’s bonds whose authorization is proposed, plus the principal of, and interest on, all outstanding COFIM bonds (except those COFIM bonds to be payable from the funds that have been set aside and deposited in an escrow account to cover full payment thereof) payable every fiscal year (beginning in the fiscal year in which the proposed COFIM bonds will be issued) is equal to or lower than the applicable fixed income, as defined in this chapter.
(d) Notwithstanding the provisions of § 6753 of this title, COFIM may use any sum of the monies derived from the revenues stated in §§ 6752 and 6754 of this title, or the proceeds from the sale of bonds issued under the provisions of this chapter, to defray expenses incurred in connection with the issue and sale of such bonds, including those related to insurance, letters of credit, or other credit instrument or liquidity, and to cover any operating expenses.
(e) COFIM shall be attached to the Government Development Bank for Puerto Rico (hereinafter, the “GDB”), which shall assume COFIM’s operating expenses.
(f) The Board of Directors of COFIM shall be composed of seven (7) members, three (3) of which shall be members of the Board of Directors of the GDB; three (3) mayors, two (2) of which shall belong to the political party controlling the most municipalities, and one (1) mayor elected by all other municipalities; and one (1) member, who shall represent public interest, shall be recommended by the mayors of the majority and minority political parties and ratified by the Governor. The members of the Board of Directors of the GDB and the three (3) mayors shall be members of the Board of Directors of COFIM for the term of their tenure. However, in the case of mayors, such tenure shall not exceed two (2) consecutive terms. The representative of the public interest shall continue to hold office until the Governor deems it convenient. All members of the Board of Directors of COFIM shall hold office until their successors are appointed and take office.
Any vacancy in the Board of Directors of COFIM, other than for the expiration of the term, shall be filled in the same manner as the original appointment, but for the remainder of the unexpired term. The members of the Board of Directors of COFIM shall not receive any compensation for their services. COFIM shall only reimburse any expenses incurred by them in carrying out their duties, subject to the regulations to be promulgated by the Board of Directors of COFIM.
The powers of COFIM shall be exercised by the Board of Directors of COFIM in accordance with the provisions of this chapter. Four (4) members of the Board shall constitute a quorum, provided that at least (2) two of the mayors are in attendance. A vacancy in the Board of Directors of COFIM shall not impair its right to exercise all the powers and duties of COFIM.
The President of the GDB for Puerto Rico shall be the Chair of the Board of Directors of COFIM and act as its chief executive officer. The Board of Directors of COFIM shall appoint one Secretary and any other officials it may deem pertinent, none of which shall be a member thereof. By the affirmative vote of a majority of all its members, the Board of Directors of COFIM may adopt, amend, alter, and repeal regulations that are inconsistent with this chapter or any other law, to manage its affairs and businesses, appoint Board Member committees, and establish the powers of such committees, and the title, qualifications, terms, compensation, appointment, separation, and obligations of officials and employees. Provided, however, That such regulations may not be altered, amended, or repealed unless the proposed alterations, amendments, or repeals have been notified in writing to all members of the Board of Directors within at least one week before holding the meeting in which such issue shall be considered.
(g) COFIM shall have the following powers, duties, and authorities, which powers, duties, and authorities may be exercised solely to attain the purposes for which COFIM was created.
(1) To have an official seal that may be altered as necessary.
(2) To acquire property for its corporate purposes by means of assignment, gift, purchase, bequest, or donation; hold and exercise property rights thereon, and dispose of them.
(3) To acquire any kind of property in payment or on account of debts previously incurred or in exchange for investments previously made in the course of its business, when such acquisition is necessary to reduce or prevent a loss in connection therewith, to keep such property for the time the Board of Directors deems convenient, and to exercise property rights thereon and dispose of the same.
(4) To purchase, own, sell, exchange, or otherwise dispose of municipal bonds and notes under such terms, prices, and manner determined by COFIM;
(5) To purchase, hold, lease, mortgage, pledge, assign, or otherwise convey all its property and/or assets.
(6) To sue and be sued.
(7) Appoint, hire, and contract the services of officials, agents, employees, and professional assistants and pay the compensation for such services determined by the Board of Directors of COFIM.
(8) To acquire, own, and dispose of stocks and stock-purchase warrants, shares (either preferred or common) in partnerships and joint enterprises, covered bonds, convertible securities, and other securities issued by any corporate entity organized under the laws of the Commonwealth or authorized to do business in Puerto Rico, or by partnership or joint enterprises organized under the laws of the Commonwealth, the United States, or any other country engaged in projects that promote the economic development of Puerto Rico, and to exercise all powers and rights related thereto; as well as to secure loans and other obligations incurred by public and private entities by means of guaranty or letter of credit.
(9) Enter into and enforce any contract that may be necessary and convenient to attain the purposes of COFIM, or related to any loan made to a municipality or to the purchase or sale or municipal bonds, notes, or other investment, or to carry out its obligations.
(10) Invest its funds in direct obligations of the United States or fully guaranteed as to principal and interest by the United States, or in obligations of any agency, instrumentality, commission, authority, or other political subdivision of the United States; obligations of the Commonwealth or fully guaranteed as to principal and interest by the Commonwealth, or obligations of any agency, instrumentality, commission, authority, or other political subdivision of the Commonwealth; obligations of international banking institutions recognized by the United States and to which the United States has contributed capital; obligations or common or preferred stock issued by domestic or foreign corporations, whether public or private, rated by a credit rating agency nationally recognized in the United States in one of its three (3) highest rating categories or, if not rated by such credit rating agencies, they must be comparable in quality. COFIM may also invest its funds in bank acceptances and other obligations or certificates of deposit, endorsed or issued, as the case may be, by banks organized or authorized to do business under the laws of the Commonwealth, the United States, or the States of the United States.
(11) To borrow money and otherwise incur indebtedness, whether secured or unsecured, for any of its corporate purposes, upon such terms and conditions as the Board of COFIM may determine; dispose of its obligations by evidencing such loans; create, execute, and deliver trust instruments and other agreements related to any of such loans, bonds, notes, and mortgage obligations or other obligations; and by authority of the Commonwealth granted herein, issue its own bonds, notes, and mortgage obligations or other obligations in the form, with the guarantee, and under such redemption terms, with or without premium, and sell the same in public or private sales at the price or prices determined for all of them by its Board of Directors.
(12) Engage in security purchase and sale transactions with repurchase or resale agreements.
(13) Exercise all those corporate powers that are not incompatible with those stated herein, which are granted to corporations under the laws of Puerto Rico, and exercise all such powers, within and outside Puerto Rico, to the same extent that a natural or juridical person would or could to it.
(h) The income, operations, and property of COFIM shall enjoy the same tax exemption as the GDB, and the bonds, notes, and other obligations of COFIM, as well as the proceeds thereof, shall enjoy the same tax exemption as the bonds, notes, and other obligations issued by the GDB.
(i) COFIM may issue bond anticipation notes, and such notes:
(1) may be issued in a maximum principal amount that shall not exceed what the Board of Directors of COFIM determines may be repaid from the proceeds of the bond issue authorized under subsection (b) of this section and allowed under subsection (c) of this section;
(2) shall not be subject to the limitation set forth in section (c) of this section unless the COFIM’s bond authorizing documents provide otherwise, and neither shall they be considered in the calculation of outstanding bonds required by said subsection; and
(3) may be repaid from the proceeds of the bonds issued under the provisions of this chapter and any of its available funds.
(j) As of fiscal year ending on June 30, 2015, and for subsequent fiscal years, a certified public accounting firm holding a license in effect in Puerto Rico, shall audit the financial statements of COFIM. Not later than October 31 after the close of the fiscal year, said certified public accounting firm shall submit an audit report to the Board of Directors of COFIM including, in addition to an opinion on the financial statements, an opinion about compliance with the requirements of this chapter.
History —Jan. 24, 2014, No. 19, § 2.