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Someone owes us an explanation.
June 6, 2002
The government of Puerto Rico says its broke, yet it is sitting on more than $7 billion in idle or abandoned real estate assets.
Yes, thats right. As revealed in our front page story today, just four of the Commonwealth governments largest real estate holding agencies have idle or abandoned land and buildings worth at least that much. Thats according to a conservative CARIBBEAN BUSINESS estimate based on consultations with brokers and other real estate industry experts.
Were not talking about the total value of property owned by these agencies. Nor are we talking about land reserved for environmental conservation. Were talking about excess property, literally hundreds of empty schools and other public buildings, industrial facilities, and vast tracks of land all over the island that are just sitting there, without being used productively and without any future plan to use it or sell it off to the private sector.
It gets worse. In some cases the government agencies dont even know how much property they have. You read right. Several government agencies dont even have an inventory of their literally millions of square feet of property all over Puerto Rico.
The biggest culprit is the Highway and Transportation Authority (HTA). As part of its function to build roads and highways, the HTA acquires and holds title to vast tracks of land all over the island. When the road is finally built, the HTA ends up with remnants all over the place. In some instances the scraps measure several acres. The agency doesnt know how much of it could be used because it doesnt even have an inventory of this excess land.
The HTA also holds title to hundreds of old and abandoned public school buildings, and the land they sit on, in virtually every town. Again, agency officials couldnt tell how many, with their own estimates ranging from 600 to 1,500. Does this sound absurd? We think so.
Also absurd is the University of Puerto Rico annual cry-baby spectacle before the legislature to ask for more money on top of its already multimillion dollar allocation when the fact is the UPR is sitting on a pile of dough. You see, under the law, for years the UPR has been getting the property that reverts to the state when someone dies without inheritors. But, guess what? The UPR doesnt have an inventory of that property either. It could be worth tens of millions of dollars.
Other agencies, like the Puerto Rico Industrial Development Co., the Public Buildings Authority, and the Land Administration, are more responsible in the management of their real estate inventories. At least they know what they have. Still, a lot of it is not being used and perhaps never will be for the purpose for which it was acquired. For example, Pridco, which does a fairly good job in the management of its inventory of industrial buildings, holds 2,000 acres of undeveloped land that will never be used to establish manufacturing operations. Pridco ought to sell that land to the private sector.
Thats what any self-respecting businessperson would do. When revenues go down and you are cash strapped, the first thing you do in business is cut costs. The second is to get rid of idle, unproductive but marketable assets by turning them into cash. But most government officials have never run a business or had to make ends meet during an economic recession. So for decades the problem has festered.
Eighteen months into its tenure, the Calderon administration is still blaming its predecessor for supposedly leaving the government bankrupt. Its so bad, they say, coming into a second full fiscal year in office (starts July 1), that they couldnt figure any way to balance the budget but to raise taxes on some of the most popular consumer items and providing an incentive for people to squander their Individual Retirement Account savings. All, you see, because they have no money.
With the blink of an eye, the government could make the budget deficit disappear by selling off just a fraction of that idle and abandoned real estate property it owns. More importantly, the private sector would be putting those valuable assets into productive use, thus contributing to Puerto Ricos economic development.
While this idea has eluded its predecessors, it presents the Calderon administration with a unique opportunity to shine at both solving its fiscal crisis and promoting Puerto Ricos economic development.
This Caribbean Business article appears courtesy of Casiano Communications.