The Governing Board of the Municipal Revenue Collection Center (CRIM, by its Spanish acronym) allegedly decided to drop out of negotiations with the company BCMG for the collection of nearly $2.3 billion in overdue debt, since the transaction involved selling their billion-dollar portfolio in exchange for a $400-million advance, according to statements made by the board's chairman Javier Carrasquillo.

Carrasquillo, who is also the mayor of the municipality of Cidra, told NotiCel that the board's 'unanimous' decision was to halt negotiations with the company that had been awarded the portfolio sales contract. However, last week, he also told at least one specialized US media outlet that the negotiations were ongoing.

In midst of the ambivalence and lack of clear and official information about the transaction, there are nearly $395 million that have been offered to the municipalities as an advance from the portfolio sales. Meanwhile, the municipalities are also facing approximately $350 million in cutbacks from the subsidies they receive from the central government. The Fiscal Control Board had ordered a transaction to be carried out with CRIM's unpaid debt balances, as part of the Fiscal Plan.

These negotiations, as brought to light by NotiCel, also give rise to a conflict of interest between the mayors of larger municipalities--which could internally take over the management of their property tax debt--and those of smaller municipalities, which do not have the infrastructure or expertise to assume this responsibility in order to improve their own finances.

Estimate of what the municipalities would receive from the sale of the CRIM portfolio.

'The vote was cast, and it was unanimous. We are vetoing the negotiations. We will not be negotiating with these people,' Carrasquillo told NotiCel, while at the same time telling news outlet Debtwire that, 'we are in negotiations with the company BCMG.' He also acknowledged that a $395-million advance had been offered, and that the portfolio sale, once introduced to the negotiations for debt collection services, had 'complicated the transaction'.

In spite of this, Carrasquillo assured NotiCel that the negotiation process with BCMG never took off, alleging that during the initial meeting with the negotiating committee--which comprises the members who evaluated and recommended the company--, it was said that the cash advance was subject to pledging part of the debt portfolio as collateral.

According to Carrasquillo, this part of the transaction went against what was originally understood by the CRIM Governing Board and the evaluating committee when the company's proposal was approved. He said that the committee had initially understood--and the proposal implied--that the company was willing to offer a cash advance in exchange for the contract to provide professional services.

'That is another process altogether. It is virtually the sale, in part or in whole, of the portfolio. That is governed by Act 21 and it is not a professional services contract, so it requires the approval of FAFAA, and possibly the approval of the Fiscal Board. So, this is why we halted the negotiations,' Carrasquillo reiterated.

Carrasquillo explained that in the last meeting it was decided that they would resume the search for companies that could offer a similar advance in exchange for a professional service contract. Last January, CRIM had awarded the contract to privatize the debt collection under BCMG, as part of CRIM's efforts to increase its collections and offset the dire financial situation in the municipalities.

However, documents obtained by NotiCel show that the conditions for the sales transaction had been conveyed to the members of the CRIM Governing Board right from the start, which casts doubt on the justification provided to drop out of the negotiations.

The statement sent by BCMG runs counter to the explanation provided by CRIM's chairman: according to the company, the submitted proposal has always included the conditions for the advance, subject to law.

A source from the municipal office gave us access to the document--which is fifteen pages long, including annexes--where BCMG claims there are at least 24 mentions of the transaction terms in the proposal submitted last year, as well as in the summary submitted for evaluation.

'Please keep in mind that the words 'act 21', 'sale', 'purchase', and its equivalents appear more than 11 times in these nine pages (of the summary),' reads the letter, after insisting that the company assumed the sales terms were understood, since they never received a reply asking for further clarification.

So, what now?

According to Carrasquillo, the CRIM Board recommended asking the evaluating committee to define the contract terms for professional services to collect the debt, and to look for companies available to offer these services plus an advance, without having to sell the portfolio.

It is worth noting that the process has now become one devoid of formal proposals. The Board will instead approach prospects directly.

'We're going to determine what we want. The process will be inverted. We won't be asking for proposals. We, as a board, will say what CRIM wants, and we will go to the companies interested in offering these services under these conditions. The process will be reversed under the same conditions (we had), plus others we may include. 'I want this. Let me know if you're interested,'' the NPP mayor explained.

The sale of the collection process on CRIM's debt portfolio began over a year ago and it was resumed after Hurricane Maria. The transaction is now even more important for the future of most municipal coffers, after the financial impact the municipalities have suffered in recovering from the damages caused by the storm.

'This delays the process. I wish we could have this done by tomorrow, but it is what it is. We were confident that the negotiations with this company would yield the cash advance we so dearly need. However, if it is not possible, if there are additional elements to those we had originally considered and the negotiation cannot be completed, then we will have to look for alternatives, and the alternative is to revert the process,' the mayor pointed out.

We reached out to BCMG CEO Thomas R. McOsker. He sent a written statement saying he would make no comments about CRIM's decision.

'Right now, BCMG cannot comment on this process, but we trust that the technological and financial solutions BCMG is currently offering for municipal, state, and federal agencies will be an integral component in Puerto Rico's economic recovery,' McOsker expressed.