autonomous municipality of caguas, puerto rico

Transcription

AUTONOMOUS MUNICIPALITY OF CAGUAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2012
PAGE INTENTIONALLY LEFT IN BLANK
Table of Contents
Page
I.
II.
INTRODUCTORY SECTION
Letter of Transmittal
GFOA Certificate of Achievement
List of Principal Officials
Organizational Chart
iii
liv
lv
lvi
FINANCIAL SECTION
Independent Auditors’ Report
1
Management’s Discussion and Analysis
3
Government Wide Financial Statements:
Statements of Net Assets
Statement of Activities
23
25
Fund Financial Statements
Governmental Funds Balance Sheet
Reconciliation of Fund Balance of Governmental Funds
to Net Assets of Governmental Activities
Statements of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statements of Activities
Statements of Net Assets – Proprietary Funds
Statements of Revenues, Expenses and Changes in Net
Assets – Proprietary Funds
Statements of Cash Flows – Proprietary Funds
Notes to Financial Statements
Schedule of Revenues, Expenditures-Budget and
Actual – General Fund
Note to Schedule of Revenues and Expenditures Budget and
Actual – General Fund, Non GAAP budgetary Basis
Combining Financial Statements:
Combining Balance Sheet –Nonmajor Governmental Funds
Combining Statements of Revenue, Expenditures and Changes in
Fund Balance –Nonmajor Governmental Funds
26
28
29
31
32
34
35
36
84
85
87
89
(CONTINUED)
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III.
STATISTICAL SECTION
Financial Trends
Government-Wide Information:
Net Assets by Component
Changes in Net Assets
Fund Information:
Fund Balances Governmental Funds
Changes in Fund Balances Governmental Funds
93
94
96
97
Revenue Capacity
Assessed Value and Actual Value of Taxable Property
Direct Property Tax Rates
Principal Property Tax Payers, Current and Previous Years
Property Tax Levies and Collections
98
99
100
101
Debt Capacity
Ratios of Outstanding Debt By Type and Ratios of General
Bonded Debt Outstanding
Legal Debt Margin Information
102
103
Demographic and Economic Information
Demographic and Economic Statistics
Principal Industries Employers Current Year and Nine Years Ago
104
105
Operating Information
Full-time Employees by Function
Operating Indicators by Function/Program
Capital Asset Statistics by Function
106
107
108
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LETTER OF TRANSMITAL
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iv
Carlos Crespo Massa, CPA
Secretary
of Administration
Samuel Sierra Rivera, CPA
Finance Director
November 30, 2012
To the Honorable Mayor, City Council and Citizens of the Autonomous Municipality of
Caguas:
The law requires that all general purpose local governments publish a complete set of
financial statements within six months after the end of the fiscal year. These financial
statements must be audited by a firm of licensed Certified Public Accountants and
presented in conformity with Generally Accepted Accounting Principles (GAAP). Pursuant to
the aforementioned requirements we hereby submit the Comprehensive Annual Financial
Report (CARF) of the Autonomous Municipality of Caguas, Puerto Rico for the fiscal year
ended June 30, 2012.
This report consists of management’s representations concerning the finances of the
Municipality. Consequently, management assumes full responsibility for the completeness
and reliability of all the information presented in this report. To provide a reasonable basis
for making these representations, management of the City has established a comprehensive
internal control framework that is designed both to protect the City’s assets from loss, theft
or misuse and to compile sufficient reliable information for the preparation of the City’s
financial statement in conformity with GAAP. Because the cost of internal controls should
not outweigh their benefits, the City’s, comprehensive framework of internal controls has
been designed to provide reasonable assurance rather than absolute assurance that
financial statements will be free from material misstatement. As management, we assert
that, to the best of our knowledge and belief, this financial report is complete and reliable
in all material aspects.
The Municipality’s financial statements have been audited by Parissi, PSC, a public
accounting firm fully licensed and qualified to perform audits of local governments. The goal
of the independent audit was to provide reasonable assurance that the Municipality’s
financial statements, for the fiscal year ended on June 30, 2012, are free of material
misstatements. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by the Management; and
evaluating the overall financial statement presentation. The independent auditors
concluded based upon the audit, that there was a reasonable basis for rendering an
unqualified opinion that the Municipality´s financial statements for the fiscal year ended on
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June 30, 2012, are fairly presented in conformity with GAAP. The independent auditor’s
report is presented as the first component of the financial section of this report.
GAAP requires that Management provides a narrative introduction, overview and analysis
of the basic financial statements in the form of Management’s Discussion and Analysis
(MD&A). This letter of transmittal is intended to complement the MD&A and should be read
in conjunction with it. The Municipality’s MD&A can be found immediately following the
independent auditor’s report in the financial section of the CAFR.
Profile of the City of Caguas
Creole... For the people of Puerto Rico this
word has a unique meaning. It signifies what
makes them and their Island unique. Its sights...
Its tastes... Its sounds... Its essence. And there
is a unique place where the full meaning of the
word Creole comes to life... Caguas. You can
ask anyone in Puerto Rico.
Set at the crossroads of the main
highways connecting the north
to the south and the center to
the east of the Island, Caguas is
the place where the past,
present and future of the Puerto
Rican culture meet.
In just one place you can find all the savor and
beauty Puerto Rico and its people have to offer.
The Municipality, located in the Central-Eastern region of Puerto Rico, is the Island´s fifth
largest city, and according to the 2010 Census, it has a population of 142,893, and a
population density of 2,394 residents per square mile. The boundary encompasses an area
of approximately 58.07 square miles and is divided in 11 political subdivisions or wards
(“barrios”).
Brief History
Caguas started with the life of the Taíno natives. It was a peaceful existence, quiet, and
productive such as the nature of our natives who were obedient, docile and simple. Caguax
was the supreme chief of the Turabo River Valley, along which margins the native’s
settlement was located.
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When the British and the Dutch attacked the Capital city, many of its residents, who were
fearful of losing their lives and properties, started to move inland, and many arrived at the
Turabo Valley.
In 1812, when the Cádiz Constitution became effective in Puerto Rico, the then Governor
Meléndez Bruna, ordered – the Caguas inhabitants – to constitute the town into a municipal
council. In 1820, Caguas received the title of Village and head of the district of the Province
of Spain. This granted the “cagüeños” (Creoles) the same rights as those the Kingdom
Spaniards had, and allowed them to exercise the same duties and obligations upheld by the
Constitution.
The title of City was not granted until 1894. In 1897 a new political regime was established
in Puerto Rico different to all forms and manners that had operated in the Island during the
four hundred years since the discovery. It was a government of administrative autonomy,
and although Spanish sovereignty remained, there were a House of Representatives and an
administrative council to handle all local matters.
In October 5, 1898, the Spanish flag was substituted for the United States of America flag.
The mayor was Don Vicente Muñoz Barrios, appointed in February of that year by the
autonomous government to substitute the last mayor under the Spanish domain, don José
María Solís (1897-1898). In 1952, Governor Don Luis Muñoz Marín created the
Commonwealth of Puerto Rico and the first mayor of Caguas, under the new constitution
was Don Ángel Rivera Rodríguez. From the moment the town was named Village until it was
designated a City, its residents have worked hard on the improvement and growth of the
City of Caguas.
The accelerated urban developments, typical of the times we are living, have transformed
Caguas into a cosmopolitan city. Caguas, the Creole Heart of Puerto Rico, beats at the
rhythm of a rich cultural heritage, added to unique business and entertainment offers in the
Island. These elements, along with the budding infrastructure endow the City with both a
modern and historic character.
Caguas is a city that looks towards the future while being proud of its origins, and its vast
cultural and patrimonial richness resulting from the fusion of Indigenous, Spanish and
African cultures.
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Caguas’ municipal government consists of its Mayor and a sixteen-member City Council, all
of which are elected by its constituents every four years. The Mayor is responsible, among
other matters, for: (i) establishing and carrying out the policies and the ordinances of the
Municipal Legislature, (ii) overseeing the day-to-day operations of the municipal
government, and (iii) appointing the heads of the various municipal departments. The
Municipal Legislature is responsible, among other matters, for (i) adopting municipal
ordinances and resolutions, (ii) adopting the budget for each fiscal year, and (iii) approving
the Mayor´s appointments of the heads of the various municipal departments.
Caguas is a sustainable and livable city due to a transformation at all levels, achieved by the
vision, the solidarity of all sectors of society, and new public management approaches to
carry out the mission of “providing people access to quality services in a creative and
effective way through the optimal use of resources and the active participation of its
citizens.”
Budgetary Process and Control
The Mayor is responsible for preparing and submitting a
preliminary balanced general budget resolution to the
Caguas City Council no later than May 15 of each year.
The draft budget resolution must include, by law, a
budget message and a financial plan.
The budget message should include a summary of its
major aspects and justification for the principal
budgetary requests.
The financial plan has to provide, among other things, a summary of municipal expenditures
by categories such as salaries, wages, materials, services and permanent works for the
upcoming fiscal year, a detailed estimate of resources to cover expenditures, a comparative
statement of proposed appropriations, and information related to each program and its
objectives.
It is the result of weighted analysis of resources and opportunities available in our city,
framed on the principle of austerity which must prevail in the midst of the economic
challenges facing our Country. We are completing a challenging and complex fiscal year.
Worldwide fiscal difficulties have had a serious impact on the economy of Puerto Rico,
affecting virtually all sectors. Renowned economists and financial forecasts also point to
2013 as a difficult year. Therefore, municipal governments are called to respond effectively
to this juncture with strategies and projects that contribute to reducing the material and
social impact of the time. Although our budget reflects a reduction of resources as
compared to previous years, it allows us to continue advancing projects, works and priority
programs as set out in our business plan.
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This will let us continue providing agile and efficient services to our fellow citizens, while
maintaining the stability and financial strength that characterizes this municipal
administration.
The City Council may amend the budget resolution, but it may not
eliminate or reduce some items such as: interest and amortization
payments on public municipal debt, other statutory obligations or
expenses, payment of legal claims, and amounts necessary to cover
any prior year deficit.
The City Council is required to approve and submit the budget to
the Mayor no later than June 13 of each year, and the Mayor has six
(6) days to approve it or return it to the City Council for
amendments.
In the event the City Council does not approve the budget proposal within the ordinary
session, it is understood that the budget was in fact, approved, and shall apply for the
following year.
If the Mayor does not submit a draft budget resolution to the City Council on time, the City
Council can prepare and approve one by its own initiatives. If the City Council does not
prepare one of its own, the previous year’s budget shall apply.
Amendments to the budget require the approval of the Municipal Legislature. Transfers of
appropriations within the budget, known as Mayor’s Executive Orders, do not require the
approval of the City Council.
The Municipality maintains budgetary controls to ensure compliance with legal provisions
embodied in the annual approved budget resolution. Budgets are monitored and controlled
at departmental level; however, expenditures cannot legally exceed total appropriations at
the Municipality level. Budget and actual comparison for the General Fund is located in the
Financial Section of the CAFR.
Budgetary control for capital improvement projects is maintained at the individual project
level, by fund, and is approved on an inception-to-date basis for each project rather than on
an annual basis.
Therefore, there is no similar comparison presented for capital projects funds. As an
additional control, the Municipality employs an encumbrance system that reduces available
appropriations in governmental funds upon issuance of purchase orders, contracts or other
forms of legal commitments. Encumbrances at year-end do not constitute expenditures or
liabilities, but are accounted for as a reservation of fund balance.
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Economic Condition and Outlook
Puerto Rico economy: Climbing out
FROM THE ECONOMIST INTELLIGENCE UNIT
After many years of recession, Puerto Rico's economy
appears to have hit bottom and is now on a slow road to
recovery. Growth is expected to be a mere 0.7% in fiscal
year 2012 (which ends in June), according to
government forecasts, but officials see this as the start
of a major turnaround.
They intend to support this upturn with a medium-term
development strategy, which most recently included the
enactment of a law that provides tax incentives to
promote Puerto Rico as a hub for export services.
Puerto Rico's gross national product (GNP, its preferred measure of economic activity as this
nets out the large outflow of profits from US-based firms operating there) has not
registered growth since fiscal year 2006, when it expanded by just 0.5%. This was followed
by five years of contraction. By comparison, during this stretch of time the mainland US
economy shrank in only one year, 2009 (by 3.5%), during the depth of the global financial
crisis.
The island's poor performance is the result of a combination of factors, including eroding
competitiveness, structural changes in the manufacturing industry (particularly
pharmaceuticals, a major component of Puerto Rico's manufacturing base), the phasing out
of federal tax incentives for producers on the island and the local government's severe fiscal
imbalances. The latter has required a major fiscal retrenchment effort by the actual
administration in order to keep the government running and maintain Puerto Rico's credit
rating and access to financing. This has had a negative impact not only on public spending
but also employment, as the public sector is a major provider of jobs on the island.
Signs of recovery
Against a backdrop of fiscal adjustment, the economy has remained weak. However, select
indicators have begun to show a clear improvement. The Puerto Rico ManufacturingPurchasing Managers Index has been above a threshold that reflects expansion for 14 of the
last 20 months. Exports in fiscal year 2011 totaled US$64.9bn, 5.2% over the prior year.
Retail sales grew by 2.8% year on year in 2011, and by 4% in December alone. Auto sales in
2011 also showed modest improvement, with growth of 1.5% year on year. In the
important tourism industry, the occupancy rate reached 69.2%, up 1.5 percentage points
over 2010. Furthermore, Puerto Rico has benefited from stimulus funding from the federal
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government in the amount of US$7.1bn, of which US$5.9bn (83.5%) has been disbursed,
largely for infrastructure projects.
A local stimulus plan involves US$500m, of which US$365m has been spent. However, as
these funds will soon be depleted, the government's recovery strategy is based on a
medium- and long-term plan to boost Puerto Rico's competitiveness, attract investment to
new or growing sectors, focus more on innovation and research and development, and
promote the island as a business hub connecting the North America with the broader
Caribbean and Latin American area.
New tax breaks created
One step in this direction is a new law to aggressively foment growth of the local services
industry and the exportation of services, thereby diversifying the drivers of economic
growth and attracting new private capital. The Export Services Act (No 20 of 2012) aims to
turn Puerto Rico into an international centre for legal, consulting, financial, engineering and
other forms of services. The law provides for 20-year decrees, renewable for 10 additional
years, which guarantee the tax breaks cannot be subject to subsequent legislative changes.
Under the decree, a new outside business setting up in Puerto Rico to provide services for
export (or an existing local service provider that expands into exports) will be subject to a
4% flat corporate income tax rate (compared with the normal local rate of 30%), with a
possibility of lowering this to 3% if exports are the main revenue generator of the company.
Distributions from earnings and profits from such ventures will be 100% tax exempt in
Puerto Rico. The operation will also be exempt from property taxes.
As a complement to this act, lawmakers passed the Individual Investors Act (Act 22 of 2012),
designed to attract investors and high net worth individuals to take up residence in Puerto
Rico. Benefits include 100% exemption from local taxes on interest and dividends, and on
long-term capital gains accrued after the person becomes a legal resident. It is hoped that
the act will attract business professionals (or retirees) to relocate to the island and will
further encourage foreign or mainland-based services companies to set up shop there.
Outside of these efforts, Puerto Rico has continued to lobby legislators in Washington to
amend Section 933 of the US Tax Code by adding a clause that would allow US companies in
Puerto Rico to benefit from US tax provisions permitting dividends paid to a parent
company on the mainland to be tax-deductible. The measure, which has not advanced,
would partially replace special benefits provided to Puerto Rico under Section 936 of the tax
code, which expired in 2006. The issue might not be considered until the US Congress takes
up a more comprehensive overhaul of the tax code, which is much discussed in political
circles but does not look to be on the horizon.
Too soon to tell
It is too soon to determine whether Puerto Rico's latest efforts to boost economic growth
and diversification will bear the desired fruit. In the short term at least, the government's
ongoing fiscal squeeze will keep government consumption and investment low.
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The economy also suffers from very high rates of unemployment, and this will continue to
dampen private demand. A strong dependence on imports, particularly of fuel, will also
hinder growth. Externally, conditions also remain fragile.
Although the Economist Intelligence Unit no longer foresees a risk of recession in the US,
and forecasts US GDP growth of 1.9% in 2012, this is far below the rate of 3% enjoyed in
2010. Sluggish US growth will limit expansion of Puerto Rico's tourism, services and retail
sectors. Recession in the euro zone, and the risk of an oil price spike, will also dampen
Puerto Rico's growth prospects. We forecast that Puerto Rico's GNP will grow by a modest
0.5% in fiscal 2012, although we expect a pick-up to 1.4% in 2013, as credit conditions
improve and trends in several domestic sectors continue in a positive direction. The
government's policies could help to lift this to higher rates over the medium.
While Puerto Rico struggles, Caguas thrives
FROM THE FINANCE DEPARTMENT UNIT
Economic growth, a growing population, lower
unemployment than Puerto Rico’s average and
higher labor-participation rate, among other factors,
sets the Autonomous Municipality of Caguas apart
from the rest of the Island.
This means that something good enough we must be
doing. Puerto Rico has been in a recession-turneddepression for the past six years.
Unemployment has been increasing steadily during this time, the Island’s economy has
been in downward spiral, and the labor-participation index is one of the lowest in the world.
Not so for Caguas.
In the past 15 years, Caguas has grown from a big rural town to the center economic growth
in the Eastern-Central Region of Puerto Rico. While the Government Development Bank
measures Puerto Rico’s economy recovery in terms of slower economic contraction in 2012
versus 2011, the numbers from Caguas’ statistics reflect growth on a complete different
level.
While Caguas saw a population growth of 1.7%, Puerto Rico’s population decreased by 2.2%
over the past 10 years -according to the 2010 U.S. Census. Local economy has caused many
businesses to close or downsize, while Caguas has added 6,004 registered businesses since
1997, an increase of 102%. Puerto Rico’s labor-participation rate has been lingering under
40% for some time now, while Caguas is above 50%. Almost 25% of the Municipality’s
population has attained a bachelor’s degree, versus 21% for the rest of the Island, and the
average household income in Caguas is of $22,581 versus $18,610 in the island.
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The area has become a center of robust economic activity; it has more than 90
manufacturing plants, including multinational and local companies such as Pfizer,
Patheon/Mova, Johnson & Johnson, Saint Jude’s Medical, Vernet, and Avant Technologies.
Companies in the sectors of healthcare, construction, transportation & logistics, and
telemarketing have established headquarters in the Municipality, and the retail sector has
big names such as Costco, JC Penny, Sears, K-mart, Home Depot, Wal-Mart, Marshalls and
TJ Maxx with presence in the region.
In addition, there are other chains like Office Max, Sam’s, Pet Smart, IHOP, Krispy Kreme,
Office Depot, iShop, and Burlington, among others. So, what is the magic behind this
success?
With a novel administrative style called “participatory democratic system”(also known as
collaborative governance) that calls for citizenship participation in analyzing needs,
identifying strategic objectives, and prioritizing initiatives, the Municipality’s governmental
leadership has been the driver of Caguas’ progress.
As the biggest municipality in the area, Caguas has the responsibility of becoming the
spearhead of the Eastern-Central Region’s economic development. The Region comprises
nine municipalities with more than 500,000 people, and we need to work toward improving
their quality of life.
Governing with the people, not for the people, is the Municipality’s administrative strategy.
Using this managerial style, in 1997 Caguas commenced working on the Strategic Plan that
would give direction to the region’s economic and social growth. Ten years later, in 2007, a
Second-Generation Strategic Plan was developed to revise and give continuity to current
initiatives.
At this stage, almost 2,500 people representing 400 local organizations from all sectors
participated in identifying and analyzing the Municipality’s standing in important areas of
interest and influencing factors. Participants developed a vision of where the Municipality
should be in the future, formulated a strategy to reach these levels, and then moved on to
implementation and follow-up.
This government managerial style has yielded benefits. The collaboration between the
Caguas administration, citizens and private sector has built communication bridges among
them. Bureaucracy is almost nonexistent and groups enjoy an unprecedented camaraderie.
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The Financial Sector
Following a year taken up mostly by efforts to
stabilize operations, the banking sector is ready to
regain full financial footing and begin growing loan
portfolios in 2012. All that activity should yield a
much-needed positive effect on the economy. In
2011 the financial sector entered in a stabilization
phase when they saw a mix of positive indicators
that reflect an improvement in economic activity,
but on the other hand, they were still facing
challenges both on the local and global scale.
Twenty eleven was a decisive year for local banking, when they stabilized the system and
managed to attract foreign investment.
In 2012 it’s expected to continue the stabilization period, with the advantage of a
strengthened financial system returning to profitability, increased lending activity, a
recovering real estate market, and a retail market on the rise.
The optimism comes through despite the fact that the financial sector said banks will still
need to address internal challenges, such as managing a high volume of assets in default
and deal with the uncertain effects that external factors, such as the price of oil, the
situation in Europe and the future allocation of federal funds could represent. The banking
institutions still have work to do to improve their balance sheets and took their predictions
a step further by saying there is still opportunity for additional consolidation.
Financial bankers think there’s too much banking going on in Puerto Rico considering the
size of our economy, which is something that makes banking less profitable. If the economy
is stagnant and banking is affected by the events of the last five years, it almost becomes
like a game of ‘cat and mouse’, they said.
Despite losing three players in 2010 — Westernbank, Eurobank and R-G Premier Bank —
Puerto Rico still hosts a healthy banking community, which could “improve profitability and
generate a higher loan production” if it were to consolidate further. Improvement will also
hinge on coordinated public-private initiatives to implement steps that contribute to
creating jobs and getting over the recession. In terms of the primary interest rate for
commercial banks, the monetary policy from the Federal Reserve Bank is maintained, aimed
at holding intact the federal funds rate, positioning the primary rate at 3.25% during the
projected fiscal years. According to Global Insight, it is projected that this rate will remain at
3.25% for both fiscal years 2012 and 2013.
Puerto Rico's banking sector is confident it will achieve positive results this year.
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Wholesale and Retail
Caguas is a commercial hub, providing goods
and services to its residents and neighboring
municipalities. The sales and use tax is a good
indicator of the performance of this sector. The
reason is that the tax base is much wider than
in most U.S. jurisdictions. It includes most
goods purchased by households with the main
exceptions of unprepared food, medicines, gas
and cars.
It also includes most consumer services being the main significant exceptions education,
health and construction. As Puerto Rico economy stabilizes and starts to grow, the
performance of this sector in Caguas will improve. It is expected that this will continue to be
the most dynamic segment of Caguas economy.
Caguas has one of the biggest concentrations of retail space in the Island. Total retail space
is distributed amongst large, medium and small sized shopping centers, two main urban
shopping centers and individual retail stores.
Other developments in Caguas such as the Angora Plaza and other mixed use projects under
construction will continue to increase the amount of retail space available. These hubs of
retail activity boast over 1.8 million square feet of retail space, housing nearly 275 stores, 30
fast food restaurants and 11 movie halls. It attracts shoppers from San Juan Metro Area,
and from the Eastern and Central regions.
National retailers such as Wal-Mart, Sam’s, Costco, JC Penney, K-Mart, Sears, Home Depot,
and OfficeMax rank their Caguas stores in these shopping centers amongst their top
producers.
In addition, we have other national retailers and chains such as Marshalls, Starbucks, Rooms
to Go, Walgreens, Office Depot, Krispy Kreme, Burlington, IHOP and PetSmart that have
launched their local operations in Caguas.
Recently, the drug store chain CVS entered the Caguas
market and has two stores slated to open during the
next three years. We are seeing a secular change in
consumption patterns in Puerto Rico. This will have
grave implications for a retail sector used to having
overly indebted consumers. Real retail sales in PR have
fallen 19% since peaking in FY 2005, just before the
economic downturn started. However, this has not
been de case in our region.
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We know recession lowers asset prices (think houses and shares) while the debt used to buy
those assets remains. High debt and prospects of higher inflation mean lower consumption
growth. Commercial real estate will feel the pain too and the new normal may be lower
growth locally and globally. Consumers have grown weary in regard to their own near-term
employment and income prospects. Yet, even during this recessionary period, we have seen
the entrance of new restaurant franchises and stores.
As for retail sales, the Caguas Region experienced four times the average Puerto Rico
growth rate.
Retail Sales Benchmark (millions of $)
1
2010
2011
Growth
Puerto Rico
$34,384
$35,352
3%
Caguas1
$5,246
$5,888
12%
Caguas Commercial Region
Puerto Rico accumulated retail sales amounts during a six month period (July to December)
in fiscal year 2012 accrued $18,235.3 million. This represented an increase in sales of 2.5%,
as compared to the same period in fiscal year 2011.
Small and Medium Sized Businesses
A new Tax Incentive Program was established with more aggressive levy credits to promote
the generation of growth opportunities for our citizens and businesses. The new Code
provides tax benefits for activities in certain sectors, such as the traditional downtown and
gateways around the city.
The Municipality recognizes the importance of small and medium sized businesses (SME’s)
for its economic development and prosperity. That is why we continue to support their
development and growth through integrated strategies in areas such as marketing product
development and financial planning. Promo Caguas, the unit in charge of promoting SME’s,
provides direct assistance in the development of business plans, financing, local and federal
incentives such as tax credits and tax exemptions, promotion of exports by local companies,
and entrepreneurial training.
Our efforts in promoting SME’s have resulted in the creation of over 1,600 new businesses,
$11.5 million in financing and over 700 jobs. These efforts were recognized by the
prestigious International Economic Development Council’s Program Awards. Caguas won
the category of programs of business retention and expansion in place for more than three
years for cities with a population of up to 200,000.
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If there was ever any question of what the backbone of our private-sector economy is, the
Caribbean Business (Puerto Rico weekly business newspaper) listing of the Top 400 Locally
Owned Companies answers it clearly. And this listing is only of 400 companies. There are at
least 100,000 small and midsize locally owned companies operating and creating tens of
thousands of jobs and moving our economy. After overcoming a six-year economic slump,
the combined revenue generated by the Top 400 Locally Owned Companies in Puerto Rico
during 2011 was up from the previous year, for the second year in a row.
In 2011, combined revenue of the Top 400
was $26.51 billion, up by about $1.3 billion,
or 5.28%, from 2010, when revenue reached
$25.18 billion. The Top 400 Locally Owned
Companies provided 142,835 full-time jobs in
2011, up 9,410, or 7%, from 2010.
Given the fact that the top locally owned
companies in Puerto Rico have, since 2006,
endured the effects of the longest economic
downturn to hit the island in 80 years, these
results highlight the heroic efforts these
private companies have made to keep their
businesses and the local economy moving
forward.
The Top 400 Locally Owned Companies should be highly commended and admired as the
backbone of our economy, and even more so for their incredible achievements after
overcoming difficult circumstances. Once again, the Top 400 have demonstrated their
resolve and ability to rise to the occasion through their strength, persistence and creativity.
Their feat is further confirmed when you consider that during fiscal 2011 (ended June 30,
2012), the local economy grew 0.7% after six consecutive years of contraction, according to
the Puerto Rico Planning Board.
The newspaper Top 400 Locally Owned Companies showed their resiliency and tenacity in
finding ways to overcome hurdles such as increased operational costs in a highly challenging
economic scenario, and many of them reinvented themselves by expanding into different
products and services. In 2011, it was again a test of survival for many businesses, but also a
period of solid growth for others. The sharp business acumen demonstrated by the Top 400
to creatively keep costs at bay, and even increase sales in some cases, is testimony to the
fact that an entrepreneurial spirit and good management techniques remain very much
alive and strong in Puerto Rico. They are businesses at their best and deserve a lot of praise
not only for their superior performance despite surviving tough economic odds, but also, in
large part, for helping sustain the island through challenging times.
xvii
The Top 400 Locally Owned Companies in Puerto Rico, in 2011, employed 142,835 people in
full-time positions, representing about 13.15% of people employed in Puerto Rico at the
time (1,086,000), and about 16.82% of the private-sector workforce (849,000). In calculating
the number of full-time employees, part-time employees are included where applicable
(two part-time employees equals one full-time employee). Companies in the wholesale,
retail, insurance, service, healthcare and manufacturing sectors lead the Top 400 list of
locally owned companies, with combined revenue of $23 billion, or 86.7% of the total Top
400 revenue in 2011.
Government
Puerto Rico’s economy is climbing out of its
marathon recession at a slighter quicker pace
than expected this year. The Planning Board,
said the economy is on pace to grow by a
modest 0.4 percent during fiscal 2012. That is
narrowly down the agency’s earlier estimate of
0.7 percent for the year, which ends June 30.
The upturn will mark the first annual growth in
Puerto Rico’s economy since the onset of the
local recession in 2006.
Puerto Rico’s economy contracted 1 percent in fiscal 2011 after shrinking 3.8 percent in
fiscal 2010, 4 percent in fiscal 2009, 2.9 percent in fiscal 2008 and 1.2 percent in fiscal 2007,
according to Planning Board numbers. The island economy was last on positive footing in
fiscal 2006, when it posted 0.5 percent growth, down from 1.9 percent the previous year.
The Planning Board said it expects the economic rebound to gain ground in fiscal 2013,
projecting growth to edge up to .06 percent, previously estimated at 1.1 percent.
Nonetheless, this will depend on factors such as the price of oil, the economy of the United
States economy, and the measures taken by the government to improve the local economy.
One of the greatest challenges being experienced by the local economy is the weakness of
the labor market. Have lost 202,000 jobs since 2006 and the participation rate is maintained
at the lowest level in decades, 40.2 %. Some economic sectors are experiencing some
improvement. Exports, the sale of new cars, retail sales and the sale of houses demonstrate
some degree of improvement. However the economy needs a comprehensive reactivation
program based on short term action to reduce operational costs, boost investment and
stimulate the production capacity of local businesses.
xviii
The government sector usually provides stability in times of economic upheaval. In Puerto
Rico this was not the case as massive layoffs in the Central government were carried out in
2009 and 2010 in order to improve the fiscal deficit and shore-up government-owned
corporations. Standard and Poor’s just improved the outlook of Puerto Rico government
debt, signaling that the fiscal adjustment is tapering off. At Caguas municipal level the
situation has been very different…
Employment
The Establishments Survey of the Department of Labor and Human Resources indicates that
the labor market in Puerto Rico recorded a decrease in the first six months of fiscal year
2012. The total of employed persons during the period from July to December of fiscal year
2012 reported an average of 923,700 individuals. This number represents a reduction of
0.2% as compared to the same period in fiscal year 2011. This decrease is the smallest
recorded since fiscal year 2006.
This is the worst recession in Puerto Rico’s history. The island economy has contracted 13%
since FY 2006 or the past five years. Given this negative growth in recent years, the labor
market is experiencing the consequences. A common misconception is that a decline in the
unemployment rate is by definition is always a positive result. The recession has raised the
structural rate of unemployment, reducing labor supply and potential output. The Island
faces many challenges ahead.
According to the Labor Department’s Establishments Survey, the labor market still shows no
signs of recovery. With the end of fiscal year 2012, cumulative figures suggest negative
growth overall. An average of 921.8 thousand people were employed over this period,
representing a loss of 1,800 jobs, or 0.2% less than the average reported for the last fiscal
year. The unemployment rate during fiscal year 2012 held steady at 15% due to factors
associated with the substantial contraction of the labor force, which lost some 5,000
individuals over the last fiscal year. Yet the working-age population increased to an average
of 3.2 million individuals (+2.1%) for the fiscal year ended in June 2012.
xix
The employment performance in Caguas is significantly better than in Puerto Rico as a
whole and marginally better than the recent experience of the United States. The Retail and
Wholesale plus Services sectors account more of two thirds of the employment in Caguas.
These sectors are sensitive to changes in economic conditions. In the last couple of years,
the employment level on Caguas has remained steady, while the employment level of
Puerto Rico has declined.
Other Sectors
The manufacturing sector has seen a decline in employment as a result of consolidations in
the pharmaceutical industry and expiration of patents. Caguas has not been immune to this
trend with Pfizer announcing a major restructuring plan that will shut down its local
operation by the end of 2012.
Nonetheless, Mexico’s based Neolpharma Group will be picking up the assets of Pfizer’s
Caguas manufacturing plant, through an agreement that is expected to close during the first
quarter of 2013. The deal includes all of Pfizer’s real estate and assets at the 32-acre facility,
where approximately 130 employees still remain. Pfizer said they will become employees of
Neolpharma following the completion of the transaction. In addition, approximately 60
employees will remain at the site as short-term employees, for a transition period.
As part of the City development strategies, Caguas offers tax incentives and support
services to promote new investment and entrepreneurship in the City in the areas of
Manufacturing, Advanced Services, Emerging Technologies, and Life Sciences among others.
xx
Conflict in the Middle East and in Africa’s northern
region, places where large quantities of the world’s
crude oil is produced, triggers variations in the current
and future price of a barrel of oil. The consequences of a
serious interruption in the oil supply, puts the world
economic recovery at risk. Historically, the price of oil has
had a negative impact on the world economy and also on
the countries which do not produce petroleum and do
not have alternative means for generating energy.
Our island does not produce petroleum and has an energy consumption economy less
diversified than that of the United States, which makes us more vulnerable to changes in
the price of a barrel of oil and to conflicts in which oil-producing countries are involved. The
economy of Puerto Rico has been affected by significant increases in the price of a barrel of
oil and its derivatives, which have, in turn, provoked periods of economic recession.
Furthermore, an increase in the oil price produces changes in the general price level,
affecting costs in the production process because of consistently higher prices for raw
materials, food, electricity, and products derived from petroleum, which consequently
increases inflation.
The main oil crude streams that serve as price indicators in world markets are: Brent and
West Texas Intermediate (WTI). Brent is taken as an indicator for European markets, while
WTI is the oil price indicator for the United States. According to Global Insight, the average
price projections for a WTI oil barrel are $97.90 and $108.10, respectively, for Puerto Rico
fiscal years 2012 and 2013.
xxi
Tourism
As the social and economic hub of Eastern Central
Puerto Rico, Caguas continues to evolve as the most
dynamic tourist destination on the Island offering a
distinct true Puerto Rican Creole cultural experience.
Caguas represents the “Criollo”… (creole) the true
Puerto Rican identity. A fusion of three ethnic roots:
Taíno, Spanish and African, which is different from the
“Spanish” identity of San Juan.
It is a vibrant and dynamic city that throbs with gastronomic as well as hotel, cultural,
nature, adventure, recreational, sports and entertainment offerings of the highest order
showcased in a beautiful, exciting and fun way.
In the last ten years, we have developed a great variety of world-class tourist attractions
and activities.
To showcase the Puerto Rican Identity, the City has developed a series of events, activities,
monuments and tourist attractions. We strongly encourage a visit to Downtown Caguas and
follow The Creole Heart Trail (“La Ruta del Corazón Criollo”) – a historic and cultural planned
urban trail featuring twelve stops.
This cultural experience links the offerings of the City’s eight museums, public art
expositions, arts and crafts galleries, monuments, and historical sites just steps away from
one another. It is complemented with a nature walk along the river, local festivals and
performing art shows. This route continues to expand as new attractions are developed.
A great variety of restaurants showcasing
international and tasty local creole food including
delicious local fritters, delightful local homemade
candy or ice cream, exquisite Puerto Rican coffee,
piña coladas and fruit frappes are available.
The Caguas Botanical and Cultural Garden (“Jardín
Botánico y Cultural William Miranda Marín”) is our
main feature. It is the core proposal of our nature and
adventure offerings. It receives visitors from all over
the Island and the world.
xxii
Surprisingly, the Garden promotes much more than respect
for nature… it is also a showcase of Puerto Rico´s history.
The Garden rests on 60 acres of trails that take visitors in a
journey through flowers, indigenous and exotic centenary
trees, colorful arena of tropical flora and foreign species.
A diversity of theme gardens honors our three ethnic roots
- Taíno, Spanish and Africans. It is also the home to ruins of
the Hacienda San José sugar cane processing facility as well
as to the remains of a large indigenous village.
In addition, visitors will enjoy of guided tours, paddle boats in the lake, bullock rides, and
savor local traditional Creole cuisine at the Guariquitén: a rustic, alfresco food kiosk. For
those a bit more adventurous Caguas offers an extraordinary experience with nature in the
San Salvador Rural Ward. It features ziplines and rappelling adventures throughout the rain
forest. Participants travel across cannons, cascades, trees and the river, always under the
supervision of specialized guides.
The City continues to support the local tourism sector through a strong partnership with
businesses in this important sector of the economy. Through the “Travel Partners Network”,
the municipality sponsors promotional activities and events while coordinating
improvements to transportation, signage and safety. Caguas continues to partner with the
local Sheraton Four Points Hotel and Casino and is actively pursuing the development of a
75 room business hotel in the Downtown area.
Some of the members of the “Travel Partners Network” are: Moisty Skate & Family Park
which is dedicated to new generation sports developments such as inline skate, skateboard,
scooter, skates and pools. During 2010, the park added several attractions such as water
slides and lazy river pool.
Bowlera, a leading fun and entertainment center continues to attract thousands of visitors
to its Downtown location. It is the most modern bowling alley on the Island.
During 2011, the city continued to develop and sponsor
many and varied cultural activities such as: “Salsa” Music
Nights, Outdoor Cinema, the International Short Film
Festival, among other arts and entertainment activities
throughout the year. Among them there is a one of a kind
activity that attracts thousands of visitors to Downtown
Caguas every month; it is known as the Al Fresco Culinary
and Music Fest. As a result of our efforts and particularly
those of travel partners, the number of visitors increased
by 23% during fiscal year 2011-2012 in comparison to the
2010-2011 fiscal year.
xxiii
Last year, for the first time, (1) we welcomed cruise
passengers on day tours to the City, and (2) tours to
Caguas are sold online through Expedia. These are very
important milestones in the development of Caguas as
a tourist destination.
The Four Points by Sheraton Caguas Real Hotel &
Casino, during its 7 years the hotel has consistently
kept healthy occupancy rates, being the corporate
market the highest segment producer. Year to date
the occupancy is 62%.
In order to appeal to other markets as well, the hotel management team has designed a
special package for group Marriage Retreats and every summer brings a package for the
enjoyment of the entire family.
This year, in partnership with Caguas Travel Partners, we promoted all the local attractions.
The diversity of the Four Points by Sheraton Caguas Real Hotel and Casino allows to also
being the premier host of social events.
All our tourist attractions and offerings are included in our two websites:
www.visitcaguas.com (English version) and www.visitacaguas.com (Spanish version).
Housing
Six years ago, in the peak of an unseen frenzy, it was hard to imagine the current crisis in
which the Puerto Rico housing sector is now trapped. What began as a disturbing mess in
2007 has turned into a nightmare for developers, bankers, brokers, and the economy as a
whole. Past and current administrations have not remained indifferent to housing woes and
have squeezed public coffers to get this sector back on track. Public money might have
stopped the bleeding, but the housing boat is wrecked and a long awaited rebound does
not look ahead soon. The golden years of housing are gone. An unfortunate combination of
demographic and economic factors is standing against housing, and the public and private
sectors will have to team up to rescue housing in Puerto Rico.
One of the Municipality’s major priorities is to provide access to adequate and safe housing
to its citizens. Despite the tough and prolonged economic challenges facing the
Commonwealth of Puerto Rico, we have been enormously successful in this endeavor.
During the last several years we launched a number of projects for low-income families
enabling them to purchase affordable housing, thus improving their quality of life and
economic well-being.
xxiv
Our most recent project, Senderos de Robles, along with other successful projects, such as,
Caguas Courtyard Community Housing, Villa Nueva Apartments and Boneville Apartments
have all served to effectively benefit many low income families in Caguas and neighboring
areas. There are three projects in the planning or permit phases with the objective to
increase the population residing in the Traditional Urban Center of Caguas; Campio Alonso
Apartments, La Placita Apartments and Condominium Los Porticos. Furthermore, these
projects confirm our administration’s solid commitment to continue to provide affordable
housing to the most economically and socially disadvantaged families of our community,
regardless of the budgetary constraints.
For five consecutive years since 2007, The Municipality of Caguas has achieved a High
Performance evaluation by the Housing Urban Development Department (HUD) in the
Section 8 Program.
Construction
Construction is one of the fundamental sectors of the Puerto Rican economy. Investment in
construction, which refers to new construction carried out by private companies and by
state and municipal governments, is a highly important component of the economic
development of any country, both in the short and long terms.
After six (6) years of experiencing negative growth in the economy, the construction
Industry reported positive growth for the last fiscal year 2011. Construction projects for
fiscal year 2011 amounted to $3,842.0 million. This represented an increase of $173.5
million or 4.7%, in comparison with fiscal year 2010, when it reached $3,668.5 million. This
growth was due to renewable energy projects carried out by the private sector, and
investment made by the public sector.
It is estimated that construction investment for fiscal year 2012 will be $452.0 million in real
prices, an increase of 5.0%. At current prices, a value of $4,166.0 million was projected, an
increase of 8.4%. For fiscal year 2013, construction investment was estimated at $496.0
million in real prices, an increase of 9.7%.
At current prices, a total of $4,707.0 million was
projected, representing an increase of 13.0%. The
Puerto Rico Bankers Association now believes
that the housing market could achieve a modest
improvement this year, as the economy climbs
out of recession.
The Municipality of Caguas has concentrated the
efforts in the housing industry by combining
private and public resources.
xxv
Long-Term Financial Planning
Management of public funds represents a great challenge and responsibility within the
public finance profession. Sources and amount of revenues, and the cost of administering a
municipal government must be clear and sound to internal and external auditors. The
Municipal Administration relies on reports of precise figures concerning revenues and costs
for the different decision-making processes such as, but not limited to, budgeting and
financing activities and projects held during any given fiscal year.
Collecting bad debts, identifying uncollectible accounts and debugging debts allows a more
realistic view of municipal revenues. Attaining the objectives on difficult times will increase
the taxpayers’ base and therefore, municipal revenues. It is also important to provide tax
fairness to businesses operating in any given state or local jurisdiction; it must be one of the
main objectives for any public finance officer.
The Municipality’s long term financial planning considers various efforts that continue to
increase the City’s recurring income. The task forces continue to identify tax revenue
opportunities through the increase of assessed properties and their values within the
current property tax system.
CRIM (Spanish acronym for Center for Municipal Revenues Collection) is the entity
responsible for the assessment of all personal and real estate located within the
Municipality of Caguas and for the levy, administration and collection of the corresponding
taxes. The Municipality engaged an external consulting firm to assist and expedite these
services. Among the different types of services offered, the consulting firm has engaged in
the process of assisting CRIM to assess new constructions and other existing properties.
These assessments will then become part of the CRIM´s tax roll register. This is the
subsidiary of all properties assessed for tax purposes.
The Consulting Firm submits the new assessed properties for CRIM´s review and validation,
after which it assigns the assessed valuation and tax to be imposed. Then, the CRIM
determines those new properties that would have to be added in the tax roll, either
because they are newly constructed or because they were existing properties with
unreported identified betterments. This process is performed either through physical
inspections, awareness of existent activities within the Municipality or by comparing the
sales taxes volume returns (in case of commercial properties) with the property taxes
returns, among other strategies. The updated information is delivered to the CRIM to be
included within the tax roll for subsequent taxes levies. This process will be continued
because it has given excellent results in revenues for the City.
In addition, within the Finance Department we created a specialized division with top-notch
knowledge and expertise in local and municipal taxes.
xxvi
With the help and support of Internal Revenue Agents, we are counseling our medium and
small businesses through personal visits, literature, seminars and conferences, among other
strategies. Immediate increase in our revenues has been evident since the implantation of
this unit.
Relevant Financial Policies
Cash temporarily idle during the year was invested in Certificates of Deposit and obligations
of the U.S. Treasury. The Government Development Bank, which is the Fiscal Agent of the
Commonwealth of Puerto Rico, established the Investment Policy for State and
Municipalities entities. The Municipality Policy, which was approved by the Fiscal Agent, is
to minimize credit and market risks while maintaining a competitive yield on its portfolio.
Accordingly, deposits are either insured by federal depository insurance or collateralized.
The investments held by the Municipality of Caguas, were either backed by the full faith and
credit of the U.S. Government or were investments with a credit rating of A-/A3 and above.
The Municipality maintains a comprehensive all-risk property insurance program through a
commercial carrier, covering approximately $500 million in property values. The program
contains a $25,000 deductible, provides 100% replacement cost of property and has a
maximum limit of $100 million for earthquake damage and $100 million for hurricane and
flood damage.
Law No. 137 of August 9th, 2002, amended Article 17.001 and added Article 17.016 to the
1991 Autonomous Municipalities Law No. 81 of the Commonwealth of Puerto Rico. This
amendment authorizes Municipalities “to be part of, participate, support and sponsor nonprofit organizations under the General Law of Corporations of 1995, as amended, and as
long as it is organized to promote economic and cultural development or social
improvement of a municipality or region of which the municipality is part of and the
corporation counts with the participation and engagement of, in addition of the
municipalities, the different sectors composed of higher level educational institutions and
industrial and commercial enterprises, including businesses and industries associations...
Municipalities’ participation on the Board of Directors cannot exceed 1/3 of the total
members.”
Under this Article, the Municipality of Caguas participates in various forms with (1)
Corporación de Bellas Artes de Caguas (COBAC);
(2) Corporación de Salud Aseguradora
por Nuestra Organización Solidaria, Inc. (SANOS); (3) Corporación de Conservación
Etnoecológica Criolla, Inc. (CCECI); (4) Iniciativa Tecnológica Centro-Oriental, Inc.(INTECO);
and (5) Banco de Desarrollo Centro Oriental, Inc. (BADECO).
xxvii
Major Initiatives / Programs
Democratic Governance
When late Honorable William Miranda Marín initiated his first term as Caguas´ Mayor, on
January 1997, he developed a Strategic Plan, “Caguas 20/20” (referring to a City with
perfect vision), in which he connected cultural policies that besides being instruments for
public service and for the protection of the patrimony, became tools to develop actions
related to coexistence and identity of the people of Caguas.
Caguas set out an ambitious agenda to transform every
aspect of its social and economic life for the benefit of
its citizens. The Mayor followed a model called
“Gobernanza Democrática” (Democratic Governance),
to administrate the City with the people in a
collaborative and participative approach. This model
served as a framework for all of the initiatives, from
community to industrial development.
Caguas not only achieved tremendous progress in
increasing its revenues and thus its capacity to improve
and develop infrastructure, but also increased the level
of services provided to its citizens through new and
improved programs in the areas of Education, Family
and Community Service, Public Safety, Health Services,
Urban Development, Economic Development and
Tourism, and Public Works.
The challenge undertaken was to improve the city and raise the collective self-esteem of
the people. Through a new municipal image, the Mayor challenged citizens to craft “a New
Country”, away from the past and from current standards. This lead to a dynamic public
works program, transportation improvements, new recreational areas, arts and culture
appreciation, sustainable economic development, employment opportunities, and new
aesthetically appealing icons were reflective of the new city. Public administration improved
through new technologies, as well as by planning and management strategies.
The late Mayor´s vision summarized and became Caguas´ new identity statement: “Caguas,
our new country, a vibrant, safe, beautiful and orderly city, sustainable and healthy,
educated and modern, technologically advanced, united in coexistence, economically
dynamic, competitive and proud to be the best.”
xxviii
The straightforward mission became: “To provide access to quality services through creative
and effective means, and the optimal use of resources in a context of active citizen
participation.”
Its success soon made Caguas an exemplary city in the public administration practice in
Puerto Rico. Citizen participation led to citizen action, at levels unheard of in Puerto Rico .
Green Initiatives
In accordance to our strategic guidelines, we have designed initiatives, programs and
projects directed to the balance between the three main components of sustainability:
environment, economic development and community. Initiatives such as: the
redevelopment of our Downtown Business District, the conservation and preservation of
our cultural, natural and environmental sensitive areas, the conservation of our watersheds,
the promotion of our recycling programs, our cleaning and reforestation programs, the
planning and development of a light train system for the transportation between our
Region and the Metropolitan area, among others, are examples of the efforts to make
Caguas a sustainable city. As a priority under these initiatives are the studies and use of
renewable energy and its feasibility for the residential, commercial and industrial sectors of
our City.
The Municipality received $ 1.3 million from the Energy Efficiency Conservation Block Grant
(EECBG) - ARRA funds for seven demonstrative projects of alternative renewable energy
sources that were successfully completed this year.
xxix
They were: the first “Green Roof Project” in our city at our Centro Criollo de Ciencias y
Tecnología (C3TEC, Caguas Science and Technology Center), 102 low-interest loans were
granted through our Banco de Desarrollo Centro Oriental (BADECO, Spanish acronym for
Eastern-Central Development Bank) for the purchase of solar heaters and energy star
products, Caguas Thermal Photovoltaic Project installed a solar heater and 1kW
photovoltaic system ( interconnected with net metering) in 41 residences in Villa Turabo
development where an 80% of the participants benefit from the net metering with a
reduction in consumption of approximately 30% of their monthly payment, Wind Studies in
Monte Borrás and Las Hormigas sector with a good potential for wind systems, Photovoltaic
System ( 7.8 kW) in the Head Start in Mariolga, Photovoltaic System (5kW) in Santa Elvira
Community Center consider as successful initiatives and a LED retrofit project in our
Governmental Building that includes the replacement of 1,500 bulbs.
Projects such as Green Loans, Green Roof, and Villa Turabo provide us with excellent
baselines or background information for future projects including engineering design (i.e.,
Irradiation Peak Hours) and financial analysis (i.e., Payback period) and are consider as
examples for other cities.
Caguas Municipal Government stimulates economic development strategies that preserve
ecological diversity and sustainable use of the species and ecosystems. Regarding
environmental and green infrastructure protection, Caguas certainly has had great
achievements. Environmental protection is the Municipal Government´s priority against
private interests, aiming to promote development opportunities that meet the current
economic needs, without compromising the ability of future generations to satisfy their
own needs.
Regional Initiatives
Caguas, a technologically advanced city, was pioneer in wireless transmission to provide
Internet access in public spaces, with the largest electronic network linking libraries in the
Region.
With the vision of being a multisectorial model for economic
transformation, the Mayor created the Eastern-Central
Technology Initiative, INTECO (Spanish acronym), an alliance
among municipalities in the Region, and with its support he
developed a Network of Business Incubators, a Special School
of Science, Mathematics and Technology and the Interactive
Science and Technology Creole Center.
We can say, due to input from our peers and the business community that INTECO is
already the model institution par excellence of regional economic development in our
country.
xxx
In this historic moment, on the threshold of the tenth anniversary there is a need to
highlight once more the achievements and the importance of the Broadband project.
In March 31 of this year INTECO reached and exceeded the most important goal required by
the Federal Government, the disbursement of $11.9 million, that is, to complete the 67% of
the project within two years of its inception.
The Specialized Secondary School in Science, Mathematics and Technology (CIMATEC,
Spanish acronym), continues to grow and strengthening. In June of 2012, it was held the
graduation of the second class of ninth grade. In August of 2012 it will be expanded to
eleventh grade (11th.) and will have an enrolment of 326 students, 50 of them sponsored
totally or partially. For their accommodation, began the construction of three (3) regular
classrooms and one (1) technology laboratory.
INTECO carried through to completion the first study of mobility and intermodal
transportation plan in 11 municipalities of the Eastern-Central Region. It was submitted last
April in a technical workshop to an audience of 101 professional members of the College of
Engineers and Surveyors, the College of Architects of Puerto Rico, and the Puerto Rican
Planners Society. During that workshop the entity provided each Mayor an individual study
prepared for their respective municipalities.
The business incubator and its supporting program, INOVA, have become valuable for the
development of new businesses in the Region. With almost four years of operation, we
have succeeded in creating a total of 161 direct jobs and 30 indirect jobs through 19
companies installed in the premises and three virtual companies. This fiscal year (2012-13)
we will begin to graduate some companies that have already completed their incubation
period and as they develop, they will be located in other facilities within any of the
Municipalities of the Region.
xxxi
Pentagon Technology
PENTAGON Technology Based Regional Economic
Development Initiative includes the following 5 high
impact projects: [1] Science and Technology
Enterprises Incubator (CEECTEC); [2] Science and
Mathematics Magnet School (CIMATEC); [3]
Interactive Science and Technology Creole Center
(C3TEC); [4] Workforce Innovation for Regional
Economic Development (WIRED), and [5] Broadband
Infrastructure for the Eastern Central Region of Puerto
Rico (BICER).
PENTAGON Regional Initiative investment totals $47M. This investment is targeted at
cultural and knowledge developments for the competitiveness of present and future
generations in local, regional and global settings.
PENTAGON was forged to address knowledge-based economic development, education,
research and development, and entrepreneurship using science and technology as a
launching pad. PENTAGON objectives are entrepreneurship, research, development, and
self employment and wealth formation workforce innovations, high paying jobs retention or
creation, and awareness of the importance of Science and Technology in our daily and
future life.
PENTAGON Regional Economic Development Initiative was acclaimed by the International
Economic Development Council (IEDC) with an Honorific Award under the Technology Based
Economic Development Category in the IEDC 2010 Annual Conference Competition.
Planning and/or financing for PENTAGON ($47M) was secured in partnership alliances with
[1] US Department of Commerce’s [a] US Economic Development Administration Planning
Grant for Regional Broadband and Construction Grant for CEECTEC incubator. [b] National
Telecommunications and Information Administration Construction Grant for Construction of
Broadband Infrastructure; [2] State Commonwealth of Puerto Rico’s Department of Labor
(WIRED) and [3] US Department of Labor (WIRED), [4] Puerto Rico Industrial Development
Company; [5] eight Municipalities which conform the Eastern Central Region; eight
Universities and Community Colleges and Entrepreneurs of the Eastern Central Region
which conform the Board of Directors and/or members of INTECO, Inc.
xxxii
On July 1st, 2010, el Banco de Desarrollo Centro
Oriental, Inc. (BADECO) came to its existence as the
only Regional Community Bank in Puerto Rico.
BADECO is a non-profit organization created and funded by the Autonomous Municipality of
Caguas as a spinoff of what was known for 27 years as the Community Development Bank
of Caguas.
Since its inception, the bank administrates various loan funds for the Municipality of
Caguas; such as the Economic Development Agency (EDA) Revolving Loan Fund Program.
The Fund started with a $300,000 loan from EDA and as of today it has provided financing
to over 200 businesses in the Municipality in the amount that exceeds $2million.
BADECO is a community bank that understands the current financial hardships that every
businesses and individuals are facing today. BADECO is committed to serve those who do
not have access to the traditional forms of credit or lending by giving them the tools and
guidance to financial success for their businesses and their respective communities.
Startups are BADECO’s principal lending group encompassing, over 90% of all loans. These
are the clients that the traditional financial institutions are not willing or able to lend due to
their credit history; risks associated with a startup o no credit history at all.
In the past 3 years BADECO through various sources of funds, has awarded approximately
55 business loans to micro and small businesses in which almost 50% are start-ups. This has
allowed the generation of about 150 direct jobs in the Municipality of Caguas and
approximately 300 indirect jobs. Of these new businesses, most of the jobs salaries range
from $8 to $12 per hour. Several workshops have been offered to new entrepreneurs in the
areas of business plan development, accounting, and permits and during this recent year
2011 workshops were offered to employees laid off and displaced persons to establish
micro and small businesses. Over 40 potential entrepreneurs have taken the full courses.
On August 2012, BADECO received a $1million loan (repayment at 1% per year for 20 years)
from the Small Business Administration so it can relend the funds to new or existing micro
and small business in the region.
BADECO’s Region (East Central Region of Puerto Rico) is encompassed by sixteen (16)
Municipalities; Aibonito, Aguas Buenas, Caguas, Cayey, Ceiba, Cidra, Culebra, Gurabo,
Humacao, Juncos, Las Piedras, Maunabo, Naguabo, San Lorenzo, Yabucoa and Vieques.
xxxiii
Education
Our Government has adopted the initiative “Caguas
Ciudad Educadora” (Caguas Educational City) as our
continued commitment in providing the best
educational opportunities for our children.
This initiative develops and promotes strategies
that foster an education that arises from the
interest and needs of the children in participating
schools.
Three Elementary Schools in communities of high poverty and our Specialized Secondary
School of Science, Mathematics and Technology, (CIMATEC) are part of this initiative. Such
as this Initiative, we continue to develop strategies based on our Democratic Governance.
The “Creole Neurodigital Center” is focused in providing internet access through wireless
system around our eleven (11) electronic libraries. Citizens from remote areas have been
able to access information for their own personal benefit, for educational purposes of their
children and for enjoyment.
The Specialized Secondary School of Science, Mathematics and Technology, (CIMATEC)
continues its growth. We have continued to add a grade per year. A lunch room was built
and additional classrooms have been provided with up to date equipment and technology.
Our students have succeeded in many academic competitions. Robotics, Science and Math
competitions continue to be their subjects of strength.
Students are involved in special projects with renown Universities and their performance
continues to be outstanding. In May 2014 we will have our first High School graduate class.
The Caguas Science and Technology Center (C3Tec)
celebrated its soft opening. The Center had been
used for many special educational events. Finally, it
has been able to introduce the different hands on
presentations that will be available for the public.
Many schools of different cities participated in this
event, leaving hand prints as a symbol of their
attendance and part of future events that will
highlight Caguas’ commitment with education and
the intellectual development of its citizens.
xxxiv
In March 2012, Caguas hosted the first
International Democratic Education Conference
(IDEC 2012) ever celebrated in our Island and Latin
America. Countries as far as Nepal, Myanmar, India,
Korea, Wales and Germany participated in this
conference which drew over 800 participants. This
Conference awoke the interest of many educational
communities in Puerto Rico, driving to create
meeting spaces and focus groups interested in
developing a National Plan for education in our
Island.
Three former Secretaries of Education attended and participated in the conference. This
brought our own interest in identifying the four (4) pilot schools in our City to receive the
insights of democratic education. As mentioned before, Caguas Educational City will identify
a variety of outstanding human, physical and available resources from our city to support
and guide our children’s interests. This model believes that by targeting on strengths and
interests, a change in attitudes will occur. In addition, our youths will be motivated to
achieve and seek success through improving their surrounding environments.
Several of our elementary schools participate in a Federal Funding Grant known as 21st
Century. Two hundred fifty elementary school students (250) participate. Our programs
provide tutors, recreation and cultural activities and events as means to expand and nourish
their educational experiences. The participating schools are from low income, low achieving
school communities.
Above eighty percent (80%) of the participating students have increased their attendance
and have improved academically. In addition, many parents of these students have
benefited from training and orientations related to child development and parenting skills.
Our goal has been focused on retention.
Our Mayor has improved his alignment of interest for his tenure which covered the
provision of positive experiences for our youths. The project “Caguas, A City for Our Youths”
developed a special “Commission for Peace” in which Junior and High school students
participate in activities such as, “Conciencia de Calle” or Street Consciousness. Two major
events have taken place related with these alignments. Students from all backgrounds were
invited to participate in performing their personal experiences as teenagers. Over 300
students demonstrated their talents and leadership skills. They also proved their interests in
being involved in public events, especially those which promote and prove what teenagers
are capable of accomplishing. This project promotes the taking over our streets and public
spaces with activities that nurture positive attitudes, learning environments, expression of
talents and social activities where peace is front and central of all forces.
xxxv
Family and Community Services
The Department of Human Development is
responsible for promoting the economic and
social well-being of families, children, individuals,
and communities in the Municipality by
overseeing and financing a broad range of
programs and activities that include direct
services and assistance to children, youth,
families,
communities,
persons
with
developmental disabilities, immigrants, residents
of public housing, and others.
Within the scope of authority of this unit is the Department of “Desarrollo Social y
Autogestión Comunitaria”, or Social Development and Community Self-management. This
department, which was created as part of the transformation plan, assumes the leadership
role of working with communities and enlisting their support to organize and play a more
active role in managing and resolving community concerns with the municipality
To date, the committed work of members of this department with community leaders has
resulted in the organization of Caguas’ eleven (11) wards, and one hundred-sixty (160)
active community-based entities, all of which play an active role in drafting their
community’s strategic improvement plans. During the past fifteen (15) years, $2.5 million in
public funds were awarded to eighty eight (81) active resident associations to develop and
improve sports and recreation facilities, cultural and community centers, infrastructure
projects, and community economic development projects.
Another major accomplishment by this department was the creation of a Volunteer Center
in collaboration with AmeriCorps, a component of the VISTA Federal program and with
community leaders. It has also been actively engaged in providing support to many
community based organizations that provide services to the homeless, elderly, and others in
need in response to personal or natural disasters.
Public Safety
The Department of Public Safety and Security has had the opportunity to grow, integrate
and diversify to respond effectively and assertively to safety and security challenges facing
our citizens. The most outstanding achievements include the professionalization program of
the Municipal Police. By agreement between the University of Turabo and our municipal
government, a group of 42 Municipal Police are taking college courses leading to an
Associate Degree in Criminal Justice with a concentration in Public Safety and Protection.
xxxvi
Moreover, with the completion of this degree, the employee will receive a special incentive.
This program is extended to all our Municipality Municipal Police, becoming the first
municipality in Puerto Rico in reaching this agreement.
Improving the working conditions of our Community Police involves reviewing salary scales.
The Office of Management and Budget in conjunction with the Office of Human Resources
conducted the evaluation of all records of our law enforcement officers to check their pay
scales and raise the base salary. On the other hand, a job offering was announced to take
the examination for promotion to the rank of Sergeant. The same was offered to a total of
86 municipal police. Of these seven (7) managed to pass the exam.
Other tests were administered and seminars leading to preparation before being promoted
to Sergeant. In addition, we achieved a collaborative agreement with the State Police and
Federal Agencies. We allocate about 35 employees of our Municipal Police to the State
Police to enforce a coordinated work plan.
Also, we assign a resource to the Federal Anti-Drug Agency, "DEA" to collaborate on highlevel research in search of criminal operating in the upper echelons of these criminal
organizations. We developed and implemented a new security plan for our City, which
integrates all components of our society and Agencies Law and Order.
In fiscal year we made an investment of $300,000 for Optimizing the Virtual Surveillance
System. With improvements and investments made, we renew the whole technological
system that supports Virtual Surveillance services. An amount of 185 cameras are
monitored seven days, 24 hours a day, across 16 screens.
Also we impact on our Police Headquarters with 9 cameras. Also, the project was
implemented SOS "Secure Our Schools, by granting a federal proposal that allocates funds
to develop and promote school safety and the integration of our Municipal Police resources
with the school community.
During the last year the Municipal Police has been
restructured to create a Community Police, and
developed a virtual surveillance system that
includes video cameras in high-risk public places.
Community Police and School Patrols collaborate
with safety orientation campaigns among citizens.
This wide participation of community members
reaffirms the sense that is promoted in the
Democratic Governance.
xxxvii
Health Services
The Strategic Plan has been instrumental in
making Caguas a healthier city. During the
last fifteen years, Caguas has been proactive
in the prevention of diabetes, heart disease,
poor nutrition and diseases through massive
vaccinations, and free annual health and
nutrition fairs throughout the city to
promote awareness of healthy living.
Also community development projects, such as cultural, sports and care to people with
special needs, childcare for working women, childhood and populations within the limits of
marginality, have been created.
In the area of health, prevention is springboard to our efforts. Thousands of children,
youngsters and adults have been vaccinated. Annual health fairs are held with free services
such as detection tests for hypertension, diabetes and heart disease conditions.
SANOS Corporation is a 501c3 nonprofit
organization
organized
under
the
Autonomous
Municipality
Law
to
accomplish the vision of “Caguas the
Healthiest City of Puerto Rico”.
The Creole Coalition for Continuous Care
to Homeless was established on our
initiative and currently integrates 13 civic
organizations of our municipality and of
neighboring municipality of San Lorenzo.
SANOS is responsible for projects such as the health corridor and the provision of quality
integrated ambulatory primary healthcare services including substance abuse and mental
health services with focus in low income and special populations as homeless and residents
of the Caguas 11 Public Housing Projects. As well SANOS also impact the Eastern Central
Region municipalities with health promotion and health prevention strategies.
The Municipality continues to invest in health services provided for Caguas citizens,
entering into an alliance with Mennonite’s Hospital – a major hospital in the city of Caguas,
for the provision of specialized services, X Rays and lab tests and for future development of
healthcare services and projects for the elderly.
xxxviii
Urban Development
Caguas 2020 is a strategic urban master plan that establishes the guidelines for city growth
from 150,000 to 250,000 inhabitants. The study recommends a managed growth model that
includes: redesign and improvement of the city’s transportation and infrastructure;
restoration of the city’s natural environment; core densification through residential and
commercial revitalization; and improvement of the public realm by enhancing the city’s
distinct neighborhoods. The plan articulated an integrated reinvestment strategy with bold
initiatives that redefine the image of Caguas.
The municipality has accepted this plan wholeheartedly, and has implemented many of the
recommendations contained therein and will continue the plan. We are actively pursuing
funding at the Federal and local levels to support further projects on the list provided by the
2020 Plan.
Through combined efforts of the Urban Planning Office and the Downtown Development
Corp. (ODECUT, Spanish acronym), the City is pursuing an ambitious strategy to develop 500
residential units, new commercial and office space, and improvements to infrastructure in
the area. During the past five years, the City has already invested close to $100 million in
public projects such as the New City Hall, Science and Technology School, Science and
Technology Interactive Center, street and sidewalk improvements, and beautification
initiatives.
xxxix
Actually, the New Regional Court of Caguas is under construction at the downtown northern
entrance with a total investment of $150 million. This has created 830 jobs during the
construction until 2013. Also, Caguas Courtyard rental housing for low-income household,
at an estimated cost of $23 million is almost completed. We just started the University
Triangle of Caguas with an initial investment of $3.8 million for the establishment of a new
campus in the southern part of Downtown for year 2012. The Inter American University of
Puerto Rico will add about 1,000 students to its enrollment. Last but not least, Senderos del
Robles, a 44 apartments units project at an approximately $5 million cost, will start next
year.
Guides of urban design for facades called "Urban Charms" (Encantos Urbanos) Guide for
restoration, renovation or new construction of facades. This guide lays down general
architectural concepts with the purpose of promoting the management and beautification
in Downtown public spaces, such as public square Plaza Santiago R. Palmer and commercial
boulevard Paseo Gautier Benítez.
The new Gautier Benítez boulevard project will begin in 2012, transforming areas with
infrastructure, ornaments, safety features, and a new managerial approach. This project will
link what we call "urban Islands" and blocks in a framework of development where
recreational, residential, commercial and academic users will create a coherent, diverse and
balanced package. An incentive to promote and to re-orient the commercial concept of the
Paseo Gautier Benítez to "Outlets" stores to anchor, support, strengthen and revitalize the
Downtown commercial sector, known as traditional urban center.
The Infill’s project includes clutter, plots and properties in abandonment and pledges, with
the intention of developing small housing projects for sale or rent. Beginning 2012,
construction projects will be built in 300-400 square meters plots, to lift structures which
accommodate approximately three to six 850-square-foot apartments units at an estimated
cost of $100,000 each.
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Transportation System
Planning and design continue for the “TODOS”*
transportation system between the San Juan Metro area
and the Eastern Central Region. There are two viable
options, a magnetic levitation (Maglev) system or a rapid
bus transit line. The first is estimated at $400 million
while the latter is estimated at $250 million.
*(Spanish acronym for Organized Transportation for an Ordained and Sustainable
Development)
The Urban Train mass transit system is expected to spin a major transformation of the way
people travel within the metropolitan area and the City. Caguas Autonomous Municipality
has reviewed studies that clearly indicate that the success of the urban train depends on
the extension of routes including reaching San Juan and the East and Central Regions.
The City already initiated the design of the
train that will improve the transportation to
and from the San Juan Metropolitan area and
Caguas. However, due to the present economic
situation, the Government of Puerto Rico has
not been able to allocate $200 million in their
budget to start the project. Nonetheless, we
are working with the possibility of creating a
Public-Private Partnership willing to finance the
whole project.
Magnetic levitation vehicles are neither a new nor an especially challenging technology.
Similar full-scale operational maglev systems have been built in Germany, China and Japan.
These systems employ a high-tech guide way, generating powerful magnetic forces that
yield very high speeds utilizing very sophisticated electronic controls.
xli
A Green Technology
Maglev (derived from magnetic levitation), is a transportation system that uses magnetic
levitation to suspend, guide and propel vehicles from magnets rather than using mechanical
methods, such as friction-reliant wheels, axles and bearings. Maglev transport is a means of
flying a vehicle or object along a guideway by using magnets to create both lift and thrust,
only a few inches above the guideway surface. High-speed Maglev vehicles are lifted off
their guideway and thus move more smoothly, quietly and require less maintenance than
wheeled mass transit – regardless of speed. This non-reliance on friction also means that
acceleration and deceleration can far surpass that of existing forms of transport. The power
needed for levitation is not a particularly large percentage of the overall energy
consumption; most of the power used is needed to overcome air resistance as with any
other high-speed form of transport.
Transcriollo
By signing an agreement with 150 public transportation
providers, Caguas Municipality announced the launching
of Transcriollo, the first integrated public transportation
system with electronic monitoring in a municipality, with
extended hours and on-time guarantees, by granting
them an incentive in order to establish effective and
efficient mobility within the city.
The vehicles belonging to Transcriollo are properly labeled as a symbol of reliability for the
citizen. Each will have a GPS or electronic tracking device that will allow us to know not only
their location, but mechanical condition. In the event a vehicle has a mechanical
breakdown, another vehicle may be dispatched immediately.
This effort will be complemented by a plan to widen sidewalks in pedestrian areas, lighting
improvements and installation of a new model of stop signs. Similarly, the project will be
integrated by bike paths, pedestrian paths and connectors where citizens can walk or ride a
bicycle as a means of transportation to visit government service centers, universities and
places of entertainment. Bicycle parking "racks" or other devices properly identified will be
installed where cyclists can leave their bikes while doing their personal or professional
dealings around the City.
Downtown Caguas trolleys and buses, and the initiative that eventually integrated the
municipalities that make up the Eastern-Central Region were the first steps for the arrival of
the train that will connect the magnet cities to the Metropolitan Area.
xlii
Economic Development
The Secretariat for Sustainable Economic Development (SEDES) was forged and planned by
the Municipality, in its Strategic and Action Plans since FY 2000.
In fact, the SEDES initiative within Caguas local government was acclaimed by the
International Economic Development Council (IEDC) with the “Excellence in Economic
Development Award” in the IEDC 2010 Annual Conference Competition, under the Business
Retention and Expansion Program Category. The Secretary of SEDES is member of AMC
Executive Committee. Under the leadership of the Mayor, SEDES pursued a strategy to
institutionalize and potentiate the local and regional economic development agenda at the
higher executive level of the Local Government.
The Municipality’s mission is to “provide quality services to the citizens in creative and
effective ways, optimizing the use of resources and active citizen participation.” But within
that mission a specific SEDES mission was forged: “To actively promote the retention and
creation of jobs, self employment and entrepreneurship.” The Secretary of SEDES renders
all executive services directly in coordination with the Mayor. It is divided into seven
program areas: [1] Tax Incentives, [2] PromoCaguas, an entrepreneurial promotion center,
[3] Tourism and Hospitality, [4] Downtown and Historic District Development, [5]
Community Development Financing, [6] Promotion and Development of Creole Art Crafts;
Cinematographic development and [7] Office of the Secretary and Special Projects.
While continuing the promotion of new investments in the area, Caguas is focusing on the
development of small and midsize businesses (Pymes, for its Spanish acronym) to continue
its economic growth. Promo Caguas is another initiative that has proven successful in
helping new business start-ups and in expanding operations of existing ones. Less than two
years since its founding, this initiative created by the municipal office to promote economic
activity in the Region, has accomplished what its central government counterparts
operating for many more years have yet to.
The City created this office to help promote the
development of economic activity, not only in Caguas, but in
the whole Region as well.
The City offers areas for business people’s businessmanagement training and education. The municipality
always had these kinds of programs, but with PromoCaguas,
we went somewhat further, offering a larger set of services
choices.
xliii
Besides offering commercial education and training, this
office strengthens the business climate in the Region by
attracting new investments and helping already
established businesses become more competitive.
Our support starts with helping businesspeople
conceptualize their future efforts, develop their
business plan, lineup financial support and identify all
possible tax incentives.
Our economic-development vision is not only aimed at Caguas. Also, if our neighboring
towns grow and strengthen economic activity, we all benefit from it.
The municipality also offers qualified candidates local tax incentives for new businesses, or
already established ones experiencing financial difficulties. The latter group receives the
incentives under the existing companies’ retention program. Included in the exemptions are
municipal patents, as well as property and construction taxes. PromoCaguas is also directly
involved in promoting export efforts.
SEDES holistic approach serves as a spring board for development and considers
intervention for growth in local and regional assets as classified into: social capital, human
capital, economic-financing capital and physical-technological capital. AMC was the first
municipality in Puerto Rico to institutionalize Economic Development at the local
government level, a role that used to be delegated to State agencies.
Another important initiative Promo Caguas implemented is Agroinova, a novel agricultural
promotional program that has enjoyed notable success since its implementation six months
ago. Agroinova includes training and mentoring to incentivize new businesses in the region's
agricultural sector.
We want to create a brand that identifies companies
committed to quality and innovation, as well as to
reactivate agricultural production on the Island.
The office provides technical support to clients and will
sell products for growers. We want farmers to concentrate
on what they do best, which is produce. We guarantee we
will sell their products for them. At present, more than 10
kinds of vegetables are being harvested and sold through
the program to restaurants and local supermarkets.
xliv
The City’s economic development efforts have paid off as seen by the stability shown in the
number of new businesses, new investment promoted by the tax incentive program, and
sales of existing businesses which have remained stable during the economic downturn.
Small and medium sized businesses are essential to the City’s economic development and
vibrancy.
Undoubtedly, the City became a hub for sustainable economic development while
protecting the environment. The strategic objective of protecting the natural environment
and embracing the attractiveness of all the areas stimulated the establishment of
enterprises and businesses, as well as the development of a tourism industry respectful of
the environment.
ExpoCaguas is a biennial conference and trade fair created to
promote international business. Conceptualized around the
theme of innovation as a source of sustainable economic
development, ExpoCaguas provides an excellent opportunity
to establish direct contact with dozens of local and
international businesses.
This event was the third major international trade fair organized by Caguas Autonomous
Municipality in order to strengthen business relationships to continue promoting the
economic development of industry and commerce in Caguas, Puerto Rico.
ExpoCaguas 2012 aimed to spread the activity of micro and small enterprises in Caguas,
Central and Eastern Puerto Rico, and international trade links created in the production of
goods and services. In addition, the event promoted entrepreneurship with professional
advice and guidance aimed at facilitating the organization of new production projects
among the audience.
This year the event was conceptualized in an interactive theme park using the model of
entrepreneurship development ASOPYMES (micro and small businesses) companies. The
2012 Expo was an interactive business fair where participants had the opportunity to learn
the concept and stages of a business, while enjoying entertaining and fun surroundings
aimed at promoting an entrepreneurial culture.
This trade fair offers the advantage of concurrent meetings, formidable opportunity to
participate in forums and conferences on current issues related to economic development,
competitiveness, foreign trade, and potential business areas, among others. The developing
of self-management in the areas of agribusiness and technology were high on the agenda of
this new edition of Expo Caguas.
xlv
A thorough program of conferences and workshops by renowned national and international
experts offered the possibility to be trained in business opportunities in the areas of health,
green technology, telecommunications and global entrepreneurship.
During the previous edition, ExpoCaguas featured more than 100 exhibitors from Puerto
Rico, South and Central America, and the Caribbean. It was an excellent opportunity to
promote trade among Puerto Rico and the Caribbean basin. Expo Caguas 2013 is scheduled
to be held during the fall, early October.
Caguas has more than 6,000 registered business entities which represents a 180% increase
since 1997. Business Tax and Tax Incentive Programs granted 39 incentives. As before
mentioned, in the area of manufacturing within the Region we have over 90 operations
from US and foreign like: Pfizer, Patheon/Mova, Avant Technologies, Jude Medical, and
Mylan Pharmaceutical, among others.
Sales Tax Pioneers
In September 2005, City Mayor, Honorable William Miranda Marín, levied the first
Municipal tax in Puerto Rico via City Ordinance, of 1% over any sale transaction within
Caguas jurisdiction. The island wide renowned “Willie Tax” resulted in an estimated
$500,000 additional monthly income for the city. Soon after, the Puerto Rico Legislature
uniformed all of the municipality taxes to a common 1.5%. According to the authorities, this
tax allows for funding the management of solid waste disposal as well recreational facilities.
The additional income generated by this contribution also opened space to maintain, as
well as to improve the quality of the services provided by the Municipality. The only
exempted transactions are wholesales, manufacture, and prescription drugs.
Caguas
xlvi
Tourism / Arts
Caguas Botanical and Cultural Garden
Caguas Botanical and Cultural Garden is a project
within the comprehensive “Caguas 2020” Plan, and
is part of the ecological corridor. The project uses
renewable
technology
for
environmental
protection, such as solar energy lighting along the
paths in a space not only devoted to the
conservation of a valuable ecosystem, but that has
the purpose of further promoting educational,
cultural and scientific endeavors. It is also an area
to promote the healthy coexistence and the sense
of Creole pride of Caguas citizens.
William Miranda Marín Botanical and Cultural Garden is the most important and ambitious
ecological project, in an area of some 60 acres donated by land developers to the
Municipality, at the request of the late Mayor. Besides a passive park, the Botanical Garden
includes other attractions related with the natural environment of the Region. The Cagüitas
River also runs along part of the land and a navigable artificial lake was built in three acres
of land, with a small clover-shaped island in the center (called Island of Identity), whence
musical and cultural activities are held.
In this magnificent project, the appreciation of our history and our cultural roots is
combined with ecological fervor, producing a natural intra-urban space truly formidable.
Different aspects of the ethnic history and components of the Puerto Rican People are
exhibited in this park, such as models of the structures used in the past to lodge the slaves
brought from Africa to work in the sugarcane plantations, and an outdoors museum related
to sugar production. Caguas Cultural and Botanical Garden is a natural exhibition site of
archaeological findings of millennial deposits of Igneri pre-Columbian ethnic group , as well
as of pre-Taíno and Taíno cultures.
Actually it is a major tourism destination and an icon of the Municipality as well as all of
Puerto Rico.
xlvii
City Museums and Attractions
Besides environmental preservation and
education, in Caguas all activities enhance local
cultural life, community identity and pride,
promote cultural and artistic innovations, and
bring together diverse audiences. Funded by
partnerships, the launching pad of this task is the
Cultural Development Department and its
Museums Program. It rests upon the Creole
Museums Network that connects eight museums
in a succession that can be toured on foot or
trolleys, as part of the Route of the Creole Heart
(Ruta del Corazón Criollo).
Since the historic centers should not be apart
from the city, its outskirts, people or traditions,
this Route is connected by the Creole cultural
patrimony manifest in every turn: churches,
Fine Arts Center, residential and commercial
buildings, plazas, and museums.
This part of the Strategic Plan turned the
Historic Center into a symbol of life with clearcut representatives, making for an authentic
cultural historic rehabilitation.
Caguas flagship museum is the Caguas Art
Museum, or Casa Amarilla. Built during the first
decade of the 20th Century, this building was
residence of the manager of the cigars
manufacturing company, General Cigars, Mr.
C.W. Boone. It housed a tobacco warehouse, a
Public Health Unit, and later, a commercial
establishment. Right now it houses, besides the
prestigious museum, two additional exhibitions
halls dedicated to traveling exhibits of artistic
works, and the administrative offices of the
Cultural Development Department of the
Municipality.
xlviii
In the area of the Caguas Government Center,
office buildings and cultural spaces flank the
Paseo de las Artes Abelardo Díaz Alfaro, a linear
plaza.
At the end of this plaza lays this office building,
including the Municipal Legislature and the
Mayor’s office. The building is designed as the
focal point of the plaza and has a grand doubleheight ‘window’ that frames the view to the
Caguas Valley and the Monument to the Taína
Women.
Caguas integrates activities and leisure for all
types of visitors… from a great variety of shows
and sports events, to the traditional Bohemia
Nights and Salsa Evenings with Coffee Aroma.
With one of the largest concert halls in the
Caribbean, the Caguas Performing Arts Center is
one of the main artistic and cultural hubs in
Puerto Rico. And as if that were not enough, the
Moisty Skate and Family Park and the Bowlera
are ideal places to have fun and a good time.
The Puerto Rican Creole cuisine shows the
fusion of the three ethnical heritages that gave
us our origin as people: the Taíno, the Spaniard
and the African.
The gastronomic offer in Caguas not only
pleases all tastes with the traditional roasted
pork and rice with pigeon peas from our typical
“lechoneras”, but also with the delicacies of the
creole dishes and the exquisite variety of
international dishes served in the excellent
restaurants in the City.
Caguas is the heart and soul of Puerto Rico, beats at the rhythm of rich cultural patrimony,
complemented with a wide variety of unparalleled commercial and entertainment offer.
The city’s of effervescence is merely 20 minutes from San Juan.
xlix
Public Works
The Ministry of Infrastructure, Embellishment
and Conservation integrated the Public Works
Department. Buildings conservation, recycling,
sanitation and embellishment is our arm to
achieve a balanced and harmonious
development of all urban and rural areas of
our city. The biggest challenge is to enable the
growth, in line with community needs to
promote order, respect and sustainability of
natural and human resources.
It is equally responsible for the waste disposal and recycling strategies, as well as the
adoption of strategies to promote energy efficiency and the use of renewable energy
sources, in accordance with the Strategic Plan. The measures include legal mechanisms so
that if natural environment is seriously affected by construction developments, the
developers will have to lessen the impact, reforest and create natural environments in the
new developments under the policy of sustainable development.
Actually one of the top priorities is to achieve an integrated urban mobility system that
reduce our dependence on imported fossil fuels and make viable the densification of our
urban areas, preventing further unplanned sprawl in our valley. That effort rests primarily
on our Development Office and Project Citizen’s Mobility, which manages 198 projects for a
total investment of approximately $110.6 million.
The Recycling and Sanitation Department continued with increasing recovery of recyclables
by Recycling Program at Home. Educational campaigns included Collect Christmas Tree,
Country Commitment Recycling in 14 participating schools, among others. Within the plan
of processing plant material, vegetative material team attended 259 requests vegetative
material for a total of about 8,700 tons of recycled material.
Municipal Public Works Department also used about 18,951 tons of asphalt to repair streets
and roads in rural and urban areas, with an investment of more than $1.0 million. Jobs also
included security, streams and creeks cleaning, installation of lighting and bridges, as well as
painting different areas of the City.
Management Services
Technology goes hand-in-hand with government efficiency. The Municipality of Caguas
utilizes technology to better serve the people and manage services in a tough economy. It is
vital for governments to be able to accomplish more with less.
l
Technology has been a fundamental and strategic component at the Municipality, resulting
in government efficiency, costs reduction and improved services. The management of
projects pursues the goals of making the best use of ability to control and implement
innovating projects; processes and services that can only be accomplished by means of
technology.
The utilization of modern technologies has allowed us to streamline and increase efficiently,
diminish expenditures in energy consumption and communications. We have integrated
new transactions into our existing government applications and expanded the bandwidth.
We provided a portable device to our Municipal Internal Revenue Service (MIRS) Agents
allowing the online connection to our computerized financial application to identify
delinquency, to clear up of accounts and the integration of Municipal Policemen to confer
fines. The Municipality had thousands of registered businesses and during the inspections,
unregistered businesses were also identified as well as businesses that did not report
business volume or failed to reported amendments to their business income tax. We
Inspected 2,124 businesses to ensure compliance and successfully collected $1 million in
new money, increasing municipal revenues.
In addition, it was implemented a new "Intelligent Transport Fines Systems" designed for
sending the notification of fines directly to the accounting department and to DOT
(Department of Transport), with the intention of increasing the process of expediting the
collection of revenues. A wireless PDA (Personal Digital Appliance) device was delivered to
the local Police to issue the traffic fines and records the transaction. On the initial two
weeks a $17,000.00 in fines was reported by the new system.
Independent Audit
Local statutes require an annual audit by independent certified public accountants. The
independent auditors from Parissi, P.S.C. were selected by the Municipality to perform the
audit of the financial statements of the governmental activities, business type activities,
each major fund, and the aggregate remaining fund information as of and for the year
ended June 30, 2012 in accordance with auditing standards generally accepted in the
United States of America. The independent auditors’ report on the financial statements is
included in the financial section of this report.
The Municipality is also required to undergo an annual audit to obtain reasonable assurance
about compliance with the requirements of laws, regulations, contracts and grants
applicable to each of its major federal programs. This audit was also conducted by Parissi,
P.S.C. and the Single Audit Report will be published at a later date as a separate document.
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Awards
Caguas: Livable City Bronze Award
On November 2010 our City won a Bronze medal in the United Nations
Organization “International Livable Communities Award”, 13rd Edition.
A total of 50 countries competed. Our City participated in the “C”
Category (75,000 to 150,000 habitants). Besides Caguas, the cities of
Norwich, England (Gold medal), Wicklow, Ireland (Gold medal), South
East Gran Canaria, Spain (Silver medal), and Chicago, reached the
Finals.
The City became a hub for sustainable economic development while protecting the
environment through its Public Works Department, in charge of various services, including
the maintenance of local streets, flood control facilities, maintenance of common areas,
solid waste collection, recycling, parks and recreational facilities maintenance and public
lighting maintenance.
Cleanliness of the City is of outmost importance for the Municipality even in State roads,
bridges and facilities. This municipal agency developed gardens throughout the City,
including a Meditation Garden or Japanese Garden in the Governmental Building, the New
Millennium Garden in the José Mercado Avenue, planted 300 trees in the Cagüita´s River
basin and along Expressway PR-52, a major highway that runs from north to south of Puerto
Rico. Waste management continues to be a top priority in Caguas because of the City’s
status as the hub for business and tourism activity. Our recycling program continues to
serve as a standard for other municipalities to follow.
All these embellishment and reforesting initiatives have been recognized by local, national
and international organizations:
In the year 2009: Tree City USA Award given by the National Arbor Day Foundation
of the city of Nebraska, Caguas was recorded as an “Arboreal City”.
In the year 2006, Caguas received the “Environmental Quality Award” in the
Government category, awarded by the United States Environmental Protection
Agency to the Autonomous Municipality of Caguas, for establishing a comprehensive
environmental protection program in the City.
In the years 2001, 2003 and 2004, Caguas´ Public Works Department received the
Caribbean Urban Forestry Award, for establishing programs of reforestation,
gardening, beautification and environmental conservation.
In the years 2002, 2003 and 2004, the Puerto Rico Environmental Quality Board
granted Caguas its Cleanest City Award.
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The Government Finance Officers Association of the Unites States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the
Autonomous Municipality of Caguas for its comprehensive annual financial report for the
fiscal year ended June 30, 2011. This was the third consecutive year that the Municipality
has achieved this prestigious award. In order to be awarded a Certificate of Achievement,
the Municipality has to publish an easily readable and efficiently organized CAFR that
satisfies both US GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our
current comprehensive annual financial report continues to meet the Certificate of
Achievement Program’s requirements and we are submitting it to the GFOA to determine
its eligibility for another certificate.
Acknowledgments
We express our appreciation to the Mayor and the City Council for their continuous
support. Their vision and leadership always allows us to accomplish our goals in a
responsible and progressive manner.
We recognize that the preparation of this report could not have been accomplished without
the assistance of the entire staff of the Finance Department. With appreciation for all
members of the Finance Department who contributed to the preparation and completion of
this report, we want to make a special acknowledgement to Ms. Berguedys Diaz, Executive
Secretary of the Finance Director for all her dedication in the last three years to put forth all
the documents towards the achievements of the Comprehensive Annual Financial Report.
Due credit is also given to our independent auditors, Parissi, P.S.C., for their continuous
advice and commitment.
Respectfully submitted,
AUTONOMOUS MUNICIPALITY OF CAGUAS, PUERTO RICO
Carlos Crespo Massa, CPA
Secretary of Administration
Samuel Sierra Rivera, CPA
Finance Director
liii
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ELECTED OFFICIALS
MAYOR
William E. Miranda Torres
ELECTED MUNICIPAL COUNCELORS
PRESIDENT
Andrés Miranda Rodríguez
José R. Torres Torres
Rafael A. Carballo Collazo
Vilma S. Muñoz Díaz
Félix Guzmán Alejandro
Mario E. Manrique González
Alberto R. Costa Berríos
Elvira Martínez Vda. De Portela
Amílcar Algarín Solá
Antonio Cruz Gorritz
José A. Velázquez Grau
Esteban Ramírez Del Valle
Ismael González Rivera
Nina D. Valedón Santiago
Victoría Cintrón Cruz
Maritza Fortuño Lorenzana
APPOINTED OFFICIALS
VICE-MAYOR
Wilfredo A. Puig Pérez
CITY MANAGER
Lydia I. Rivera Denizard
Carlos J. Crespo Massa, CPA
Secretary of Administration
Aida I. González Santiago
Secretary of Human Development
Juan F. Alicea Flores
Secretary of Infrastructure, Beautification, and Conservation
Zamia M. Baerga Torres
Secretary of Sustentainable Economic Development
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1
2
MANAGEMENT’S DISCUSSION AND ANALYSIS
3
Management’s Discussion And Analysis
As of June 30, 2012
4
As of June 30, 2012
To the Citizens and the Municipal Legislature
of the Municipality of Caguas
As management of the Autonomous Municipality of Caguas (hereafter
the Municipality), we offer readers of the Municipality’s financial
statements this narrative overview and analysis of the financial activities
of the Municipality for the fiscal year ended June 30, 2012. We
encourage readers to read the information presented here in
conjunction with the basic financial statements.
Financial Highlights

The net assets of the Municipality, including both, governmental and business type
activities exceeded its liabilities at the close of the fiscal year by $353,416,777.

The government’s total assets, in the Governmental Wide Statement of Net Assets
increased by $2,674,630 and government’s liabilities increased by $20,297,070. These
changes resulted in a decrease in total net assets of $17,622,440 (net decrease in net
assets of $16,466,971 plus prior period adjustment of $1,155,469). Refer to Capital
Assets and debt Administration Section for general information related with the use of
funds provided by debt issuance.

As of the close of the current fiscal year, the Municipality’s governmental funds
reported combined ending fund balances of $67,731,091, as restated, after a total and
combined net increase of $10,323,694.

The Municipality’s total general long-term debt increased by $18,994,050 during the
current fiscal year. The use of funds provided by the issuance of special loans or
infrastructure development, parking facilities and acquisition of equipment. Refer to
Capital Assets and Debt Administration Section for general information related with to
the use of funds provided by debt issuance.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to The Municipality’s
basic financial statements. The Municipality’s basic financial statements consist of three
components; 1) government-wide financial statements, 2) fund financial statements, and 3)
notes to the financial statements (see Figure 1). The basic financial statements present two
different views of the Municipality through the use of government-wide statements and
fund financial statements. In addition to the basic financial statements, this report contains
other supplemental information that will enhance the reader’s understanding of the
financial condition of the Municipality.
5
As of June 30, 2012
Required Components of Annual Financial Report
Figure 1
Autonomous Municipality of Caguas
Management’s Discussion
and Analysis
Government Wide
Financial Statements
Summary
Basic Financial Statements
Fund Financial
Statements
Notes to the Financial
Statements
Detail
Basic Financial Statements
The first two statements in the basic financial statements are the Government-wide
Financial Statements. They provide both short and long-term information about the
Municipality’s financial status.
The next statements are the Fund Financial Statements. These statements focus on the
activities of the individual parts of the Municipality’s government. These statements provide
more details than the government-wide financial statements. There are three parts to the
Fund Financial Statements: 1) the governmental funds statements; 2) the budgetary
comparison statements; and 3) the proprietary fund statements.
The next section of the basic financial statements is the Notes to the Financial Statements.
The notes to the financial statements explain in detail some of the data contained in those
statements.
6
As of June 30, 2012
Government-wide Financial Statements
The government-wide financial statements are designed to provide the reader with a broad
overview of the Municipality’s finances. The government-wide statements provide short
and long-term information about the Municipality’s financial status as a whole.
The Statement of Net Assets presents information on all of the Municipality’s assets and
liabilities, with the difference between the two reported as net assets. Over time, increases
or decreases in net assets may serve as a useful indicator of whether the financial position
of the Municipality is improving or deteriorating.
The Statement of Activities presents information showing how the Municipality’s net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as
the underlying event giving rise to the change occurs, regardless of the timing of related
cash flows. Thus, revenues and expenses are reported in this statement for some items that
will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but
unused vacation leave). The Statement of Activities is focused on both the gross and net
cost of various activities (including governmental, business-type, and component unit, if
any). This is intended to summarize and simplify the reader’s analysis of the revenues and
costs of the Municipality’s activities and the degree to which activities are subsidized by
general revenues.
The government-wide statements are divided into two categories: 1) governmental
activities; and 2) business-type activities. The governmental activities include most of the
Municipality’s basic services such as public safety, parks and recreation, and general
administration. Property taxes and state and federal grant funds finance most of these
activities. The business-type activities are those that the Municipality charges directly to
users to provide the service. These include Community Development Bank and Multi-tenant
building.
The government-wide financial statements are included from pages 23 through 25 of this
report.
Fund Financial Statements
The fund financial statements provide a more detailed look at the Municipality’s most
significant activities. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The
Municipality, like all other governmental entities in the Commonwealth of Puerto Rico, uses
fund accounting to ensure and reflect compliance (or non-compliance) with finance-related
legal requirements, such as the General Statutes or the Municipality’s budget ordinance. All
funds of the Municipality can be divided into two categories: governmental funds and
proprietary funds.
7
As of June 30, 2012
Governmental Funds – Governmental funds are used to account for those functions
reported as governmental activities in the government-wide financial statements. Most of
the Municipality’s basic services are accounted for in governmental funds. These funds
focus on how assets can readily be converted into cash inflows and outflows, and what
monies are left at year-end that will be available for spending in the next fiscal year.
Governmental funds are reported using an accounting method called modified accrual basis
of accounting. This method is also known as a current financial resources focus. As a result,
the governmental fund financial statements give the readers a detailed short-term view
that helps them determine if there are more or less financial resources available to finance
the Municipality’s programs. The relationship between government activities (reported in
the Statement of Net Assets and the Statement of Activities) and governmental funds is
described in a reconciliation that is a part of the fund financial statements.
The Municipality adopts an annual budget for its General Fund, as required by the General
Statutes. The Municipality’s annual budget is a legally adopted document that incorporates
input from the citizens of the Municipality, the management of the Municipality, and the
decisions of the Municipal Legislature about which services to provide and how to pay for
them. It also authorizes the Municipality to obtain funds from identified sources to finance
these current period activities. The budgetary statement provided for the General Fund
demonstrates how well the Municipality complied with the budget ordinance and whether
or not the Municipality succeeded in providing the services as planned when the budget
was adopted. The budgetary comparison statement uses the budgetary basis of accounting
and is presented using the same format, language, and classifications as the legal budget
document. The statement shows four columns: 1) the original budget as adopted by the
municipal legislature; 2) the final budget as amended by the municipal legislature; 3) the
actual resources, charges to appropriations, and the final relationship between revenues
and appropriations; and 4) the difference or variance between the final budget and the
actual resources and charges.
Proprietary Funds – The Municipality has one kind of proprietary fund known as the
Enterprise Funds. These funds are used to report the same functions presented as businesstype activities in the government-wide financial statements. The Municipality uses
enterprise funds to account for its Community Development Bank activity and for its Multitenant operations. These funds are the same as those separate activities shown in the
business-type activities in the Statement of Net Assets and the Statements of Revenues,
Expenses and Changes in Net Assets.
Notes to the Financial Statements – The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and fund
financial statements.
8
As of June 30, 2012
Government-Wide Financial Analysis
As noted earlier, net assets may serve over time as one useful indicator of a government’s
financial condition. The total assets of the Municipality exceeded its liabilities by
$353,416,777 as of June 30, 2012. The Municipality’s net assets decreased by $17,622,440
(net decrease in net assets of $16,466,971 plus prior period adjustment of $1,155,469) for
the fiscal year ended June 30, 2012.
One of the largest portions of the net assets ($372,930,209) reflects the Municipality’s
investment in capital assets net (e.g. land, buildings, infrastructure, and equipment); less
any related debt still outstanding that was issued to acquire or contract those assets. The
Municipality uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the Municipality’s investment in its
capital assets is reported net of the outstanding related debt, the resources needed to
repay that debt must be provided by other sources, since the capital assets cannot be used
to liquidate these liabilities. An additional portion of the Municipality’s net assets
($27,418,338) represents resources that are subject to external restrictions on how they
may be used. The remaining balance is unrestricted.
The Municipality’s Net Assets
Figure 2
Governmental
Activities
2012
2011
Current and other assets
Capital assets
Loan receivable, net
Total assets
Total
2012
2011
148,349,276
518,664,823
828,542
667,842,641
137,784,138
526,257,009
—
664,041,147
1,211,846
23,147,188
800,060
25,159,094
1,555,516
23,604,950
1,125,492
26,285,958
149,561,122
541,812,011
1,628,602
693,001,735
139,339,654
549,861,959
1,125,492
690,327,105
65,068,957
274,485,451
339,554,408
63,755,610
255,487,808
319,243,418
30,550
—
30,550
40,877
3,593
44,470
65,099,507
274,485,451
339,584,958
63,796,487
255,491,401
319,287,888
Net assets:
Invested in capital assets, net of
related debt
349,783,021
Restricted
27,418,338
Unrestricted
(48,913,126)
Total net assets
$ 328,288,233
360,577,001
40,101,047
(55,880,319)
344,797,729
23,147,188
—
1,981,356
25,128,544
23,604,950
—
2,636,538
26,241,488
372,930,209
27,418,338
(46,931,770)
353,416,777
384,181,951
40,101,047
(53,243,781)
371,039,217
Current liabilities
Other liabilities
Total liabilities
$
Business-type
Activities
2012
2011
9
As of June 30, 2012
The Municipality’s Changes in Net Assets
Figure 3
Governmental
Activities
2012
2011
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Volume of business taxes
Sales taxes
Intergovernmental
Licenses and permits
Interest and investment income
Gain on disposal of capital assets
Other
Total revenues
$
Expenses:
General government
Public safety
Public works
Cultural and recreation
Health and welfare
Economic development
Housing
Sanitation and environmental
Education
Interest
Community Development Bank
Multitenant
Total expenses
Decrease in net assets before transfer
Transfer
Net decrease in net assets
Net assets, beginning as previously reported
Prior period adjustments
Net assets, beginning as restated
Net assets, ending
$
Business-type
Activities
2012
2011
Total
2012
2011
2,641,886
31,463,254
2,524,865
1,531,778
35,241,185
4,979,585
56,170
—
—
111,098
—
—
2,698,056
31,463,254
2,524,865
1,642,876
35,241,185
4,979,585
56,891,271
24,084,347
20,187,076
14,333,905
5,453,189
834,404
95,807
852,095
159,362,099
54,082,666
26,227,325
18,845,077
11,766,517
2,428,661
755,974
—
1,493,917
157,352,685
—
—
—
—
—
1,703
—
35,978
93,851
—
—
—
—
—
2,341
—
9,543
122,982
56,891,271
24,084,347
20,187,076
14,333,905
5,453,189
836,107
95,807
888,073
159,455,950
54,082,666
26,227,325
18,845,077
11,766,517
2,428,661
758,315
—
1,503,460
157,475,667
46,853,541
11,060,805
30,008,248
6,584,416
17,995,172
6,765,876
11,907,765
16,298,783
16,931,864
10,676,171
—
—
175,082,641
39,743,963
10,410,999
29,591,596
4,577,429
19,084,763
14,063,387
11,045,789
15,637,305
15,887,413
9,258,116
—
—
169,300,760
—
—
—
—
—
—
—
—
—
—
90,145
750,135
840,280
—
—
—
—
—
—
—
—
—
—
69,481
246,092
315,573
46,853,541
11,060,805
28,057,169
6,584,416
17,995,172
8,716,955
11,907,765
16,298,783
16,931,864
10,676,171
90,145
750,135
175,922,921
39,743,963
10,410,999
29,591,596
4,577,429
19,084,763
14,063,387
11,045,789
15,637,305
15,887,413
9,258,116
69,481
246,092
169,616,333
(15,720,542)
263,993
(15,456,549)
(11,948,075)
—
(11,948,075)
(746,429)
(263,993)
(1,010,422)
(192,591)
(2,124,671)
(2,317,262)
(16,466,971)
—
(16,466,971)
(12,140,666)
(2,124,671)
(14,265,337)
344,797,729
(1,052,947)
343,744,782
358,218,122
(1,472,318)
356,745,804
26,241,488
(102,522)
26,138,966
29,302,270
(743,520)
28,558,750
371,039,217
(1,155,469)
369,883,748
387,520,392
(2,215,838)
385,304,554
328,288,233
344,797,729
25,128,544
26,241,488
353,416,777
371,039,217
10
As of June 30, 2012
Governmental Activities – Governmental activities decreased the Municipality’s net assets
by $16,509,496, (net decrease in net assets of $15,456,549 plus prior period adjustment
$1,052,947), thereby accounting for almost the total reduction in the net assets of the
Municipality. Key elements of this decrease are as follows:
Revenues

Total overall revenues had a net increased by 1.28% over prior year. The following
categories had an increase from prior year:
o Property taxes, 5.20% – mostly as a result of real estate taxes revenue increase and
a general property tax amnesty program.
o Sales taxes, 7.12% – mostly by an increase in retail sales, $1,341,999.
o Intergovernmental, 21.8% – legislative appropriations and other intergovernmental
grants increases by $2,567,388.
o License and permits, 12.5% – this category includes an extraordinary income for the
construction permits of the new courthouse, Las Catalinas Mall pipeline, CVS
Pharmacy and others by $3,024,528.
The following categories had a decrease from prior year:

Operating grants and contributions, 10.7% – mainly by the aggregated grants reductions
of $3,777,931 in non-recurring American Recovery and Reinvestment Act (ARRA) fund,
the Community Development Block Grants (CDBG) and Ryan White.

Capital grants and contributions, 49.3% – $2,454,720.

Volume of business, 8.2% – reflects a reduction in revenues of $2,142,978, mainly from
a large pharmaceutical enterprise that started a phase out period down to the closure of
its operations.

Other revenues, 42.9% or $615,387.
Expenditures
Total overall expenditures had a net increase by 3.42% over prior year.
Following are the most significant changes during the year:

The increase in general government expenses of 17.88% or $ 7,109,578 is mainly the
result of a positive adjustment reducing the reserves for legal cases by $ 4 million during
2011 and an increase in other various expenses such as electricity and depreciation,
among others for 2012.
11

As of June 30, 2012
The decrease in economic development expense of 38% or $5,346,432 is mainly the
result of last year nonrecurring transactions such as a transfer made for the design and
planning phases of the urban train ($4.9 millions) and the contribution made to
complete the construction of Caguas Courtyard ($600,00) a multi familiar housing
development.
Revenues by Source - Governmental Activities
Property taxes
36%
Other taxes
33%
Capital grants
and
contributions
2%
Intergovernment
9%
Operating
grants and
contributions
20%
Other
6%
Business-type Activities: Business-type activities decreased the Municipality’s net assets by
$1,112,944, (net decrease in net assets of $1,010,422 plus prior period adjustment of
$102,522)
Revenues by Source - Business Type Activities
Other
40%
Charges for
services
60%
12

As of June 30, 2012
Total revenues decreased by 23.7% over prior year.
o Charge for services decreased by 49.4%, while other income increased by 277% - On
July 1st, 2010, the Municipality of Caguas successfully completed the transfer of
assets of the Community Development Bank to establish the first regional
community bank of Puerto Rico named Banco de Desarrollo Centro Oriental
(BADECO). The Municipality’s transfer includes the former bank’s unrestricted loans
and capital assets. Therefore, charges on loans originations and interest income
decreased by $168,297 vs. $54,928 for the years 2012 and 2011 respectively.
o A sale of two rental spaces from the Multitenant Building resulted in a capital gain of
$1,528,317. That non-recurring revenue resulted in a material difference for the
current year.

Total expenses increased by 166.3 % over prior year
o According to the above explained transactions, the Community Development Bank
expenses as well as the Multitenant building expenses increased by 29.74% and
204.82%, respectively. Such increased expenses were salaries and professional
services assumed by BADECO and allowances for loan losses. With respect to the
Multi-tenant building, some construction projects were finished and capitalized,
therefore the depreciation expense increased. Also energy, insurance and other
operational costs increased.
Financial Analysis of the Municipality’s Funds
As noted earlier, The Municipality uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental Funds – The focus of The Municipality’s governmental funds is to provide
information on near-term inflows, outflows, and balances of usable resources. Such
information is useful in assessing the Municipality’s financing requirements. Specifically,
unassigned fund balance can be a useful measure of a government’s net resources available
for spending at the end of the fiscal year.
At June 30, 2012, the governmental funds of the Municipality reported a combined fund
balance of $67,731,091, as restated. This amount represents an increase of $10,323,694 or
17.9% over last year. Following is a summary of the most relevant funds’ change when
compared to prior year:
General Fund – The general fund revenues increased by $6.3 million and the
expenditures increased $2.2 million. Proceeds from debt service cash surplus, debt
refunding and capital project fund, produced additional net cash flows of $8.2 million
and an increase of 83% in the Fund.
13
As of June 30, 2012
Housing and Rental Program – Housing revenues increased by $455,168 basically from
Federal Funds appropriations. The fund expenditures increased by $148,390. The
program’s fund balance decreased 20% from prior year.
Head Start and Food and Children Program – Revenue from Head Start Program
decreased by $1.0 million while expenditure decreased by $636,135.
Capital Project Fund – Revenues from capital project fund decreased by $8 million, while
expenditures decreased by $13 million, as long as most of the constructions in process
were completed during the year. The fund balance increased $11.6 million as a result of
debt issue proceeds of $18.5 million.
Debt Service Fund – Revenue from debt service fund increased by $3.7 million, as a
result of prior year collections from the property tax amnesty act of 2011. While the
fund expenditures increased $4.7 million, the fund balance decreased $7,269,074, as a
result of the transfer of excess cash of $14.6 million to the general fund.
Legislative and Other Governmental Funds – Revenues from these funds decreased
$902,524, while expenditures increased by $11.6 million which include the acquisition of
the Lincoln Plaza Building and a new municipal parking facility.
General Fund Budgetary Highlights: During the fiscal year 2012, the Municipality’s budget
was changed, according to the latest results and ordinances and resolutions approved by
the Mayor and the Municipal Legislature. Generally, budget amendments fall into one of
three categories: 1) amendments made to adjust the estimates that are used to prepare the
original budget ordinance once exact information is available; 2) amendments made to
recognize new funding amounts from external sources, such as Federal and State grants;
and 3) increases in appropriations as a result of cash surplus from prior period to
supplement capital projects funding and general government activities.
This space is intentionally left in blank.
14
As of June 30, 2012
Original
Resources:
Property taxes
Sales taxes
Fines and penalties
Intergovernmental
Parking lot fees
Rent and other resources
Amounts available for appropriation
$
Expenditures charged to appropriations:
Culture and recreation
Economic and social development
Education
General government
Health and welfare
Housing
Public safety
Public works
Total charges to appropriations
Excess of resources over appropriations
33,275,786
24,800,000
17,120,000
450,000
700,000
14,329,320
2,210,000
183,090
15,814,134
108,882,330
6,095,734
5,247,738
2,441,537
44,764,714
10,521,358
979,168
16,115,336
10,977,158
11,739,587
108,882,330
$
—
Transfers
—
—
—
—
—
—
—
—
—
—
(254,251)
(46,332)
(106,403)
1,880,718
(39,955)
(46,131)
(11,861)
(1,321,846)
(53,939)
—
—
Final
33,275,786
24,800,000
17,120,000
450,000
700,000
14,329,320
2,210,000
183,090
15,814,134
108,882,330
5,841,483
5,201,406
2,335,134
46,645,432
10,481,403
933,037
16,103,475
9,655,312
11,685,648
108,882,330
—
The following were the most significant budgetary transactions:

The original General Fund appropriation for fiscal year 2012 was $108,882,330 which is
higher than the prior year appropriations by $3,179,249.

Actual budgetary transactions generated an excess of resources over appropriations of
$5,609,254 due to the following:
o Actual revenues were more than budgeted amounts by $4,931,578. This result was a
combination of an increase in licenses and permits ($3,221,744), property taxes
($1,087,066) and rent and other resources ($1,136,409) and a minor decrease in
volume of business taxes ($356,760) and sales taxes ($239,432).
o Actual appropriations resulted in an economy of $677,676 which is mostly related
with minor decrease in all programmatic functions.
15
As of June 30, 2012
Proprietary Funds – The Municipality’s proprietary funds provide the same type of
information found in the business-type column within the government-wide statements but
in more detail. Unrestricted net assets of the Community Development Bank at the end of
the fiscal year amounted to $830,931, and those of the Multitenant Building equaled
$1,150,425. Multitenant Building has net assets invested in capital assets by the amount of
$23,147,188. The total decrease in net assets was $29,351 for the Community Development
Bank and $981,071 for Multitenant Building. Other factors concerning the finances of these
funds have already been addressed in the discussion of the Municipality’s business-type
activities.
Capital Asset and Debt Administration
Capital assets – The Municipality’s capital assets for its governmental and business – type
activities as of June 30, 2012, total $541,812,011 (net of accumulated depreciation). The
depreciation expense for the fiscal year was $27.8 million and additions to infrastructure
and other capital assets were $21.1 million. Retirements of capital assets during year were
$1.3 million. These assets include buildings, roads and bridges, land, machinery and
equipment, park and recreations facilities, and vehicles.
Major capital asset transactions during the year include:

Infrastructure improvements and construction of publics works in general throughout
the city, $18.3 million.

Minor collectors and rural roads’ repairs and betterments at various communities, $2
million.

Acquisition of Building at the entrance of the city which main purpose is to provide
parking facilities to the surrounding medical and commercial facilities, $9.7 million.

Land acquisitions for future developments, $245,000.

Maintenance of Municipality’s buildings, $815,000.

Acquisitions of equipment for various municipal departments and legal and other
professional fees, $1 million.
This space is intentionally left in blank.
16
As of June 30, 2012
The Municipality’s Capital Assets
(net of depreciation)
Figure 5
Governmental
Activities
2012
2011
Capital assets not being depreciated
Land and improvements
$
Construction in progress
Works of art and historical treasures
Total not being depreciated
Capital assets net of depreciation
Facilities and improvements
Buildings and improvements
Roads and streets
Equipment and vehicles
Total net of depreciation
Total capital assets net of
depreciation
$
Business-type
Activities
2012
2011
Total
2012
2011
49,598,556
10,835,621
3,504,311
63,938,488
49,770,830
39,601,894
3,504,311
92,877,035
3,937,554
—
—
3,937,554
3,937,554
—
—
3,937,554
53,536,110
10,835,621
3,504,311
67,876,042
53,708,384
39,601,894
3,504,311
96,814,589
32,738,178
138,057,862
271,618,544
12,311,751
454,726,335
26,887,123
115,487,108
278,065,130
12,940,613
433,379,974
—
19,209,634
—
—
19,209,634
—
19,667,396
—
—
19,667,396
32,738,178
157,267,496
271,618,544
12,311,751
473,935,969
26,887,122
135,154,503
278,065,131
12,940,613
453,047,369
518,664,823
526,257,009
23,147,188
23,604,950
541,812,011
549,861,958
Additional information on the Municipality’s capital assets can be found on Note 6 of the
Basic Financial Statements.
Major additions to constructions in progress (disbursements of more than $200,000) as of
June 30, 2012 are as follows:
Project
Infrastructure remodeling
New Government Building Improvement
Hector Sola Bezares Court Improvement
Caguas Court Yard Community Housing
Maintenance of Infrastructure
$
$
Amount
207,740
550,000
407,142
209,221
566,129
1,940,232
17
As of June 30, 2012
Long-term Debt – As of June 30, 2012, The Municipality had total bonded debt outstanding
of $269,363,170 all of which is debt backed by the full faith and credit of the Municipality.
The Municipality’s Outstanding Debt
General Obligation Bonds
Figure 6
Governmental
Activities
2012
2011
General obligation bonds
Federal loans and notes
Special loans
Total
$ 226,568,577
4,200,000
38,591,000
$ 269,359,577
207,397,577
4,870,000
37,855,000
250,122,577
Business-type
Activities
2012
2011
3,593
—
—
3,593
39,571
—
—
39,571
Total
2012
2011
226,572,170
4,200,000
38,591,000
269,363,170
207,472,417
4,870,000
37,855,000
250,197,417
The Municipality’s total debt increased by $19,201,022 (7.66%) during the fiscal year 2012,
primarily due to $32,120,000 issued in special loans and bonds for infrastructure
development.
The Commonwealth of Puerto Rico limits the amount of general obligation debt that a
municipal government can issue to 10 percent of the total assessed value of taxable
property located within the municipality’s jurisdiction. On March 2009, the Government of
Puerto Rico enacted the Special Act, Declaring a State of Fiscal Emergency and Establishing
an Integrated Fiscal Stabilizing Plan to Save the Credit of Puerto Rico (Public Law 7). Among
other things, this Law introduced a new way to view the Real Property valuation (see note 7
of the accompanying financial statements).
Also, the Municipality has a sales tax redemption fund, composed of .2% of the .5% of the
municipal sales tax rate portion of 1.5%, to support the debt service fund capacity. This
fund, in addition to other variables, is used to calculate the Municipality’s borrowing
capacity, along with the property tax redemption fund, within a specific timeframe. The
Municipality’s borrowing margin for the audited year was approximately $15,905,000 with a
contribution to the fund (in the audited year) of approximately $2,844,899.
Summary of Local Economy
The Municipality of Caguas was founded in 1775. Caguas has the fifth largest population of
Puerto Rico with boundaries that encompass an area of approximately 59.07 square miles,
and according to the 2010 Puerto Rico Community Survey the population of Caguas was
142,893. It was estimated by the US Census that the population of Puerto Rico had an
overall decrease of over 19,000 citizens during the last 15 months ended on July 2012.
Notwithstanding, it was also estimated that from the larges municipalities, Caguas had the
lowest decrease of 1.7%. The City’ jurisdiction is bounded on the North by the
18
As of June 30, 2012
Municipalities of San Juan and Trujillo Alto, on the South by the Municipalities of Cayey and
San Lorenzo, on the East, by the Municipalities of Gurabo and San Lorenzo, and on the West
by the Municipalities of Aguas Buenas and Cidra.
The largest employers in Caguas are the State and the Municipal governments, Avon
Enterprises, Wal-Mart, Sam’s Club and Amigo Supermarket retail chains, K-mart Corp.,
Costco, AT&T, Walgreens, and HIMA-San Pablo Hospital.
The City’s economy has an industry composition somewhat similar to the rest of the island’s
largest Municipalities. In the 1960’s textile manufacturing and agriculture made up the
largest amount of the local economy, but by the mid-seventies the manufacturing share of
employment had declined to a lower percentage.
Major Industries and Services (including government)
Government Services: The governmental service is the largest source of employment in the
Municipality, accounting for the largest quantity of employment. The Municipal government
sector remains stable in relation to the past year. Government sector includes a diversity of
employment areas such as education, electric power service, water supply, police, public
works, culture and recreation, health, legal service, and others.
Health Services: As a major regional medical center, the medical services industry is one of
the largest employers in the area. It includes the privately owned hospitals, HIMA-San Pablo
and Hospital Menonita, formerly San Juan Bautista. These facilities provide primary,
secondary and tertiary health services to the residents of Caguas and adjacent small towns,
and are responsible for establishing and developing strategies and programs designed to
promote health, prevent diseases and early detection and diagnosis of health problems.
They promote adequate health treatment and rehabilitation services as well.
Caguas is included in the Commonwealth’s Health Reform program. The Commonwealth’s
Health Reform program consists of comprehensive health insurance coverage for qualifying
low-income residents of Puerto Rico through a managed care system. Under the Health
Reform program, the Government of Puerto Rico selects, through a bidding system, one
private health insurance company in each of several designated regions of Puerto Rico and
pays such insurance company the insurance premiums for each eligible beneficiary within
such region. The municipality of Caguas pays $7.8 million to the Puerto Rico’s Health
Administration, as required by law, to cover part of the insurance premium paid by the
Government of Puerto Rico for its citizens. Caguas participates in this program not only as a
health provider, through its facilities, but also as an Independent Provider Association (IPA)
sharing with insurers the health insurance risk.
The health services industry had been one of the fastest growing sectors in Caguas. During
fiscal year 2011, HIMA San Pablo Hospital almost completed the construction of a modern
medical facility for cancer treatment, parking lot facilities and a new medical office building.
19
As of June 30, 2012
Education: The Interamerican University of Puerto Rico (IU), established a new facility in
Caguas during 2012. It is expected that the IU will start its operations in January 2013 for
the upcoming semester that begins in August 2013. Other technical-university colleges
eagerly compete to attract more students to their classrooms. The tendency of students
coming to Caguas represents a new governmental challenges and socio-economic
opportunities.
Trade (retail and wholesale): The trade sector is the strongest growing sector in the area.
Many major national chains such as Wal-Mart, Costco, Walgreen’s, Best Buy, Home Depot,
and Office Depot have expanded into the area, helping maintain relatively stable levels of
consumer spending.
Construction: The constructions in the private sector, an important source for the
economic growth, stabilized during 2012. Employment and gross receipts in construction
had a minor increase as a result of the construction of a Superior Court Building and
Facilities. The inventories of new homes were reduced during the year as a result of a state
tax incentive law to stimulate the sale of residential properties.
The most recent developments such as “Nuevo Centro de Gobierno”, “Centro Interactivo de
Ciencias, Matemática y Tecnología” (C3Tec), and other developments mentioned above,
play an important role in education and the local economy.
Budget Highlights for the Fiscal Year Ending June 30, 2013
Governmental Activities: A budget decrease of $3 million, approximately, is expected
during the fiscal year 2012-2013. Property taxes (benefiting from residential and industrial
developments), city tax, and revenues from permits and fees are expected to remain the
same as prior year projections (without considering any inter-fund transfer). However
intergovernmental funds would experiment a reduction due to a decrease in contribution in
lieu of taxes from the Electric Power Authority. The Municipality will use these increases in
revenues to finance programs currently in place.
Budgeted expenditures in the General Fund are expected to decrease by 3% as per prior
year results. Conservation and environmental are the lead departments that have the
reductions.
Requests for Information
This report is designed to provide an overview of the Municipality’s finances for those with
an interest in this area. Questions concerning any of the information found in this report or
requests for additional information should be directed to: Municipality of Caguas, Office of
the Mayor, P.O. Box 907, Caguas, Puerto Rico, 00726-0907, or http://www.caguas.gov.pr.
20
Statement of Net Assets
As of June 30, 2012
BASIC FINANCIAL STATEMENTS
21
As of June 30, 2012
22
AUTONOMOUS MUNICIIPALITY OF CAGUAS
As of June 30, 2012
Governmental
Activities
Business-Type
Activities
26,590,269
4,464,156
67,708,496
1,549,158
—
—
2,919,997
10,653,800
3,107,757
1,357,119
15,243,885
20,043
190,342
221,837
337,312
128,037
132,943,050
—
—
—
—
—
—
—
—
(337,312)
—
1,211,846
28,139,427
4,464,156
67,708,496
—
2,919,997
10,653,800
3,107,757
1,357,119
15,243,885
20,043
190,342
221,837
—
128,037
134,154,896
13,274,841
828,542
2,131,385
63,938,488
454,726,335
534,899,591
667,842,641
—
800,060
—
—
23,147,188
23,947,248
25,159,094
13,274,841
1,628,602
2,131,385
63,938,488
477,873,523
558,846,839
693,001,735
Total
Assets
Current assets:
Cash and cash equivalents
Investments
Cash with fiscal agent
Accounts receivable:
Property tax
Volume of business tax, net
Sales taxes, net
Intergovernmental
Federal grants
License and permits
Rent, net
Other accounts
Internal balances
Deferred debt issue costs
Total current assets
Non-current assets:
Restricted cash and investments
Loans receivable, net
Deferred debt issue costs
Capital assets, net of accumulated depreciation
Total non-current assets
Total assets
$
$
(Continued)
See notes to financial statements.
23
As of June 30, 2012
Governmental
Activities
Business-Type
Activities
7,170,885
1,158,823
4,628,080
24,055,978
6,143,924
5,264,392
14,396,314
1,305,966
40,261
904,334
26,957
—
—
—
—
—
3,593
—
—
—
7,197,842
1,158,823
4,628,080
24,055,978
6,143,924
5,264,392
14,399,907
1,305,966
40,261
904,334
Total current liabilities
65,068,957
30,550
65,099,507
Non current liabilities net of current portions:
Bonds, notes payable and special loans
Accrued compensated absences
Accrued legal claims
Due to other governments
254,963,263
12,994,812
1,853,680
4,673,696
—
—
—
—
254,963,263
12,994,812
1,853,680
4,673,696
Total non-current liabilities
274,485,451
—
274,485,451
Total liabilities
339,554,408
30,550
339,584,958
349,783,021
23,147,188
372,930,209
3,575,086
159,078
286,498
19,813,194
—
—
—
—
3,575,086
159,078
286,498
19,813,194
3,584,482
(48,913,126)
—
1,981,356
3,584,482
(46,931,770)
328,288,233
25,128,544
353,416,777
667,842,641
25,159,094
693,001,735
Total
Liabilities and Net Assets
Current liabilities:
Accounts payable
Accrued liabilities
Accounts payable from restricted assets
Volume of business tax deferred revenue
Deferred federal grant revenue
Accrued interest payable
Bonds, notes payable and special loans
Due to other governments
Advance deposits
$
Net assets:
Invested in capital assets, net of related debt
Restricted for:
Housing programs
Food and children programs
Capital projects
Debt service
Other special purposes, mainly for health,
education and construction projects
Unrestricted
Total net assets
Total liabilities and net assets
$
(Concluded)
See notes to the financial statements.
24
Functions/Programs
Governmental activities:
General government
Public safety
Public works
Health and welfare
Housing
Education
Unallocated interest
Total governmental activities:
Business-type activities:
Multitenant
Total business-type activities:
Expenses
$
$
$
$
Charges for
Services
Statement of Activities
Revenues
Operating
Grants and
Contributions
Net (Expense) Revenue and Changes in Net Assets
Capital Grants
and Contributions
46,853,541
11,060,805
30,008,248
6,584,416
17,995,172
6,765,876
11,907,765
16,298,783
16,931,864
10,676,171
175,082,641
105,238
588,401
—
122,987
—
1,787,815
—
37,445
—
—
2,641,886
—
903,621
—
—
947,491
3,419,077
10,889,573
266,687
15,036,805
—
31,463,254
—
—
2,524,865
—
—
—
—
—
—
—
2,524,865
90,145
457,762
547,907
24,816
31,354
56,170
—
—
—
—
—
—
General revenue:
Property taxes
Sales taxes
Intergovernmental
Gain on sale of capital assets
Other
Total general revenues
Transfers in (out)
Changes in net assets
Net assets - beginning (as previously reported)
Net assets - beginning (as restated)
Net assets - ending
Governmental
Activities
(46,748,303)
(9,568,783)
(27,483,383)
(6,461,429)
(17,047,681)
(1,558,984)
(1,018,192)
(15,994,651)
(1,895,059)
(10,676,171)
(138,452,636)
—
—
—
$
$
56,891,271
24,084,347
20,187,076
14,333,905
5,453,189
834,404
95,807
852,095
122,732,094
263,993
(15,456,549)
344,797,729
(1,052,947)
343,744,782
328,288,233
Business-Type
Activities
—
—
—
—
—
—
—
—
—
—
—
Total
(46,748,303)
(9,568,783)
(27,483,383)
(6,461,429)
(17,047,681)
(1,558,984)
(1,018,192)
(15,994,651)
(1,895,059)
(10,676,171)
(138,452,636)
(65,329)
(426,408)
(491,737)
(65,329)
(426,408)
(491,737)
—
—
—
—
—
1,703
—
(256,395)
(254,692)
(263,993)
(1,010,422)
26,241,488
(102,522)
26,138,966
25,128,544
56,891,271
24,084,347
20,187,076
14,333,905
5,453,189
836,107
95,807
595,700
122,477,402
—
(16,466,971)
371,039,217
(1,155,469)
369,883,748
353,416,777
(Concluded)
25
Assets
Investments
Property tax receivable
Volume of business tax receivable, net
Sales taxes receivable, net
Intergovernmental receivables
Federal grants receivable
Due from other funds
License and permits receivable
Rent receivable, net
Other accounts receivable
Total assets
General
$ 26,590,269
—
—
—
10,653,800
3,107,757
591,661
—
16,541,303
20,043
167,512
—
$ 57,672,345
Housing and
Rental
Program
Public
Residential
Administration
Head Start
Food and
Children
Program
Capital
Project
Debt
Service
Legislative
Other
Governmental
Funds
2,149,439
—
—
—
—
—
—
2,384,556
—
—
—
57,185
4,591,180
699,513
—
—
—
—
—
—
98,400
—
—
—
—
797,913
489,199
—
—
—
—
—
—
7,041,208
—
—
—
2,881
7,533,288
2,361,059
30,153,970
4,464,156
—
—
—
80,318
5,077,488
—
—
—
—
42,136,991
—
35,052,972
—
2,919,997
—
—
—
—
—
—
—
—
37,972,969
1,477,555
—
—
—
—
—
—
—
—
—
—
—
1,477,555
6,098,076
2,501,554
—
—
—
—
685,140
642,233
—
—
22,830
161,771
10,111,604
Total
Governmental
Funds
39,865,110
67,708,496
4,464,156
2,919,997
10,653,800
3,107,757
1,357,119
15,243,885
16,541,303
20,043
190,342
221,837
162,293,845
(Continued)
26
Liabilities and Fund Balances
Liabilities:
Accounts payable and accrued
liabilities
Bonds and notes payable
Interest payable
Due to other funds
Deferred volume of business tax
Deferred sales taxes revenue
Deferred federal grant revenues
Other deferred revenues
Advance deposits
Total liabilities
Public
Residential
Administration
7,170,885
—
—
—
30,275,232
1,669,414
—
713,812
904,334
40,733,677
480,442
—
—
535,652
—
—
2,341,675
55,194
—
3,412,963
171,636
—
—
626,277
—
—
—
—
—
797,913
—
1,178,217
—
—
—
—
3,993,401
2,453,824
10,491,443
16,938,668
57,672,345
General
$
Fund balances:
Restricted for housing programs
Restricted for youth and children
programs
Restricted for debt service
Restricted for capital projects
Restricted for special projects
Commited
Assigned
Unassigned
Total fund balances
Total liabilities and fund balances
Housing and
Rental
Program
$
Head Start
Food and
Children
Program
Other
Governmental
Funds
Total
Governmental
Funds
Capital
Project
Debt
Service
357,694
—
—
872,592
—
—
6,143,924
—
—
7,374,210
2,380,655
—
—
9,804,798
—
—
5,077,488
41,528
—
17,304,469
—
12,895,383
5,114,581
—
—
—
—
—
—
18,009,964
47,606
—
—
1,388,396
—
—
—
—
—
1,436,002
1,190,047
—
—
2,976,276
—
—
642,233
685,000
—
5,493,556
11,798,965
12,895,383
5,114,581
16,203,991
30,275,232
1,669,414
14,205,320
1,495,534
904,334
94,562,754
—
—
—
—
—
—
1,178,217
—
—
—
—
—
—
—
1,178,217
—
—
—
—
—
—
—
—
159,078
—
—
—
—
—
—
159,078
—
—
24,832,522
—
—
—
—
24,832,522
—
19,963,005
—
—
—
—
—
19,963,005
—
—
—
41,553
—
—
—
41,553
—
—
—
4,618,048
—
—
—
4,618,048
159,078
19,963,005
24,832,522
4,659,601
3,993,401
2,453,824
10,491,443
67,731,091
4,591,180
797,913
7,533,288
42,136,991
37,972,969
1,477,555
10,111,604
162,293,845
Legislative
(Concluded)
27
Reconciliation of Fund Balance of Governmental
Funds to Net Assets of Governmental Activities
As of June 30, 2012
Fund balance per governmental funds
$
67,731,091
Amounts reported for governmental activities in the statements of net
assets are different because:
Capital assets used in governmental activities are not financial
resources and not reported in funds.
518,664,823
Other long-term liabilities, such as accrued compensated absences,
litigations and other contingencies are not available to pay for current
year expenditures and therefore are not reported in the funds:
Compensated absences
Legal claims
Christmas bonus
Long term receivable
Due to other governmental agencies
Accrued interest
(14,300,778)
(1,853,680)
(1,158,823)
828,542
(4,713,957)
(149,811)
Deferred debt issuance cost amortized during the life of debt, are not
financial resources.
2,259,422
Other economic resources not available to pay current year
expenditures, but collectible after the period of availability, are not
reported in the funds.
17,445,598
General obligation bonds, special and federal loans are not due and
payable in the current period and therefore not reported in the funds.
(256,464,194)
Net assets of governmental activities
$
328,288,233
28
$
Expenditures:
General government
Public safety
Public works
Health and welfare
Housing
Education
Capital outlays
Debt service payments:
Principal
Interest
Total expenditures
Excess (deficiency) of revenue
over (under) expenditures
$
Head Start
Food and
Children
Program
Housing and
Rental
Program
Public
Residential
Administration
33,805,696
24,446,587
17,190,954
5,453,189
1,069,249
588,401
667,310
14,333,905
105,238
1,558,200
37,445
531,324
99,787,498
—
—
—
—
9,043,960
—
5,362
—
—
—
—
2,112
9,051,434
—
—
—
—
1,181,222
—
345
—
—
—
—
—
1,181,567
—
—
—
—
13,533,177
—
647
—
—
—
—
12,507
13,546,331
—
—
—
—
3,611,766
—
116,650
1,234,331
—
102,247
—
121,927
5,186,921
23,085,575
—
2,844,899
—
—
—
38,483
—
—
—
—
—
25,968,957
—
—
—
—
—
—
1,906
200,000
—
—
—
—
201,906
—
—
—
—
3,083,634
—
3,701
1,675,057
—
127,368
—
448,670
5,338,430
56,891,271
24,446,587
20,035,853
5,453,189
31,523,008
588,401
834,404
17,443,293
105,238
1,787,815
37,445
1,116,540
160,263,044
37,172,806
9,588,248
12,334,447
5,972,996
12,103,366
2,444,411
1,011,189
15,790,403
2,256,092
1,911,270
—
—
—
—
—
—
9,260,791
—
—
100,064
—
—
—
—
—
—
1,153,260
—
—
28,307
—
—
—
—
—
—
—
—
13,201,610
329,187
—
—
4,843,901
9,873
—
1,306,288
292,014
—
113,915
4,738,754
—
—
—
—
—
—
—
—
—
—
—
—
244,625
—
—
27,944
—
—
—
151,833
1,238,408
362,033
2,093,882
125,810
633,787
77,083
286,483
141,079
985,289
13,786,523
38,411,214
9,950,281
19,516,855
6,108,679
12,737,153
3,855,726
12,003,737
15,931,482
16,556,906
21,045,938
247,606
106,632
100,939,466
—
—
9,360,855
—
—
1,181,567
—
—
13,530,797
670,000
108,254
12,082,999
14,623,735
10,449,145
25,072,880
—
—
424,402
—
—
19,730,377
15,541,341
10,664,031
182,323,343
(1,151,968)
(309,421)
—
15,534
(6,896,078)
896,077
(222,496)
(14,391,947)
(22,060,299)
General
Revenues:
Property taxes
Sales tax
Federal grants
Fines and penalties
Intergovernmental
Parking lot fees
Rent and other services
Solid waste disposal
Other
Total revenues
Statements of Revenues, Expenditures and Changes
in Fund Balance -Governmental Funds
Capital
Project
Debt
Service
Legislative
Other
Governmental
Funds
Totals
(Continued)
29
Housing and
Rental
Program
Public
Residential
Administration
Head Start
Food and
Children Program
(1,151,968)
(309,421)
—
15,534
(6,896,078)
896,077
(222,496)
(14,391,947)
(22,060,299)
—
13,325,000
(13,325,000)
14,629,108
(6,467,457)
8,161,651
7,009,683
—
—
—
—
—
—
(309,421)
—
—
—
—
—
—
—
—
—
—
—
—
—
15,534
18,530,000
—
—
—
—
18,530,000
11,633,922
—
—
6,463,957
(14,629,108)
(8,165,151)
(7,269,074)
—
—
—
—
—
—
(222,496)
13,590,000
—
—
270,877
(3,384)
13,857,493
(534,454)
32,120,000
13,325,000
(13,325,000)
25,981,726
(25,717,733)
32,383,993
10,323,694
9,574,514
354,471
9,928,985
1,487,638
—
1,487,638
—
—
—
143,544
—
143,544
13,600,623
(402,023)
13,198,600
27,232,079
—
27,232,079
781,464
(517,415)
264,049
5,360,582
(208,080)
5,152,502
58,180,444
(773,047)
57,407,397
16,938,668
1,178,217
—
159,078
24,832,522
19,963,005
41,553
4,618,048
67,731,091
General
Excess (deficiency) of revenues
over expenditures
$
Other financings sources (uses)
Debt issuances
Debt refundings
Debt refundings
Transfer in
Transfer out
Other financing sources, net
Net change
Fund balances at beginning of year
(as previously reported)
Restatement
Fund balances at beginning of year (as restated)
Fund balances at end of year
$
Statements of Revenues, Expenditures and Changes
in Fund Balance -Governmental Funds
Capital
Project
Debt
Service
Legislative
Other
Governmental
Funds
Totals
(Concluded)
30
Reconciliation of the Statements of Revenues
Expenditures and Changes in Fund Balances
Governmental Funds to the Statement of Activities
Net change in fund balance - total governmental funds
$
10,323,694
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statements of activities, the cost of those assets is allocated over their
estimated useful lives as depreciation expense. This is the amount by which
depreciation expense ($27,763,930) exceeded capital outlays $21,045,938 in
(6,717,992)
the current period.
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenue in the governmental funds.
(855,295)
Debt and advances proceeds provide current financial resources to
governmental funds, but issuing debt and advances increases long-term
liabilities in the statement of net assets. Repayment of debt principal is an
expenditure in the governmental funds, but the repayment reduces long -term
liabilities in the statement of net assets. This is the amount by which net
proceeds ($32,120,000) exceeded principal expenditures $15,541,341.
(16,578,659)
Collections on long term receivables are revenues in the governmental funds,
but reduced receivable balance in the statement of net assets.
(141,458)
Debt issuance costs are expenditures to governmental funds, but are deferred
assets in the statements of net assets. This is the amount of debt issue costs for
the year.
(15,774)
Some expenses reported in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
the governmental funds. This is the amount by which the net increases in net
gain on disposition of capital assets $95,807 and accrued interest $3,634 were
exceeded by the net increase in compensated absences $1,297,608, legal claims
(1,471,065)
$115,377, and debt to other governmental agencies of $157,521.
Change in net assets of governmental activities
$
(15,456,549)
31
As of June 30, 2012
Community
Development
Bank
Multitenant
Buildings
Totals
Assets
Current assets:
Total current assets
$
359,088
359,088
1,190,070
1,190,070
1,549,158
1,549,158
800,060
—
800,060
—
3,937,554
3,937,554
—
19,968,600
19,968,600
Total assets subject to depreciation
Less: Accumulated depreciation
—
—
19,968,600
(758,966)
19,968,600
(758,966)
—
23,147,188
23,147,188
800,060
23,147,188
23,947,248
1,159,148
24,337,258
25,496,406
Non current assets:
Loans receivable, net
Capital assets:
Capital assets, net
Total non current assets
Total assets
$
(Continued)
32
As of June 30, 2012
Community
Development
Bank
Multitenant
Buildings
Totals
Liabilities and Net Assets
Liabilities:
Current liabilities:
Notes payable
Due to other fund
Accounts payable and accrued liabilities
$
Total liabilities
Net assets:
Investments in capital assets, net
Unrestricted
Total net assets
Total liabilities and net assets
$
3,593
324,624
—
—
12,688
26,957
3,593
337,312
26,957
328,217
39,645
367,862
—
830,931
23,147,188
1,150,425
23,147,188
1,981,356
830,931
24,297,613
25,128,544
1,159,148
24,337,258
25,496,406
(Concluded)
33
Operating revenue:
Rent interests and loan origination fees
Total operating revenue
Operating expenses:
Depreciation
Bad debt expense
Other
Statements of Revenues, Expenses and Changes
In Net Assets, Proprietary Funds
$
Total operating expenses
Operating loss
Non-operating revenue (expense):
Interest income
Other
Total non-operating revenue (expense)
Tranfer out
Multitenant
Buildings
24,816
24,816
31,354
31,354
56,170
56,170
—
83,272
6,873
457,762
—
—
457,762
83,272
6,873
90,145
457,762
547,907
(65,329)
(426,408)
(491,737)
—
35,978
1,703
(292,373)
1,703
(256,395)
35,978
(290,670)
(254,692)
(263,993)
(263,993)
(29,351)
(981,071)
(1,010,422)
962,804
(102,522)
860,282
830,931
25,278,684
—
25,278,684
24,297,613
26,241,488
(102,522)
26,138,966
25,128,544
—
Changes in net assets
Net assets at beginning of fiscal year
Net assets at beginning of fiscal year (as restated)
Net assets at end of fiscal year
Community
Development
Bank
$
Totals
34
Statements of Cash Flows Proprietary Funds
As of June 30, 2012
Community
Development
Bank
Cash flows from operating activities:
Collection of loans
Cash collected from interest
Cash collected from customers
Payments to suppliers and professional services
Net cash provided by operating activities
$
82,083
24,816
31,354
(6,873)
131,380
—
—
(533,712)
1,301,735
(533,712)
1,301,735
—
768,023
768,023
—
1,703
1,703
100,026
259,062
359,088
801,080
388,990
1,190,070
901,106
648,052
1,549,158
$
(65,329)
—
83,272
82,083
(426,408)
457,762
—
—
(491,737)
457,762
83,272
82,083
$
100,026
31,354
131,380
Cash flows from investing activities:
Interest income and net cash provided
by investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of fiscal year
Cash and cash equivalents at end of fiscal year
Reconciliation of operating income (loss) to net
cash provided by operating activities:
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Operating loss
Depreciation
Bad debt expense
Decrease in loans receivable
Net cash provided by operating activities
Totals
—
—
31,354
—
31,354
Cash flows from non-capital financing activities:
Principal payments on notes payable
Decrease in loan due to general fund
Net cash provided by
non-capital financing activities
$
82,083
24,816
—
(6,873)
100,026
Multitenant
Buildings
Supplementary Cash Flow Information
The Municipality restated the Community Development Bank cash and loan receivables
balance at July 1, 2011 for $102,522.
35
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Autonomous Municipality of Caguas (the Municipality), was founded in 1775, and
operates as a governmental unit of the Commonwealth of Puerto Rico under the Law No. 81
of August 30, 1991, known as the “Autonomous Municipalities Laws of the Commonwealth
of Puerto Rico”. It is governed by a Mayor and a 16 member Municipal Legislature elected
for a four-year term. The Municipality provides services to its residents in the areas of
health, public works, education, public safety, urban development, economic development,
culture and recreation, and other general and administrative services.
The accompanying financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America.
Financial Reporting Entity
In evaluating how to define the Municipality for financial reporting purposes, management
has considered all potential component units. The decision to include a potential
component unit in the reporting entity was made by applying the provisions of Statement
No. 14 of the Governmental Accounting Standards Board (GASB) as amended by GASB No.
39, “Determining whether Certain Organizations are Component Unit” – and amendment of
GASB Statement No. 14. The basic, but not the only criteria for including a potential
component unit within the reporting entity, is if elected officials of a primary government
are financially accountable for the entity. Financial accountability exists if the primary
government appoints a voting majority of the entity’s governing body and if either one of
the following conditions exist; the primary government can impose its will on the other
entity or the potential exists for the other entity to (1) provide specific financial benefits to
or (2) impose specific financial burdens on the primary government. A second criteria used
in evaluating potential component units is if the nature and significance of the relationship
between the entity and a primary government are such that to exclude the entity from the
financial reporting entity would render the financial statements misleading or incomplete.
GASB No. 39 provided additional guidance to determine whether certain organization for
which the primary government is not financially accountable should be reported as
components units. A legally separate, tax-exempt organization should be discretely
presented as a component unit if all of the following criteria are met: (a) the economic
resources received or held by the separate organization are entirely or almost entirely for
the direct benefit of the primary government, its component units, or its constituents; (b)
the primary government, or its component units, is entitled to, or has the ability to
otherwise access, a majority of the economic resources received or held by the separate
organization, and; (c) the economic resources received or held by an individual organization
that the specific primary government, or its component units, is entitled to, or has the
ability to otherwise access, are significant to the primary government.
36
There are two methods for presentation of the component unit in the financial statements:
blending – the financial data of the component unit’s balances and transactions in a manner
similar to the presentation of the Municipality’s balance; and discrete – presentation of the
component unit’s financial data in column separate from the Municipality’s balances and
transactions.
The relative importance of each criterion must be evaluated in light of specific
circumstances in order to determine which component units are to be included as part of
the reporting entity. Our specific evaluations of the criteria applicable to the Municipality
indicate no organizations meet the criteria to be included as component units. Accordingly,
these basic financial statements present only the Municipality as the reporting entity.
These financial statements present the respective financial position of the governmental
activities, business-type activities, each major fund, and the aggregate remaining fund
information of the Municipality, as of June 30, 2012, and the respective changes in financial
position, where applicable, thereof for the fiscal year then ended. Based on the above
criteria the Municipality does not have component units to include within its reporting
entity.
GASB No. 34 established two bases for reporting financial information: government-wide
financial statements and fund presentation. The government-wide financial statements
method adopts the flow of economic resources measurement focus and accrual basis of
accounting for both governmental activities and business-type activities. The basis for
preparing fund financial statements is similar to conventional governmental financial
statements except for the focus for presentation is on major funds rather than on fund
types. Capital assets, including infrastructure assets, and depreciation charges are reported
on the entity–wide perspective financial statements. The management’s discussion and
analysis information precedes the basis financial statements but is considered required
supplementary information.
Government –Wide Financial Statements:
The focus of the government wide financial statements is on the overall financial position
and activities of the Municipality as a whole. The government wide financial statements
present the following:

Financial information about the overall government without presenting information
about the individual funds or fund types.

Differentiate between the Municipality’s governmental activities and business type
activities.

Measure and present all financial balances and activities based on the economic
resources measurement focus and the accrual basis of accounting.
37
The flow of economic resources measurement and accrual accounting are the basis upon
which government-wide financial statements are prepared. Under the flow of economic
resources measurement focus and accrual basis of accounting, revenues are recognized
when earned and expenses are recognized when incurred when these activities are related
to exchange and exchange like activities. In addition, long-lived assets are capitalized and
depreciated over their estimated economic lives.
The government–wide financial statements include the Statement of Net Assets and the
Statement of Activities:
Statement of Net Assets:
Presentation of assets and liabilities – Assets and liabilities are presented in the
statement of net assets using a classified approach which distinguishes between all
current and long term assets and liabilities.
Presentation of capital assets – The governmental entity should report all of its capital
assets in the statement of net assets, based on their original historical cost. Capital
assets that have been donated should be capitalized at their estimated fair value at the
date of the receipt.
Presentation of long-term liabilities – Long-term liabilities include debts such as bonds,
notes, and federal loans. In addition, operating liabilities such as compensated absences
and claims must be reported in the statement of net assets.
Presentation of component of net assets – Net assets represent the difference between
the Municipality’s total assets and its total liabilities. The statement of net assets must
identify the components of the net assets, namely (a) invested in capital assets, net of
related debt; (b) restricted net assets; and (c) unrestricted net assets.
Invested in capital assets, net of related debt is the difference between capital assets (net of
accumulated depreciation) and liabilities attributable to the acquisition, construction or
improvement of those assets.
Restricted net assets arise if either of the following conditions exists: (a) externally imposed
by creditor, grantors, contributors or laws and regulations of other governments or (b)
imposed by law through constitutional provisions or enabling legislation.
Assets that are not classified as invested in capital assets (net of related debt) or restricted
are included in the category of unrestricted net assets.
38
Statement of Activities:
Revenues and other financing inflows – A fundamental concept in the presentation of
the statement of activities is the identification of resources inflows to the Municipality
that are related to specific programs and those that are general in nature. Revenues are
divided in program revenues and general revenues.
Program revenues – Program revenues are those that are identified with a specific
function, otherwise the revenues would not flow to the Municipality. As established
before, program revenues are presented in the statement of activities as a subtraction
of related program expenses in order to identify the net cost or benefit of a particular
program. Program revenues are divided in charges for services, operating grants and
contributions and capital grants and contributions.
General revenues – General revenues included resources that are not specifically
related with a specific function, but that are used in the operation of the Municipality.
Expenses – The Municipality reports expenses, including depreciation expense by
function. Direct expenses are those that are specifically associated with a service,
program or department and are clearly identifiable to a particular function.
Generally, the cost (net of estimated salvage value) of capital assets should be
depreciated over their estimated useful lives. Depreciation expense is reported as direct
expense of the specific functional category with which the related capital asset has
relationship.
Fund Financial Statements:
Fund based financial statements are included in order to demonstrate that restrictions
imposed by statutes, regulations, or contracts have been followed. The Municipality has the
following major funds:
Governmental Funds – These financial statements have a short term emphasis and
generally measure and account for cash and other assets that can easily be converted to
cash and are used to account for the Municipality’s expendable financial resources and the
related liabilities. The measurement focus is upon determination of any changes in financial
position. The Municipality’s major funds are the following:
General Fund
The general fund is used to account for all financial transactions, except those required
to be accounted for in another fund.
39
Housing and Rental Program
Accounts for current financial resources restricted mainly for housing rental programs to
low and very low income family. Resources are funded by the United States Department
of Housing and Urban Development, mainly through the Section 8 Housing Voucher and
Home Investment Partnership Programs.
Public Residential Administration
On March 26, 2003, the Municipality entered into an Intergovernmental Management
Agreement (the Agreement), with the Puerto Rico Public Housing Administration
(PRPHA). The purpose of the Agreement was to designate the Municipality to act as
independent contractor for the PRPHA to manage, administer and operate the low
income housing project denominated as Jose Gautier Benitez (the Project), under the
United States Housing Act of 1937, as amended. The Project is located at State Road No.
1, behind Villa del Carmen Shopping Center in Caguas, Puerto Rico.
As part of the Agreement, the Municipality submits, on the 1st day of February of each
year, an Annual Management Plan in which it delineates its proposed budgets for the
year and any work to be performed in the Project.
Head Start Food and Children Program
Accounts for current financial resources restricted for the education of pre-school aged
children that are mainly funded by the United States Department of Health and Human
Services and the United States Department of Agriculture. It also accounts the grants
and donated food to maintain a food service program for eligible children and adults in
nonresidential day care centers.
Capital Project
Capital projects fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities, other than those financed by
proprietary funds. It also includes the Community Development Block Grants (CDBG)
which are awarded to develop viable urban communities by providing decent housing
and suitable living environment for persons of low and moderate income.
Debt Service
The debt service fund is used to account for the accumulation of resources for, and the
payment of, general long-term debt principal, interest and related costs.
40
Legislative
The legislative funds account the accumulation of resources approved by the Legislature
of the Commonwealth of Puerto Rico designated for the investment of such in special
projects related mainly with health and welfare, public works, economic development
and others as requested by the Municipality’s citizenship.
Other Governmental Funds
It was previously reported as Other Special Revenue funds. Current financial resources
used to account for the proceeds of specific revenue sources (other than debt service or
capital projects) such as federal grants, that are legally restricted to expenditures for
various specified purposes.
The financial statements of the governmental funds are the following:
Balance Sheet – Reports information at June 30, 2012 about the current financial
resources (assets, liabilities and fund balances) of each major governmental fund.
Statement of Revenues, Expenditures and Changes in Fund Balance – Reports
information about the inflows, outflows and balances of current financial resources of
each major governmental fund for the fiscal year ended June 30, 2012.
Proprietary Funds – Financial statements for proprietary funds are based on the flow of
economic resources (measurement focus) and the accrual basis of accounting. They are
used to account for activities, which are similar to operations in the private sector. The
proprietary fund type consists of enterprise funds.
Enterprise Funds
The enterprise funds are used to account for operations that are financed and operated in a
manner similar to private business enterprises where the intent is that the cost of providing
goods and services (including depreciation) be financed or recovered primarily through user
charges, or where the Municipality has decided that periodic determination of revenues
earned and expenses incurred is appropriate.
The Municipality includes as operating transactions in the enterprise funds any activity
undertaken in the course of ordinary business, as well as ancillary activities or activities that
are a natural extension of, or that result from, these activities. Transactions resulting from
events or transactions clearly distinct from the ordinary activities and which are not
expected to occur frequently or regularly are reported as non-operating transactions.
Each enterprise fund has the option under GASB No. 20 Accounting and Financial Reporting
for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund
Accounting, to elect and apply all Financial Accounting Standard Board (FASB)
41
pronouncements issued after November 30, 1989, unless this conflict with a GASB
pronouncement. The enterprise fund within the Municipality has elected to apply FASB
pronouncements issued after November 30, 1989. The Municipality’s enterprise funds
follows:
Community Development Bank – This enterprise fund, accounts for the economic
resources designated mainly for the approval of loans for economic development in the
benefit of the Caguas citizenship.
Multitenant Buildings – Accounts the deposit of rental resources designated for the
Municipality’s normal operation other than those functions accounted in the general
fund.
The financial statements of the proprietary funds are the following:
Statement of Net Assets – Assets and liabilities are presented in a classified format to
distinguish between current and long term assets and liabilities.
Statement of Revenues, Expenses and Changes in Net Assets – Revenues and expenses
are reported by distinguishing between operating and non-operating revenues and
expenses.
Statement of Cash Flows – The primary purpose of the statement of cash flows is to
provide relevant information about the cash receipts and disbursements of the
Municipality during the fiscal year. The information of the statement of cash flows
should help financial report users assess (a) the Municipality’s ability to generate future
net cash flows; (b) ability to meet its obligation as they come due; (c) its needs for
external financing; (d) the reasons for differences between operating income and
associated cash receipts and disbursements and the effects on the entity’s financial
position of operating, capital and related financing activities, non-capital related
financing activities and investment activities during the period.
Basis of Accounting
The basis of accounting determines when the Municipality recognizes revenues and
expenditures/expenses and related assets and liabilities. Governmental fund types follow
the modified accrual basis of accounting. Under this basis of accounting, revenues and other
governmental fund financial resource increments are recognized in the accounting period in
which they become susceptible to accrual - that is, when they become both measurable and
available to finance expenditures of the fiscal period. Available is defined as economic
resources which are collectible within the current period, or soon enough thereafter to be
used to pay liabilities of the current period. The Municipality has defined this period to be
no later than sixty days for municipal taxes, and up to ninety days for other financing
resources including bond issuance and loan proceeds.
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In applying the susceptible to accrual concept to governmental revenues, there are
essentially two types of revenues. In one, monies must be expended on the specific purpose
or project before any amounts will be paid to the Municipality; therefore, revenues are
recognized based upon the expenditures incurred. In the other, monies are virtually
unrestricted and are usually revocable only for failure to comply with prescribed compliance
requirements. These resources are reflected as revenues at the time of receipt or earlier if
the susceptible to accrual criteria are met.
The Municipality reports deferred revenue on its balance sheet. Deferred revenue arises
when potential revenue does not meet both the measurable and available criteria for
recognition in the current period. Deferred revenue also arises when the Municipality
receives resources before it has a legal claim to them, as when grant monies are received
prior to the incurrence of qualifying expenditures.
In subsequent periods, when both revenue recognition criteria are met, or when the
Municipality has a legal claim to the resources, the liability for deferred revenues is
removed from the balance sheet and revenue is recognized.
Licenses, permits, service charges, fines and forfeits and miscellaneous revenues are
recorded as revenues on the cash basis. Investment income is recorded as revenue when
earned. Expenditures and related liabilities are generally recorded, except as described
below, in the accounting period in which the liability is incurred. Expenditures and related
liabilities for interest on long-term obligations, are recorded when due, except for interest
due July 1st of the following year which is accounted for as paid on June 30. Vacation, sick
leave, disallowances and litigation are recorded in the statement of net assets.
The enterprise fund follows the accrual basis of accounting. Under the accrual basis,
revenue is recognized when earned and expenses are recorded as liabilities when incurred,
without regard to receipt or payment of cash, respectively. The enterprise funds also
distinguish operating revenue and expenses from non operating items. Operating revenue
and expenses generally results from providing services and producing and delivering goods
in connection with a proprietary fund’s principal ongoing operation. Revenue and expenses
not meeting this definition are reported as non-operating revenue and expenses.
Budgetary Accounting
The Municipality’s annual budget is prepared on the budgetary basis of accounting and
represents departmental appropriations recommended by the Mayor and approved by the
Municipality’s City Council prior to the beginning of the fiscal year. Budgetary control is
maintained at the department level for each individual appropriation. Amendments to the
budget, and budgetary transfers related to personal expenditures, require the approval of
the City Council. Non-capital encumbrances lapse at the end of the next fiscal year.
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The annual budget, which is developed utilizing elements of program budgeting, includes an
estimate of revenues and other resources for the fiscal year.
For budgetary purposes, encumbrances accounting is used. The encumbrances (that is,
purchases orders and contracts) are considered expenditures when a commitment is made.
For GAAP reporting purposes, encumbrances outstanding at year-end are reported as
reservations of budgetary appropriations within GAAP fund balance and do not constituted
expenditures or liabilities on a GAAP basis because the commitments will be honored during
the subsequent year.
Please refer to the Schedule of Revenues and Expenditures Budget and Actual – General
Fund Non GAAP Budgetary Basis in page 84.
Cash and Investments
Substantially all cash balances are commingled in a deposit and checking accounts,
certificates of deposits and several special purpose bank accounts, except for cash and
investments restricted by law. Each fund records its equity interest in the pooled cash
balance. The available cash balance in the general checking account beyond immediate
needs is invested in interest bearing deposits. Investment earnings are all credited to the
general fund. Cash and cash equivalents include investments with original maturities of
ninety days or less from the date of acquisition, which also applies for the enterprise funds.
Investments are carried at fair value. Investments are composed of highly liquid U.S.
Treasury Securities. Changes in the market value of its investments are recorded at the
closing of the period.
Cash with fiscal agent includes property tax collections withheld by the Municipal Revenue
Collection Center (CRIM, as per its Spanish acronyms) which are restricted for the payment
of the Municipality’s general obligations through the debt service fund.
Receivables
The receivable in the general fund include predominantly amounts owed by tax payers for
volume of business tax and for the sales and use tax, net of estimated uncollectible
amounts. These items are recognized as revenue when they become measurable and
available based on actual collections during the soon enough period following the fiscal year
end related to tax returns due before year end. These receivables also include amounts
owned by taxpayers on income earned in periods prior to June 30, 2012, estimated to be
collectible but not currently available, and thus are reported as deferred revenue in the
general fund.
Accounts receivable are stated net of estimated allowances for uncollectible accounts in the
amount of $4,385,668 which are determined based upon past collection experience and
current economic conditions.
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Inter-Fund Transactions
The Municipality has the following types of transactions among funds:
Transfers – Transfers that are reported when incurred as “Transfers in” by the recipient
fund and as “Transfers out” by the disbursing fund.
Receivables and Payables – Transactions among funds outstanding at the end of the
fiscal year are referred as due to/from other funds. The general fund provides services,
at cost, to other funds. The amounts charged to other funds are treated as reductions in
expenditures of the general fund.
Eliminations are made in the government-wide statements of the amounts reported as
inter-fund receivables as well as transfers, except for the net residual amounts due between
governmental and business-type activities, which are reported as internal balances.
Capital Assets
Capital assets acquired or constructed, whether owned by governmental activities or
business-type activities are recorded and depreciated in the government-wide financial
statements. No long-term capital assets or depreciation are shown in the governmental
funds financial statements.
Capital assets, include public domain infrastructure (e.g., roads, bridges, sidewalks and
other assets that are immovable and of value only to the Municipality). Capital assets with
an individual cost of $40,000 or more are recorded at cost or estimated historical cost if
purchased or constructed. Capital assets under this amount are capitalized if the estimated
life of assets is extended by more than 25%, the cost results in an increase in the capacity of
the asset, the efficiency of the assets is increased by more than 10%, significantly changes
the character of the assets or in the case of streets and roads-if the work done impacts the
“base” structure. Donated capital assets are recorded at the estimated fair value at the date
of donation. Equipment and other with a cost of $100 or more are recorded at cost or
estimated historical cost.
The cost of normal maintenance and repairs that do not add to the value of the capital asset
or extend capital assets lives are not capitalized. Major improvements are capitalized and
depreciated over the remaining useful lives of the related capital assets. Finally, major
outlays for capital assets and improvements are capitalized as the projects are constructed.
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Capital assets are depreciated using the straight-line method over the following estimated
useful lives:
Installations and recreational parks
Building and building improvements
Infrastructure
Personal property, plaques and monuments
Software
120 to 600 months
60 to 600 months
nil to 600 months
36 to 180 months
12 to 72 months
The Municipality follows the provision of GASB Statement No. 42, Accounting and Financial
Reporting for Impairment of Capital Assets and for Insurance Recoveries – an amendment of
GASB Statement No. 34. This statement establishes guidance for accounting and reporting
for the impairment of capital assets and for insurance recoveries. The Municipality has
made such capital assets evaluation and has determined that there is no impairment of
capital assets as of June 30, 2012 to be recorded in accordance with GASB Statement No.
42.
Deferred Revenue
Deferred revenue at the governmental fund level arises when potential revenue does not
meet either the measurable or available criteria for revenue recognition in the current
period. Deferred revenue also arises when resources are received before the Municipality
has a legal claim to them as in the case of the volume of business tax which is collected on
April 15 each year, but which are available to use within the immediate following fiscal year
operations and activities. In subsequent periods, when the revenue recognition criterion is
met, or when the Municipality has a legal claim to the resources, the liability for the
deferred revenue is reclassified to revenue. Deferred revenue at the government-wide and
proprietary fund levels arises only when the Municipality receives resources before it has a
legal claim to them.
Accrued Compensated Absences
Employees accrue vacation leave at a rate of 2.5 days per month up to a maximum of 30
days. Unpaid vacation time accumulated is fully vested to the employees from the first day
of work. Employees accumulate sick leave at a rate of 1.5 days per month up to a maximum
of 90 days. Upon retirement, an employee receives compensation for all accumulated
unpaid sick leave at their then current rate of pay, if the employee has at least 10 years of
service with the Municipality. Total vested pay benefits accrued for compensated absences
at June 30, 2012 amounts to $14,300,778.
Long-term Debt
The liabilities reported in the government-wide statements include the Municipality’s
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general obligation bonds and notes for the realization of capital projects, and other longterm liabilities including vacation, sick leave, and litigation. Long term obligations financed
by proprietary fund types are recorded as liabilities in those funds. Other long term
liabilities besides the bonds, notes and special loans, as the accrued compensated absences,
and accrued legal claims are liquidated using resources from the general fund.
Premiums, discounts, and issuance costs, whenever arise, are presented in the respective
fund column and is deferred and amortized over the life of the debt. Bond issue costs are
presented as deferred charges in the government-wide financial statements while being
reported as expenditures within the fund financial statements.
Restrictions of Fund Balance
Restrictions of fund balance represent portions of fund balances that are legally segregated
for a specific future use or are not appropriable for expenditure. The Municipality has
implemented the provisions of the GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions as of July 1, 2010, in which it is required to classify and
report amounts in the appropriate fund balance classification by applying their accounting
policies that determine whether restricted, committed, assigned, and unassigned amounts
are considered to have been spent. Also this Statement provides for a non-spendable fund
balance classification which includes amounts that cannot be spent because they are either
not in spendable form or legally or contractually required to be maintained intact. These
reservations of fund balance may include, but not limited to, the following purposes:
Debt Service – Represents fund balance available to finance future debt service
payments.
Capital Projects – Represent fund balance available to finance future capital outlays and
other public works projects. Also include fund balances available to finance projects
approved by the Legislature of the Commonwealth of Puerto Rico for housing, culture
and recreation, public works, economic development and other activities requested by
the Municipality’s citizenship.
Head Start Food and Children Programs – Represents fund balances available to finance
activities of education and care of the eligible elderly population, mainly through the
Head Start, Child Care and Child Care Food federal programs.
Housing Projects – Represent fund balances available to finance activities oriented to
the housing rent, acquisition, construction and rehabilitation for the Municipality’s
eligible citizenship.
Special Projects – Represent fund balances available to finance activities which serve
different purposes as stated through donor’s imposed restrictions.
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The Municipal Legislature is the highest level of decision-making authority within the
Municipality to commit any amount within the fund balance for a specific purpose. Such
commitment requires the issuance of either an ordinance or resolution. Those committed
amounts cannot be used for any other purpose unless the Municipality removes or changes
the specified use by taking the same type of action it employed to previously commit those
amounts. If a modification or a cancellation needs to be made to any amount previously
committed, an explanatory memorandum needs to be prepared accompanying the
amended ordinance or resolution. There are instances in which public hearings might also
need to be performed.
Amounts that are constrained by the Municipality’s intent to be used for specific purposes,
but are neither restricted nor committed, are reported as assigned fund balance. The
intended use of such funds is expressed by the Municipality’s management through their
departmental budgets which are submitted to the Municipality’s Budget Office. The nature
of the actions necessary to remove or modify an assignment only requires the approval of
the Director of each department.
The Municipality has the policy to consider that committed amounts would be reduced first,
followed by assigned amounts, and then unassigned amounts as well as restricted amounts
would be reduced first followed by unrestricted amounts, when expenditures are incurred
for purposes for which amounts in any of those unrestricted fund balance classifications
could be used.
Claims and Judgments
The estimated amount of the liability for claims and judgments, which is due on demand,
such as from adjudicated or settled claims, is recorded in the general fund. The government
wide financial statements include an amount estimated as a contingent liability or liabilities
with a fixed or expected due date, which will require future available financial resources for
its payment.
Use of Estimates
The preparation of the financial statement in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the basic
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Subsequent Events
In preparing the financial statements, the Municipality’s management consider events and
transactions subsequent to June 30, 2012, that are determined to be significant and
material that should be considered for financial statement purposes. Within this process,
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management consults with its legal counsel and performs monitoring procedures over
significant receipts and disbursements and over the Municipal Legislature ordinances and
resolutions, among other procedures. In preparing these financial statements, the
Municipality has evaluated significant transactions for potential recognition or disclosure
through October 31, 2012, the date the financial statements were issued. Based on such
analysis, no additional transaction need to be recorded or disclosed.
Future Adoption of Accounting Pronouncements
The GASB has issued the following accounting standards that have effective dates after June
30, 2012:

GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of
GASB Statements No. 14 and No. 34. The objective of this Statement is to improve
financial reporting for a governmental financial reporting entity. The requirements
of Statement No. 14, The Financial Reporting Entity, and the related financial
reporting requirements of Statement No. 34, Basic Financial Statements—and
Management’s Discussion and Analysis—for State and Local Governments, were
amended to better meet user needs and to address reporting entity issues that have
arisen since the issuance of those Statements. This Statement modifies certain
requirements for inclusion of component units in the financial reporting entity. For
organizations that previously were required to be included as component units by
meeting the fiscal dependency criteria, a financial benefit or burden relationship
also would need to be present between the primary government and that
organization for it to be included in the reporting entity as a component unit.
Further, for organizations that do not meet the financial accountability criteria for
inclusion as component units but that, nevertheless, should be included because the
primary government’s management determines that it would be misleading to
exclude them, this Statement clarifies the manner in which that determination
should be made and the types of relationships that generally should be considered
in making the determination.
This Statement also amends the criteria for reporting component units as if they
were part of the primary government (that is, blending) in certain circumstances.
For component units that currently are blended based on the "substantively the
same governing body" criteria, it additionally requires that (1) the primary
government and the component unit have a financial benefit or burden relationship
or (2) management (below the level of the elected officials) of the primary
government have operational responsibility for the activities of the component unit.
New criteria also are added to require blending of component units whose total
debt outstanding is expected to be repaid entirely or almost entirely with resources
of the primary government. The blending provisions are amended to clarify that
funds of a blended component unit have the same financial reporting requirements
as a fund of the primary government. Lastly, additional reporting guidance is
49
provided for blending a component unit if the primary government is a businesstype activity that uses a single column presentation for financial reporting.
This Statement also clarifies the reporting of equity interest in legally separate
organizations. It requires a primary government to report its equity interest in a
component unit as an asset.
The provisions of this Statement are effective for financial statements for periods
beginning after June 15, 2012. Earlier application is permitted.

GASB Statement No. 62, The Codification of Accounting and Financial Reporting
Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.
The objective of this Statement is to incorporate into the GASB’s authoritative
literature certain accounting and financial reporting guidance that is included in the
following pronouncements issued on or before November 30, 1989, which does not
conflict with or contradict GASB pronouncements:
1. Financial Accounting Standards Board (FASB) Statements and Interpretations
2. Accounting Principles Board Opinions
3. Accounting Research Bulletins of the American Institute of Certified Public
Accountants’ (AICPA) Committee on Accounting Procedure.
This Statement also supersedes Statement No. 20, Accounting and Financial
Reporting for Proprietary Funds and Other Governmental Entities That Use
Proprietary Fund Accounting, thereby eliminating the election provided for
enterprise funds and business-type activities to apply post-November 30, 1989 FASB
Statements and Interpretations that do not conflict with or contradict GASB
pronouncements. However, those entities can continue to apply, as other
accounting literature, post-November 30, 1989 FASB pronouncements that do not
conflict with or contradict GASB pronouncements, including this Statement.
The requirements of this Statement are effective for financial statements for periods
beginning after December 15, 2011. Earlier application is permitted. The provisions
of this Statement generally are required to be applied retroactively for all periods
presented.

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position. This Statement provides financial
reporting guidance for deferred outflows of resources and deferred inflows of
resources. Concepts Statement No. 4, Elements of Financial Statements, introduced
and defined those elements as a consumption of net assets by the government that
is applicable to a future reporting period, and an acquisition of net assets by the
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government that is applicable to a future reporting period, respectively. Previous
financial reporting standards do not include guidance for reporting those financial
statement elements, which are distinct from assets and liabilities.
Concepts Statement 4 also identifies net position as the residual of all other
elements presented in a statement of financial position. This Statement amends the
net asset reporting requirements in Statement No. 34, Basic Financial Statements—
and Management’s Discussion and Analysis—for State and Local Governments, and
other pronouncements by incorporating deferred outflows of resources and
deferred inflows of resources into the definitions of the required components of the
residual measure and by renaming that measure as net position, rather than net
assets.
beginning after December 15, 2011. Earlier application is encouraged.

GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This
Statement establishes accounting and financial reporting standards that reclassify,
as deferred outflows of resources or deferred inflows of resources, certain items
that were previously reported as assets and liabilities and recognizes, as outflows of
resources or inflows of resources, certain items that were previously reported as
assets and liabilities.
Concepts Statement No. 4, Elements of Financial Statements, introduced and
defined the elements included in financial statements, including deferred outflows
of resources and deferred inflows of resources. In addition, Concepts Statement 4
provides that reporting a deferred outflow of resources or a deferred inflow of
resources should be limited to those instances identified by the Board in
authoritative pronouncements that are established after applicable due process.
Prior to the issuance of this Statement, only two such pronouncements have been
issued. Statement No. 53, Accounting and Financial Reporting for Derivative
Instruments, requires the reporting of a deferred outflow of resources or a deferred
inflow of resources for the changes in fair value of hedging derivative instruments,
and Statement No. 60, Accounting and Financial Reporting for Service Concession
Arrangements, requires a deferred inflow of resources to be reported by a
transferor government in a qualifying service concession arrangement. This
Statement amends the financial statement element classification of certain items
previously reported as assets and liabilities to be consistent with the definitions in
Concepts Statement 4.
This Statement also provides other financial reporting guidance related to the
impact of the financial statement elements deferred outflows of resources and
deferred inflows of resources, such as changes in the determination of the major
fund calculations and limiting the use of the term deferred in financial statement
presentations.
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
GASB Statement No. 66, Technical Corrections—2012—an amendment of GASB
Statements No. 10 and No. 62. The objective of this Statement is to improve
accounting and financial reporting for a governmental financial reporting entity by
resolving conflicting guidance that resulted from the issuance of two
pronouncements, Statements No. 54, Fund Balance Reporting and Governmental
Fund Type Definitions, and No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncements.
This Statement amends Statement No. 10, Accounting and Financial Reporting for
Risk Financing and Related Insurance Issues, by removing the provision that limits
fund-based reporting of an entity’s risk financing activities to the general fund and
the internal service fund type. As a result, governments should base their decisions
about fund type classification on the nature of the activity to be reported, as
required in Statement 54 and Statement No. 34, Basic Financial Statements—and
Management's Discussion and Analysis—for State and Local Governments.
This Statement also amends Statement 62 by modifying the specific guidance on
accounting for (1) operating lease payments that vary from a straight-line basis, (2)
the difference between the initial investment (purchase price) and the principal
amount of a purchased loan or group of loans, and (3) servicing fees related to
mortgage loans that are sold when the stated service fee rate differs significantly
from a current (normal) servicing fee rate. These changes clarify how to apply
Statement No. 13, Accounting for Operating Leases with Scheduled Rent Increases,
and result in guidance that is consistent with the requirements in Statement No. 48,
Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of
Assets and Future Revenues, respectively.

GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an
amendment of GASB Statement No. 27. The primary objective of this Statement is to
improve accounting and financial reporting by state and local governments for
pensions. It also improves information provided by state and local governmental
employers about financial support for pensions that is provided by other entities.
This Statement results from a comprehensive review of the effectiveness of existing
standards of accounting and financial reporting for pensions with regard to
providing decision-useful information, supporting assessments of accountability and
interperiod equity, and creating additional transparency.
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This statement is effective for fiscal years beginning after June 15, 2014. Earlier
implication is encouraged.
This Statement replaces the requirements of Statement No. 27, Accounting for
Pensions by State and Local Governmental Employers, as well as the requirements of
Statement No. 50, Pension Disclosures, as they relate to pensions that are provided
through pension plans administered as trusts or equivalent arrangements (hereafter
jointly referred to as trusts) that meet certain criteria. The requirements of
Statements 27 and 50 remain applicable for pensions that are not covered by the
scope of this Statement.
The impact of these statements on the Municipality’s basic financial statements has
not yet been determined.
2. ANNUAL REVENUES
Property Taxes
The CRIM, is responsible for the assessment of all real and personal property located within
the Municipality of Caguas and for the levy, administration and collection of the
corresponding taxes. The property tax is levied each year on the assessed value of the
property at the beginning of the calendar year. Assessed values of real property are
determined based on the market value existing as of 1957 and of personal property at the
current value at the date of assessment.
Complete real property tax exoneration is granted by the Commonwealth of Puerto Rico on
the first $15,0001 of the assessed valuation of owner occupied residential units. However,
the Municipality receives the full amount of the exonerated tax base as of January 1, 1992,
except for residential units assessed at less than $3,500 on which a complete exemption is
granted. Complete exemption from personal property taxes up to an assessment of $50,000
is granted to retailers with an annual volume of net sales under $150,000. The Department
of the Treasury, instead of the property taxpayer, becomes the source of payment in these
cases.
The effective tax rate for the fiscal year ended June 30, 2012 is 1.003%2 for real property
and 8.03% for personal property of which 1.03% of each class of property belongs to the
Commonwealth of Puerto Rico (.103 in the case of real property). The remaining percentage
is distributed as follows:
1
Law 7 increased the real property tax exoneration to $150,000.
2
Note that Law 7 reduced the real property’s tax rate to one tenth (1/10).
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(a) .6%3 and 4.00% for real and personal property, represent the Municipality’s basic
property tax rate which is appropriated for general purposes and accounted for in the
general fund. The basic property tax rate is segregated by CRIM and accounted for an
equalization fund together with a percentage of the net revenues of the Puerto Rico
electronic lottery and a subsidy from the Commonwealth of Puerto Rico. The
equalization fund assures that every municipality receive at least an amount equal to
the tax collected to its base year or prior year.
The Commonwealth makes a contribution equivalent to .20% portion of the tax rates to
compensate the municipality for a discount granted to the taxpayers. Accordingly, the tax
rates imposed to the taxpayer for real and personal property are .983% and 7.83%.
(b) 3% of each represents the ad valorem tax restricted for debt service and
accounted for in the debt service fund.
Since the collection of property taxes, for all of the Municipalities in Puerto Rico, is a
responsibility of the CRIM, it shall report to the Municipality the estimated and actual
property taxes collections, as well as the operational expense allocation to each local
government. During the fiscal year ended June 30, 2012 the allocated expenses to the
Municipality amounted to $1,407,991.
Section 5803(b) of Law No. 80 of the CRIM, allows the municipalities to develop and carry
on activities and programs to expedite the assessments of new constructions and existing
properties not yet assessed. Accordingly, along with a covenant with the CRIM, the
Municipality engaged into an initiative, in order to increase the tax base of assessed
properties over which the tax rate is applied and to expedite the collection of the taxes
receivable in arrears at the CRIM (there is no receivable recorded within the Municipality’s
general ledger). The Municipality contracted an external consulting firm to assist and
expedite these services. Among the different types of services offered, the consulting firm
has engaged into the process of assisting the CRIM to assess the new construction and
other existing properties. These assessments will become then part of the CRIM tax roll
register. This is the subsidiary of all properties assessed for tax purposes.
The new assessed properties are submitted for review and validation by the CRIM which
proceeds to assign the assessed valuation and the tax to be imposed. Then, the CRIM
determine those new properties that would to be added in the tax roll, either because they
are from new construction or because are previous existing properties, with betterments
identified but not reported previously. This process is performed either through physical
inspections, knowledge of existent activities within the Municipality, and comparing the
sales volume taxes returns (in case of commercial properties) with the property taxes
returns, among other strategies. The updated information is delivered to the CRIM in order
to be included within the tax roll for subsequent taxes levies.
3
Please referred to footnote (b)
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Also the consulting firm provides support to the Municipality by attending the taxpayers’
request for services and by providing follow up on the CRIM taxes receivables in arrears.
The purpose of these combined efforts is to improve the efficiency of the tax service and
collections.
Volume of Business Taxes
The Municipality imposes a volume of business tax pursuant to Act No. 113 of July 10, 1974,
on all business entities, which operate within the Municipality, which are not exempt from
the tax pursuant to the Industrial Incentives Act. The tax is based on gross revenues, as
defined by law, computed at the rate of 1.50% for financial institutions and savings and
loans associations, and .50% for all other business entities.
The minimum gross revenue to file the Volume of Business Tax Declaration is $5,000 and
the minimum tax payable is $25. The date to file the Volume of Business Tax Declaration is
April 15 each year. The Municipality grants a five percent discount, if the taxes are paid on
or before April 15. Otherwise, 50% of taxes payable must be paid within the first 15 days of
each semester beginning with the first semester ending December 31.
Collections of volume of business tax revenues received mainly in April 15, are accounted as
deferred revenues, since such collections have a time requirement and should be used
starting July 1st of next fiscal year. In the next fiscal year, the deferred volume of business
tax revenues are recognized as revenue, net of any credit or refunds payable to taxpayers.
Sales Taxes
On July 4, 2006, Law No. 117 known as “Tax Justice Law of 2006” (hereinafter the Act)
incorporated a set of amendments to Law No. 120 of October 31, 1994 - “Internal Revenue
Code of Puerto Rico of 1994”. One of the objectives of this Act was to impose a general sale
and use tax of 5.5% at the Commonwealth level. Of this 5.5%, the Act authorized the
Municipalities to impose sales and use tax of 1.5% at the Municipal level following the same
regulations imposed in the Act. It was a mandate that the 1.5% was approved and
established by Ordinance duly approved by the Municipal Legislature.
On July 12, 2006, the Municipality approved Ordinance No. 6A-6, Series 2006-2007
imposing the 1.5% sales and use tax as authorized in the Act, effective September 1, 2006.
Consequently, Ordinance No. 05A-46, as amended, was rescinded effective August 31,
2006. The Internal Revenue Code of Puerto Rico of 1994 was again amended with Law No.
80 of July 29, 2007, specifically addressing Law No. 117. Law No. 80 made it a requirement
for Municipalities to impose a 1.5% municipal tax uniformly across the Commonwealth.
Municipalities would collect 1% as previously established in Sections 2410 and 6189 of the
Act and the remaining .5% would be collected by the Department of Treasury of the
Commonwealth of Puerto Rico. In order to comply with the new State Tax Code, on August
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3, 2007 the Municipality approved Ordinance 07B-4 (effective August 1, 2007), which
abolished Ordinance No. 6A-6, Series 2006-2007 and took the Municipality out the role of
imposing regulations over the sales and use tax. From this point forward all amendments,
new laws, rules, and regulations are responsibilities of the Commonwealth of Puerto Rico as
stated by the law.
As the last amendment, the current Law No. 80 dictates that the .5% collected by the
Department of Treasury will be deposited and administered by the Puerto Rico Government
Development Bank and will be used for the following purposes:
1. Municipal Redemption Fund – composed of .2% of the .5% (equivalent to 40%). To
be used to grant loans for the exclusive benefit of the municipalities. This fund, in
addition to other variables, is used to calculate the Municipality’s borrowing power
within a specific timeframe. The Municipality’s borrowing margin for the audited
year was approximately $15,905,000 with a contribution to the fund (in the audited
year) of $2,844,889.
2. Municipal Development Fund – composed of .2% of the .5% (equivalent to 40%). To
be used to establish a Municipal Development Fund to be distributed among all
municipalities according to the formula established as part of the Law.
3. Municipal Improvements Fund – .1% of the .5% (equivalent to 20%). To be
distributed according to Legislation passed by the Legislative Assembly for capital
improvement projects in the municipalities.
3. CASH, CASH EQUIVALENTS, AND INVESTMENTS
Puerto Rico laws authorize governmental entities to invest in direct obligations or
obligations guaranteed by the federal government or the Commonwealth of Puerto Rico.
The Municipality is also allowed to invest in bank acceptances, other bank obligations and
certificates of deposit in financial institutions authorized to do business under the federal
and Commonwealth laws. During the year, the Municipality invested its funds in interest
bearing bank accounts, and certificates of deposit. The Municipality is subject to the
following credit risks:
Custodial Credit Risk Related to Deposits
Custodial credit risk is the risk that, in the event of the bank failure, the Municipality’s
deposits may not be recovered. The Municipality is authorized to deposit only in institutions
approved by the Department of the Treasury of the Commonwealth of Puerto Rico. Such
deposits should be kept in separate accounts in the name of the Municipality. Under Puerto
Rico statutes, public funds deposited in commercial banks must be fully collateralized for
the amount deposited in excess of federal depository insurance. During the year ended June
30, 2012, the Municipality deposited its funds in bank accounts bearing interest.
56
In addition, as of June 30, 2012, the Municipality's custodial credit risk was approximately
$46 million, which, is the bank balance of cash deposited at the Government Development
Bank of Puerto Rico. These deposits are exempt from the collateral requirement established
by the Commonwealth, these are uninsured and uncollateralized.
Investments
The fair value of the investments in fixed income securities held by the Municipality as of
June 30, 2012:
Guaranteed investment contracts (GIC) and total investments
$ 4,464,156
The Municipality’s investments are exposed to custodial credit risk, credit risk,
concentration of credit risk and interest rate risk. Following is a description of these risks as
of June 30, 2012.
Custodial Credit Risk Related to Investments
Custodial credit risk for investments is the risk that, in the event of failure of the
counterparty to a transaction, the Municipality may not be able to recover the value of the
investment or collateral securities that are in the possession of an outside party. At June 30,
2012 the investments were registered in the name of the Municipality and were held in the
possession of the Municipality’s custodian banks.
Credit Risk
All fixed income securities at the time of purchase must be of investment grade quality. All
issuances shall be rated investment grade by at least two of the nationally recognized rating
agencies. The following schedule presents the Moody’s ratings as of June 30, 2012:
Moody's Rating
Baa1
Investment Type
Guaranteed investment contracts (GIC)
Fair Value
$ 4,464,156
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value
of an investment. At June 30, 2012, the Municipality maintains investments in fixed income
securities with a fair value of approximately $4.4 million. Market values of such investments
are very sensitive to the changes in the interest rates. At June 30, 2012, the Municipality
had a risk of not recovering the market value of such investments if such investments are
sold. The Municipality does not have a formal policy for managing the interest rate risk
besides investing its funds in barely non-risky instruments as required by the Municipal
Affairs Commissioner Office (OCAM) ruling.
57
The following schedule summarizes the investments in fixed income securities of the
Municipality at June 30, 2012:
Guaranteed insurance contracts
Maturity
Fair Value
(2012) $ 4,464,156
Investment Maturities (In Years)
More than
Less than 1
1-5
5-10
4,464,156
—
—
More
than 10
—
As of June 30, 2012, investments maturities are as follows:
Maturity
Less than one year
One to five years
More than five to ten years
More than ten years
Maximum
Maturity
100%
0%
0%
0%
Concentration of Credit Risk
No investment in fixed income security in any organization represents 5% or more of the
Municipality’s net assets.
4. INTERGOVERNMENTAL REVENUES
Sources of intergovernmental revenues are primarily of governmental payments from the
Commonwealth of Puerto Rico and “in lieu of tax” payments from certain quasi public
corporations, such as Puerto Rico Electric Power Authority (PREPA). The amount of
contribution in lieu of tax for the year 2011-2012 was $11,018,992.
Grants and subsidies received from the Commonwealth of Puerto Rico include, among
others, subsidies through legislative appropriations mainly for capital improvements.
5. INTER-FUND LOANS
Due from/to other funds
Inter-fund receivables and payables generally reflect temporary loans, billings for services
provided and recovery of expenditures. Following is a summary of inter-fund assets and
liabilities as of June 30, 2012:
58
Receivable Fund
Payable Fund
Capital Projects
Other Governmental Funds
Legislative
Head Start, Food and Children Program
Public Housing Residential Administration
Housing and Rental Program
Multitenant
General
$
$
Amount
9,804,798
2,976,276
1,388,396
872,592
626,277
535,652
324,624
12,688
16,541,303
The purpose of each inter-fund balances are the following:
Payables to the general fund:
Capital Projects Fund – includes expenditures mainly of the Community Development
Block grants and Community Facilities Loans Programs and other related projects
sponsored by the Municipality, which are initially disbursed through the general fund.
Legislative Funds and Other Governmental Funds – includes expenditures mainly to
finance certain public safety and health and welfare projects that involve both the use
of federal and municipal funds and which were initially disbursed through the general
fund.
Head Start, Food and Children Program, Public Residential Administration and Rental
Housing, – includes operating expenditures and other related projects sponsored by the
Municipality, which are initially disbursed through the general fund.
Housing and Rental Program – includes expenditures mainly of the Section 8 Housing
Choice Voucher, HOME Investment Partnership Program and other housing projects
sponsored by the Municipality, which are initially disbursed through the general fund.
Community Development Bank (CDB) and Multitenant – includes professional fees, rent
and other operating expenses of the CDB, but disbursed initially through the general
fund.
Transfers in/out
Inter-fund transfers in/out reflect the transfers of resources from one fund to another
without the attempt of recovering such revenues. Following is a summary of inter-fund
transfers for the year ended June 30, 2012:
59
Transferred in
Debt Service
Other Governmental
Transferred out
General
$
Amount
6,463,957
6,884
(6,470,841)
Debt Service
$
$
14,629,108
(14,629,108)
Other Governmental
$
$
3,384
(3,384)
Multitenant
$
$
263,993
(263,993)
$
General
General
Other Governmental
The purpose of each inter-fund transfers are the following:
Transfers-out from the General Fund – Current financial resources transferred mainly
for the operational loans debt service payments and other municipal activities.
Transfers-out from the Debt Service Fund – Current financial resources transferred
mainly for the operational activities of the General Fund.
Transfers-out from the Other Governmental Fund – Current financial resources
transferred mainly for the operational activities of the General Fund.
Transfers-out from the Multitenant Fund – Current financial resources transferred to
governmental funds for acquisition of equipment and improvements to property related
to the Municipality’s social and economic development activities.
This Space Is Intentionally Left In Blank
60
6. CAPITAL ASSETS
A summary of the activity of capital assets for governmental activities group follows:
Balance
June 30, 2011
$
Construction in progress
Works of art and historical treasures
Total capital assets not being depreciated
Other capital assets
Computer software
Infrastructure
Total other capital assets
Accumulated depreciation
Building and improvements
Computer software
Infrastructure
Capital assets, net
$
Additions
Retirements
Transfers
Balance
June 30, 2012
49,770,830
39,601,894
3,504,311
92,877,035
692,958
7,282,714
—
7,975,672
(865,232)
—
—
(865,232)
—
(36,048,987)
—
(36,048,987)
49,598,556
10,835,621
3,504,311
63,938,488
39,512,815
205,414,547
1,112,084
440,177,951
42,664,875
728,882,272
—
9,773,000
—
—
3,297,266
13,070,266
—
—
—
—
(440,325)
(440,325)
7,178,841
17,611,302
—
11,258,844
—
36,048,987
46,691,656
232,798,849
1,112,084
451,436,795
45,521,816
777,561,200
Balance
June 30, 2011
Depreciation
Expense
12,625,693
89,927,440
503,014
162,112,820
30,333,332
295,502,299
1,327,785
4,813,547
185,347
17,705,431
3,731,820
27,763,930
—
—
—
—
(431,364)
(431,364)
—
—
—
—
—
—
13,953,478
94,740,987
688,361
179,818,251
33,633,788
322,834,865
526,257,008
(6,717,992)
(874,193)
—
518,664,823
Retirements
Transfers
Balance
June 30, 2012
The Municipality’s policy is to transfer construction in progress properly concluded to other
classification of capital assets if such capital project is being used. During the fiscal year,
land was sold for $970,000, sale price, for a gain on sale of $104,768.
When capital assets that are to be used in governmental activities are purchased or
constructed, the resources expended for those assets are reported as expenditures in the
governmental funds within the capital outlays and included as additions in the roll-forward
activity of the capital assets in the government-wide financial statement. However, in the
statement of activities, the cost of those assets is allocated over the estimated useful lives
and reported as a depreciation expense. As a result, fund balance decrease by the capital
outlays balance – the amount of financial resources expended, whereas net assets
decreases by the amount of depreciation expense charged for the year.
61
The amount by which depreciation expense exceeded capital outlays for the current year is
as follows:
Description
Amount
Depreciation expense
Capital outlays
Excess of depreciation expense
over capital outlays
$
27,763,930
(21,045,938)
$
6,717,992
Also the detail of these amounts is presented in the previous table including the activity of
the capital assets.
Depreciation expense for capital assets of governmental activities was charged to the
following functions as follows:
Description
Amount
$ 10,107,334
3,047,914
8,129,516
5,258,018
732,487
299,351
177,630
11,193
487
$ 27,763,930
Public works
General government
Health and welfare
Public safety
Education
Housing
A summary of the activity of capital assets for business-type activities group follows:
Balance
June 30, 2011
Total not being depreciated
$
Other capital assets
Total other capital assets
Accumulated depreciation
Building and improvements
Capital assets, net
$
Additions
Retirements
Transfers
Balance
June 30, 2012
3,937,554
3,937,554
—
—
—
—
—
—
3,937,554
3,937,554
19,968,600
19,968,600
—
—
—
—
—
—
19,968,600
19,968,600
301,204
301,204
457,762
457,762
—
—
—
—
758,966
758,966
23,604,950
(457,762)
—
—
23,147,188
62
7. GENERAL LONG - TERM DEBT
The legal debt margin of the Municipality is equal to 10% of the total property assessment
located within the municipality’s jurisdiction. Following are the assessed values of the real
and personal property as of June 30, 2012:
Real
Property
Personal
Property
Total
Gross
Exempt
Taxable
Exonerated
$
7,189,854,910
(491,301,280)
6,698,553,630
(3,278,494,240)
576,386,120
(234,189,018)
342,197,102
(4,196,437)
7,766,241,030
(725,490,298)
7,040,750,732
(3,282,690,677)
Net value
$
3,420,059,390
338,000,665
3,758,060,055
Law No. 7 of March 9, 2009, as amended, known as Law for the Declaration of a State of
Fiscal Emergency, amended the Property Tax Law No. 83 of August 30, 2001. This law
established that for fiscal years 2009-2010 thru 2012-2013, the assessed valuation of the
real property will be determine in accordance as per Law No. 83, but multiplied by ten (10)
times. This amendment applies to those fiscal years beginning after June 30, 2009. Also
requires that the tax rate applicable to the real property will be determined in accordance
with the regulations established under the Law No. 83, but reduced to one tenth (1/10).
The residential property owners are entitled to a real property tax exoneration for an
amount up to $15,000 on the assessed value of the property. However, for fiscal years
beginning after June 30, 2009, Law 7 increased the real property exoneration amount the
tax payer is entitled by multiplying the exonerated valuation by ten times (up to $150,000).
These tax provisions apply for fiscal years 2009-2010 thru 2012-2013.
In September 2, 2010, the Government of Puerto Rico approved the Law No. 132 to provide
for various tax incentives to stimulate the real estate market.
The tax incentives relates to: new and existing real estate property sales (capital gain
incentives), leased real estate properties (rented property income tax incentive), real
property tax (real property tax incentives) and payments of internal revenue stamps and
other government charges and miscellaneous taxes related to the sale or purchase of a real
estate property.
The Law No. 132 allows a 100% exemption of the real property tax payments required by
Law 83 of August 30, 1991, as amended, to those tax payers that acquire a real property
within the period of September 1, 2010 until June 30, 2011. During the fiscal year this
incentive was extended until June 30, 2012. The exemption is valid during a five years
period beginning on January 1, 2011.
63
The above mentioned incentives will be phased out in the following manner:
For real property purchases made during the period of July 1, 2012 to December 31, 2012:
A 50% property tax exemption from CRIM will be granted during a period of five years.
After December 31, 2012:
All the incentives will be eliminated.
According to the property tax roll provided by the CRIM, for the fiscal year 2011-2012, the
valuation of the net taxable property (real and personal) have change from prior year in the
following amounts:
Net Property
Valuation
Increase
(Decrease)
Description
Real property
Personal property
$
92,055,511
(27,393,636)
Estimated Tax
Effect Increase
(Decrease)
904,906
(2,144,921)
The fiscal impact for the future years has not been determined by the Municipality’s
management.
Changes in general long-term debts of governmental activities for the fiscal year ended June
30, 2012 are summarized as follows:
Balance at June 30,
2011
(as restated )
Bonds
Loans
$
Total
$
Payments
Debt Refunding
New Debt
Issued
Balance at June
30, 2012
Due within
one year
226,568,577
207,397,577
4,870,000
37,855,000
(9,934,000)
(670,000)
(15,604,000)
—
—
13,325,000
29,105,000
—
3,015,000
4,200,000
38,591,000
11,800,600
400,000
2,195,714
250,122,577
(26,208,000)
13,325,000
32,120,000
269,359,577
14,396,314
64
As of June 30, 2012, debt service requirements for the above long-term debt are as follows:
Fiscal Year
Principal
Interest
Total
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2037
$
14,396,314
15,274,414
14,269,414
15,296,414
13,229,414
69,991,955
64,415,000
34,638,652
27,848,000
13,209,533
20,514,504
19,593,709
15,012,925
13,851,610
56,117,564
34,642,778
18,135,642
4,928,756
27,605,847
35,788,918
33,863,123
30,309,339
27,081,024
126,109,519
99,057,778
52,774,294
32,776,756
Total
$
269,359,577
196,007,021
465,366,598
This Space Is Intentionally Left In Blank
65
The following table presents the outstanding balance as of June 30, 2012 of the general
obligation bonds which were issued for capital project activities within the Municipality
separate from those issued for operational activities:
Description
Issuance for capital project activities:
$85,000 payable in annual installments from $2,000 to $7,000 with
interest rate at 5% until year 2014, secured by the Municipality.
Balance
$
13,000
$125,000 payable in annual installments of $5,000 with interest rate
fluctuating from 2.7% to 5.6% until year 2026, secured by the
Municipality.
75,000
$1,545,000 payable in annual installments from $20,000 to $130,000
with interest rate fluctuating from 6% to 7.5% until year 2035, secured
by the Municipality.
1,525,000
interest rate fluctuating from 6% to 7.5% until year 2035, secured by the
Municipality.
735,000
interest rate fluctuating from 2.53% to 5.31% until year 2029, secured
310,000
interest rate fluctuating from 2.53% to 5.31% until year 2029, secured
385,000
interest rate at 4.75% until year 2030, secured by the Municipality.
413,000
interest rate at 5% until year 2015, secured by the Municipality.
117,000
with interest rate fluctuating from 2.7% to 5.6% until year 2026, secured
1,050,000
with interest rate fluctuating from 2.36% to 5.31 % until year 2028,
secured by the Municipality.
1,290,000
with interest rate fluctuating from 4.17% to 5.28% until year 2024,
1,215,000
66
Description
Balance
with interest rate at 4.5% until year 2030, secured by the Municipality.
$
1,345,000
927,000
2,301,650
2,330,000
6,365,000
7,130,000
7,790,000
7,920,000
7,140,000
7,495,000
with interest rate fluctuating from 0.52% to 5% until year 2025, secured
8,850,000
with interest rate fluctuating from 0.32% to 5% until year 2025, secured
8,835,000
$13,300,000 payable in annual installments from $355,000 to
$1,315,000 with interest rate fluctuating from 4.87% to 6.34% until year
2016, secured by the Municipality.
5,665,000
67
Description
Balance
$1,505,000 with interest rate fluctuating from 4.70% to 8% until year
5,385,000
352,027
548,000
$1,785,000 with interest rate fluctuating from 5% to 7.71% until year
3,440,000
interest rate fluctuating from 6% to 7.5% until year 2035, secured by
the Municipality.
495,000
1,010,000
Municipality.
705,000
1,010,000
1,595,000
3,995,000
11,860,000
3,475,000
68
Description
Balance
with interest rate fluctuating from 5% to 5.58% until year 2025,
7,955,000
7,000,000
8,590,000
$18,285,000 payable in annual installments of $731,400 with interest
rate fluctuating from 3.71% to 7.5% until year 2036, secured by the
Municipality.
18,285,000
Municipality.
815,000
Municipality.
245,000
$9,760,000 payable in annual installments from $145,000 to $8,720,000
9,760,000
interest rate of 4.5% until year 2037, secured by the Municipality.
279,900
with interest rate fluctuating from 3.89 % to 5.82% until year 2032,
2,915,000
interest rate fluctuating from 1.53 % to 7.5% until year 2022, secured
416,000
with interest rate fluctuating from 4.16% to 5.72% until year 2024
6,495,000
69
Description
Balance
with interest rate fluctuating from 1.53% to 7.5% until year 2033
6,476,000
with interest rate fluctuating from 4.75 % to 7.5% until year 2034,
4,570,000
Total issuance for capital project activities
$
188,893,577
$
9,440,000
Issuance for operational activities:
7,990,000
20,245,000
Total issuance for operational activities
$
37,675,000
Total general obligation bonds issuance
$
226,568,577
The following table presents the outstanding balance as of June 30, 2012 of the federal
loans and notes which were issued for capital project activities within the Municipality.
None of these liabilities were issued for operational activities:
Sec. 108 Federal Loans:
Description
$8 million payable in annual installments fluctuating from $200,000 to
$600,000 at 7.5% interest reate until year 2019, secured by building and
adjacent parking facility owned by the Municipality and appraised at an
aggregated fair market value of approximately $11.8 million.
Total federal loans and notes
Balance
$
4,200,000
$
4,200,000
70
The following table presents the outstanding balance as of June 30, 2012 of loans which
were issued for capital project activities within the Municipality separate from those issued
for operational activities:
Description
Municipality.
Balance
$
750,000
Municipality.
195,000
$1,010,000 payable in annual installments from $110,000 to $175,000 with
Municipality.
775,000
interest rate fluctuating from 1.53% to 7.5% until year 2033, secured by the
Municipality.
516,000
Municipality.
8,315,000
Municipality.
335,000
Municipality.
2,445,000
interest rate fluctuating from 6.% to 7.5% until year 2018, secured by the
Municipality.
385,000
$2,015,000 payable in annual installments of $287,857 with interest rate
Municipality.
2,015,000
Municipality.
615,000
Municipality.
1,105,000
71
Description
Balance
Municipality.
$
720,000
Municipality.
2,255,000
Municipality.
325,000
Total issuance for capital project activities
$
20,751,000
Description
Balance
Issuance for operational activities
with interest rate fluctuating from 6% to 7.5% until year 2036, secured by
the Municipality.
$ 13,325,000
Total issuance for operational activities
4,515,000
$ 17,840,000
Total loans issuance
$ 38,591,000
Current Refunding
During current year the Municipality issued an aggregated balance of approximately $13.3
million in new loans for a current refunding of previous outstanding loans amounting to $13.1
million with the Government Development Bank (GDB). The costs associated with this
transaction, amounting approximately to $170,000, were financed within the new debt issued.
This transaction did not contemplate any interest expense savings. The refinanced debt was
originally issued to cover operational expenses.
Long-term debt for business-type activities at June 30, 2012 is summarized as follows:
Description
Special bond obligation for $300,000 to provide for financing the
reconstruction and rehabilitation of housing project for citizens of low
and moderate income; annual interest rate at 2% with maturity on
July 30, 2013, secured by the Municipality.
$
Balance
Due within
one year
3,593
3,593
72
The debt service requirement for the long-term debt of Enterprise fund is schedule as
follows:
Fiscal Year
Principal
2013
$
Interest
3,593
Total
36
3,629
Balance
Due within
one year
8. DUE TO OTHER GOVERNMENTAL ACTIVITIES
The Municipality has a liability with the CRIM as summarized below:
Description
Law No. 42 repayment plan, issued for $1,875,566 at 30
years with a semi-annual rate of 3.0938%.
$ 1,593,957
40,261
The Land Information Management System is a digitalized system that maintains a register
containing the geographical (location, boundaries, etc.) and descriptive (proprietorship,
area, assessed values, etc.) inventory of all properties in Puerto Rico.
The Law No. 42 dated January 2000, allows the CRIM to issue debt based on the
disbursements made in excess to the municipalities on their final liquidation. The
municipalities engaged in an installment plan with the CRIM to repay such amounts
received in excess prior to the fiscal year 2000.
The debt service requirement for the long-term debt with the Municipal Revenue Collection
Center is scheduled as follows:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2034
Principal
Interest
Total
$
40,261
42,790
45,479
48,336
48,336
242,901
394,977
535,668
195,209
98,013
95,483
92,795
89,937
89,937
310,192
296,390
155,699
12,201
138,274
138,273
138,274
138,273
138,273
553,093
691,367
691,367
207,410
$
1,593,957
1,240,647
2,834,604
73
Also the following debts were included within the amount due to other governments:
USDA Rural Development Loan
Outstanding balance as of June 30, 2012
$ 3,120,000
9. ACCRUED LIABILITIES
At June 30, 2012, the Municipality had the following accrued liabilities:
Balance at June 30,
2011
Additions
Deductions
Balance at June
30, 2012
Due within
one year
Accrued legal claims
$
13,003,170
1,738,303
7,622,627
115,377
(6,325,019)
—
14,300,778
1,853,680
1,305,966
—
Total
$
14,741,473
7,738,004
(6,325,019)
16,154,458
1,305,966
Liabilities for compensated absences have been typically liquidated in prior years through
the General Fund.
10. RETIREMENT PLANS
Employees Retirement System of the Government of the Commonwealth of Puerto Rico
The Municipality participates in the Employee’s Retirement System of the Government of
the Commonwealth of Puerto Rico (the System), a cost-sharing multiple-employer defined
benefit plan, which covers only eligible full-time employees. The System provides
retirement, death, and disability benefits and annuities.
Employees contribute 5.775% for the first $550 of their monthly gross salary and 8.275% for
the excess over $550 of monthly gross salary. The Municipality is required to contribute
9.275% of the participants’ gross salary. On September 24, 1999, Law No. 305 an
amendment to Act No. 447 of May 15, 1951, which created the System, was enacted with
the purpose of establishing a defined contributions plan (System 2000). Employees
participating in the current system as of December 31, 1999, may elect to stay in the
defined benefit plan or transfer to the new program. Persons joining on or after January 1,
2000 will only be allowed to become members of the System 2000. System 2000 will reduce
the retirement age from 65 to 60 for those employees who joined the current plan on or
after April 1, 1990.
System 2000 is a hybrid defined contribution plan, also known as a cash balance plan. Under
this new plan, there will be a pool of pension assets, which will be invested by the System
together with those of the current defined benefit plan. The Commonwealth of Puerto Rico
74
will not guarantee benefits at retirement age. The annuity will be based on a formula which
assumes that each year the employee’s contribution (with a minimum of 8.275% of the
employees’ salary up to a maximum of 10%) will be invested in account which either; (1)
earn a fixed rate based on the two year Constant Maturity Treasury Note or, (2) earn a rate
equal to 75% of the return of the System investment portfolio (net of management fees), or
(3) earn a combination of both alternatives. Participants will receive periodic account
statements similar to those of defined contribution plans showing their accrued balances.
Disability pensions will not be granted under System 2000. The employer’s contribution
(9.275% of the employee’s salary) will be used to fund the current plan.
For the year ended June 30, 2012, total covered payroll was approximately $30.2 million.
Covered payroll refers to all compensation paid by the Municipality to employees covered
by the System on which contributions to the pension are based.
The amount of the annuity shall be one and one-half percent of the average compensation
multiplied by the number of years of creditable service up to twenty years, plus two percent
of the average compensation multiplied by the number of years of creditable service in
excess of twenty years, for those employees covered after March 31, 1990, the annuity shall
be equal to one and one-half percent of the average compensation multiplied by the
number of years of creditable service, in no case shall the annuity be less than $2,400.
Funding Policy
Contribution requirements are established by law and are as follows:
Municipality
Employees:
Hired on or before March 31, 1990
9.275% of gross salary
Hired on or after April 1, 1990
5.775% of gross salary up to $6,600
8.275% of gross salary over $6,600
Total employee contributions to the above-mentioned plans during the year ended June 30,
2012 amounted to $2,484,301. The Municipality’s contributions during the years ended
June 30, 2012, 2011 and 2010 amounted to approximately $2,796,800, $2,640,518, and
$2,673,000 respectively. These amounts represented 100% of the required contribution for
the corresponding years. The Municipality complied with this required contribution
percentage for the current and past two years.
75
On July 6, 2011 was issued the Act No. 116, an amendment to Act No. 447 of May 15, 1951. This
act brought the following amendments to the employer contribution requirements effective
July 1, 2011:
Contribution by the Municipality
Increasing by 1% each July 1 from the year
2012 to 2015 and then,
Increasing by 1.25% each July 1 from the
year 2016 to 2020
Questions concerning any of the information provided in this disclosure or requests for
additional information should be addressed to the Commonwealth of Puerto Rico Government
Employees and Judiciary Retirement Systems Administration, 437 Ponce de León Avenue, Hato
Rey, Puerto Rico 00918.
Retirement Plan of Head Start Food and Children Program
Effective January 1, 2002, the Municipality created a retirement plan (the Plan) for all
employees of those whose salaries were funded with the Head Start Food and Children
Program federal financial award and which have at least one year of service and are age
twenty-one or older. The Plan is part of the Popular Master Defined Contribution
Retirement. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The Municipality was required to contribute three percent (3%) of the employees’ annual
compensation. The Municipality complied with this required contribution percentage for the
current and past two years. Participants may contribute based on after tax contributions
amounts representing up to ten percent (10%) of the aggregate compensation paid to the
employee, excluding the Christmas Bonus.
Participants are immediately vested in their contributions plus actual earnings thereon.
Vesting is based on years of continuous service. The participant vesting schedule on such
portion of their accounts is described below:
Completed years of service
Less than 3 years
At least 3 years
At least 4 years
At least 5 years
At least 6 years
At least 7 years
Vested percent
0%
20%
40%
60%
80%
100%
76
The vesting provisions consider years of service before the employer established this Plan.
On termination of service due to death, disability or retirement, a participant or beneficiary
may elect to receive a lump-sum amount equal to the value of the participants’ vested
interest in his/her account, or maintain the funds in the Plan. Also, ten years annuities are
allowed under the plan. The normal retirement age is the latter of the date a participant
attains his 65th birthday or the fifth anniversary of the first day of the plan year in which
he/she commenced participation in the Plan. Early retirement distributions are not
permitted. Under the provisions of the Plan, participants are not permitted to withdraw any
amount contributed by the employer from the plan, unless separated from employment.
During the year ended June 30, 2012, the Municipality contributions to this plan amounted
to approximately $247,000, and for the years ended June 30, 2011 and 2010 contributed
approximately $233,000 and $217,000, respectively.
11. COMMITMENTS
Operating Leases
The Municipality leases various properties and equipment under operating lease
agreements, which generally have terms of one year or less and are automatically renewed
if sufficient funds are available. Lease agreements covering periods in excess of one-year
are cancelable at the Municipality’s option upon 30 days written notice to the lesser.
Expenditures for the year ended June 30, 2012 amounted to approximately $1,917,662.
Future operating lease commitments are scheduled as follows:
Year
2013
2014
2015
2016
2017
Total
Amount
$ 1,897,452
755,827
445,818
289,977
50,442
$ 3,439,516
Solid Waste Disposal Contract
The Municipality has a solid waste disposal contract with E.C. Waste, Inc. until December
31, 2014, to provide the service for the recollection, management and disposal of solid
waste. In the contract it was established that the Municipality is committed to pay E.C.
Waste Inc. $11.50 per unit served applied to a starting minimum of 45,500 units with
annual increase of one percent (1%) up to fiscal year to be ended at January 1, 2014.
Expenditure for the year ended June 30, 2012 for this service amounts to $7.8 million,
approximately.
77
In addition, the Municipality is committed to pay an additional $25.00 per tons that the
Municipality transports and deposits in the E.C. Waste, Inc.’s center of recollection of such
solid wastes for their processing. The price of the rate is also subject to an annual income
increase of one percent (1%). Future commitments are scheduled as follows:
Year
2013
2014
2015
$
Total
$
Amount
8,433,087
8,433,087
4,216,543
21,082,717
Other Commitments
The Municipality has entered into various agreements to provide professional and
consulting services, health services, repairs and maintenance of facilities, marketing and
other miscellaneous services to its constituents. Future commitment payments are
scheduled as follows:
Year
2013
2014
2015
2016
2017
Total
$
Amount
17,223,822
424,145
103,882
103,743
103,743
$ 17,959,335
Contributions to Not for Profits Corporations
Law #137 of August 9th, 2002, amended Article 17.001 and added Article 17.016 to the
1991 Autonomous Municipalities Law No. 81 of the Commonwealth of Puerto Rico. This
amendment authorizes Municipalities “to be part of, participate, support and sponsor nonprofit organizations under the General Law of Corporations of 1995, as amended, and as
long as it is organized to promote economic and cultural development or social
improvement of a municipality or region of which the municipality is part of and the
corporation counts with the participation and engagement of, in addition of the
municipalities, the different sectors composed of higher level educational institutions and
industrial and commercial enterprises, including associations grouping businesses and
industries... Municipalities’ participation on the Board of Directors cannot exceed 1/3 of the
total members.”
Under this Article, the Municipality of Caguas, participates in various forms with (1)
Corporación de Bellas Artes de Caguas (COBAC);
(2) Corporación de Salud Aseguradora
78
por Nuestra Organización Solidaria, Inc. (SANOS); (3) Corporación de Conservación
Etnoecológica Criolla, Inc. (CCECI); (4) Iniciativa Tecnológica Centro-Oriental, Inc. (INTECO);
and (5) Banco de Desarrollo Centro Oriental, Inc. (BADECO).
On October 8, 2004 representatives of the Municipality and COBAC signed a 15-year lease
contract, transferring the operations of the Fine Arts Center (FAC) to COBAC effective July 1,
2004 for a $1,000 annual rental fee payable to the Municipality. In addition, the
Municipality is scheduled to make annual contributions for 5 years at par with the
commitments that each representative on the Board has agreed to contribute.
Subsequently, COBAC would obtain and provide the financial resources necessary for its
operations from resources other than the Municipality. Finally, the Municipality’s
representation on the Board of Directors is 4 out of 17 members, or 24% of the voting
power.
On July 1, 2006 representatives of the Municipality and SANOS signed a 5-year lease
contract for the facilities where SANOS is currently located for a $1 annual fee payable to
the Municipality. In addition, the Municipality agreed to contribute $300,000 annually for
fiscal years 2006-2007 and 2007-2008 and pay the utilities until June 30, 2009. More
recently, on August 26, 2011, the Municipality contributed $310,000 to SANOS for
education and drug prevention services.
On April 18, 2007 representatives of the Municipality and CCECI signed a 10-year lease
contract for the land and facilities comprising the Caguas Botanical and Cultural Garden for
an annual fee of $1,000 effective April 18, 2007. The Municipality agreed to contribute (1)
operation funds for $500,000 for each fiscal year 2007-2008 and 2008-2009; $350,000 for
fiscal years 2009-2010 and 2010-2011 and $350,000 for fiscal year 2011-2012; (2) payment
of utilities corresponding to the land and facilities included in the contract; (3) payment of
the applicable insurance policies as the owner of the land and facilities; and (4) remaining
funds assigned to the development of the Garden in the various dependencies/departments
within the Municipality until June 30, 2007. During the fiscal year 2011-2012, the
Municipality made contributions to CCECI for a total of $440,000 to cover operating
expenses.
On September 3, 2003 representatives of the Caguas and other Municipalities signed a
contractual agreement with INTECO to contribute funds; property; social, human, physical
and technological capital from time to time. After the initial contribution, each Municipality
would contribute approximately $1 per person annually according to the most recent
Census available. The Municipality of Caguas and INTECO have and will enter into
contractual agreements for specific projects from time to time. Finally, the Municipality’s
representation on the Board of Directors does not exceed the 1/3 of the total members.
More recently, during the year, the Municipality contributed $860,000 to INTECO to cover
operating expenses.
79
Housing and Rental Contracts
The Housing Choice Voucher Program (HCVP) provides rental assistance to help very low
income families afford decent, safe, and sanitary rental housing. The Municipality as a local
public housing agency (PHA) is authorized under Federal and State laws to operate housing
programs within an area or jurisdiction. The Municipality, as a PHA accepts the application
for rental assistance, selects the applicant for admission, and issues the selected family a
voucher confirming the family’s eligibility for assistance. The family must then find and lease
a dwelling unit suitable to the family’s needs and desires in the private rental market. The
PHA pays the owner a portion of the rent (a housing assistance payment (HAP)) on behalf of
the family.
The subsidy provided by the HCVP is considered a tenant-based subsidy because when an
assisted family moves out of a unit leased under the program, the assistance contract with
the owner terminates and the family may move to another unit with continued rental
assistance (24 CFR section 982.1).
HUD enters into annual contributions contracts (ACCs) with PHAs under which the
Department of Housing and Urban Development (HUD) provides funds to the PHAs to
administer the programs locally. The PHAs enter into HAP contracts with private owners
who lease their units to assisted families (24 CFR section 982.151).
During the fiscal years ended June 30, 2012 and 2011, the Municipality has incurred in
HAP’s for $7.2 million, in average. No significant changes are expected during the
subsequent fiscal year.
12. CONTINGENCIES
Litigation
The Municipality is a defendant in legal matters that arise in the ordinary course of the
Municipality’s activities. With respect to pending and threatened litigation, the Municipality
has reported liabilities of $1,853,680 in the government-wide statements for anticipated
unfavorable judgments or future disbursements.
The amount presented in the total liabilities of the governmental activities in the statement
of net assets represents the amount estimated as probable liability, which will require
future available financial resources for its payment. The Municipality’s administration and
legal counsel believes that the ultimate liability in excess of amounts provided would not be
significant. In addition, the Municipality is a defendant or co-defendant in several legal
proceedings, which are in the discovery stage. Certain of these claims are covered by
insurance. Legal counsel with the information currently available cannot determine the final
outcome of these claims. As a result, the accompanying general-purpose financial
statements do not include adjustments, if any, that could result from the resolution of these
legal proceedings.
80
Federal Financial Assistance
The Municipality receives financial assistance from the federal government in the form of
grants or entitlements. The Municipality recognizes federal grant revenues when the
related grant agreements are approved and notified by the federal agencies by written
communication. All grants are subject to financial and compliance audits by the grantor
agencies, which could result in requests for reimbursement by the grantor agencies for
expenditures, if disallowed under the terms of the grants. These amounts, if any, of
expenditures, which may be disallowed by the granting agencies, cannot be determined at
this time. The Municipality’s administration believes that such disallowances, if any, will not
have a material adverse effect on the financial position of the Municipality.
13. RISK MANAGEMENT
The Risk Management Division of the Municipality is responsible for assuring that the
Municipality’s property is properly insured. Annually the Risk Management Division
compiles the information of all property owned and its respective market value. After
evaluating this information regarding all the property owned by the Municipality, this
division submits the data to the Public Insurance Division of the Department of the Treasury
of the Commonwealth of Puerto Rico who is responsible for purchasing all property and
casualty insurance policies of all municipalities. Settled claims have not exceeded the
commercial coverage during the past three years.
14. HEALTHCARE COSTS
During the year ended June 30, 2000 the Governor of the Commonwealth of Puerto Rico
required to the municipalities of Puerto Rico an annual contribution to subsidy the cost of
the implementation and administration of the Healthcare Reform. Such contributions are
required to be disbursed from general fund operating budget. Total contributions made by
the Municipality amounted to approximately $7,794,000 for the fiscal year ended June 30,
2012.
15. RESTATEMENTS
The Municipality has restated the beginning fund balances of funds financial statements at
July 1, 2011 to correct inter-fund amounts, accounts payable to be in conformity with their
respective subsidiaries. Since these transactions receive the same accounting treatment in
fund financial statements as in government-wide, the effect is the same in both financial
statements.
81
The following tables summarize the effects of the situations mention above per column of
the financial statement:
Fund description:
General fund
Capital project fund
Legislative fund
Other governmental fund
Total
Amount
$
354,471
(402,023)
(517,415)
(208,080)
$
(773,047)
The Municipality has restated the beginning fund balances of governmental activities at July
1, 2011 to correct the following situations:
Amount
Funds Financial Statements
Net effect in funds financial statements
$
Other Corrections Having Effect In Government-Wide Only
Correction of USDA Rural Development not previously recorded
(773,047)
(279,900)
Total Government-wide Activities
$
(1,052,947)
The Municipality restated the beginning net assets of business type activities to correct the
following:
Enterprise Funds
Correction of cash account and loan receivables not previously recorded
Amount
$
(102,522)
16. SUBSEQUENT EVENTS
In preparing these financial statements, the Municipality has evaluated events and
transactions for potential recognition or disclosure through October 29, 2012, the date the
financial statements were issued. Based on such analysis management decided to disclose
the following:

On July 20, 2012, the Municipality entered into a Loan Agreement (the Agreement) with
the Governmental Development Bank of Puerto Rico (the GDB). The Agreement
provides for borrowing in the amount of $1,505,000, including finance charges,
82
through July 1, 2037 (the Maturity Date) and shall be known as 2012 Municipal General
Obligation Bonds. The Bonds will be issued as registered notes without coupons in
denominations of $5,000 with maturities of July 1 of each year through 2037.
Borrowings will bear interest at an annual rate which will not exceed the maximum
interest rated authorized by law. Due interests shall be paid semi-annual in January 1
and July 1 each year. The Municipality’s good faith, credit and its power to impose
contributions will be compromised for the repayment of this liability and will begin on
January 1, 2013. The Municipality will also pay legal, accounting, and other fees and
expenses in accordance with the Loan Agreement.

On September 30, 2012, the Municipality entered into a Loan Agreement with the
Governmental Development Bank of Puerto Rico (the GDB). The Agreement provides for
borrowing in the amount of $135,000, including finance charges, through July 1, 2019
(the Maturity Date) and shall be known as 2012 Municipal General Obligation Loan. The
Loan will consist of registered notes without coupons in denominations of $5,000 with
maturities of July 1 of each year through 2019. Borrowings will bear interest at an
annual rate which will not exceed the maximum interest rated authorized by law. Due
interests shall be paid semi-annual in January 1 and July 1 each year. The Municipality’s
good faith, credit and its power to impose contributions will be compromised for the
repayment of this liability and will begin on January 1, 2013.

On September 30, 2012, the Municipality entered into a Loan Agreement (the
Agreement) with the Governmental Development Bank of Puerto Rico (the GDB) for the
paving of roads in various neighborhoods. The Agreement provides for borrowing in the
amount of $2,040,000, including finance charges, through July 1, 2019 (the Maturity
Date) and shall be known as 2012 Special Obligation Loan. The Loan will be dated the
day it is issued as a single denomination with maturities of July 1 of each year through
2019. Borrowings will bear interest at an annual variable prime rate plus 1.5%, with an
annual minimum of 6%. Due interests shall be paid semi-annual in January 1 and July 1
each year. The Municipality’s good faith, credit and its power to impose contributions
will be compromised for the repayment of this liability and will begin on January 1,
2013. The Municipality will also pay legal, accounting, and other fees and expenses in
accordance with the Loan Agreement.
*****
83
Revenue and other Resources:
Property taxes
Sales taxes
Fines and penalties
Intergovernmental
Parking lot fees
Rent and other resources
Amounts available for appropriation
$
Expenditures charged to appropriations:
Education
General government
Health and welfare
Housing
Public safety
Public works
Total charges to appropriations
Excess of resources over appropriations
$
Schedule of Revenues and Expenditures Budget and
Actual General Fund - Non GAAP Budgetary Basis
Original Budget
Final Budget
Actual Amounts
Variance
33,275,786
24,800,000
17,120,000
450,000
700,000
14,329,320
2,210,000
183,090
15,814,134
108,882,330
33,275,786
24,800,000
17,120,000
450,000
700,000
14,329,320
2,210,000
183,090
15,814,134
108,882,330
34,362,852
24,443,240
16,880,568
588,507
717,310
14,333,906
5,431,744
105,238
16,950,543
113,813,908
1,087,066
(356,760)
(239,432)
138,507
17,310
4,586
3,221,744
(77,852)
1,136,409
4,931,578
6,095,734
5,247,738
2,441,537
44,764,714
10,521,358
979,168
16,115,336
10,977,158
11,739,587
108,882,330
5,841,483
5,201,406
2,335,134
46,645,432
10,481,403
933,037
16,103,475
9,655,312
11,685,648
108,882,330
5,749,035
5,131,313
2,300,304
46,535,984
10,359,171
922,283
16,026,412
9,594,596
11,585,556
108,204,654
92,448
70,093
34,830
109,448
122,232
10,754
77,063
60,716
100,092
677,676
—
—
5,609,254
5,609,254
84
Note to Schedule of Revenues and Expenditures
Budget and Actual – General Fund
Non GAAP Budgetary Basis
RECONCILIATION OF BUDGET/ GAAP
The schedule presents comparisons of the legally adopted budget with actual data on a
budget basis. Because accounting principles applied for purposes of developing data on a
budget basis differ significantly from those used to present financial statements in
conformity with GAAP, a reconciliation of perspective, timing, and basis of accounting
differences in the net change in fund balance for the year ended June 30, 2012 is presented
below for the general fund.
Excess of resources over appropriations - Non GAAP Budgetary Basis
$
Perspective difference :
Net change in fund balances in non budgeted funds
(441,642)
Timing difference:
Prior year expenditures
Encumbrances that are budgetary expenditures
but not used as current financial resources
Basis of accounting differences:
Revenue available for budgetary purposes not available for GAAP basis
Net change in fund balance (GAAP Basis)
5,609,254
(1,633,431)
2,453,824
1,021,678
$
7,009,683
85
86
Assets
Intergovernmental receivables
Federal grants receivable
Rent receivable
Other receivable
Total assets
$
$
Combining Balance Sheet
Nonmajor Governmental Funds
As of June 30, 2012
Federal & State
Funds
Municipal
Funds
Total
Other Governmental
Funds
2,266,124
—
685,140
642,233
—
161,771
3,755,268
3,831,956
2,501,554
—
—
22,830
—
6,356,340
6,098,080
2,501,554
685,140
642,233
22,830
161,771
10,111,608
(Continued)
87
Liabilities and Fund Balances
Combining Balance Sheet
Nonmajor Governmental Funds
As of June 30, 2012
Federal & State
Funds
Municipal
Funds
Total
Other Governmental
Funds
489,938
1,224,548
642,233
685,000
3,041,719
700,109
1,751,728
—
—
2,451,837
1,190,047
2,976,276
642,233
685,000
5,493,556
713,549
713,549
3,904,499
3,904,499
4,618,048
4,618,048
3,755,268
6,356,336
10,111,604
Liabilities:
Accounts payable and accrued
liabilities
Due to other funds
Deferred federal grant revenues
Other deferred revenues
Total liabilities
$
Fund balances:
Restricted for special projects
Total fund balances
Total liabilities and fund balances
$
(Concluded)
88
Combining Statement of Revenue, Expenditures
and Change in Fund Balance – Nonmajor
Governmental Funds
For the Fiscal Year ended June 30, 2012
Federal & State
Funds
Revenues:
Federal grants
Intergovernmental
Rent and other services
Other
Total revenues
$
Municipal
Funds
Total
Other Governmental
Funds
3,083,634
603
1,675,057
—
225,333
4,984,627
—
3,098
—
127,368
223,337
353,803
3,083,634
3,701
1,675,057
127,368
448,670
5,338,430
Expenditures:
General government
Public safety
Public works
Health and welfare
Housing
Education
Capital outlays
Total expenditures
—
275,126
2,093,882
6,837
591,083
—
286,483
132,949
982,693
1,331,437
5,700,490
1,238,408
86,907
—
118,973
42,704
77,083
—
8,130
2,596
12,455,086
14,029,887
1,238,408
362,033
2,093,882
125,810
633,787
77,083
286,483
141,079
985,289
13,786,523
19,730,377
Excess (deficiency) of revenues
over expenditures
(715,863)
(13,676,084)
(14,391,947)
—
(3,384)
—
13,590,000
—
270,877
13,590,000
(3,384)
270,877
(3,384)
(719,247)
13,860,877
184,793
13,857,493
(534,454)
1,369,118
63,678
1,432,796
3,991,464
(271,758)
3,719,706
5,360,582
(208,080)
5,152,502
713,549
3,904,499
4,618,048
Other financings sources (uses)
Debt issuance
Operating transfer out
Operating transfer in
Other financing sources (uses) net over
other financing uses
Net change
Fund balances at beginning of year
Restatement
Fund balances at beginning of year (as restated)
Fund balances at end of year
$
89
91
STATISTICAL SECTION
This part of the Autonomous Municipality of Caguas comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about
the government’s overall financial health.
Contents
Page
Financial Trends
These schedules contain trend information to help the reader
understand how the government’s financial performance and wellbeing have changed over time.
93
Revenue Capacity
These schedules contain information to help the reader assess the
government’s most significant sources of revenue.
98
Debt Capacity
These schedules presents information to help the reader assess the
affordability of the government’s current levels of outstanding debt and
the government’s ability to issue additional debt in the future.
102
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the
reader understand the environment within the government’s
financial activities take place.
104
Operating Information
These schedules contain service and infrastructure data to help the
reader understand how the information in the government’s financial
report relates to the services the government provides and the activities
it performs.
106
Except where noted, the information in these schedules is derived from the Municipality of
Caguas audited financial reports for the corresponding year. The Municipality implemented
GASB Statement No. 34 in 2003; schedules presenting government-wide information
include information beginning on that year.
Sources: The Municipality’s audited financial reports for the previous ten years. District
files and public records from various local and state agencies.
92
2012
Governmental
Invested in capital assets, net
of related debt
$ 349,783,021
Restricted
27,418,338
Unrestricted
(48,913,126)
Total
$ 328,288,233
Business-type activities
of related debt
$ 23,147,188
Restricted
Unrestricted
1,981,356
Total
$ 25,128,544
Activities Totals
of related debt
$ 372,930,209
Restricted
27,418,338
Unrestricted
(46,931,770)
Total
$ 353,416,777
2010
$
$
$
$
$
$
Net Assets by Component
Last Ten Fiscal Years
(Prepared using the accrual basis of accounting)
2009
2008
2007
2006
2005
2004
2003
370,652,456
38,934,117
(51,368,451)
358,218,122
$ 387,689,421
16,171,912
(32,910,505)
$ 370,950,828
$ 344,613,386
50,130,569
8,363,042
$ 403,106,997
$ 293,057,489
59,016,483
8,873,193
$ 360,947,165
$ 184,676,300
52,943,537
6,347,133
$ 243,966,970
$ 56,040,405
50,671,252
43,308,339
$ 150,019,996
$ 42,760,900
91,858,123
12,505,185
$ 147,124,208
$ 20,320,637
78,907,104
10,420,075
$ 109,647,816
23,722,874
5,579,396
29,302,270
$ 17,155,385
4,692,281
$ 21,847,666
$ 13,006,233
5,379,357
$ 18,385,590
$
7,754,461
5,377,561
$ 13,132,022
$
7,813,633
2,052,485
2,437,025
$ 12,303,143
$ 10,131,269
1,194,622
3,839,218
$ 15,165,109
$
8,529,687
10,361,048
$ 18,890,735
$ 12,945,714
4,532,389
$ 17,478,103
394,375,330
38,934,117
(45,789,055)
387,520,392
$ 404,844,806
16,171,912
(28,218,224)
$ 392,798,494
$ 357,619,619
50,130,569
13,742,399
$ 421,492,587
$ 300,811,950
64,394,044
8,873,193
$ 374,079,187
$ 192,489,933
54,996,022
8,784,158
$ 256,270,113
$ 66,171,674
51,865,874
47,147,557
$ 165,185,105
$ 51,290,587
91,858,123
22,866,233
$ 166,014,943
$ 33,266,351
78,907,104
14,952,464
$ 127,125,919
Note: The Municipality implemented GASB Statement No. 34 as of July 1, 2002 and commenced the prospective reporting of infrastructure assets.
93
2012
Governmental Activities:
EXPENSES
General government
Public safety
Public work
Health and welfare
Housing
Education
Debt service
Total expenses
PROGRAM REVENUES
Charge for services:
General government
Culture and Recreation
Public safety
Health and welfare
Housing
Sanitation and enviromental
Education
Operating grants and contributions
Capital grants and contributions
Total program revenues
TOTAL NET EXPENSE
Business-type activities:
Multitenant
Turabo Recreational Park
Fine Art
Total Net (Expense) Revenue
$
46,853,541
11,060,805
30,008,248
6,584,416
17,995,172
6,765,876
11,907,765
16,298,783
16,931,864
10,676,171
175,082,641
2011
$
39,743,963
10,410,999
29,591,596
4,577,429
19,084,763
14,063,387
11,045,789
15,637,305
15,887,413
9,258,116
169,300,760
2010
$
40,414,023
11,721,689
23,517,464
5,310,329
19,589,340
9,563,934
12,034,862
14,573,005
15,691,577
8,611,307
161,027,530
2009
$
43,407,060
9,965,172
31,999,201
7,429,284
19,062,734
9,675,386
18,836,679
15,092,658
14,691,953
9,448,175
179,608,302
2008
$
36,885,789
10,734,003
25,560,207
12,403,733
15,819,886
5,378,274
12,405,463
15,109,993
16,545,308
11,775,259
162,617,915
105,238
122,987
588,401
1,787,815
37,445
31,463,254
2,524,865
36,630,005
153,805
910,061
369,335
98,577
35,241,185
4,979,585
41,752,548
758,210
830,352
374,107
118,575
33,176,474
4,264,705
39,522,423
240,552
468,387
145,214
19,319
32,729,207
2,736,340
36,339,019
$
138,452,636
$ 127,548,212
$ 121,505,107
$ 143,269,283
$
69,487,314
$
(65,329)
(426,408)
(491,737)
$
$
$
$
(51,056)
1,067,991
1,016,935
$
$
10,422
(214,897)
(204,475)
$
(48,935)
(278,456)
(327,391)
$
(441,583)
(5,760)
(447,343)
2007
$
227,051
133,892
190,856
62,408
31,614,880
60,901,514
93,130,601
$
53,886,597 $
9,272,095
41,441,711
7,804,848
7,836,447
6,327,654
10,959,641
13,263,809
14,076,737
10,472,894
175,342,433
3,518,766
407,103
12,201
688,264
31,160,356
17,467,339
53,254,029
$ 122,088,404 $
$
$
(137,344) $
1,942,615
1,805,271 $
2006
38,310,363
8,797,955
24,469,027
8,276,237
9,295,701
4,133,619
12,633,171
11,737,150
15,234,980
7,767,626
140,655,829
2005
$
1,885,100
73,773
903,191
577,071
2,217,324
43,037,022
6,164,373
54,857,854
36,777,338
14,368,043
25,612,960
9,141,506
7,726,608
3,631,792
20,970,485
11,903,917
11,097,155
5,474,057
146,703,861
2004
$
1,006,537
36,806
788,307
385,599
163,402
43,686
15,275
31,901,022
23,071,261
57,411,895
41,479,793
7,645,911
13,371,867
7,842,806
11,258,187
4,414,725
6,595,290
12,042,473
13,794,946
5,415,653
123,861,651
2003
$
3,843,880
978,319
39,973
45,899,345
9,467,524
60,229,041
46,111,744
6,564,476
21,831,843
7,298,831
18,745,316
1,044,713
11,592,452
6,794,412
119,983,787
25,240,904
15,816,705
41,057,609
85,797,975
$
89,291,966
$
63,632,610
$
78,926,178
(120,636)
755,437
634,801
$
1,337,392
140,551
(148,879)
1,329,064
$
27,397
221,271
(148,879)
2,619,491
2,719,280
$
(27,785)
107,843
(146,857)
(674,283)
(741,082)
$
$
$
(Continued)
94
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
GENERAL REVENUES
Property taxes
Volume of business
Sales tax
Gain or (Loss) on disposal of capital assets
Indirect costs
Intergovernmental
Other
Total revenues
$
$
56,891,271
24,084,347
20,187,076
5,453,189
836,107
95,807
14,333,905
595,700
122,477,402
$
54,082,666
26,227,325
18,845,077
2,428,661
758,315
11,766,517
1,503,460
$ 115,612,021
$
55,698,431
23,060,087
19,464,329
699,719
1,528,317
11,272,151
1,091,739
$ 112,814,773
$
$
45,200,224 $ 53,966,882
37,477,506
25,672,625
19,653,668
18,978,615
4,935,551
4,463,529
2,105,345
3,262,871
(44,589)
750,000
10,902,119
(200,328)
1,021,244
120,029,496 $ 108,115,766
$
53,882,740
29,428,186
19,510,957
8,902,337
3,240,416
$ 114,964,636
(26,802,903) $
3,115,773
(23,687,130) $
$
52,535,437
27,906,137
8,902,250
9,374,513
2,406,489
$ 101,124,826
$
$
$
43,617,542
34,725,057
7,617,979
901,283
86,861,861
47,308,064
29,213,224
12,161,574
700,850
12,062,938
2,596
$ 101,449,246
$
$
$
43,616,537
30,972,297
6,930,134
1,596,701
9,934,152
1,703,097
94,752,918
CHANGE IN NET ASSETS
Governmental activities
$
Business-type activities
Total Primary Government
$
(15,456,549) $
(1,010,422)
(16,466,971) $
(11,948,075) $
(2,317,262)
(14,265,337) $
(15,952,223) $
6,934,498
(9,017,725) $
38,292,695
1,352,692
39,645,387
$
(7,775,955) $
2,457,458
(5,318,497) $
15,289,816
671,836
15,961,652
$
$
2,624,585 $
(3,725,626)
(1,101,041) $
37,476,392
3,059,524
40,535,916
$
$
15,366,102
(280,444)
15,085,658
Note: The Municipality implemented GASB Statement No. 34 as of July 1, 2002 and commenced the prospective reporting of infrastructure assets.
(Concluded)
95
2012*
General Fund
Commited
Assigned
Unassigned
Reserved
Unreserved
2011*
2010
Fund Balances, Governmental Funds
2009
2008
2007
2006
2005
2004
2003
$
3,993,401
2,453,824
10,491,443
-
$
893,795
2,235,950
6,444,769
-
$
2,302,160
3,379,316
$
4,383,200
(4,138,068)
$
6,143,629
2,219,413
$
6,917,308
1,955,885
$
16,293,914
14,913,915
$
9,900,652
16,783,405
$
4,723,377
15,201,604
$
5,226,372
10,759,026
Total General Fund
$
All Other Governmental Funds
Restricted for:
Housing programs
$
Youth and children
Debt service
Capital projects
Special projects
Restricted Total
Unrestricted, reported in:
Special revenue
Capital proyects fund
Debt service fund
Total All Other Governmental Funds $
16,938,668
$
9,574,514
$
5,681,476
$
245,132
$
8,363,042
$
8,873,193
$
31,207,829
$
26,684,057
$
19,924,981
$
15,985,398
1,178,217
159,078
19,963,005
24,832,522
4,659,601
50,792,423
$
1,487,638
143,544
27,232,079
13,600,623
6,142,046
48,605,930
$
2,103,837
608,957
19,995,667
12,315,145
6,515,024
41,538,630
$
1,022,667
24,128
7,209,097
24,443,301
197,213
32,896,406
$
956,645
1,164,052
3,941,040
35,056,375
1,048,604
42,166,716
$
8,471,456
1,443,609
6,318,128
59,774,609
1,653,671
77,661,473
$
3,642,056
1,004,969
16,846,301
29,629,036
2,501,819
53,624,181
$
4,150,380
6,303,516
13,562,059
23,229,212
47,245,167
$
15,681,035
20,421,434
12,285,535
22,105,345
70,493,349
$
60,416
1,781,530
16,213,039
10,658,766
5,493,715
34,207,466
50,792,423
$
48,605,930
$
41,538,630
$
32,896,406
$
4,257,657
17,183,068
63,607,441
$
77,661,473
$
53,624,181
$
47,245,167
$
70,493,349
$
36,309,999
8,389,639
78,907,104
st
*The Municipality implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions effective July 1 , 2010.
96
2012
Revenues:
Property taxes
Sales tax
Federal grant
Fines and penalties
Intergovernmental
Parking fees
Rent
Indirect cost
Solid waste disposal
Other
Total revenue
Expenditure
General government
Public safety
Public works
Health and welfare
Housing
Sanation and enviromental
Education
Capital outlays
Debt service payments :
Principal
Interest
Total Expenditure
$
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
Other financing sources (uses)
Proceeds from debt issuance
Proceeds from debt refunding
Payments of debt refunding and other uses
Advance from other governments
Property taxes transferred from debt
service fund
Operating transfer in
Operating transfer out
Other financing sources, net
NET CHANGE IN FUND BALANCE
Debt Service as a percentage of
non-capital expenditures
$
2011
56,891,271
24,446,587
20,035,853
5,453,189
31,523,008
588,401
834,404
17,443,293
105,238
1,787,815
37,445
1,116,540
160,263,044
$
2010
53,167,198
26,265,718
18,940,708
2,583,023
32,019,158
910,061
755,974
22,930,091
153,805
369,335
98,577
1,493,917
159,687,565
$
Change in Fund Balances, Governmental Funds
(Prepared using the modified accrual basis of accounting)
2009
55,698,431
26,043,011
20,051,076
1,297,115
31,258,252
830,352
682,234
18,981,159
220,031
294,561
118,575
1,075,040
156,549,837
$
2008
45,200,224
27,054,049
17,531,315
4,033,924
26,451,538
468,387
2,088,394
19,916,128
240,552
145,214
19,319
235,591
143,384,635
$
2007
53,764,606
25,672,625
18,978,615
4,463,529
26,141,461
133,892
3,203,797
10,720,031
227,051
190,856
750,000
62,408
1,021,244
145,330,115
$
2006
53,882,740
29,428,186
19,510,597
8,902,337
33,048,797
251,811
3,135,304
14,952,975
359,836
675,921
2,321,198
166,469,702
$
2005
52,535,437
27,906,137
8,902,250
9,374,558
32,993,337
73,773
2,369,746
16,406,913
300,332
506,809
4,774,795
156,144,087
$
2004
43,617,542
20,605,115
7,617,979
49,238,426
36,806
882,881
13,857,385
649,964
1,530,479
43,686
178,677
138,258,940
$
2003
47,308,064
17,540,168
12,161,574
32,516,749
978,319
663,202
24,082,358
521,829
664,767
39,973
2,657,284
139,134,287
$
43,616,537
22,366,588
6,930,134
31,409,980
25,038
1,546,063
19,581,781
271,033
1,072,921
97,096
237,009
127,154,180
38,411,214
9,950,281
19,516,855
6,108,679
12,737,153
3,855,726
12,003,737
15,931,482
16,556,906
21,045,938
36,040,433
10,276,704
22,073,362
4,261,700
14,094,371
9,271,739
11,045,326
15,409,251
16,843,621
14,284,324
35,588,049
10,731,195
14,719,619
5,072,011
14,283,042
4,352,604
11,889,816
14,452,698
15,658,563
20,965,871
36,835,062
9,490,952
23,311,211
7,179,247
14,543,053
4,322,837
18,479,742
14,777,784
14,666,929
27,233,715
30,147,616
10,379,889
17,197,882
8,264,925
15,749,859
5,178,600
11,920,904
14,849,915
14,123,498
32,532,007
44,374,128
9,086,946
25,996,558
7,698,597
7,578,755
6,206,609
10,959,641
13,170,394
13,845,949
34,367,084
36,821,338
8,474,499
14,619,698
8,005,593
8,952,654
4,039,084
11,862,211
11,448,282
15,073,873
27,526,966
33,021,702
14,310,140
16,731,263
8,873,579
7,725,226
3,631,792
20,892,425
11,903,917
11,019,382
29,829,877
37,073,714
7,036,928
12,306,822
7,218,141
10,361,493
4,063,100
6,069,987
11,004,460
12,696,203
43,289,765
15,541,341
10,664,031
182,323,343
12,841,059
8,975,105
175,416,995
15,691,623
8,611,307
172,016,398
11,412,339
9,448,175
191,701,046
9,098,033
11,775,259
181,218,387
9,176,033
10,472,894
192,933,588
7,695,033
7,767,626
162,286,857
6,628,033
5,474,057
170,041,393
6,039,422
5,415,663
162,575,698
44,737,540
6,393,104
18,130,318
6,326,797
16,335,238
835,237
11,292,008
20,947,694
12,222,445
137,220,381
(22,060,299)
(15,729,430)
(15,466,561)
(48,316,411)
(35,888,272)
(26,463,886)
(6,142,770)
(31,782,453)
(23,441,411)
(10,066,201)
32,120,000
13,325,000
(13,325,000)
-
25,659,817
34,451,293
(34,451,293)
-
32,025,000
-
30,592,500
1,386,083
25,996,000
-
24,210,000
-
42,125,000
-
14,680,000
-
15,420,000
-
2,350,000
-
25,981,726
(25,717,733)
32,383,993
5,330,823
(5,330,823)
25,659,817
9,051,710
(14,751,098)
26,325,612
10,710,169
(14,692,253)
27,996,499
17,194,331
(17,471,013)
25,719,318
19,525,568
(20,072,644)
23,662,924
14,085,014
(14,085,014)
42,125,000
613,347
8,958,574
(8,958,574)
15,293,347
10,967,026
(7,419,787)
18,967,239
12,173,000
(12,583,000)
1,940,000
10,323,694
16.2%
$
9,930,387
13.5%
$
10,859,051
16.1%
$
(20,319,912)
12.7%
$
(10,168,954)
14.0%
$
(2,800,962)
12.4%
$
35,982,230
11.5%
$
(16,489,106)
8.6%
$
(4,474,172)
$
(8,126,201)
9.6%
10.5%
97
Real P ro perty
Fiscal year ended
June 30
2012*
2011
2010*
2009
2008
2007
2006
2005
2004
2003
P erso nal P ro perty
Fiscal year ended
June 30
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
To tal P ro perty
Fiscal year ended
June 30
2012
2011
2010*
2009
2008
2007
2006
2005
2004
2003
GROSS
# P ro perty
47,732
47,227
46,442
44,999
44,125
43,163
41,653
41,220
39,997
38,641
$
EXEM P T
Value
7,189,854,910
7,031,730,668
6,908,458,026
668,709,652
653,072,232
637,333,592
603,980,438
594,128,229
559,683,848
527,355,298
GROSS
# P ro perty
3,048
3,042
2,909
3,296
3,020
2,925
2,849
2,710
2,576
2,754
GROSS
# P ro perty
50,780
50,269
49,351
48,295
47,145
46,088
44,502
43,930
42,573
41,395
$
$
Value
491,301,280
447,166,944
451,354,212
49,905,209
47,517,534
52,247,255
44,778,025
36,392,274
42,600,360
49,694,983
EXEM P T
Value
576,386,120
639,021,679
641,411,184
612,839,684
594,315,969
580,767,869
601,032,826
579,814,246
573,511,495
548,950,659
$
# P ro perty
1000
741
623
520
469
533
469
437
390
355
Value
7,766,241,030
7,670,752,347
7,549,869,210
1,281,549,336
1,247,388,201
1,218,101,461
1,205,013,264
1,173,942,475
1,133,195,343
1,076,305,957
# P ro perty
157
170
143
154
141
150
143
138
117
112
$
Value
234,189,018
269,892,877
259,018,920
229,378,366
197,298,357
192,071,390
203,179,698
203,248,741
193,826,779
153,452,645
EXEM P T
# P ro perty
1,157
911
766
674
610
683
612
575
507
467
$
Value
725,490,298
717,059,821
710,373,132
279,283,575
244,815,891
244,318,645
247,957,723
239,641,015
236,427,139
203,147,628
Assessed Value and Actual Value of Taxable Property
TA XA B LE
# P ro perty
46,732
46,486
45,819
44,479
43,656
42,630
41,184
40,783
39,607
38,286
$
Value
6,698,553,630
6,584,563,724
6,457,103,814
618,804,443
605,554,698
585,086,337
559,202,413
557,735,955
517,083,488
477,660,315
TA XA B LE
# P ro perty
2,891
2,872
2,766
3,142
2,879
2,775
2,706
2,572
2,459
2,642
$
# P ro perty
342,197,102
369,128,802
382,392,264
383,461,318
397,017,612
388,696,479
397,853,128
376,565,505
379,684,716
395,498,014
TA XA B LE
# P ro perty
49,623
49,358
48,585
47,621
46,535
45,405
43,890
43,355
42,066
40,928
$
Value
7,040,750,732
6,953,692,526
6,839,496,078
1,002,265,761
1,002,572,310
973,782,816
957,055,541
934,301,460
896,768,204
873,158,329
EXONERA TED
# P ro perty
33,637
33,505
32,876
31,770
31,106
30,850
29,914
29,551
28,530
27,402
Value
$ 3,278,494,240
3,256,559,845
3,180,445,153
305,425,970
296,769,315
294,634,177
282,789,912
278,003,002
264,009,963
250,484,583
NET VA LUE
# P ro perty
21,689
21,365
12,943
20,174
19,940
19,071
18,099
17,801
16,643
15,755
EXONERA TED
# P ro perty
620
573
585
591
634
622
626
630
556
640
$
Value
4,196,437
3,734,501
4,626,510
4,900,647
4,602,732
4,738,987
4,799,118
4,933,129
4,486,075
5,747,061
Value
$ 3,282,690,677
3,260,294,346
3,185,071,663
310,326,617
301,372,047
299,373,164
287,589,030
282,936,131
268,496,038
256,231,644
To tal direct
tax rate
0.983%
0.983%
0.983%
9.33%
9.33%
8.58%
8.58%
8.58%
8.58%
8.58%
NET VA LUE
# P ro perty
2,384
2,408
2,181
1,993
2,363
2,292
2,212
2,069
2,014
2,106
EXONERA TED
# P ro perty
34,257
34,078
33,461
32361
31,740
31,472
30,540
30,181
29,086
28,042
Value
$ 3,420,059,390
3,328,003,879
3,276,658,661
313,378,473
308,785,383
290,452,160
276,412,501
279,732,953
253,073,525
227,175,732
$
Value
338,000,665
365,394,301
377,765,754
378,560,671
392,414,880
383,957,492
393,054,010
371,632,376
375,198,641
389,750,953
To tal direct
tax rate
7.83%
7.83%
7.83%
7.33%
7.33%
6.58%
6.58%
6.58%
6.58%
6.58%
NET VA LUE
# P ro perty
24,073
23,773
15,124
22167
22,303
21,363
20,311
19,870
18,657
17,861
Value
$ 3,758,060,055
3,693,398,180
3,654,424,415
691,939,144
701,200,263
674,409,652
669,466,511
651,365,329
628,272,166
616,926,685
* The Law Number 7 dated M arch 9, 2009, amended the fo rmula fo r the co mputatio n o f real pro perty value. That new law establishes that the value o f real pro perty sho uld
be determined by multiplying the actual pro perty valuatio n amo unt by 10 times the actual value o f pro perty beginning o n January 1, 2009.
98
Fiscal year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Real Property
General
Commonwealth
Purpose Debt Service of Puerto Rico
0.58%
0.300%
0.103%
0.58%
0.300%
0.103%
0.58%
0.300%
0.103%
5.80%
2.50%
1.03%
5.80%
2.50%
1.03%
5.80%
1.75%
1.03%
5.80%
1.75%
1.03%
5.80%
1.75%
1.03%
5.80%
1.75%
1.03%
5.80%
1.75%
1.03%
Direct Property Tax Rates
Total
0.983%
0.983%
0.983%
9.33%
9.33%
8.58%
8.58%
8.58%
8.58%
8.58%
Law 7 reduced the real property’s tax rate to one tenth (1/10) for the
years 2010 to 2012.
Fiscal year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Personal Property
General
Commonwealth
Purpose Debt Service of Puerto Rico
3.80%
3.00%
1.03%
3.80%
3.00%
1.03%
3.80%
3.00%
1.03%
3.80%
2.50%
1.03%
3.80%
2.50%
1.03%
3.80%
1.75%
1.03%
3.80%
1.75%
1.03%
3.80%
1.75%
1.03%
3.80%
1.75%
1.03%
3.80%
1.75%
1.03%
Total
7.83%
7.83%
7.83%
7.33%
7.33%
6.58%
6.58%
6.58%
6.58%
6.58%
99
Personal Property
2012
Taxable Assessed
Valuation
Taxpayer
Wal-mart Puerto Rico, Inc.
Avon Products, Inc.
Walgreen's of Puerto Rico
Costco Wholesale
K Mart Corporation C/o Burr Wolff
Pfizer Pharmaceutical, LLC
Home Depot Puerto Rico, Inc.
Drogueria Betances Inc.
Sears Roebuck de Puerto Rico, Inc.
Airport Shoppes and Hotel, Corp.
$
22,689,255
13,598,829
10,678,767
10,113,735
9,763,692
8,470,982
8,056,322
7,795,211
7,442,622
7,031,418
Total
$
105,640,833
Real Property
Rank
1
2
3
4
5
6
7
8
9
10
2011
Percentage of Total
Assessed Valuation
3.97%
2.38%
1.87%
1.77%
1.71%
1.48%
1.41%
1.36%
1.30%
1.23%
18.46%
Taxable
Assessed
$
##
##
##
##
##
##
##
##
##
22,239,044
14,606,711
7,715,787
9,288,913
9,110,983
8,600,481
7,556,649
6,659,741
6,922,527
6,661,358
$
99,362,194
2012
Taxable Assessed
Valuation
Taxpayer
Puerto Rico Telephone Company, Inc.
Caguas Centrum Limited Partnership S E
First SB SCA ASSOC/MJS Caguas limited
FW Caguas Retail Joint Venture
Celulares Telefonica Inc.
Wal-mart Puerto Rico, Inc.
HIMA Parking Corporation
PR Wireless Inc.
TSCPR Family Partnership #8, LTD, SE
Sears Roebuck of PR Inc
Vornado Catalinas LP
Centennial PR Operations, Corp.
Total
Principal Property Tax Payers
Current and Previous Years
$
$
16,472,983
4,410,916
2,548,820
2,391,162
2,367,828
2,101,821
2,089,244
2,088,000
1,955,128
1,845,549
38,271,451
Rank
1
2
3
4
5
6
7
8
9
10
-
Rank
1
2
6
3
4
5
7
10
8
9
Percentage of Total
Assessed Valuation
3.50%
2.30%
1.21%
1.46%
1.43%
1.35%
1.19%
1.05%
1.09%
1.05%
15.64%
2011
Percentage of Total
Assessed Valuation
4.21%
1.17%
0.68%
0.63%
0.63%
0.56%
0.21%
0.55%
0.52%
0.49%
9.64%
Taxable
Assessed
$
##
##
##
##
##
##
##
$
13,475,646
3,969,824
2,293,937
2,166,419
1,891,638
2,203,200
1,897,874
1,660,997
2,490,683
3,119,885
35,170,103
Rank
1
2
5
7
9
6
8
10
4
3
Percentage of Total
Assessed Valuation
3.57%
1.05%
0.61%
0.57%
0.50%
0.58%
0.50%
0.44%
0.66%
0.83%
9.32%
Source: Municipal Collection Tax Center
100
Property Tax Levies and Collections
Collected within the fiscal year of the levy
Fiscal Year
ended June 30
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Amount
Collected of
Current Year
Taxes Levied
Taxes Levied
for the Fiscal
Year
$ 58,594,113
61,199,448
61,809,774
55,861,044
58,023,498
55,396,264
51,399,609
50,348,040
45,913,573
45,599,674
$
34,643,304
40,592,294
36,253,449
38,467,806
45,692,028
48,061,336
43,584,140
41,353,094
36,490,062
37,394,310
Collections
from prior years
levied taxes
Percentage
of levy
59%
66%
59%
69%
79%
87%
85%
82%
79%
82%
$
15,790,399
11,336,060
15,074,274
13,299,991
5,302,089
4,110,971
3,933,986
3,892,984
4,522,425
3,670,960
Total
Collections to
Date
$ 50,433,703
51,928,354
51,327,723
51,767,797
50,994,116
52,172,307
47,518,126
45,246,078
41,012,487
41,065,270
Ratio of Total
Tax
Collections to
Total Tax Levy
86%
85%
83%
93%
88%
94%
92%
90%
89%
90%
101
Municipality's Outstanding Debt
Governmental Activities
General obligation bondsa
Special Loans
2012
$
Total
Business type activities
Special bonds
226,568,577
4,200,000
38,591,000
269,359,577
3,593
Total general outstanding debt
$
2011
$
207,117,677
4,870,000
37,855,000
249,842,677
39,571
2010
$
211,783,677
5,470,000
17,939,000
235,192,677
74,840
Ratios of Outstanding Debt by Type and Ratios
of General Bonded Debt Outstanding
2009
$
115,180,680
6,555,000
96,058,500
217,794,180
224,165
2008
$
115,103,680
8,229,000
66,032,758
189,365,438
279,435
2007
$
114,153,680
8,605,000
50,043,791
172,802,471
363,982
2006
$
101,853,030
9,560,000
43,684,824
155,097,854
489,871
2005
$
2004
82,882,197
10,470,000
25,175,858
118,528,055
$
544,105
269,363,170 $ 249,882,248 $ 235,267,517 $ 218,018,345 $ 189,644,873 $ 173,166,453 $ 155,587,725 $ 119,072,160 $
#############
#############
#############
#############
#############
#############
#############
#############
143,027
143,027
142,893
143,274
143,176
142,984
142,769
143,844
12,564.00
12,564.00
2003
75,404,197
11,245,000
18,861,891
105,511,088
$
5,626,715
111,137,803
68,676,030
11,985,000
19,527,924
100,188,954
5,815,750
$
106,004,704
143,169
142,497
Percentage of personal income b
14.99%
13.91%
13.54%
13.55%
10.50%
10.99%
9.98%
7.85%
7.66%
7.64%
b
1,883
1,747
1,646
1,520
1,323
1,209
1,086
824
737
703
1,584
3,758,060,055
1,448
3,693,398,180
1,482
3,654,424,415
804
691,939,144
804
701,200,263
798
674,409,652
713
669,466,511
576
651,365,329
527
628,272,166
482
616,926,685
6.03%
5.61%
5.80%
16.65%
16.42%
16.93%
15.21%
12.72%
12.00%
11.13%
Total long-term debt per capita
b
Bonds payable per capita
Net assessed value of taxable property
Percentage of bonds payable of net assessed
value of property
a
Details regarding the Municipality’s outstanding debt can be found in the Note 7 in the current financial statements.
See Demographical and Economic Statistics for personal income population data for the Municipality. The ratios are calculated using personal income and
population for the fiscal year.
b
102
Assessed Value of Taxable Property
$
Legal debt limit 10% of assesed value of taxable property
Debt applicable limit:
General obligation
Less: GO's Debt Service Fund Balance
Total Net applicable to limit
Legal Debt Margin
$
4,483,550,353
$
Total net applicable to limit
Legal Debt Margin
Total net applicable to the limit
as a percentage of debt limit
$
a
448,355,035
265,159,577
19,963,005
245,196,572
203,158,463
2012
Legal Debt Limit
Legal Debt Margin Information
2011
2010
2009
2008
2007
2006
2005
2004
2003
448,355,035
441,045,800
436,479,755
128,154,934
126,037,644
121,810,146
120,501,326
117,394,248
89,676,820
87,315,830
245,196,572
217,740,598
194,860,800
110,637,495
112,884,406
110,312,904
85,006,729
69,320,138
63,118,662
52,462,991
203,158,463
223,305,202
241,618,955
17,517,439
13,153,238
11,497,242
35,494,597
48,074,110
26,558,158
34,852,839
54.7%
49.4%
44.6%
86.3%
89.6%
70.5%
59.0%
70.4%
60.1%
77.8%
Note:
a The Municipal Collection Tax Center revised the property valuation for the fiscal year.
103
Fiscal
Year
Population
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
142,773
143,027
142,893
143,274
143,176
142,984
142,769
143,844
143,169
142,497
Demographic and Economic Statistics
Personal
Income
**
**
*
*
*
*
*
*
$
$
$
$
$
$
$
$
$
$
1,739,403,459
1,796,991,228
1,737,293,094
1,608,680,472
1,805,449,360
1,575,540,696
1,558,323,635
1,516,691,136
1,450,301,970
1,386,923,301
Unemployment
Percentage
Rate
Per
Capita
$
$
$
$
$
$
$
$
$
$
12,183
12,564
12,158
11,228
12,610
11,019
10,915
10,544
10,130
9,733
**
**
*
*
*
*
*
*
13.5
14.7
15.6
14.3
11.4
10.3
10.7
10.0
10.6
11.3
Source: US Census Bureau
*American Community Survey 1-year estimate
**Estimate by Advantage Business Consultant
104
Principal Industries Employers
Current Year and Nine Years Ago
2012
Industry
RETAIL TRADE
EDUCATIONAL SERVICES
HEALTH AND WELFARE
PUBLIC ADMINISTRATION
ADM. SERVICES AND SOLID WASTE
ACCOMMODATION AND FOOD SERVICES
MANUFACTURING
CONSTRUCTION
WHOLESALE TRADE
PROFESSIONAL TECHNICAL SERVICES
REAL ESTATE, RENT OR LEASE
TOTAL
Employees
9,197
5,274
4,960
4,846
4,191
3,599
3,557
2,289
1,709
1,254
40,876
47,116
Rank
1
2
3
4
5
6
7
8
9
10
-
2003
Percentage of
Total City
Employment
19.5%
11.2%
10.5%
10.3%
8.9%
7.6%
7.5%
4.9%
3.6%
2.7%
86.76%
Employees
8,382
3,649
4,271
6,065
3,337
1,997
6,250
2,055
1,796
843
38,645
42,684
Rank
1
5
4
3
6
8
2
7
9
10
Percentage of
Total City
Employment
19.64%
8.55%
10.01%
14.21%
7.82%
4.68%
14.64%
4.81%
4.21%
1.97%
90.54%
Source: Puerto Rico Department of Labor and Human Resources.
105
FUNCTION
GENERAL GOVERNMENT
PUBLIC SAFETY
PUBLIC WORKS
CULTURE AND RECREATION
HEALTH AND WEALTH FARE
ECONOMIC AND SOCIAL DEVELOPMENT
HOUSING
SANITATION AND ENVIRONMENTAL
EDUCATION
TOTAL
Full-time Employees by Function
Last Ten Fiscal Year
2012
424
311
325
144
539
36
62
136
28
2011
409
332
322
171
563
35
61
138
31
2010
326
355
304
134
467
79
62
118
27
2009
288
337
336
175
450
61
55
111
20
2008
322
326
386
176
482
67
59
119
31
2007
360
330
403
215
527
85
62
126
33
2006
309
297
368
193
519
81
56
110
32
2005
323
304
402
379
581
86
60
106
33
2004
212
285
391
270
30
19
107
30
2003
308
281
369
214
136
33
25
115
31
2,005
2,062
1,872
1,833
1,968
2,141
1,965
2,274
1,344
1,512
Source: Information was obtain from Municipality's Human Resource Department.
106
Function/Program
2012
2011
2010
Operating Indicators by Function/Program
2009
2008
2007
2006
2005
2004
2003
PUBLIC SAFETY
Physical arrests
Parking violations
Traffic violations
1,633
7,658
14,683
4,027
6,788
8,622
3,816
6,984
12,596
3,222
14,345
21,004
15,919
18,147
12,235
17,379
17,191
17,998
19,180
16,256
17,235
17,016
17,868
16,118
PUBLIC WORK
Walk side construction (cubic yd.)
Street resurfacing (tons.)
Potholes repaired (tons.)
Traffic signals
Bus lines (Trolleys)
Total route miles
Passengers
2,423
18,951
5,890
678
3,869
17,970
4,651
603
2,654
8,498
3,502
704
2,311
10,395
3,967
310
3,407
27,010
3,706
580
3,737
16,630
4,017
169
1,304
25,073
4,755
364
1,978
22,090
4,898
603
1,613
31,561
5,390
260
1,208
18,698
6,439
123
39,835
143,239
29,956
117,762
29,586
140,972
23,724
79,516
17,648
75,316
16,545
63,979
3,494
17,370
45,035
48,795
51,553
53,268
87
6,299
22
779,350
41,675
23
1,985
30
391,871
43,232
23
2,390
27
106,753
37,623
25
1,002
12
130,104
37,668
25
1,008
15
122,301
37,350
25
1,012
17
119,600
31,470
20
712
18
120,500
25,398
17
704
31
148,650
29,062
15
558
27
48,650
28,122
10
712
26
22,600
36
113,350
16
22
84,181
14
22
19,407
16
36
3,217
14
36
3,218
14
36
3,121
13
34
3,108
13
34
3,112
11
33
3,050
11
31
2,810
10
36,698
1,865
61,980
1,586
80
34,586
1,978
49,205
1,514
80
349
446
46,116
1,514
80
285
37
100
1,482
80
285
38
100
1,482
80
300
43
95
1,482
90
302
43
95
1,482
90
305
42
92
1,482
90
305
42
87
1,482
90
289
40
88
1,482
90
81
196
196
196
192
189
178
162
162
162
187
45
842
21
23
295
870
30
500
79
12
436
791
179
821
59
36
104
428
38
44
10
482
316
18
152
547
4
32
336
4
85
608
220
5
19
206
344
110
9
19
91
240
522
314
2
9
58
9,299
20,756
86
4,387
91
3,744
85,512
5,719
50
2,379
87
4,580
91,325
5,098
100
6,000
40
1,040
87,367
3,103
51
1,211
105,473
1,478
19,506
1,508
-
2,537
-
-
768
104
2,585
169
3,978
-
1,221
96
3,362
183
5,875
-
1,324
258
26
1,325
164
11
125
113
33
1,279
125
24
1,279
251
9
1,279
214
27
1,279
341
38
1,279
235
58
1,279
248
25
1,279
362
24
56,470
9,071
55,959
7,879
68,631
9,000
44,145
8,214
59,851
13,474
61,702
21,162
67,676
17,500
76,412
13,084
58,276
13,762
59,097
10,902
14,829
15,710
16,946
17,139
17,138
17,130
17,131
17,149
17,142
17,139
316
279
243
160
80
-
-
-
-
1,035
1,071
1,386
1,219
1,219
1,219
1,219
1,219
1,219
CULTURE AND RECREATION
Museum attendance
Arts workshops
Arts workshops attendance
Cultural activities
Cultural activities attendance
Sports organizations
Sports activities attendance
Sports played
HEALTH AND WEALTH FARE
Elderly transportation*
ADA transportation*
Food-services*
Head-start enrollment
Care center enrollment
ECONOMIC AND SOCIAL DEVELOPMENT
Community organizations
Business Support Center
Orientation or individual support
Group training
Training attendance
Business trainings
New business created
Jobs created
Tourism
Orientation for visitors
Websites visits
School groups
Students served
Tourists tours
Tourists tours attendance
Botanical and garden attendance
HOUSING
Vouchers
Donations minimum rehabilitation
Home grants
SANITATION AND ENVIRONMENTAL
Waste Disposal Collected (tons)
Recyclables Collected (tons)
EDUCATION
Public school enrollment
Municipal school enrollment
School transportation service
Source:
Various City Departments
*Presentation methodology was changed for year 2011 in order to make data more meaningful.
107
1,219
Function
Public safety
Police:
Mobile unit
Stations and substations
Patrol units
Emergency:
Emergency units
Public works
Highways and streets (lineal miles)
**Public works units
Civic Center
Museums
Recreational facilities:
Soccer parks
Basketball courts
Baseball parks
Jogging tracks
Pasive parks
Community's center-facilities
Health and welfare:
Public Hospitals
Emergency Centers
Vaccination center
Movil health unit
Community centers
Head Start centers-owned premised
Head Start centers-leased premised
Municipal care centers
Economic and Social Development
Urban centers
Commercial spaces
Main event venues
Sanitation and enviromental
*** Collection truck
Education
Science and Technology School (Jr. High)
Library
Electronic library
Capital Assets by Function
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
1
12
33
1
12
45
12
62
12
58
12
46
11
44
*
37
*
24
*
9
*
6
3
1
4
4
4
4
3
3
3
3
364
-
364
-
346
-
346
-
346
1
346
10
346
6
346
3
346
2
346
5
1
8
1
8
1
7
1
7
1
6
1
6
1
6
1
6
1
6
1
6
2
126
39
42
78
8
2
126
39
42
78
8
90
42
38
26
8
90
42
38
26
8
90
42
38
26
7
*
*
*
*
6
*
*
*
*
6
*
*
*
*
6
*
*
*
*
6
*
*
*
*
6
1
1
1
1
56
18
16
2
1
1
1
1
62
14
20
2
2
6
2
1
62
14
20
3
2
6
2
1
62
14
20
3
2
6
2
1
62
14
20
3
1
6
2
1
*
14
20
3
1
5
1
1
*
14
20
3
1
4
1
1
*
14
20
3
1
3
1
1
*
14
20
3
1
3
1
1
*
14
20
3
1
45
1
1
45
1
1
66
1
1
66
1
1
67
1
1
67
1
1
67
1
1
67
1
1
67
1
1
67
1
-
-
-
-
-
2
10
2
1
1
2
1
11
1
1
10
1
1
11
1
1
11
1
1
9
1
8
1
8
1
7
1
7
1
6
Source: Various City Departments
*No data was available
**Public work units are the vehicles purchased per year
***Collections truck are the vehicles purchased per year
108

autonomous municipality of caguas, puerto rico

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