Puerto Rico’s Governor, Oversight Board Find Common Ground on Economic Provisions

Sides still disagree on troubled public pension reform system.

After months of butting heads, Puerto Rico and its federally appointed oversight board have agreed on the debt-ridden commonwealth’s much-needed economic reform plans, although pension reform still is in dispute.

As part of the economics deal, Gov. Ricardo Rossello and the legislature will revoke their statute that makes at-will firing tougher for private-sector employers. The government hopes that this will lead to an influx of on-island hiring, reports Reuters. In exchange for relaxing the termination laws, the board will no longer try to eliminate Christmas bonuses or reduce the number of sick days for public and private-sector workers.

The board’s fiscal plan, which it unveiled in April, would have ordered the removal of the bonuses and reduced sick days to 14 days, a program the governor adamantly criticized. The island’s currently grants 27 vacation and sick days per year for full-time employees.

The board will also work to revise plans to reverse the bankrupt island’s economy, by closing a third of the commonwealth government’s budget over six years. Rossello had rejected the original blueprint, saying the board lacked the power to order such spending reductions.

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However, there was no agreement on how to deal with another massive controversy: Puerto Rico’s pension reform.

The federally appointed board’s director, Natalie Jaresco, told BondBuyer.com that it is still looking to cut the spending for public-worker retirement benefits by 10% starting in fiscal 2020, a plan Rossello also opposes. The commonwealth faces a $70 billion shortfall, and can only cover 8% of its pension obligations.

Although she did not say when, Jaresco expects the board to vote on the fiscal plan’s changes “soon.”

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Ohio Teachers’ Plan Nabs 20% Stake in New York Tower

Retirement system joins Allianz and Kuwait Investment Authority as Hudson Yards investors.

Ohio’s $77.6 billion teachers’ retirement plan has purchased a near-20% stake in a New York office building in a new development called Hudson Yards.

The State Teachers Retirement System of Ohio paid $431.9 million for the stake, 10 Hudson Yards, reports The Real Deal, which obtained the information via property records filed with Ohio.

The Related Companies and Oxford Properties Group, the majority owners of the property, told the publication that the agreement was “another vote of confidence” from a large-scale investor.

Hudson Yards is a massive new development rising in a once-blighted section of Manhattan near the Hudson River. It has attracted leases from major commercial tenants like media giant Time Warner, investment company BlackRock, and law firm Skadden Arps.

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Other investors in the 52-story building are German insurer Allianz and the Kuwait Investment Authority. According to the deal, which includes a $1.2 billion refinancing of debt from Goldman Sachs and Deutsche Bank, the skyscraper is valued at $2.15 billion.

In New York, the teachers’ pension plan and Related also co-own the ground lease at the base of Related’s 240,000 square-foot retail condominium at One Union Square South. The Ohio retirement system also owns 15 Union Square West’s retail condo as well as 590 Madison Avenue’s 1 million-square-foot office building.

Along with the $262 billion Canada Pension Plan Investment Board, Allianz’ investment arm, Allianz Capital, recently became part of the first private infrastructure trust as part of a plan to further develop toll roads in India.

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