By The Star Staff
Fifteen municipalities are forging a legal battle against the Puerto Rico Electric Power Authority’s (PREPA) settlement with Cobra Acquisitions for work to restore the electrical grid after hurricanes destroyed it in 2017, because they will lose $75 million in construction and municipal taxes.
Gov. Pedro Pierluisi Urrutia said the settlement does not stop towns from seeking the tax payments owed for the construction work performed by Cobra.
PREPA on July 31 agreed to back Cobra Acquisitions in its municipal tax dispute, as the utility reached a $188 million settlement with the contractor in the Title III bankruptcy court.
Under the terms of the settlement, PREPA will pay Cobra $188 million. Cobra had initially argued that PREPA owed $406 million, including interest expenses for work completed more than five years ago after hurricanes Maria and Irma devastated the island.
PREPA would pay Cobra $150 million 10 business days after U.S. District Judge Laura Taylor Swain approves the settlement, and another $20 million once the utility’s bankruptcy plan is confirmed. It will pay another $18 million once it receives an order that allows it to release money that is subject to a garnishment notice from several municipalities, which allege that Cobra did not pay taxes owed.
PREPA has also agreed to back Cobra in the tax dispute, but not be liable for the money if Cobra ultimately loses. Cobra has agreed to cooperate with PREPA in appeals to the Federal Emergency Management Agency.
The Financial Oversight and Management Board asked the court to lift the 60-day moratorium on all litigation approved by the judge, to approve the settlement.
The municipalities that claim Cobra owes them money are: Gurabo, Las Piedras, Humacao, Caguas, Salinas, Arroyo, Cayey, Guayama, Yabucoa, Guaynabo, Patillas, Maunabo, Ceiba, Naguabo and Utuado.
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