(Bloomberg) -- The federal oversight board for Puerto Rico is putting the brakes on the commonwealth's plans to turn a dockyard in Old San Juan into a party and entertainment district, complete with an “urban forest” and floating beaches.
In a letter filed Dec. 2, the Fiscal Oversight and Management Board, or FOMB, said that the development deal between the Puerto Rico Convention Center District Authority and Las Brisas Property Management and CapRock Partners appeared to be a no-bid contract, and therefore in violation of the island's bankruptcy regulations that require large deals “promote market competition.”
The federal oversight board was installed as part of a 2016 federal law to help the island right its finances, and it has regularly clashed with local leaders on their spending and development priorities.
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Governor Pedro Pierluisi announced the “Bahia Urbana” -- or Urban Bay -- project earlier this week, saying the private companies were investing $118 million to revitalize a downtrodden area on the edges of the historic district. Once complete, the area would be home to bars, restaurants, an amphitheater, a tourism market and a 1,000 square-foot (93 square-meter) “urban forest” and floating sand-covered islands. The project is also expected to generate more than 250 jobs.
Under the 20-year agreement, the Puerto Rico Convention Center District Authority, a government agency, would received $100,000 per year as rent and 3% of total revenue, estimated at about $7 million per year, the board said.
Calls to the Convention Center District Authority seeking comment were not immediately returned.
In its letter, the board asked the government to submit the contract for approval.
“In the event that the referenced contract has already been executed, please be advised that such contract shall not be deemed to be in effect until it is reviewed and approved,” the board said.
Puerto Rico, a U.S. territory of 3.3 million people, is trying to emerge from a record-setting bankruptcy, where private investment and new business will be key to meeting its obligations.
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