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    U.S. home prices climbed 1.7% in June, to take year-over-year gains to 6.5%, CoreLogic said Tuesday. Fifteen states and the District of Columbia were the strongest since the series began in 1976. Only four states-- Massachusetts, Connecticut, Louisiana and Mississippi-- saw year-over-year declines. The largest peak-to-current declines are Nevada at 32.2% and Florida at 28.7%.

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    The candidates who will share the stage at this week's GOP primary debate are likely to agree on at least one thing: Congress should focus on securing the border with Mexico, not debating the legal status of this country's 11 million undocumented immigrants.“The first thing is to secure our borders,” Donald Trump said recently when asked about the unauthorized population. “After that, we’ll have plenty of time to talk about it.”It's a common view among members of his party, including Sen. Marco Rubio (R-Fla.), a rival for the presidential nod.Yet some economists and demographers who have studied Mexican immigration suggest that stricter security at the border could actually increase the number of undocumented immigrants in the country. One group of researchers estimates that by 2010, increased border enforcement over the decades had increased the number of unauthorized migrants in this country by 44 percent.Crossing the border has become more difficult, but not difficult enough to prevent many Mexican families from settling here. Yet if the border were less heavily policed, some experts argue, many migrants would be crossing it illegally, traveling between their homes and families in Mexico and temporary jobs here. Given security at the border, some of these itinerant workers have decided to simplify things by staying here permanently, the reasoning goes.If so, more undocumented immigrants are residing in the United States as a result of border enforcement, often bringing their families along with them.Republicans' focus on border security is "simply misplaced and counterproductive and far as I can tell serves no constructive purpose whatsoever, but that’s where the debate is," argues Wayne Cornelius, a political scientist at the University of California, San Diego.He describes the increase in the undocumented population as a massive "unintended consequence" of border enforcement on the huge market for immigrant labor in the Southwest. It's a striking critique of a party that has long warned of the dangers of government intervention in the economy.Limiting immigration from Mexico, though, has been a goal that Democrats and Republicans have shared for most of the half century since 1964. That was when Congress voted to end a guest-worker agreement with Mexico that had allowed migrant laborers into the United States since the Second World War. The workers kept on coming illegally, despite Congress.And that was the beginning of undocumented immigration. Leonard F. Chapman, the Marine Corps general and President Nixon's immigration commissioner, called it "a growing, silent invasion of illegal aliens" in 1976. He was among the first to argue for stricter security at the border.Many of these immigrants came to settle, but many others only stayed a few months before returning, according to Douglas Massey, a sociologist at Princeton University. He and his colleagues began conducting surveys of Mexican families on both sides of the border in 1982.They've collected detailed information about who is crossing the border over the decades, asking Mexicans questions about their families, their jobs, their financial circumstances, whether they crossed legally or illegally, when and where they crossed, and whether and how much they paid a guide, one of the smugglers known at the border as coyotes.The researchers found that in 1986, about three in five of those who crossed the border had returned to Mexico within 12 months, as shown in this chart.That same year, Congress passed the first major law increasing security at the border with Mexico. Since then, the United States has dedicated vast resources -- drones, cameras, manpower and hundreds of miles of fencing -- to securing the border. All of that has cost tens of billions of dollars.Yet these additional security measures haven't prevented many immigrants from entering the country across the Southern border, research suggests. To be sure, making the crossing has become riskier. Just about everyone who crosses illegally now hires a coyote. And the coyotes are charging more than ever, at more than $2,700.Coyotes can charge high fees, because they almost always find ways around, under or through whatever is in their way. For decades, an immigrant who tried to enter the country illegally was almost guaranteed to find a way, even if he or she was detained by the Border Patrol on the first crossing.Between 1970 and 1988, the vast majority of undocumented immigrants crossed either at San Diego or at El Paso. When federal agents cracked down -- in El Paso in 1993 and in San Diego the following year -- immigrants simply began hiking through Arizona's Sonoran Desert, Massey's survey data show."This was a Bill Clinton project," recalls Cornelius, who has separately been conducting his own surveys of migrants since 1975.His data show the same trends that Massey and his colleagues have identified. Cornelius says that in recent years, to get around the 651 miles of fence built along the border under President George W. Bush and President Obama, coyotes are going through the front door, concealing their clients in vehicles or presenting false papers in order to smuggle them past customs agents at official ports of entry.In the past few years, the rate of successful crossings has declined a little, but most still make it through eventually, according to data.Massey's data as well as federal statistics suggest that the number of Mexicans attempting to enter the United States without papers has declined sharply since 2000. At this point, as many undocumented immigrants are returning home as are entering illegally, and there are now fewer undocumented immigrants living here now than ever.Yet the data suggest that decline is not a result of increased enforcement at the border. Undocumented immigration has declined because the Mexican economy has expanded while the U.S. economy has not done well, and because Mexico's population is getting older. Young adults are the most likely to immigrate.Despite the stiff prices the coyotes were charging, it was still worth it for many undocumented Mexican migrants to cross into the United States as long as they had a hope a finding a good job here. Doing it more than once, though, may not be worth it anymore. Massey and others argue that's the more important consequence of the increase in the costs -- and the dangers -- of crossing illegally.Migrant laborers who might have come for a few months in the past whenever their families needed money and then returned to Mexico are now more likely to stay, the data show -- bringing their families with them, or starting new families here.Mark Krikorian, executive director of the conservative Center for Immigration Studies, rejects this version of the history of the Mexican border. He argues that the reason that fewer immigrants are returning is not that they are trying to avoid the expense of coming back, but that the seasonal, rural economy of migrant agricultural labor is being replaced by a resident workforce in permanent occupations in major cities, such as construction and child care.Krikorian dismisses as "laughable" the idea that border enforcement has increased the number of undocumented immigrants living in the country."It's completely malarkey," he said. "That's just a fantasy, really an ideologically driven fantasy."For their parts, the proponents of that idea agree that other factors would have steadily increased the undocumented population in the United States in any case -- the shift to permanent employment, the boom in Mexico's population, and the economic advantages that young Mexicans could gain by moving to the United States.Proponents do argue that some immigrants have responded to the hardening of the border by staying put north of it, rather than south of it. For that reason, they say, border security has exacerbated the underlying demographic and economic trends driving Mexicans into this country.In an analysis of their data, Massey and his colleagues found that while there was no statistically significant correlation between the Border Patrol's budget on undocumented migration, the budget was highly correlated with whether undocumented immigrants returned to Mexico.In an unpublished estimate, Massey and his colleagues calculated that the population of undocumented immigrants in the United States in 2010 -- roughly 14 million, by his estimate -- was 4.3 million greater than it would have been had Congress not increased the Border Patrol's budget above its level in 1986. In other words, Massey argues, border security has increased the undocumented population by 44 percent."We'd have a much smaller undocumented population now if we’d done absolutely nothing," Massey said.Some doubt that the increase in the undocumented population due to border enforcement was so drastic, and they argue that in any case, Congress could constrain undocumented immigration.If policymakers wanted fewer immigrants to enter the country illegally, they should have taken a different approach, said Pia Orrenius, an economist at the Federal Reserve Bank of Dallas.She noted that away from the border, federal agents have more effective means of deterring immigration that can reduce the undocumented population. Strictly enforcing the laws against undocumented immigrants working makes it harder for them to get by. The result is that illegally crossing the border for work is less attractive to would-be migrants in Mexico, and those who are here have less reason to stay."This really hurts people in the pocketbook every day," Orrenius said.Historically, though, Congress has spent taxpayers' money on security at the border, rather than on enforcement in the interior. As noted in one report from the nonpartisan Migration Policy Institute that critiqued congressional priorities, spending on border enforcement has exceeded spending on all other immigration programs combined. Customs and Border Patrol received $12.4 billion in 2014.Some of the GOP candidates have been talking about stricter enforcement in the interior, including Rubio and Scott Walker. "Part of doing this is put the onus on employers, getting them E-Verify and tools to do that," the Wisconsin governor told CNN's Chris Wallace earlier this year, referring to the federal government's electronic program for verifying employees' eligibility to work.Mostly, though, Republican politicians have focused on the border, which Trump visited last month."Border enforcement is the sexy option," Cornelius said. "Politicians can go to the border and do stand-ups."






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    Midsummer report card on labor market often hard to grade. A hearty gain in U.S. jobs in July would put the Federal Reserve on the cusp of its first increase in interest rates since the end of the Great Recession. But midsummer employment reports often have a way of blowing up the narrative.

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    With market observers expecting the Federal Reserve to raise interest rates this year, some investors may be worried about what will happen to their holdings of real estate investment trusts. They should know that even though equity REITs won't perform as well when rates are rising, they'll still be better investments than a lot of alternatives.

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    There is a mystery rising around the corner from my home in Northeast D.C. Its reveal has been slow: one floor at a time, the metal skeleton taking shape over months. The work seems to sputter on and off, and several times I've wondered if something went wrong. The money ran out. Or the inspectors caught wind.The neighborhood is scattered with projects that were begun and abandoned. My favorite suspended remodel still has a poster in the window in the future-is-already-past verb tense unique to real estate: "Coming in summer of 2012."In neighborhoods like this undergoing rapid change, there's a deep gulf between what we can see — someone is trying to build something — and what we know about what's really happening. How big will that apartment be? When is it supposed to be finished? And, because I know you're wondering: What are they planning to do about parking?This information, which can be gleaned from the magnificent treasure that is government building permits, often publicly exists. But it's never really been democratized. A group of tech companies and pilot cities is trying to do that now in ways that could have some fascinating implications. Imagine if you had a location-aware app that could call up the details of a construction site as easily as Redfin can show you the nearest for-sale home.Imagine if Zillow (Z) could tell you that cute add-on to the row home you like was never inspected by the city. Or if economists could use remodeling permits to forecasts gentrification while it was still possible to help long-time residents stay in their homes."I think there’s potential here to start getting a picture of what’s going on in cities, of economic indicators," says Mark Headd, a "developer evangelist" with the civic-tech company Accela that has been working with this data. "Can this give us insight into gentrification and where that’s happening? What kinds of permits are being issued, and how long do they take?"App developers and national platforms dread dealing with city data when it means individually extracting information in different forms from hundreds of local governments. "There’s a logistical nightmare trying to get this data," says Svenja Gudell, the senior director of economic research at Zillow.So Zillow (Z), Accela and several other partners and local governments including Tampa, San Diego and Chattanooga have developed a common standard all cities can use to publish data about building and construction permits. The concept has important precedent: Google (GOOG) helped coax cities to standardize their transit data so you can track bus and train routes on Google Maps. Yelp has tried to do the same with municipal restaurant inspection data so you can see health scores when you're scouting dinner.Building permit data similarly has the potential to change how consumers, researchers and cities themselves understand the built world around us. Imagine, to give another example, if an app revealed that the loud construction site in your neighbor's back yard had no permits attached to it. What if you could click one link and tell the city that, speeding up the bureaucracy around illegal construction?Gudell has all kinds of other ideas: Once housing economists have more data about renovations to go with home prices, it'll be easier to gauge the value of adding a bathroom or new kitchen to a home. It'll be easier to study consumer behavior: How likely are families to expand their current home than move to a new one? If you think you're buying into a changing neighborhood, this data could tell you more accurately what that change will look like.Zoom out, Gudell says, and these permits in the aggregate can indicate when the economy is starting to pick up, or precisely where in the city things are improving. Conversely, we can learn a lot about the state of a neighborhood — or the need for city investment — when no one there has been able to afford modest upgrades in a generation.It won't make sense for Zillow (Z) or other national companies like it to start building this data into their sites until more cities come on board. Seattle, though, has already built a platform tracking new real-estate projects that hints at what could be possible. Projects that have to go through a design review are all mapped by the city here, with each one linked to a timeline, images and public documents.There is one foreseeable complication to all this newly accessible information. It could further empower groups opposed to development in cities with fierce fights over it, or it could create the sudden impression that development is accelerating (when, in reality, it's just the flow of information that is). Eddie Tejeda, the CEO of Civic Insight, another company that has worked on the project, argues that the most ardent NIMBYs already know where to find this data."If you’re really, really dedicated and devoted to finding out about new development, you already know about the ugly spreadsheet websites where you can download it," he says. "What we’re trying to do is bring more people into the conversation — to not just allow the most fringe and the most loud who can get access to this information and be ever louder, but allow other voices to come into the conversation as well."






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    There is a mystery rising around the corner from my home in Northeast D.C. Its reveal has been slow: one floor at a time, the metal skeleton taking shape over months. The work seems to sputter on and off, and several times I've wondered if something went wrong. The money ran out. Or the inspectors caught wind.The neighborhood is scattered with projects that were begun and abandoned. My favorite suspended remodel still has a poster in the window in the future-is-already-past verb tense unique to real estate: "Coming in summer of 2012."In neighborhoods like this undergoing rapid change, there's a deep gulf between what we can see — someone is trying to build something — and what we know about what's really happening. How big will that apartment be? When is it supposed to be finished? And, because I know you're wondering: What are they planning to do about parking?This information, which can be gleaned from the magnificent treasure that is government building permits, often publicly exists. But it's never really been democratized. A group of tech companies and pilot cities is trying to do that now in ways that could have some fascinating implications. Imagine if you had a location-aware app that could call up the details of a construction site as easily as Redfin can show you the nearest for-sale home.Imagine if Zillow (Z) could tell you that cute add-on to the row home you like was never inspected by the city. Or if economists could use remodeling permits to forecasts gentrification while it was still possible to help long-time residents stay in their homes."I think there’s potential here to start getting a picture of what’s going on in cities, of economic indicators," says Mark Headd, a "developer evangelist" with the civic-tech company Accela that has been working with this data. "Can this give us insight into gentrification and where that’s happening? What kinds of permits are being issued, and how long do they take?"App developers and national platforms dread dealing with city data when it means individually extracting information in different forms from hundreds of local governments. "There’s a logistical nightmare trying to get this data," says Svenja Gudell, the senior director of economic research at Zillow.So Zillow (Z), Accela and several other partners and local governments including Tampa, San Diego and Chattanooga have developed a common standard all cities can use to publish data about building and construction permits. The concept has important precedent: Google (GOOG) helped coax cities to standardize their transit data so you can track bus and train routes on Google Maps. Yelp has tried to do the same with municipal restaurant inspection data so you can see health scores when you're scouting dinner.Building permit data similarly has the potential to change how consumers, researchers and cities themselves understand the built world around us. Imagine, to give another example, if an app revealed that the loud construction site in your neighbor's back yard had no permits attached to it. What if you could click one link and tell the city that, speeding up the bureaucracy around illegal construction?Gudell has all kinds of other ideas: Once housing economists have more data about renovations to go with home prices, it'll be easier to gauge the value of adding a bathroom or new kitchen to a home. It'll be easier to study consumer behavior: How likely are families to expand their current home than move to a new one? If you think you're buying into a changing neighborhood, this data could tell you more accurately what that change will look like.Zoom out, Gudell says, and these permits in the aggregate can indicate when the economy is starting to pick up, or precisely where in the city things are improving. Conversely, we can learn a lot about the state of a neighborhood — or the need for city investment — when no one there has been able to afford modest upgrades in a generation.It won't make sense for Zillow (Z) or other national companies like it to start building this data into their sites until more cities come on board. Seattle, though, has already built a platform tracking new real-estate projects that hints at what could be possible. Projects that have to go through a design review are all mapped by the city here, with each one linked to a timeline, images and public documents.There is one foreseeable complication to all this newly accessible information. It could further empower groups opposed to development in cities with fierce fights over it, or it could create the sudden impression that development is accelerating (when, in reality, it's just the flow of information that is). Eddie Tejeda, the CEO of Civic Insight, another company that has worked on the project, argues that the most ardent NIMBYs already know where to find this data."If you’re really, really dedicated and devoted to finding out about new development, you already know about the ugly spreadsheet websites where you can download it," he says. "What we’re trying to do is bring more people into the conversation — to not just allow the most fringe and the most loud who can get access to this information and be ever louder, but allow other voices to come into the conversation as well."






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    There is a mystery rising around the corner from my home in Northeast D.C. Its reveal has been slow: one floor at a time, the metal skeleton taking shape over months. The work seems to sputter on and off, and several times I've wondered if something went wrong. The money ran out. Or the inspectors caught wind.The neighborhood is scattered with projects that were begun and abandoned. My favorite suspended remodel still has a poster in the window in the future-is-already-past verb tense unique to real estate: "Coming in summer of 2012."In neighborhoods like this undergoing rapid change, there's a deep gulf between what we can see — someone is trying to build something — and what we know about what's really happening. How big will that apartment be? When is it supposed to be finished? And, because I know you're wondering: What are they planning to do about parking?This information, which can be gleaned from the magnificent treasure that is government building permits, often publicly exists. But it's never really been democratized. A group of tech companies and pilot cities is trying to do that now in ways that could have some fascinating implications. Imagine if you had a location-aware app that could call up the details of a construction site as easily as Redfin can show you the nearest for-sale home.Imagine if Zillow (Z) could tell you that cute add-on to the row home you like was never inspected by the city. Or if economists could use remodeling permits to forecasts gentrification while it was still possible to help long-time residents stay in their homes."I think there’s potential here to start getting a picture of what’s going on in cities, of economic indicators," says Mark Headd, a "developer evangelist" with the civic-tech company Accela that has been working with this data. "Can this give us insight into gentrification and where that’s happening? What kinds of permits are being issued, and how long do they take?"App developers and national platforms dread dealing with city data when it means individually extracting information in different forms from hundreds of local governments. "There’s a logistical nightmare trying to get this data," says Svenja Gudell, the senior director of economic research at Zillow.So Zillow (Z), Accela and several other partners and local governments including Tampa, San Diego and Chattanooga have developed a common standard all cities can use to publish data about building and construction permits. The concept has important precedent: Google (GOOG) helped coax cities to standardize their transit data so you can track bus and train routes on Google Maps. Yelp has tried to do the same with municipal restaurant inspection data so you can see health scores when you're scouting dinner.Building permit data similarly has the potential to change how consumers, researchers and cities themselves understand the built world around us. Imagine, to give another example, if an app revealed that the loud construction site in your neighbor's back yard had no permits attached to it. What if you could click one link and tell the city that, speeding up the bureaucracy around illegal construction?Gudell has all kinds of other ideas: Once housing economists have more data about renovations to go with home prices, it'll be easier to gauge the value of adding a bathroom or new kitchen to a home. It'll be easier to study consumer behavior: How likely are families to expand their current home than move to a new one? If you think you're buying into a changing neighborhood, this data could tell you more accurately what that change will look like.Zoom out, Gudell says, and these permits in the aggregate can indicate when the economy is starting to pick up, or precisely where in the city things are improving. Conversely, we can learn a lot about the state of a neighborhood — or the need for city investment — when no one there has been able to afford modest upgrades in a generation.It won't make sense for Zillow (Z) or other national companies like it to start building this data into their sites until more cities come on board. Seattle, though, has already built a platform tracking new real-estate projects that hints at what could be possible. Projects that have to go through a design review are all mapped by the city here, with each one linked to a timeline, images and public documents.There is one foreseeable complication to all this newly accessible information. It could further empower groups opposed to development in cities with fierce fights over it, or it could create the sudden impression that development is accelerating (when, in reality, it's just the flow of information that is). Eddie Tejeda, the CEO of Civic Insight, another company that has worked on the project, argues that the most ardent NIMBYs already know where to find this data."If you’re really, really dedicated and devoted to finding out about new development, you already know about the ugly spreadsheet Web sites where you can download it," he says. "What we’re trying to do is bring more people into the conversation — to not just allow the most fringe and the most loud who can get access to this information and be ever louder, but allow other voices to come into the conversation as well."






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    * Factory orders increase 1.8 percent in June. * Gain in core capital goods orders lowered to 0.7 percent. * Shipments of core capital goods revised to show increase. By Lucia Mutikani. New orders for U.S. factory goods rebounded strongly in June on robust demand for transportation equipment and other goods, a hopeful sign for the struggling manufacturing sector.

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    New orders for U.S. factory goods rebounded strongly in June on strong demand for transportation equipment and other goods, a hopeful sign for the struggling manufacturing sector. The Commerce Department said on Tuesday new orders for manufactured goods increased 1.8 percent after a revised 1.1 percent decline in May. The increase was in line with economists' expectations.

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    Orders for goods produced in U.S. factories rose 1.8% in June, the Commerce Department said Tuesday. Economists surveyed by MarketWatch had expected orders to climb 2% after a revised 1.1% decline in the prior month. Orders for durable goods-- products meant to last at least three years-- advanced 3.4% in June.

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    Imagine a scenario in which the federal government helps households pursue the American dream with ultra-loose credit, only to see prices skyrocket and families take on loads of debt they can't repay. Yes, it sounds like the housing market of a decade ago, but some say it is also the challenge of today's higher- education system. The federal government has boosted aid to families in recent decades to make college more affordable.

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    Greece expects to wrap up its bailout deal with international creditors by Aug. 18, with the drafting of the agreement to begin Wednesday, according to media reports. The ongoing talks are reaching the end of the first phase, with the second phase to include the details of the final deal. Greece's finance and economic ministers were expected to meet with the international creditors later on Tuesday to talk about privatization plans and bank recapitalization, Reuters reported.

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    A key report on U.S. manufacturing is raising some doubt about the strength of the economy in the final half of the year. The Institute for Supply Management's manufacturing index, released about 30 minutes earlier than scheduled on Monday, fell to 52.7% in July from 53.5% in June. A survey of economists by MarketWatch had forecast a 53.7% reading.

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    Steve Gutmann used to have a basement that he never used. Now strangers use Getaround.com to book Gutmann’s $6-an-hour car for errands and travelers stay in his newly refurbished basement apartment, listed at $115 a night on AirBnb.

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    Puerto Rico doesn't have enough money to pay its bills. A drought has forced the island's government to ration water. It's easy to blame this problem on the hot, dry weather, but Puerto Ricans say that isn't the only culprit. Juan Camacho's home will have running water for a day and then no water at all for the following two days.

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    Debt-plagued Puerto Rico defaulted on a bond payment for the first time Monday, triggering what is likely to be a long battle with creditors as it seeks to restructure about $73 billion in loans.The U.S. territory, whose governor has declared its debts “unpayable” and is seeking the largest restructuring ever in the country’s municipal bond market, paid just $628,000 of a $58 million payment owed by its Public Finance Corp. because the legislature didn’t provide enough money, according to the island’s Government Development Bank. “Due to the lack of appropriated funds for this fiscal year the entirety of the PFC payment was not made today,” bank president Melba Acosta Febo said in a statement. “This was a decision that reflects the serious concerns about the commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained.”The default marks an escalation of the financial crisis on the island, which has been caught in a nearly decade-long recession that has crimped government revenues and triggered an exodus to the U.S. mainland.Moody’s Investor Services, which tracks the bond market, said the default is likely the first of many to come. “This event is consistent with our belief that Puerto Rico does not have the resources to make its forthcoming debt payments,” Emily Raimes, a Moody’s vice president, said in a statement. “This is the first of what we believe will be broad defaults on commonwealth debt.”[How Washington helped create Puerto Rico’s staggering crisis]In late June, Puerto Rico Gov. Alejandro García Padilla declared the island’s debts “unpayable” and called on creditors to come to the table to renegotiate repayment terms. Puerto Rico — unlike cities such as Detroit or Vallejo, Calif. — cannot seek protection under Chapter 9 of the U.S. Bankruptcy Code. García Padilla has called on U.S. lawmakers to grant Puerto Rico’s state-run corporations, which are highly indebted and provide vital services from electricity to water, the right to file for bankruptcy. That would allow those corporations an orderly process to restructure their obligations. The Obama administration has voiced support for allowing the island’s corporations bankruptcy protection, but it has continuously emphasized that there will be no federal bailout for Puerto Rico. In a letter last week, Treasury Secretary Jacob J. Lew told Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Finance Committee, that Puerto Rico’s financial situation was “urgent” and said Congress should consider some orderly process to restructure the island’s debt.Lew also voiced support for ongoing efforts on the island to devise a long-term fiscal plan that points to how the island would fix its fiscal problems and reignite the economy if some form of debt relief is extended. A group of policymakers is expected to present the restructuring plan by the end of this month.Although some policymakers have embraced the idea of financial restructuring for Puerto Rico, many investors are opposed. They believe the island could continue to raise taxes, fees or utility rates, to pay what it owes. Moreover, they say, one reason they decided to loan money to the economically distressed commonwealth is precisely because it could not declare bankruptcy.Public Finance Corp., a fiscal arm of Puerto Rico’s government, recently notified investors who hold appropriation bonds, typically those backed by funds set aside by the legislature, that it had not transferred money to a trustee to pay the debt due at the beginning of this month. The corporation said the legislature never actually appropriated the funds. [Is it lights out for Puerto Rico?]David Fernandez, a public finance attorney in New York, said he hopes that the default shifts the conversation about Puerto Rico’s debt away from the overall size of the obligation, to one that focuses on the level of debt — and ability to pay — exhibited by the individual issuers of bonds on the island. While the island’s electric utility has one set of problems, he said, perhaps other debt issuers are in better shape to pay. They might also face greater legal mandates to pay as well. For example, the island’s constitution says that general obligation bond holders should be paid even before government workers.“It is the individual entities that have issued this debt. That is where the focus should be,” Fernandez said.






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    Debt-plagued Puerto Rico defaulted on a bond payment for the first time Monday, triggering what is likely to be a long battle with creditors as it seeks to restructure about $73 billion in loans.The U.S. territory, whose governor has declared its debts “unpayable” and is seeking the largest restructuring ever in the country’s municipal bond market, paid just $628,000 of a $58 million payment owed by its Public Finance Corp. because the legislature didn’t provide enough money, according to the island’s Government Development Bank. “Due to the lack of appropriated funds for this fiscal year the entirety of the PFC payment was not made today,” bank president Melba Acosta Febo said in a statement. “This was a decision that reflects the serious concerns about the commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained.”The default marks an escalation of the financial crisis on the island, which has been caught in a nearly decade-long recession that has crimped government revenues and triggered an exodus to the U.S. mainland.Moody’s Investor Services, which tracks the bond market, said the default is likely the first of many to come. “This event is consistent with our belief that Puerto Rico does not have the resources to make its forthcoming debt payments,” Emily Raimes, a Moody’s vice president, said in a statement. “This is the first of what we believe will be broad defaults on commonwealth debt.”[How Washington helped create Puerto Rico’s staggering crisis]In late June, Puerto Rico Gov. Alejandro García Padilla declared the island’s debts “unpayable” and called on creditors to come to the table to renegotiate repayment terms. Puerto Rico — unlike cities such as Detroit or Vallejo, Calif. — cannot seek protection under Chapter 9 of the U.S. Bankruptcy Code. García Padilla has called on U.S. lawmakers to grant Puerto Rico’s state-run corporations, which are highly indebted and provide vital services from electricity to water, the right to file for bankruptcy. That would allow those corporations an orderly process to restructure their obligations. The Obama administration has voiced support for allowing the island’s corporations bankruptcy protection, but it has continuously emphasized that there will be no federal bailout for Puerto Rico. In a letter last week, Treasury Secretary Jacob J. Lew told Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Finance Committee, that Puerto Rico’s financial situation was “urgent” and said Congress should consider some orderly process to restructure the island’s debt.Lew also voiced support for ongoing efforts on the island to devise a long-term fiscal plan that points to how the island would fix its fiscal problems and reignite the economy if some form of debt relief is extended. A group of policymakers is expected to present the restructuring plan by the end of this month.Although some policymakers have embraced the idea of financial restructuring for Puerto Rico, many investors are opposed. They believe the island could continue to raise taxes, fees or utility rates, to pay what it owes. Moreover, they say, one reason they decided to loan money to the economically distressed commonwealth is precisely because it could not declare bankruptcy.Public Finance Corp., a fiscal arm of Puerto Rico’s government, recently notified investors who hold appropriation bonds, typically those backed by funds set aside by the legislature, that it had not transferred money to a trustee to pay the debt due at the beginning of this month. The corporation said the legislature never actually appropriated the funds. [Is it lights out for Puerto Rico?]David Fernandez, a public finance attorney in New York, said he hopes that the default shifts the conversation about Puerto Rico’s debt away from the overall size of the obligation, to one that focuses on the level of debt — and ability to pay — exhibited by the individual issuers of bonds on the island. While the island’s electric utility has one set of problems, he said, perhaps other debt issuers are in better shape to pay. They might also face greater legal mandates to pay as well. For example, the island’s constitution says that general obligation bond holders should be paid even before government workers.“It is the individual entities that have issued this debt. That is where the focus should be,” Fernandez said.