Intermediaries drive up public-nuisance costs and shrink compensation

The Centro de Periodismo Investigativo (CPI) documented that firms hired by municipalities to handle public nuisances and forced expropriations build a network of subcontracts and payments that leaves a return for almost every commercial partner — except the municipality — and that, in large part, stays off the radar of the Office of the Comptroller (OCPR).

In Caguas, Francis & Gueits Law Office proposed a plan with outside lawyers; one of them, in turn, subcontracted the lawsuit operation. An analysis of invoices at the Court of First Instance shows that chain imposed on owners a charge of 20,000 dollars on top of the value of properties declared a nuisance. The same firm charges about 10,000 dollars for legal representation; the municipality assigned it 263 properties. Universal Properties Realty Government Services, with contracts in 22 municipalities, presents invoices that run about 22,000 dollars per property. Neither Francis & Gueits nor Universal bills the city hall: the cost is loaded onto the property and paid by whoever buys the nuisance, reducing what the expropriated person might receive.

San Sebastián offers the contrast: Mayor Javier Jiménez Pérez told CPI the municipality runs the program in-house and estimates 4,500 to 5,000 dollars per property (engineer, surveyor, lawyer, appraisal), with the buyer covering appraisal plus 10% in costs under the Municipal Code. In Caguas, Mayor William Miranda Torres canceled Universal after “deficiencies” and referred it to Justice; he kept Francis & Gueits.

Part of buyers’ money passes through the escrow account of Encinales Realty — tied to attorney Juan Hernández Rivera — before being deposited (if at all) in court. CPI notes that this, plus the fact that municipality–buyer contracts are not registered with OCPR, takes those transactions out of ordinary Comptroller oversight. Of 35 lawsuits by the firm between January 2021 and May 2023, in 25 not a cent was deposited to compensate the expropriated owner; in 14, the property’s debt was only the 20,000 dollars billed by Francis & Gueits.

A Caguas judge, Elías Rivera Fernández, questioned at a March 2023 hearing that “miraculously” the expenses equaled the property’s net value. CPI had already reported that in 84% of Francis & Gueits and Universal appraisals the conclusion is demolition (land minus debris), and that in 87.5% of the expropriations reviewed there was no deposit for indemnity. The Board of Examiners of Appraisers is investigating appraisers’ methodology; Justice/NIE and referrals from the PIP (Santiago and Márquez) are also underway. Hiring intermediaries is not, by itself, a fraud judgment: it is a pattern of costs and opacity that the primary puts on the table.