>> puerto rico's beaches and sunshine have always delighted tourists. for years, the economy has struggled under a cloud of debt. now, the government insist that the situation is improving. >> there is the doomsday prophecies about being like detroit or greece, they have gotten it wrong. >> creating tax incentives for business. puerto rico is taking steps to become a destination for investors and people are taking notice. >> san juan represents one of the great investment opportunities of my generation. >> can puerto rico comeback from the brink of disaster and get capital?

we will give you a sweeping view of the island of debt and opportunity. join us as bloomberg tv heads to puerto rico. welcome to a special report on "puerto rico: island of debt and opportunity." i am stephanie ruhle. even after raising $3 billion, puerto rico is still $70 billion in debt. that is one difficulty the island faces. along with double-digit unemployment and energy prices that are double the average rate in the u.s. mainland. governor alejandro garcía padilla has announced a comprehensive plan to surmount these challenges and turn the economy around. i visited puerto rico last month and asked the governor about the changes he's making and the tough road ahead. >> we will be able to reduce the deficit and i am about to prove the first balanced budget in 23 years.

i am balancing the budget without firing people. we have been able to reduce the unemployment rate, reduce very heavily the crime rate. so, we are improving. >> how? how are you doing this? you have raised this money, it will buy you time. what are the actual action steps because you have to get out from under a big deficit? >> the market was going the wrong way. now, we need to take off, the economy, and we are doing that in a very comprehensive way. tourism is blooming, manufacturing is back on its feet again. we have been able to expand the farming industry. unemployment numbers on my term have been 14, it was still high but it was 16 with the previous governor.

>> it is still double what it is in the states. you are having a massive migration of people leaving puerto rico for the u.s. how do you stop this? >> it is here like everywhere. if there are no jobs and a high crime rate, people leave. what we can do to stop that, reduce the unemployment rate and enhance security. >> what kind of companies are you trying to attract? are there certain industries or companies that you are talking to? >> we need to diversify. that is why we are entering very strongly into aerospace. honeywell, hewlett-packard. this is a success story. at the end of the day, we prove that the doomsday prophets about

puerto rico being like detroit or greece, they were wrong. >> if you don't restructure your debt, you could look like argentina. >> now, they are comparing us with argentina, instead of detroit and greece. at the end of the day, the doomsday prophet, they said that we will not be able. we would very strongly. >> you went to the market but it was distressed and high-yield investors in the u.s. that's got to buy these deals and it is a distressed opportunity. this is a lot of money you have to pay back. you have to dig yourself out of a massive hole. this is in the hands of somewhat loan sharks. >> everybody said that it was to 11%. it was eight.

it is still high but we were able. even better is for each dollar that we sold, there were four that were there to buy. there were offers for 14 billion dollars, $16 billion. the access is there. we need to make our economy take off. what we did was buying time. now, we have the runway and we have to improve in agriculture. >> do you need to modernize your energy system, they are double what they are in the states. if you are going to have all of this building here, manufacturing, how are you going to do it when the energy bills are so high? >> if you compare puerto rico

with the jurisdiction of the united states, if you go with a white, with even alaska, there are areas where you pay for times than what you have an puerto rico. we need to improve. we are about to release the environmental impact document. we are have our main power plant as lng and transfer that into propane. we'll be able to reduce emissions and reduce the energy price. >> it was 31 when i was sworn

in. now it is 26. doill do whatever i need to to improve pripa said that he might have to have a rate hike. >> did you need to start over? you have agencies that have $300 million in unpaid bills. >> and that is one of the ideas. >> what happens if all of the union workers say i'm going on strike, i cannot take this anymore? >> that will not happen. that has happened with the previous government. he fired 30,000 people. that had a domino effect. mortgages went down, cars went down.

when i try to get them in a position for them to pay their loans, their mortgage, so that we can make everyone grow at the same time. >> governor padilla is confident that he is getting puerto rico's internal issues under control but the success hinges on getting capital from outside of the commonwealth. we will look at new tax laws designed to make the island a paradise for investors. they are creating plenty of interest. >> my phone rings with people wanted to know a little bit more. >> right now, a reminder of persistent problems, but a promise for the future. more of my interview with the governor on "puerto rico: island of debt and opportunity." ♪

>> more than 4 million tourists visited puerto rico last year. that is good for the economy but the government is trying to persuade businesses and investors to stay permanently. two tax incentive programs have received hundreds of applications. they have already brought the island high capital transplant. >> san juan represents one of the best investment opportunities of my generation. >> he is betting on the future of puerto rico. he has moved his office and family from greenwich, connecticut. >> last year, i spent about 10 or 15 days out of puerto rico. we are all in. >> to attract investors, they offer tax exemptions to business that export their services from puerto rico to outside markets. they forecast that 250 investors

will apply in 2014. >> my phone rings three or four times a week with people wanting to know more. >> local businesses are welcome. are you seeing a shift, are you seeing companies start to move here? >> for sure. i am seeing it in aerospace. >> i've seen more people come in the last two years than in a long time. one of the big advantages is not so much how many people come comments putting puerto rico back on the map. >> the new visibility is attracting a long-range of investors. john paulson has committed hundreds of millions of dollars to buy and remodel the a store vanderbilt resort. >> he has the vision and he's

willing to put his money where his vision is. >> by all indications, puerto ricans don't resent investment from tax-advantaged investors. but these are benefits to puerto rico. >> if we did not have these laws, they would not be here. >> what are the options, having the real estate development die or go away or crumble? >> it is really working. we are receiving a lot, they are partnering with our people, creating jobs. we are really happy. >> act 20 and 22 are creating buzz about a business opportunities in puerto rico but will they be enough to stimulate investment, especially when several states are dropping their tax rates. i put the question to governor padilla. >> we are competing with other states.

what is amazing is what they find when they come here and they see that everything that they heard is not true. puerto rico is on the way up. they are putting their money here. you have john paulson, you have many people, many important people in the united states investing huge money. >> what happens in your relationship with the u.s. when you have john paulson investing so publicly that you could have politicians in new york picking up the phone and saying, you leave this state, we are going to have a problem. are you ready to hurt your relationship with u.s. politicians? >> i think that it is a competition issue.

they are competing, they want to compete. we want to compete. i hate to compete. i like to win. >> talk to me about at 20, 22 compared to what the virgin islands have offered. they tried and it never took off. why is it working here? >> our friends, our neighbors, they tried. no one took a look at it. puerto rico is now competing. we have a little bit more to offer because puerto rico, it is 135 miles, it is like a continent.

you have rain forests, beaches, you have many things you see here. >> what does it mean for wealthy puerto ricans, americans can be here for six month and one day and then their tax inheritance is completely exempt. if a puerto rican buys a something outside of puerto rico, they will pay a big tax. is that fair? >> these people are bringing wealth. that is good for everybody here. >> they would be exempt on inheritance tax for all investments, not just those in puerto rico. is that fair? >> i told you before, i'm here to win. if it brings them, they will do it. >> does it hurt your relationship with puerto ricans? i am watching local developers lose out to john paulson. don't you want puerto ricans to win? >> now, they have someone to

help them in a very hard situation. without people like paulson that invest on their assets, they would be able to lose, they were about to lose a lot of money. they are not losing that money now. it is a synergy that we are creating. they want to compete in favor of their states. i need to do the same. i respect them, we work together, their states are competing, they are blooming. new york is great. everybody loves new york. but, we need to compete, we need to improve. there was a lot that was not improving. there are more than 2 million puerto ricans who want their politicians to work for puerto rico to improve. >> there are some that argue

that john paulson has an advantage. that he has politicians in his back pocket. he is getting looks on deals that no one else has. >> they will have the same -- >> but they already live here. puerto ricans are saying that they want to have the government believe in them. >> john paulson saved the game for that and he loves the puerto ricans. there is investment getting to shore because they have this investor that came here. we need to share wealth, not poverty. we need to create wealth, to have wealth to share. the other ways to share property. i'm not here to share poverty, i am here to share wealth.

>> do you have concern that maybe of development is happening in terms of luxury real estate? are there that many hedge fund millionaires that will move here? >> at the same time we're doing that, we are doing a lot of other things. we are investing a lot of money in the land, in the area. two main tourism places. they are not together. we are putting them together. we are investigating in new hotels, in new middle-class housing projects. we are creating jobs. you can see that in many other areas. for example, the crime rate. there's been a huge reduction. this has been driven down in a huge amount. this is connected. people have more jobs.

if you have more jobs, you reduce unemployment, you reduce the crime rate. that is why you cannot fire 30,000 people. that hurt us a lot. $70 billion in debt, i have been here for 17 months. we will turn around to puerto rico and that is not happening one day to the next. >> where are you in the cycle? are you at the bottom or are you climbing up? >> economists say that we are getting to that inflection line in the economic road. the planning board forecast for the sixth year in a row, positive growth and i think that is very good. i think that we are at that inflection point.

>> the number one way for you to get yourself out of this hole is acts 20 and 22? >> it is more comprehensive. there is not only one basket. we need to bet on that one. we need to bet on tourism, agriculture, 28% came from manufacturing. 20 and 22 are the way that we can bring new wealth to the commonwealth of puerto rico. >> when we come back we are , headed to a former u.s. naval base in puerto rico called roosevelt road. >> it is central to the islands division to tomorrow. >> there is not any place like what the navy created on that 8000 acre property. ♪

>> for over 60 years, the u.s. navy southern command was located at an air base in puerto rico. in 2004, they moved out, costing the island thousands of jobs and millions of dollars in revenue. now, the redevelopment is a key priority in the economic plan and it is finally ready to get off of the ground. ample land and abundant coastline. hanger, highway, housing. it is easy to see the potential. >> in all this hemisphere, there is not a place with the infrastructure that the navy created on that 8000 acre property. >> on the ground, it is a ghost town. when the navy abandoned the base, an estimated $300 million a year vanished from the island's economy.

a reuse plan stalled for lack of private investors and public funds. the surrounding committee has been devastated. >> after we lost the base, we lost many people who pay taxes. so, that debilitated the economy and the state is not awarding the municipality enough money to rebuild take the city. >> now, they feel they have a plan for the revival of roosevelt road. >> we want a world-class developer to do something with order. >> this is a master plan with a zone for sports, recreation, commerce, and ecotourism. they will take proposals from developers to fill out this blank canvas. >> the vision is a city like

compound with entertainment and sport. >> there will be a total redevelopment, primarily around the airport first and the ports. then, we will try to get some a factoring, some universities. then, we will start breathing life into it. >> the site's infrastructure and location make it a convenient hub. the possibilities for commercial space travel have drawn interest from richard branson who recently toured roosevelt road. the government isn't shy about touting the site to other world-class investors and operators. >> this is the only place in the world what they can have their cruise ships, they can have an airport that carries even b-52's, and have a theme park. >> acres of potential and intriguing goals but the challenge is the same, selecting a plan, attracting capital, and moving the project from opportunity to reality. are you ready to make this happen? >> yes. i promise that we will make it happen.

it will not take five years. >> the government's 20 year development plan for roosevelt road projects investment of over $2 billion and the creation of nearly 25,000 jobs. it is expected that a master developer will be chosen by december. if puerto rico moves quickly and efficiently to draw investors to this opportunity, this will give a major boost to governor padilla's efforts to induce the debt and grow the economy. we will be watching his efforts closely. i am stephanie ruhle, thank you for watching. ♪