The largest portion of the $ 1.5 billion in federal disaster relief funds, that were released at the beginning of the month, will be used for housing rehabilitation, especially for reconstruction and repair projects or families relocation.
"The first Action Plan (the first $ 1,5 billion allocation) focuses on housing and economic development and the second ( $ 8,22 billion) focuses on public infrastructure," explained Fernando Gil Enseñat, Puerto Rico Housing Secretary, referring to the Community Development Block Grant Disaster Recovery (CDBG-DR).
$776 million, the largest portion of the first package, will be used for housing construction, reconstruction or relocation, according to the CDBG-DR First Action Plan, designed by the Puerto Rico Department of Housing.
About $ 175 million will be allocated to finance initiatives such as community planning and geo-referencing systems, while another $ 100 million will be granted in tax credits for the construction of low-income housing.
Funds also include about $100 million to cover part the local government´s part of repairs carried out by FEMA.
Projects left out of the initial proposal
However, the approval and release of the CDBG-DR funds was limited and left out an initiative to market Puerto Rico as a tourism and investment destination and another proposal that seeks to avoid foreclosures due to delays in mortgage payments.
So far, $60 million will remain unavailable while the U.S. Department of Housing (HUD) makes a decision on those initiatives.
"They have the prerogative to eliminate the program," explained Gil Enseñat. However, he said that they expect that the agency will issue specific guidelines to implement these initiatives.
The housing initiative that is still pending proposes to finance, at least partially, mortgage delays in those cases where people were complying with payments before the hurricanes hit the island but failed to pay because they lost their sources of income after the cyclones.
The other proposal seeks to promote the economic development of Puerto Rico through marketing the island as a tourism and investment destination.
According to Gil Enseñat, these initiatives were among those that would implemented swiftly since they already have the necessary technical structure and planning they require.
The approval of the $ 1,5 billion action plan came in July. Governor Ricardo Rosselló Nevares and HUD Secretary, Ben Carson signed the agreement last September 20, on the first anniversary of Hurricane María.
Back then, state officials estimated that they would have access to reconstruction funds in a few days. However, this did not happen. HUD requested a series of financial controls, external hiring and personnel training that had not been initially contemplated.
This situation and the federal shutdown that affected HUD operations for almost a month resulted in a delay on the the release of funds until last February 2. This is almost five months after the agreement was signed.
Gil Enseñat said that they demonstrated HUD the systems, process, transparency, internal controls and that they were told everything was great. “They said they were pleased. They told us that we were ahead of the Virgin Islands, Florida, and that we at the same level of Texas. But then they changed and said things were missing," noted Gil Enseñat about the funds release process.
As part of the process, they hired 157 temporary workers and they had the certification for the Puerto Rico Housing Department funds management program. They also hired experts in the areas where HUD required high levels of expertise.
In January, The Washington Post reported White House pressure on HUD to block disaster relief funds for Puerto Rico and the newspaper pointed that as the reason for Pat Patenaude´s resignation to HUD. Patenaude was among the highest-ranking federal officials that frequently visited the island to survey first hand progress of the initiatives.
Gil Enseñat made no direct reference to pressure from the White House or leaders in the federal government. However, he did mention that delays in projects led by the Federal Emergency Management Agency (FEMA), which is responsible for most of the reconstruction work, are dramatic and, in the long run, they could alter the agenda of projects with CDBG-DR funds.
He explained that the Puerto Rico Department of Housing has given FEMA estimates of specific damage for 265 housing projects, out of a total of 332 that they administer. On the other hand, FEMA has only done its part in seven of these cases and there are only 249 days left to complete the damage verification process.
"If the process is not completed by that date, then the process remains there and CDBG-DR funds would have to be used for needs that were not covered (by FEMA)," said Gil Enseñat.
CDBG-DR funds Action Plan establishes that federal, state, and private allocations cover 56 percent of the funds needed to rebuild Puerto Rico.
HUD is currently evaluating a second CDBG-DR allocation for $ 8.22 billion. The government seeks to expand the programs initiated with the first package and add nine additional initiatives, mainly in the infrastructure area with these funds.
The remaining CDBG-DR funds allocated to Puerto Rico ($ 10,153 billion) is reserved for other needs that have not been disclosed.