A little more than two and a half years after Hurricane María hit the island and after almost three months of shutdown due to COVID-19 pandemic, Puerto Rico enters the third phase of the economic reopening plan, having - almost as the only saving thread - the federal injection associated with the 2017 cyclone.
According to the Oversight Board, the post-María federal injection should total some $75 billion and may also include between $400 million and $500 million if the Federal Emergency Management Agency (FEMA) and the Wanda Vázquez Garced administration reach a final agreement on the damage caused by the earthquakes that affected the south of the island last January.
Besides, last week, the Board executive director Natalie Jaresko said at a congressional hearing that due to the COVID-19 pandemic, Puerto Rico should receive another $14 billion.
Due to the two natural disasters and the pandemic, Puerto Rico would receive some $89.5 billion in federal funds, an injection that no other governor in history has ever had access to.
If any parallels were to be drawn to the current situation, it could be the money Puerto Rico received between 1935 and 1955 as a result of President Franklin D. Roosevelt's "New Deal," which on the island took the form of the Puerto Rico Reconstruction Administration (PRRA). Back then, an economy of some $225 million received $82 million in federal funds for infrastructure, which could represent about $1.491 billion today.
In separate interviews, FEMA coordinator for Puerto Rico Alex Amparo, Housing Secretary Luis Carlos Fernández Trinchet, and the Office of Reconstruction Coordinator (COR3) Ottmar Chávez acknowledged that the past two and a half years have been "a learning curve," but said the reconstruction process is progressing. However, the director of the Center for a New Economy (CNE) office in Washington, D.C., Rosanna Torres, said the injection of federal funds will have little effect unless Puerto Rico articulates a coordinated strategy to ensure the use of the approved funds and overcomes credibility issues in Washington.
Permanent works ready to go
According to Amparo, over the past eight months, FEMA has gone from approving about six permanent projects a month to 400. The agency has put about $6.83 billion in committed funds in place to build roads, bridges, parks, and facilities throughout Puerto Rico.
"It's been a learning curve for municipalities, for the government and also for FEMA. There are different permits, costs, and taxes here that you don't have in other places, that we had to learn," Amparo said.
In total, after more than 90,000 damage claims, FEMA and the Puerto Rico government have identified more than 8,000 permanent work projects. For each of those projects, the parties must agree on the cost, design, and time to complete them. Between September and May, some 1,659 projects have been approved.
Amparo and Chávez revealed that between 65 and 70 percent of the identified permanent works will be approved before the end of this year.
Until last month and considering all categories under the Stafford Act, FEMA committed $19.904 billion. Of that package, which includes aid to individuals and administrative expenses, the 77 percent has already been spent.
When including funds allocated through other programs such as the Community Development Block Grant (CDBG-DR) program, the U.S. Army Corps of Engineers, Hurricane María, funds exceed $22.3 billion, Chavez said.
According to Amparo, permanent projects usually gain traction about three years after the disaster. "For permanent works, you have to do thousands and thousands of inspections, roads, buildings, only in (the Department of) Education (damage) inspections cover 1,100 schools and the same happens in PRASA (Aqueduct and Sewer Authority) with each plant and wastewater plants and thousands of miles of power lines and hundreds of (electric) substations.
The progress achieved involves multiple adjustments between the parties, he said.
A complex and "absurd" Process
Amparo is the fifth FEMA coordinator to lead the response to Hurricane María in 33 months. In that same period, FEMA adjusted the course of its disaster response on at least three occasions.
In the beginning, Puerto Rico entered into section 428 of the Stafford Act. FEMA also required to justify funds or "manual drawdown," considering "the island's history of fiscal irregularities and mismanagement.”
According to Chávez, once the bipartisan bill that allocated funds for Hurricanes Harvey, Irma, and María and other disasters was amended, it became easier for reconstruction work to improve what was destroyed rather than replacing it. Besides, last year, the so-called "National Workflow Model" was applied to Puerto Rico. Only last January, FEMA authorized the use of section 406 of the Stafford Act, which allows the use of funds for works that prevent that a new disaster results in more destruction.
Although the national model for permanent works is more precise, each project must comply with 19 steps, said Chávez, who described Amparo as "an ally" of the island in the reconstruction process.
The situation has not been much different with the CDBG-DR program, said Fernández Trinchet.
It wasn't until almost two years after Hurricane María that the federal government approved Puerto Rico´s reconstruction plan, the attorney said. According to Fernández Trinchet, since the first congressional appropriations, agreements between Puerto Rico and the U.S. Department of Housing and Urban Development (HUD) were substantially amended for times.
Of the funds approved in Congress, HUD committed some $11.3 billion and authorized the use of $3.2 billion of that package. Of that total, only $72 million have been disbursed. The disbursements amount to $144 million, the attorney said, when funds allocated to certain housing projects and documented separately by HUD are included.
"For each program, you have to prepare guidelines, you have to certify the sub-recipients (of funds). I can't move a finger without federal government approval. It's absurd," Fernández Trinchet said, referring to the agreement that last February, Vázquez Garced called a step forward.
Fernández Trinchet became Housing secretary after his predecessor - Fernando Gil - objected to the procedures established by HUD, which cost him the jo. Despite the obstacles, Fernández Trinchet is optimistic. He said that 15 years after Katrina, Louisiana still receives funding through the CDBG-DR program.
To disburse the first $3.2 billion available, Housing has developed 14 different programs.
Several programs, however, came into effect right in the middle of the pandemic when much of the economic activity and government agencies closed down because of the health emergency.
No money or will to request
Even if bureaucracy were not a stumbling block, Puerto Rico did not have the money to start rebuilding.
"Generally, the government starts with its funds, matches it with private insurance, and then FEMA comes in to cover the difference. Because of Puerto Rico´s fiscal situation, the island did not have access to the capital market or a rainy day fund. That didn't exist," Chavez said.
"It´s almost three years since Hurricane María hit the island and there are mayors, agencies fighting with insurance claims. I can't give a dollar for a project until that is resolved," Amparo added.
To resolve cash deficiencies, another $270 million in CDBG-DR funds were allocated to comply with FEMA matching requirements.
"Puerto Rico has been in a recession for 15 years and with austerity measures undermining its institutions. You can't expect the government to respond effectively if you cut back on health, education, public safety," Torres said.
In the urgency for funds, Torres added, Puerto Rico signed the agreement with HUD without negotiating the procedures to follow," Torres added. "It's 50 pages of obstacles.
"Puerto Rico is dealing with a structure of requirements that were not asked in Texas, Florida, or the Virgin Islands. It is a structure based on stereotypes that we are lazy and corrupt," Torres complained.
Reconstruction versus recovery
"We're looking at reconstruction, but recovery is something else... There is no recovery until people feel they can have a life that could be described as normal…there is no sense of security," Torres said, noting that currently, efforts between FEMA and CDBG-DR lack coordination and transparency.
Despite the obstacles, Chávez said many of the procedural and logistical issues between FEMA and the government have been overcome, laying the groundwork forthe flow of projects to advance.
To speed up the process, FEMA and the government divided the reconstruction effort between small and large-scale projects. The first program allows for the disbursement of 90 percent of the funds. The second group of projects focuses on the reconstruction of the power grid, water infrastructure, and the Department of Education. Those projects account for nearly 70 percent of the funds that will come through FEMA, and negotiations are already advanced, Amparo and Chavez said.
Among the upcoming projects, Amparo mentioned the relocation of reservoirs and school reconstruction, stressing that these new projects will seek to adopt the best practices available.
"They gave us the authority to build and replace Puerto Rico's infrastructure following the highest codes. I have said it everywhere and it is what I tell the staff all the time, these are opportunities of a generation that we cannot waste," Amparo noted.