(GFR Media)

Washington - Two years after Hurricane María struck the island, the slow release of reconstruction funds has been marked by unequal treatment to Puerto Rico, as a result of the federal government's distrust of Puerto Rican authorities.

Puerto Rico first faced the federal government's slow and inefficient response, and the island's government's lack of preparedness in the most difficult days of a catastrophe that since September 20, 2017, caused nearly 3,000 deaths and over $100,000 in damage.

The failures in the initial response have been well documented: Puerto Rico was left without sufficient supplies after the impact of Hurricane Irma on the Virgin Islands; the lack of trained personnel; and the problems in the governments to distribute water and food amid the emergency, among others.

Reports that were later corroborated by multiple sources, stated that U.S. President Donald Trump - who has falsely alleged that the island was allocated $92 billion for recovery - sought to stop aid to the island.

In Congress, where due to its colonial status Puerto Rico does not have full representation, the island was forced to file a reconstruction plan and the Oversight Board's decision to review any contract of $10 million or more, was signed into law.

"Both for FEMA and HUD funds, unprecedented requirements have been imposed," said Sergio Marxuach, director of Public Policy at the Center for a New Economy (CNE).

According to federal government data on its official website on the recovery of jurisdictions devastated by natural disasters, the allocations pledged to the island to mitigate the damage caused by Hurricane María and rebuild the island reached - as of July 31 - $ 42.867 billion.

But although they include FEMA's administrative expenses, that official figure does not take into account the $4.8 billion in emergency funds through the Medicaid program that has fully funded the Puerto Rican government's health plan over the last 21 months, or the $1.87 billion in nutrition assistance.

Including those funds, the total allocated to the island reaches $49.537 billion. Of those, disbursements, adding up the figures in the official website and Medicaid and nutritional assistance funds, total about $20.5 billion.

But funding for reconstruction has barely begun.

Although Governor Wanda Vázquez Garced has partly justified the delay, the island's recovery has faced bureaucracy issues and extraordinary requirements set by the main U.S. government offices in charge of distributing the funds: the Federal Emergency Management Agency (FEMA); and the federal Housing Department (HUD).

The numbers have fluctuated and may turn out to be lower, but the Puerto Rican government aspired for FEMA to provide at least $37 billion for reconstruction, including some $17 billion seeking to boost an Achilles heel of island's economy: its power grid,  damage –to a large extent- by the hurricane. Meanwhile, according to projections in the fiscal plan the Board adopted in May, there will be a total of up to $83 billion for reconstruction, between federal funding and private insurance.

Ever since the emergency began, FEMA and the government of Puerto Rico agreed to use an alternative method to approve funds for permanent reconstruction works. "As far as I understand it was voluntary," said Wednesday Ottmar Chávez, director of the Central Office for Recovery, Reconstruction and Resiliency (COR3), who took office just over a month ago.

According to Section 428 of the Stafford Act approved in April 2018, FEMA and the government of Puerto Rico had 18 months - or until October 11 - to reach a general estimate on the cost of all projects, for amounts that cannot change. The short-term advantage of Section 428 is that Puerto Rico only contributes 10 percent of the cost of each project, instead of 25 percent. In the long run, any complication that raises costs of the project, however, will have to be fully financed by the Puerto Rican government.

As of Wednesday, out of 9,345 permanent work projects, there were agreements for 139. Chávez said they are now discussing the idea of processing the smaller ones, with costs below $123,100 -which total about 5,000 proposals- through the regular process, they hope this will accelerate approval and inject between $300 million and $400 million into the economy in 2020.

For larger projects, such as those related to the transformation of the power grid and education infrastructure, Chávez is betting on an agreement with FEMA to extend the final date for certification between four to six months.

For a long time, FEMA has also demanded manual verification of grant applications and disbursements filed by the island's agencies and municipalities, a requirement that had been lifted in April and reimposed amid the crisis in Ricardo Rosselló Nevares´ government, and will be lifted again. "I expect the letter confirming this will arrive this week," COR3 director said, referring to last Thursday's meeting between Governor Vázquez and her team with the head of FEMA.

CDBG-DR funds

On the other side of the coin are funds allocated through the Community Development Block Grant for Disaster Recovery Program (CDBG-DR) controlled by HUD. Although Congress and the federal government have allocated $20.25 billion in CDBG-DR funds to the island to repair and rebuild homes and do mitigation work, the federal government has only made $1.507 billion available to Puerto Rico.

The very same day Rosselló Nevares resigned, August 2, HUD Secretary Ben Carson announced the appointment of a federal financial monitor to oversee the use of the $20.25 billion allocated through CDBG-DR.

Reports by the conservative Washington Examiner indicate that the White House wants an audit on the use of CDBG-DR funds.

Of the first $1.507 billion released, the Puerto Rican government had only granted and contracted $400 million this week, according to Puerto Rico Housing Secretary Fernando Gil Enseñat, although he said another $400 million are going through "the contracting process."

As of February 28, HUD approved guidelines on the use of an additional $8.221 billion from CDBG-DR funds. But, seven months later the agreement necessary to use those funds has not been signed.

HUD also placed Puerto Rico last in line for the authorization of guidelines for the use of the $8.285 million in CDBG-DR funds that would be directed to mitigation projects.

When the appointment of the federal monitor was announced, Secretary Carson decided to separate the authorization process for mitigation funds for Puerto Rico and the Virgin Islands from that of the states. The U.S. Virgin Islands got approval for its plan last week, but it is still unknown what will happen to Puerto Rico.

Congress demanded, through the most recent disaster relief bill - signed into law in June - that the action plan for those mitigation funds would be published in 90 days, which has not happened. It also included language that prevents the disbursement of those $8.285 billion until permanent works projects under Section 428 are agreed upon and Puerto Rico demonstrates that it has efficient controls for their use.

Complaints about prejudice

"We are being discriminated against and (with mitigation funds) it became clearer," Secretary Gil Enseñat said, although he saw a better attitude from HUD during the meeting between Carson with Governor Vázquez Garced, her team, and Commissioner Jenniffer González last week.

There were, however, no promises, as HUD and OMB blame each other for the delays in approving CDBG-DR funds, according to Gil Enseñat.

Secretary Gil Enseñat fears that at a time when the Puerto Rican government wants to request extensions to October 11 deadline to agree on permanent works, mitigation funds may end up trapped in the other FEMA process. Chávez said the government's legal team is examining that language.

At a press conference Wednesday, along with diaspora groups and Democratic colleagues, Senate Minority Leader Charles Schumer (New York) said things should be called by their name and that President Trump has had a discriminatory and prejudicial attitude toward the island.

Marxuach said Congress never explained why it imposed new requirements in the law passed last June, which apply to another $304 million in CDBG-DR funds allocated to match federal investment under that program.

But Marxuach said it is a contradiction to prevent the disbursement of mitigation funds when the first CDBG-DR package is to fund projects that involve relocating families.

For the Puerto Rico Housing Secretary, in addition to the discriminatory treatment of the island, the picture includes that processes for the CDBG-DR program are not regulated by law, which leaves even more discretion to HUD on how and when to distribute those funds, which will largely decide how to finance the island's reconstruction in the coming years.

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