FEMA to preauthorize Puerto Rico reconstruction projects to ensure federal funds
SAN JUAN – Promising it will be the most transparent and efficient reconstruction in the history of the United States, Puerto Rico Gov. Ricardo Rosselló announced Monday some of the “controls” that will be imposed in the administration of federal funds for long-term infrastructure projects after hurricanes Irma and María.
Among the control measures are the new Central Recovery & Reconstruction Office’s (OCRR by its Spanish initials) and the role that will be played by the Federal Emergency Management Agency (FEMA), whose regional coordinator, Mike Byrne, will also serve as federal disaster recovery coordinator, the agency announced Monday.
In addition to oversight over the use of federal money, FEMA will preauthorize each permanent work project so that prior to its start, the government can be sure it will receive federal funds to help pay for it.
“There is certainly an acknowledgment that there have to be controls [for the disbursement of federal funds]. We were the first to want to do it since the beginning. This initiated a series of discussions with both the White House and other federal agencies, particularly FEMA,” the governor said during a press conference at the Puerto Rico Convention Center, which continues to serve as the operations center for several federal agencies that have been working on the island since María.
For long-term infrastructure reconstruction projects, the government will use section 428 of the Stafford Act, which provides some flexibility in the requirements for obtaining the maximum amount of federal funds for these efforts. For example, under that section, introduced after Superstorm Sandy, the state government is not required to reconstruct exactly to the pre-disaster state, as required by FEMA’s process under section 406.
In short, section 428 would allow the government to make improvements to existing infrastructure without losing access to the maximum amount of federal funds it could obtain via reimbursement. Currently, the federal government will cover up to 90% of the cost of permanent work projects, while the rest must come from the local government’s checkbook.
The governor explained that under section 428, both the government and FEMA will analyze the damage separately and, if there is any disagreement, a third party would validate a single damage estimate. Without these evaluations, FEMA will not be able to disburse funds to pay for the respective project.
“In the past, the state had its own mechanism to have those [federal] funds that arrived and then distribute them. Now, to ensure they are being used in the most effective way possible, FEMA will have [oversight] on disbursement for those projects,” Rosselló said.
At the local level, the new OCRR will be in charge of procuring, managing and supervising any funds made available for long-term reconstruction projects, whether they come from the private, public or federal sectors.
“We believe this addresses any doubt that may exist,” the governor said about possible concerns on Capitol Hill over the commonwealth’s ability to properly use any federal funds for the island’s recovery. “The controls we are implementing are historical in nature. We will have 100% transparency, we will use methods to obtain contracts that will be clear, we will collaborate with federal agencies. If FEMA does not disburse, we cannot execute. Why? Because we want awareness to exist over [in the States] that we are taking this process of rebuilding very seriously.”
Federal government requirement?
To repeated questions about whether the implementation of the OCRR and the role of FEMA in the process to handle federal funds is an expressed requirement of Washington, D.C., to allocate recovery funds to the island, the governor assured that was not the case.
“It’s a collaboration that we have established,” Rosselló said, adding that the process to be used is the product of “talks” between the local and federal governments over the past “three to four weeks.”
For his part, Byrne simply said that whether or not the OCRR is a requirement for the granting of federal funds, “it is the correct action for an operation as complex as [the one in Puerto Rico].”
When asked by Caribbean Business what the role of the commonwealth’s financial control board should be in overseeing federal recovery funds after María, the FEMA regional coordinator answered that his authority comes from the Stafford Act, which requires his relationship be just with the governor.
“If there ends up being [additional] requirements, we will certainly cooperate and do whatever it is needed. But at this point in time, we are looking forward to develop a plan to build the recovery and I’m just going to follow the laws that I’m allowed to operate under,” Byrne added.
Regarding the request of up to $94.4 billion in federal long-term funds recently made by the Rosselló administration, the governor said discussions continue with the federal government about the final recommendation the Trump administration will make to Congress.
However, the governor was confident that his initiative to implement “controls” for the management of federal money will help his message to Congress and the White House that Puerto Rico will do what is fiscally correct.
Not yet ‘formalized’
Although two executive orders make way for the creation of the new OCRR, the entity will not be “formalized” until Dec. 6, once the board of the Public-Private Partnerships Authority (PPPA)—under which the office will be established—authorizes it.
On Oct. 23, the governor signed Executive Order 65- 2017, establishing the creation of the entity with broad powers over the management of funds that become available for the reconstruction of Puerto Rico. However, amid allegations of potential unconstitutionality, La Fortaleza amended the executive order on Nov. 10. The new order tones down the language on the management of funds and eliminates references to the legislative and judicial branches, among other changes.
Although it is anticipated that it will need a budget, employees and contractors to carry out its function, the Rosselló administration is still fine-tuning the final details for the new entity’s operation. In the case of the “experts” that will be hired, it was explained that a request for proposals will be issued once the PPPA creates the OCRR.
The new office will be under the command of Omar Marrero, who currently serves as director of the PPPA, the Ports Authority and the Convention Center District Authority.
As part of the Puerto Rico government’s request to Congress, it initially estimated it would need $9 million in federal funds to be allocated to the OCRR. However, the document does not specify how the amount will be used nor details what will be paid with that money.
Regarding the governor’s authorized representative (GAR), José Marrero, and state coordinator Héctor Pesquera, both of whom serve as liaisons between the local and federal governments, Rosselló assured they will continue to be an “instrumental part” in the process. This is because there are federal programs that are unrelated to FEMA in which they will play an important role in the procurement process of these funds, the governor explained.