Monday, October 22, 2018

Concerns Linger Over Post-Maria Funding

By on December 15, 2017

Editor’s note: The following article originally appeared in the December 14 print edition of Caribbean Business.

BY PHILIPE SCHOENE ROURA
& EVA LLORÉNS VÉLEZ

p.schoene@cb.pr; e.llorens@cb.pr

With so much of the oxygen in the hallowed halls of U.S. Congress being consumed by the harangue over Tax Reform, the shape of an appropriations bill for Puerto Rico’s recovery in the aftermath of destruction wrought by the wind beast named Maria hangs in the balance as concerns over the use of those funds still linger on the Hill. Gov. Ricardo Rosselló Nevares had hoped to quell those concerns when he created the Central Recovery & Reconstruction Office (OCRR by its Spanish initials) to manage all funds received for Puerto Rico’s reconstruction.

The governor is on the record stating he established the office in tandem with the Federal Emergency Management Agency (FEMA) as an initiative of his administration to obtain Section 428 funding. The objective truth is that FEMA’s Incident Management System protocol calls for very stringent oversight of funding that goes beyond the immediate recovery stage in funding classified A and B. Thus the moment President Trump approved Puerto Rico’s classification C to G funding—for permanent infrastructure reconstruction—mechanisms for greater control were demanded by protocol.

Gov. Rosselló defends new Puerto Rico Central Recovery & Reconstruction Office

Rosselló’s assertion that the OCRR is a sign of greater transparency from his administration is seen on the Hill as yet one more move to maintain Puerto Rico’s control of billions in federal funds that Congress would like to see handled by the Financial Oversight & Management Board (FOMB) enabled by the Puerto Rico Oversight Management & Economic Stability Act (Promesa).

“The governor is creating that office to get ahead of the requirement that there is transparency in how the money gets spent and he doesn’t want the board to do that,” a Capitol source with ties to the GOP told Caribbean Business. “But it is not a requirement of the federal government. It’s his way of telling the federal government ‘I have something in place; please don’t put the board in charge of the money.’”

Federal judge rejects Puerto Rico fiscal board’s appointment of power utility ‘chief transformation officer’

The Rosselló administration and the oversight board have clashed on several occasions over the FOMB’s control over Puerto Rico’s financial affairs. The most recent controversy saw the Rosselló administration successfully challenge the board’s reach when it named Revitalization Coordinator Noel Zamot to rule over all things Prepa when it named him the Chief Transformation Officer of the utility—Federal Justice Laura Taylor Swain ruled that the board did not have the authority to exert control over Puerto Rico’s government agencies.

The legal setback was one more incident pointing to tepid language in Promesa that failed to enable control for fear of the colonial overtones of the law. “It is not a secret in Washington that the governor is not interested in working with the board and there is not interest in Washington to further the notion that Puerto Rico is a colony,” the Capitol source told Caribbean Business.

“So, an elegant way of dealing with both of those is to say you are going to get the $10 you are asking for, but you are going to have to obtain approval from the board before we actually make the transfer,” the Capitol source continue. “So, let me just give you a contrasting point of view—the National Incident Management System and the Stafford Act do not, by design, make a distinction between an Article IV government and a 10th Amendment government. So, what is going on in Congress now is more in the form of a question: Should we be treating territories the same way we treat states in the context of emergency response and the federal government’s role in the emergency response and recovery—those kinds of things.”

Puerto Rico’s government seems yet to convince the U.S. Treasury that it has the mechanisms in place to properly manage funds. Bloomberg reported on Dec. 8, “The island’s government still hasn’t received any of the $4.9 billion of short-term loans promised in the storm aid package Congress passed at the end of October.”

The recently created OCRR continues to press forward with its drive for transparency. It recently issued four requests for proposal (RFPs) on: 1. Project Formulation: The agency will be hiring a firm or qualified team to provide expertise in project formulation and prioritization. It will also assist with the administration and enforcement of federal agency requirements to develop proposals for mitigation and to minimize future impacts of potential disasters. 2. Grant Claim Review: Seeks to identify companies with experience in establishing and reviewing the processes necessary to assess federal funds refund applications related to the recovery efforts and with compliance requirements of the various federal programs. 3. Strategic & Compliance Management Services: Seeks experienced firms in strategic planning for the long, medium and short terms to develop the coordination between federal and state agencies in managing federal funds related to recovery activities on the island. 4. Data Management: Seeks applicants with experience in handling all elements of confidential data and information associated with disaster recovery programs after a hurricane or natural disaster, along with federal funds management. In addition, the firm will be responsible for managing all data elements to ensure transparency in the recovery process.

One company that has expertise in dealing with post-catastrophic recoveries is CSA Group, a full-service project delivery firm that is already advising subgrantees in the pooling of funds. Fred Reifkohl, CSA vice president of Development, said his firm has been working for the past 20 years on projects like those pursued by the newly created office.

“I would love to be involved with that. We would love to submit a proposal for that as a Puerto Rican company that knows Puerto Rican infrastructure and we can share our expertise,” he noted. “I think there are also opportunities, from a consulting point of view, to maximize the space that is allowable by FEMA.”

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