Federal grants will take long to help Puerto Rico’s recovery
Editor’s note: This story first appeared Thursday, in the April 19-25, 2018, issue of Caribbean Business.
It will take “many months” for Puerto Rico’s $1.5 billion disaster recovery (DR) grant awarded in February and $18.5 billion in grants announced April 10 to repair hurricane-damaged homes, businesses and the power grid to enter the local economy.
The $1.5 billion grant awarded by the U.S. Department of Housing & Urban Development (HUD) in February is expected to filter into the local economy during the last quarter of 2018. Last week, the local Housing Department turned over to HUD a management plan spelling out how the agency would control the funds to prevent abuse, duplication and fraud, said Dennis González, deputy secretary of the Puerto Rico Housing Department. On May 9, the local agency must turn in an action plan providing the specifics on how it will use these funds. The plan must receive public input before HUD certifies it in June. After that, the process begins to disburse the money into the local economy.
Regarding the $18.5 billion in grants, which were assigned through the Community Development Block Grant (CDBG) program, HUD spokesman Brian Sullivan told Caribbean Business that two Federal Register notices are to be issued to provide guidelines on how the money should be spent. One notice is to spell out how $10.1 billion from these funds must be used to address remaining unmet needs created from 2017’s major disasters, including hurricanes Irma and Maria. The second notice will address the use of the remaining $8.29 billion to support mitigation activities among CDBG-DR grantees. Both documents spell out deadlines for local planning officials to submit DR plans of action and other documentation to disburse the funds.
“The notices sort of spell out the number of activities that will be covered. So, part of the money is used to recover from previous storms and the other part is to help make places stronger for future events,” he said.
Money for unmet needs, however, generally support DR activities such as home rebuilding, business assistance, economic revitalization and infrastructure repair.
Funds for mitigation activities may include home buyouts, raising homes, moving communities and rebuilding a resilient electric grid, he said.
“These funds are crucial present our vision for the new, more resilient Puerto Rico that we want to construct for our future generations,” said Gov. Ricard Rosselló in a statement following HUD’s April 10 announcement. The $18.5 billion was included in the Bipartisan Budget Act of 2018, which was signed into law Feb. 9. Of that money, $2 billion will be set aside for making the island’s electric grid more resilient.
On the other hand, the $1.5 billion grant was part of a bill signed into law Sept. 8 by President Trump that provided a total of $7.4 billion in CDBG-DR funds.
González acknowledged that by the time the money goes into the economy, Puerto Rico will be in the middle of the 2018 hurricane season, which runs June 1 to Nov. 30, but assured the island is ready for a major storm. He said the funds are the last resort after other money, such as from the Federal Emergency Management Agency and private insurance, is used up.
HUD’s Sullivan said that after a major storm like Maria, “people need the money last week, and I get it, but we have to have a planning process” because the funds are for a long-term recovery process. “This money is the last bit of federal money. It is not the second nor the third. It is the last money for unmet needs. It is for the months and years to come,” Sullivan said.
How will Puerto Rico spend the $1.5 billion, according to its plan? According to HUD, about $1.2 billion of the fund must be spent on recovery, restoration of infrastructure and housing, and economic revitalization in the areas most impacted and distressed, including Adjuntas, Aguada, Aguadilla, Aguas Buenas, Aibonito, Añasco, Arecibo, Arroyo, Barceloneta, Barranquitas, Bayamón, Caguas, Camuy, Canóvanas, Carolina, Cataño, Cayey, Ciales, Cidra, Coamo, Comerío, Corozal, Dorado, Fajardo, Guayama, Guaynabo, Gurabo, Hatillo, Humacao, Isabela, Juana Díaz, Juncos, Lares, Las Piedras, Loíza, Manatí, Maunabo, Mayagüez, Moca, Morovis, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Río Grande, Salinas, San Juan, San Lorenzo, San Sebastián, Santa Isabel, Toa Alta, Toa Baja, Trujillo Alto, Utuado, Vega Alta, Vega Baja, Villalba, Yabucoa, and Yauco.
González said the action plan for the $1.5 billion was prepared using input from mayors and nonprofit groups, as well as from numerous public hearings. He said once the action plan is made public in May, the agency is required to receive more public input before HUD approves the final plan in June.
By August, the first bids to hire companies for contracts will be sent out.
Concerns among builders
Stephen Spears, president of the Associated General Contractors Puerto Rico Chapter, says the funds were encouraging news, and the fact the local Housing Department was working with HUD to collect information and disburse funds will ensure local contractors will have a fair chance to obtain grants to perform work.