Higher cement sales indicate construction activity rebound to pre-Covid-19 crisis levels

(Screen capture of www.flickr.com/photos/cemex)

Industry group: Increased building still falls short of expectations due to federal funding delays

SAN JUAN – Cement production and sales in Puerto Rico climbed to pre-Covid-19 crisis levels in May, suggesting that the construction industry on the island seems to have recovered from the abrupt halt in projects as a result of the government’s implementation of the curfew/lockdown in mid-March to control the spread of the potentially deadly virus.

Gov. Wanda Vázquez amended the lockdown order to allow construction activity related to critical infrastructure such as electricity and water utilities, telecommunications, solid waste and biomedical disposal systems, maritime ports, airports, and roads and bridges. The governor lifted restrictions on construction activity, albeit with safeguards against the spread of the novel coronavirus, on May 11.

Cement production plummeted 64.4 percent between February and April, according to Puerto Rico Economic Development Bank (EDB) statistics collected from CEMEX Puerto Rico and ARGOS San Juan Corp. cement companies. The data was published by the Puerto Rico Statistics Institute.

Production of 94-pound sacks of cement reached 1.03 million in February before falling to 493,300 bags in March and a year low of 377,200 bags in April, when the curfew/lockdown was fully in place. The April figure was 49.5 percent lower than the 746,700 bags produced in April of last year, and 71 percent lower than the 1.29 million bags produced in April 2018.

Cement production recovered lost ground in May, increasing to 1.034 million bags.

Moreover, cement sales plunged 58 percent between February and April, according to the EDB data, falling from 1.08 million bags in February to a year low of 451,300 bags in April. The April sales were 61 percent lower than the 1.15 million bags of cement sold in the year-ago month, and 66 percent lower than the 1.33 million sold in April of 2018.

Such sales not only were recouped in May but also exceeded February’s figure by 15.3 percent, climbing to 1.24 million bags of cement.

While these figures seem to indicate that the construction industry is in full recovery mode, the head of the Associated General Contractors of America Puerto Rico Chapter (AGC-PR), whose members carry out 80 percent of construction projects on the island, cautioned that the May figures likely show pent-up rather than sustained activity.

“At first glance, the numbers surprised me because they seemed not to be consonant with the movement in the streets. When you take a deeper look at these numbers, they could indicate a temporary effect due to backed-up construction activity that was halted by the March-15 Covid-19 executive order,” AGC-PR President Architect Umberto Donato told Caribbean Business. “So when the construction sector was allowed to resume a month ago the sales of cement and concrete increased due to pent up demand for road projects that had been halted.”

Donato said that cement sales were most likely boosted by the $1.3 billion in road projects that had begun and were halted by the virus emergency. The first projects to receive authorization to resume were related to infrastructure, including roads, aqueduct and sewer systems, and electric power systems, he said, noting that construction activity has “gradually” resumed as companies have complied with certification of Covid-19 safety protocols.

“If we talk about factors accelerating the sale of cement, you will find that infrastructure projects consume a lot of cement, particularly road projects,” he said.

Nevertheless, the construction industry has yet to get a boost from federal hurricane recovery funds for permanent reconstruction, specifically the $20 billion in Federal Emergency Management Agency (FEMA) and Federal Community Development Block Grant-Disaster Recovery (CDBG-DR) earmarked for Puerto Rico to be disbursed within the next decade, Donato said.  

“In view of the projects that have begun, we do not see a sustained upward trend, although we hope that in the medium and short term we will see the start of all of these planned construction projects as federal reconstruction funds become available,” the architect said.

As a result of the emergency construction and repairs in the aftermath of hurricanes Irma and Maria in 2017, the number of jobs in the industry rose to more than 40,000, Donato said. As the emergency repair projects culminated and federal permanent reconstruction funding was held up by bureaucratic issues between Washington, D.C., and San Juan, construction employment has dropped back to “between 25,000 and 30,000,” he noted.

The AGC-PR stressed that the construction industry has not recovered fully since Puerto Rico entered into its chronic recession in 2006 – the last time the industry employed more than 60,000 people in projects with investments of over $6 billion a year.

“Jobs in construction have continued to remain low and have not grown because we have not seen a lot of construction volume. We are waiting for projects like the R3 home reconstruction project, which was scheduled for a year ago but have yet to start. Many of the big reconstruction projects at Prepa [Puerto Rico Electric Power Authority] have not occurred; the same with FEMA [Federal Emergency Management Agency] projects,” Donato said. “The net result is we have not seen a sustained increase in construction activity. We are very confident that it will happen. We hope that from now until December we see that sustainable growth as a consequence of all of those projects that should start.”

The industry official said that while current projects “have not made a discernible impact,” bigger projects involving the Transportation and Highway Department, Prepa and Aqueduct and Sewer Authority should be starting in coming months. He said that while construction of multifamily homes for the elderly and low-income families had not taken off in the last few months, “there are signs that such construction will gain momentum in the next few months” with disbursement of federal funding.

Donato said that construction volume comparable to that of the early 2000s could be reached in the next few years with the combination of private sector and disaster reconstruction funding, including Opportunity Zone Program investments, adding that this could increase employment in the industry to between 60,000 and 80,000 workers.

“If these funds are invested wisely, the multiplier effect would be well above the $20 billion,” he said, noting another $3 billion is expected in private-sector construction, particularly hotels and inns.

“This depends on how quickly these funds come in. If they come in faster, let’s say in five years, you will need even more workers in construction,” he said. “As we have seen, these things take time, and [funds] will gradually be poured into the economy. I think this gradual growth could be good for Puerto Rico so that there is sustainable growth in employment.”

Thus far, Donato said that over 80 percent of construction workers have returned to work in an industry that has had to implement a new set of regulations to safeguard workers from Covid-19 contagion. He said that these new regulations have increased project costs anywhere between 10 percent and 15 percent, depending on the type of project involved.

“This is a significant amount because in most cases it could supersede any expected profits on a project,” he said.

“The first challenge was the change in the safety procedures. Construction has many safety protocols and regulations; it is regulated by OSHA [Occupational Safety and Health Administration] due to the natural risk of building,” Donato continued. “Now there are various additional protocols such as the masks, cleaning, social distancing, etc. That is flowing very well. We have not had any reported cases of Covid-19 in the industry, which is a good sign that we are doing it right.”

The construction industry also faces the challenge of the viability of several hotel construction projects as many restrictions still remain on the tourism industry, for fear that visitors could lead to increased coronavirus cases. While the governor is expected to lift the last restrictions on the sector next month, there is still uncertainty given the growing number of cases on the U.S. mainland, from where most local tourists originate.

“There were several hotel projects affected in the short term by the lockdown but also in the medium term because tourism has not reopened in Puerto Rico and the viability of those projects are cast in doubt until visits return to normal,” he said.




Puerto Rico economic activity dropped 9.6% in 2 months

Economic Development Bank publishes index for first 4 months of 2020; cement sales dropped 53.8% in April

SAN JUAN – The Economic Development Bank for Puerto Rico (EDB), published Friday data related to the island’s Economic Activity Index (EAI) during the first four months of 2020, which reflected significant drops in the EAI’s four main indicators.

EDB President Pablo Muñiz Reyes said in a press release that during the measured period, “the island experienced the consequences of a 6.4 magnitude earthquake, followed by strong aftershocks, complicated by the subsequent state of emergency decreed characterized by the severity and scope of the current COVID-19 pandemic.”

He said the index—for which readings higher than the threshold of 100 indicate expansion—registered 122.7, 122.5, 119.3 and 113.7 in January, February, March and April, respectively.

“This represents two consecutive increases of 0.5% during January and February, followed by two decreases of 2.6% for March and 7.0% for April…, when the data is compared against the same month of the previous year,” Muñiz said.

He pointed out that the index maintained a negative growth trend from January to April, with consecutive reductions of 0.6%, 0.2%, 2.6% and 4.7%.

“In accumulated terms, the EDB-EAI average for 2019 was 122.6. This shows an increase of 1.6% compared to 2018, the second consecutive annual growth after five years with consecutive annual reductions. In addition, the accumulated average of the EDB-EAI for fiscal year 2019 was 122.1, which translates into 6.1% growth versus fiscal year 2018 (115.1 or -6.6%). The result of the EDB-EAI growth rate for fiscal year 2019 is first increase after six consecutive years of reductions,” Muñiz said.

However, the cumulative average of the index for the first four months of 2020, was 119.6, a 2.2% drop.

“In turn, the accumulated average for the first ten months of fiscal year 2020 (July-April) is 121.6, or a decrease of 0.4% when compared to the same period of fiscal year 2019,” the EDB release reads. “Finally, during April 2020, the four components of the EDB-EAI: non-agricultural salaried employment, electricity generation, gasoline consumption and cement sales showed reductions of 10.3%, 2.2%, 24.2% and 53.8%. All results were compared against the April 2019 figures.”

The following are the index’s four indicators and the percentage change from April last year.

  • Nonfarm payroll employment: (10.3%)
    • (Establishment Survey/ Thousands of employees). According to the Bureau of Labor Statistics of the U.S. Department of Labor and Human Resources monthly. The establishment survey provides employment, hours, and earnings estimates based on companies’ payroll records. It does not include farm workers, private household employees, or nonprofit organization employees

  • Electric power generation: (2.2%)
    • (Millions of kilowatt-hours). This variable is provided by the Puerto Rico Power Authority (Prepa) monthly. It includes the electric power generation produced by petroleum, natural gas, coal and renewable energy sources supplied by utility-scale solar photovoltaic generating capacity, wind farms and landfill gas sources.

  • Cement sales: (53.8%) 
    • (In millions of 94-pound bags). This variable is provided by CEMEX Puerto Rico & Argos Puerto Rico LLC monthly. The data are compiled and converted by the EDB.

  • Gas consumption: (24.2%)
    • (In millions of gallons). This variable is provided by the Puerto Rico Highways and Transportation Authority (PRHTA) monthly. The EDB adjusts the series with a three-month moving average.

The EAI is highly correlated to Puerto Rico’s real gross national product (GNP) in both levels and annual growth rates. However, it is not a direct measurement of real GNP. The annual growth rate of the EAI is not the same as the annual growth rate of real GNP.

The index’s methodology includes adjusting the data for seasonality and volatility factors, and is similar to that used by the Conference Board, a nonprofit business research organization that publishes economic indicators for the United States and several other countries.




Major national developer names Puerto Rico lead

(Screen capture of https://www.mccormackbaron.com/)

McCormack Baron Salazar taps Antonio Garate as VP, director

SAN JUAN — McCormack Baron Salazar (MBS), a national affordable housing developer, announced it has named the architect Antonio Garate as its vice president and director of development for Puerto Rico.  

St. Louis-based MBS is one of the nation’s largest developers, managers and asset managers of economically integrated urban neighborhoods that works in 47 cities and has built more than 22,000 homes.

Antonio Garate (Courtesy)

The firm said it selected Garate to lead its development efforts on the island to draw on his 25 years’ experience in commercial, residential, institutional and industrial design and construction management, Garate will. The architect earned a master of science in Building Performance and Diagnostics and a Bachelor of Architecture from Carnegie Mellon University. He is a Leadership in Energy and Environmental Design (LEED) Accredited Professional, with a specialty in Building Design and Construction, with the U.S. Green Building Council, and is a member of the American Institute of Architects and the Association of Architects and Landscape Architects of Puerto Rico.

Garate was a partner and senior project architect for Alvarez-Diaz & Villalon, an architecture and design firm based in San Juan and southeast Florida. He has worked closely with MBS in the design and contract administration of the Renaissance Square in Hato Rey and Bayshore Villas in Puerta de Tierra, both completed with 314 multifamily units and the revitalization of the Barrio Turabo community in Caguas.

The Caguas project, a $133 million investment, is back underway following the pandemic lockdown. MBS said its former public housing site will now include “housing options that are affordable to families and seniors with a broad array of incomes.” The 20-acre site in south Caguas will have 238 apartments for families in town homes and walk-up apartments and a 200-unit apartment building for seniors, the developer said.

“We look forward to Antonio growing and furthering our efforts to build more mixed income housing in Puerto Rico following best practices for resiliency and green design,” said Vincent R. Bennett, president of MBS. “His approach and experience with public-private partnerships, high-quality design and sustainable development reflect MBS’ values and vision. We look forward to being a part of the future of Puerto Rico.”  




FEMA May Extend Puerto Rico Project Estimates Deadline

COR3 Working with Federal Agency to Prepare Requests Beyond Oct. 11

Editor’s note: See the full report on the Sept. 5, 2019, issue of Caribbean Business.

The Federal Emergency Management Agency (FEMA) is evaluating requests by commonwealth agencies and municipalities for an extension to the Oct. 11 deadline to complete cost estimates for repairs and permanent work projects at hurricane-damaged sites throughout Puerto Rico—thousands of which are still being evaluated.

“The [Central Office of Recovery, Reconstruction & Resiliency (COR3)] and the Puerto Rico government are working closely with FEMA to evaluate the deadline, and to prepare extension requests beyond Oct. 11, specific to projects and applicants,” Gregory Bosko, FEMA infrastructure branch director for Puerto Rico, said in a written statement to Caribbean Business, in which he did not identify the applicants or projects requesting the deadline pushback.

“COR3 [and the] commonwealth are currently evaluating these timelines and specific project needs for the purposes of any extension requests,” Bosko added.

Some 50,027 sites on the island damaged by hurricanes Irma and Maria in 2017 are being evaluated to determine costs for emergency repairs and permanent work projects as of Aug. 26, according to Bosko. In February, then-COR3 Director Omar Marrero said 90,000 damaged sites were in the process of being inspected for fixed-cost estimates.

Damaged sites belonging to commonwealth agencies number 30,419, while municipal sites total 16,523, said Bosko, who added that 3,085 damaged sites belong to private nonprofit entities.

A U.S. Government Accountability Office (GAO) report issued last month states that the Oct. 11 deadline for finalizing fixed-cost estimates in Puerto Rico was set as part of FEMA’s alternative procedure for large-project funding under its Public Assistance program for permanent works.

The report says the island is the first U.S. jurisdiction to use the alternative procedures process for all large permanent work projects resulting from a single catastrophic event.




The High Cost of Erosion

(Juan J. Rodríguez/CB)

Huge Cost to Seaside Development

This is part one of a two-part report.

Sun, sand and saltwater are staples of the Caribbean’s image, which Puerto Rico has embraced. Along with the promotion of these resources came developments, but now the decades of warnings from scientists and other professionals about coastline construction appear to be materializing.

From luxury developments to marginalized communities, construction projects along Puerto Rico’s shorelines are experiencing increased problems with erosion, flooding and other related issues.

Many in the scientific and planning communities are calling for a moratorium on shoreline construction. Responding to these voices and the problems encountered in the aftermath of hurricanes Irma and Maria, Sen. Juan Dalmau (PIP-at large) introduced Senate Bill 1122 to establish a 20-year moratorium on shoreline construction.

The science

Planner and environmental scientist Luis Jorge Rivera Herrera explained that “[climate change] is a determinant factor, but what has worsened or deepened the situation is that throughout the various government administrations, they have allowed construction close to the [island’s] littoral, or nearshore, knowing that the littoral and the coasts have dynamic extensions.”

Rivera Herrera, who won the Goldman Environmental prize, explained that waves need room to dissipate their energy, but when a wave hits a hard surface, such as a concrete wall, it returns to the sea with a lot of strength, which in turn does not allow the sand to settle on the sea floor. This causes the loss of beach or erosion.

Addressing the argument that the current beach reduction is part of a cycle, the oceanographic geologist and professor at University of Puerto Rico’s Graduate School of Planning, Maritza Barreto Orta, explained that while there is a cycle in which the shoreline recedes and then expands, the effects on the beaches in such areas as Ocean Park [Santurce, San Juan] are beyond what would be considered a cycle.

“Beyond the cycles, or the periodicity of the cycles, the reality is that the beaches have changed,” said Barreto Orta, who is also director of Red de Playas para Puerto Rico y el Caribe (Puerto Rico & Caribbean Beach Network). Barreto Orta gave her remarks during a site visit to Ocean Park for SB 1122. She was accompanied by climatologist Rafael Méndez Tejeda, who echoed Barreto’s assessment and suggested that during the next season of shoreline expansion, people should not expect as much sand coming back as in previous years.

Geologist & UPR Prof. José Molinelli Freytes said there needs to be a “multi-hazard” approach to the problem because it is not just a loss of beachfront from erosion or an increased sea level. The scientist explained that shoreline properties are exposed to flooding, salinization of the soil, amplification of seismic waves, storm surges, tsunamis and liquefaction of the terrain in an earthquake.

—For the rest of the story, visit CaribbeanBusiness.com to subscribe.




Service at Puerto Rico Permits Office improves following reform

Economic Development Secretary Manuel Laboy Rivera and María Reina Cintrón Flores, auxiliary secretary of the Permits & Endorsements Management Office (CyberNews)

Economic Development secretary: 98% of survey respondents were highly satisfied

SAN JUAN — As a result of the new Single Business Portal (SBP), the Permits & Endorsements Management Office (OGPe by its Spanish acronym) of Puerto Rico’s Economic Development & Commerce Department (DDEC by its Spanish acronym) has improved its efficiency in terms of service to customers who apply for permits and certifications required for construction or remodeling a property, as well as to have their business operations authorized, DDEC secretary, Manuel Laboy Rivera said Thursday.

“On June 7, DDEC’s OGPe incorporated new products and certifications into the Single Business Portal to streamline and provide transparency to the process of requesting these documents. At the moment, the statistics are very positive because they show that the mechanisms to address consumer question through the online chat tool with OPGe staff, are of high satisfaction. Since the integration of the new products to the SBP from early June to June 21, 1,270 individuals were attended, of which 98 percent assured, through a survey, being satisfied with the personalized attention received through the portal,” Laboy said in a release.

The official said during the period, 252 applications were requested, including Single Permit, Single Incidental Permits, Location Consultation and Construction Permits.

OGPe Auxiliary Secretary María Reina Cintrón Flores added that the changes implemented to unify processes and expedite licenses, certifications and permits, among others, are the result of the new Joint Regulation, which aims to provide uniformity to processes at all the island’s municipalities, including the autonomous city halls. This way, the way of doing business on the island is facilitated.

Cintrón used as an example a store in San Germán, whose owner used the SBP website and obtained approval of his Single Permit and inspection in three days. To process permits and certifications through the Single Business Portal, as well as for more information, visit www.ogpe.pr.gov.




Puerto Rico Economic Development Dept. holds Single Business Portal seminars

Offers guidance on permits and licenses

SAN JUAN — Puerto Rico Economic Development Secretary Manuel Laboy Rivera announced Wednesday that his department’s Permits & Endorsements Management Office (OGPe by its Spanish acronym) will hold workshops at several organizations aimed at providing guidance on the new permits that will be managed through the Single Business Portal (SBP), which was created to unify processes and expedite the granting of licenses, certifications and permits, among other procedures.

Laboy said workshops will be offered “on the new products that will be integrated into the SBP as of June 7: Construction Permit, Operational Incidental Only Permit, Single Permit, and licenses for opening and operating businesses. These processes that have been entered in the Single Business Portal are part of the changes stipulated by the Permits Reform of Governor Ricardo Rosselló Nevares, who created a Unified Computer Information System where project proponents can request permits, in order to eliminate bureaucracy, measure effectiveness and give transparency to the processes,” Laboy said in a statement.

The first seminar was conducted by the Builders Association on Wednesday. The second, to be given by the Planning Board, will address the autonomous municipalities and will take place Thursday, May 30. The third will be held at the Architects and Landscape Architects Association on June 4, from 9 a.m. to noon. The fourth will be held by OGPe on June 5, at the Engineers & Land Surveyors Association (CIAPR by its Spanish initials) from 6 p.m. to 9 p.m.

For more information, call 787-721-8282, extension 16356.




Economic activity in Puerto Rico declined 0.7% in last month of the year

SAN JUAN – As of December, the Puerto Rico Economic Development Bank’s Economic Activity Index (EDB-EAI) increased 16.1% over the same month in 2017, marking “the fourth year-over-year increment after 69 consecutive months of negative growth,” the bank’s president, Luis Burdiel Agudo, said Thursday.

The marked difference stems from the fact that in December 2017, much of the island’s electrical transmission and distribution lines had been mangled by Hurricane Maria. During that time the index showed a year-over-year drop of 16.5%.

The index reached 119.5 points in December 2018, a 0.7% decline when compared with the previous month. For the July to December period of fiscal year 2019 the growth was of 8.9% with respect to the same period of fiscal 2018. For 2018, the improvement was of 2.6%, while in 2017 there was a 6% drop.

The EDB-EAI correlates to Puerto Rico’s real gross national product and its methodology is similar to that used for the Coincident Economic Index of 10 U.S. indicators published by The Conference Board, an independent nonprofit think tank. It follows a standard procedure to adjust the data for seasonality and volatility factors.

The EDB-EAI is made up of four indicators:

  • Total Payroll Employment (Establishment Survey/Thousands of employees). This variable is provided by the U.S. Bureau of Labor Statistics on a monthly basis. The establishment survey provides employment, hours and earnings estimates based on payroll records of business establishments in Puerto Rico.

➢ Total non-farm payroll employment for December 2018 averaged 839,700 employees, a decrease of 1.1% on a month-over-month (m-o-m) basis, an annual increment of 0.8%.

  • Total Electric Power Generation (kilowatt-hours [kWh]). This variable is provided by the Puerto Rico Electric Power Authority (Prepa) on a monthly basis. The indicator includes power generation produced by oil, natural gas, coal, solar, two wind farms and landfill gas sources.

➢ Electric power generation in December totaled 1.53 billion kWh, a 0.1% decline on a m-o-m basis, but an interannual increase of 42.5%.

  • Cement Sales (millions of 94-pound bags). This variable is provided by CEMEX Puerto Rico & Argos Puerto Rico LLC on a monthly basis. The data are compiled and converted by the EDB.

➢ Cement sales for December totaled 1.2 million bags, a 0.1% increase in a m-o-m basis, and an annual jump of 13.5%.

  • Gas Consumption (millions of gallons). This variable is provided by Puerto Rico Highways and Transportation Authority (PRHTA) on a monthly basis. The EDB adjusts the series with a three-month moving average.

➢ The preliminary number for gasoline consumption in December was 76.2 million gallons, 2.6% less than in November 2018, and an 18.9% drop compared with December 2017.




COR3 Director Calls for Control Over Recovery Funds

Omar Marrero, director of the Puerto Rico Public-Private Partnerships Authority and the Central Office for Recovery, Reconstruction & Resiliency (CB/Rafelli González Cotto)

Editor’s note: The following originally appeared in the Jan. 24-30, 2019, issue of Caribbean Business.

Omar Marrero, director of the Puerto Rico Public-Private Partnerships Authority (P3A) and Central Office for Recovery, Reconstruction & Resiliency (COR3), insisted he needs control over disbursement of funds for Puerto Rico’s recuperation, saying the excessive bureaucracy imposed by the Federal Emergency Management Agency (FEMA) is delaying the island’s recovery from the 2017 hurricanes and commencing as permanent works.

“At COR3, we have engaged in the task to ensure we can take control of a highly bureaucratic process that FEMA itself has not been able to manage efficiently,” he said.

The island not only has no control of the disbursement of funds, but also has no control over the formulation of projects. “As of today, we have zero permanent works obligated for Puerto Rico. That means everything that has been worked on are Categories A and B, which are primarily emergency categories because FEMA has a highly bureaucratic process,” said a visibly frustrated Marrero.

He said FEMA is not giving Puerto Rico the opportunity to help hasten the processes, even though Marrero said he has provided ideas.

Two weeks ago, Marrero was in Washington keeping the different agencies appraised of the island’s recovery efforts but acknowledged that currently, the challenges and conditions imposed by FEMA to disburse funds still persist.

As of this Caribbean Business interview with Marrero, only 45 percent of public assistance funds, which are used to repair public facilities damaged by Hurricane Maria, have been disbursed. “Because those funds have not been disbursed at the pace we have requested since the first day, certainly, the recuperation process has been slow,” he said.

Contrary to other U.S. jurisdictions, Puerto Rico has no control over the reimbursement process because it is totally in FEMA’s hands. Currently, mayors have complained that two years after Hurricane Maria, they are waiting for the government to reimburse them for what they paid to make repairs after the storm, hurting not only municipal coffers but also private companies.

In an effort to help gain the U.S. government’s trust, the administration of Gov. Ricardo Rosselló created COR3, which not only relies on “experts on disaster” but has a transparency portal of the federal funds that have been disbursed. The island completed two types of reconstruction plans. “We have kept the federal government abreast of what we have done, and with all due modesty, we have done a great job. But at the end of the day, we need to take over control of the process. It is the only way we can hasten the disbursements,” Marrero said.

Limited control

President Donald Trump recently accused the local government of using federal funds to pay debt in violation of federal law. Marrero said his remarks are lamentable and based on wrong premises. He said using federal disaster funds to pay debt is a violation of the Stafford Act. “Also, when you look at Puerto Rico, we don’t have control of the funds. Therefore, anyone who dares to say that Puerto Rico has wasted the funds and used the funds for something not authorized, does not know what he is saying,” he said.

The process to obtain federal funds is highly bureaucratic and consists of at least 10 steps, of which COR3 has only control of one. “I only control the disbursement,” he said.

For instance, if an agency seeks reimbursement for a $1 million repair, Marrero said the agency has to submit a request for investment to COR3 along with required documentation. COR3 then submits the request to FEMA, which does an initial review, examines whether any mitigation measures can be applied, and then puts it through an environmental preservation review and then an insurance review. The application is then returned to COR3 for review. “I usually review it in a day,” he said. The request is then submitted to FEMA again for a final review.

If the request for reimbursement is for more than $1 million, it has to go to an office in Washington, D.C. If it is more than $20 million, it has to go to another office in D.C. Only then is the money awarded.

However, the process does not end there. “That does not mean the funds are put in an account. I only get a notification that says ‘award,’” he said.

The request then has to go through what he called “the 270 process,” which consists of seven other steps in which COR3 must also show need. The process was adopted in November 2017 by the United States because Puerto Rico was a “high-risk jurisdiction.”

The 270 process requires the request to be sent to a Fiscal Transparency Group and FEMA confirms the funds can be disbursed.

“Once the money is put in our account, in less than a day, I disburse the money,” he said. “So, anyone who says we have misused a single dollar does not know the process and that includes the White House,” Marrero said.

Regarding Community Development Block Grant (CDBG) funds, Marrero said that because of the federal shutdown he does not know when the $8.2 billion that has already been allocated is going to be received. Federal officials told the government it would take them longer to evaluate a plan developed by the government.

Which funds is the island at risk of losing because of the dispute over the construction of the wall along the U.S. southern border? “They are not FEMA or CDBG funds, but the ones allocated to the U.S. [Army] Corps of Engineers because the president has discretion over them as chief commander,” he said, referring to $2.5 billion for channeling of bodies of water at Puerto Nuevo in San Juan and other dredging projects in other jurisdictions.




Puerto Rico Permits Office presents new Construction Code

SAN JUAN – Puerto Rico’s Permits & Endorsements Management Office (OGPe by its Spanish acronym) presented Thursday some of the most relevant aspects of the island’s new Permits Code, which includes recommendations for the design of new infrastructure and mitigation measures for existing ones to resist hurricanes and earthquakes.

Inspector Evelyn Moya Ginés, Health and Safety manager at OGPe, presented the document adopted Nov. 15 in a public hearing held by the House Economic Development and Planning Committee, which under House Resolution 756 is investigating the Adoption and Review of the Construction Code of Puerto Rico.

Among the recommendations of the Federal Emergency Management Agency (FEMA) Mitigation Assessment Team report is the creation of micro-zoned wind maps in which the topography of Puerto Rico is considered. According to these maps, 13 percent of the island is exposed to winds of more than 187 miles per hour (mph) and which could reach 250 mph.

To questions from committee Chairman Víctor Parés Otero, Moya Ginés pointed out that the most vulnerable points are established according to wind load and topography, but also the condition of the constructions.

Also recommended was a thorough revision of the codes every three years and that maintenance protocols be established for buildings, for which the official said the 2011 code may be used if the changes are minor but must comply with the new regulations when remodeling extensively.

She added that construction costs, based on $80 per square foot, do not rise if reinforced concrete is used; however spending 0.7 percent to 1 percent more in high-risk coastal areas is recommended when building with wood or a combination of materials, and 2 percent in those same areas if only using wood.

Regarding earthquakes, she pointed out that Puerto Rico already has design parameters that are more restrictive than other jurisdictions since the 2011 code had incorporated amendments based on a study of the island’s seismic history. However, in the revision and update of those regulations, an increase in construction costs of 0.04 percent was recommended specifically to reinforce building foundations.

She said the regulations were adopted so there was a single body of law applicable to reconstruction projects using FEMA funds, which require 2018 codes. The 2011 code may be used in other projects for up to six months after the new regulation was adopted.

Moya Ginés emphasized that with the adoption of the new regulations, taken from the International Code Council (ICC) of 2018, “we are on a par with the latest guidelines in relation to construction worldwide because, besides Puerto Rico, only 12 countries have adopted these regulations.”

A public education campaign will be conducted so people can demand that their constructions comply with the code.