HUD allocates $277.9 million for Hurricane Maria recovery in Puerto Rico

Citizen soldiers of the 190th Engineer Battalion, 101st Troop Command, Puerto Rico Army National Guard, conduct a route clearing mission on Sep. 30, 2017, in Cayey after Hurricane Maria struck the island a week earlier. (Puerto Rico Army National Guard photo by Staff Sgt. Wilma Orozco Fanfa; VisualHunt)

Time for U.S. gov’t to disburse ‘already approved’ recovery funds, resident commissioner says

SAN JUAN — The U.S. Department of Housing and Urban Development (HUD) allocated Tuesday more than $2.3 billion to support disaster recovery in 15 states, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands and Puerto Rico, which was assigned $277.9 million.

According to a press release issued by the office of Puerto Rico Resident Commissioner Jenniffer González Colón, she said that after great efforts to achieve the “allocation of more resources for the reconstruction of Puerto Rico” after Hurricane Maria struck in 2017, HUD “increased the amount allocated to these purposes by $277,853,230,” which is the largest allocation among the affected jurisdictions in 2017 and the highest total, at $20.22 billion, between Hurricane Irma (DR-4336) and Maria (DR-4339).

“Today, we take another important step to ensure those hardest-hit by recent disasters can fully recover,” HUD Secretary Ben Carson is quoted as saying in both HUD and the office of González Colón’s releases announcing the allocation. “The grants awarded today will help these local communities continue the recovery process of rebuilding their homes, restoring their businesses and repairing their critical infrastructure.”

The allocation is supported through HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR) Program to address “seriously damaged housing, businesses and infrastructure from disasters that occurred since 2017.” HUD says the program requires grantees to develop “thoughtful recovery plans informed by local residents ” and spend the majority of the funds in “most impacted” areas as identified by the department, which added that it will soon issue administrative guidelines.

“Every day we continue to demand the necessary attention so that the federal government assumes its responsibility to provide its citizens with the tools needed to cope with a disaster like the one that happened in Puerto Rico,” González Colón said. “I thank Secretary Carson for increasing the CDBG-DR funds for the island. Now, let’s concentrate on that the government of Puerto Rico can expeditiously complete the documents and plans necessary for HUD to disburse the funds and in the same way that the federal government leaves the bureaucracy aside and expedites the disbursement of these and other funds already approved to move forward with the recovery of the island.”

Public Law 115-254, which was approved Oct. 5, 2018, provides $1.68 billion in CDBG-DR funding for “disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2018.”

On June 6 Public Law 116-20 was approved. It provides $2.43 billion, including $431 million to address additional unmet infrastructure needs for 2017 disasters and $2 billion “related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the most impacted and distressed areas resulting from a major disaster that occurred in 2018 or 2019.” HUD is announcing allocations for all but $272,072,000 of the funds appropriated under 116-20. After information on all disasters in calendar year 2019 have been taken into consideration, those remaining funds will be allocated.

New Puerto Rico Economic Development Bank, Housing Finance Chief Seeks to Merge Troubled Agencies

Sends Draft Bill to La Fortaleza to ‘Optimize Operating Costs’ Via Creation of Entity Relying on Federal Funding

Editor’s note: See page 13 of the Sept. 5 issue of Caribbean Business for the full text of the report.

The new head of both the Economic Development Bank and Housing Finance Authority is forging ahead with plans to merge both agencies into one entity, that will depend largely on disaster-recovery funding to pay for its programs.

“This merger is needed to make operations more flexible and faster, and to optimize operating costs,” said Luis Carlos Fernández Trinchet, who was appointed by Gov. Wanda Vázquez last month as president of the Economic Development Bank (EDB) and as executive director of the Puerto Rico Housing Finance Administration (AFV by its Spanish initials), after the change in administration resulting from the resignation of now-former Gov. Ricardo Rosselló in July.

The official said a draft bill for EDB and AFV’s merger into a single agency was sent to La Fortaleza last week, adding that the name of the new agency has yet to be determined. He declined to provide Caribbean Business a copy of the draft bill, saying he preferred to make it public when La Fortaleza officially submits it to the Legislative Assembly as an administration bill. The discussion of the legislation and merger process should take 12 to 15 months, he said.

That timeline happens to coincide with the next elections.

Federal Home Loan Bank of NY announces round of Affordable Housing Program grant funding

SAN JUAN – The Federal Home Loan Bank of New York (FHLBNY) said it will begin accepting applications for its 2019 Round of Affordable Housing Program (AHP) grant funding on Feb. 25.

The grants are made in partnership with the FHLBNY’s member financial institutions, which number more than 32o across New Jersey, New York, Puerto Rico and the U.S. Virgin Islands.

This year marks the 50th round of AHP grants, which has supported 1,833 projects with more than $740 million in AHP grants, “helping to create or preserve more than 85,000 units of affordable housing and generating an estimated $12 billion in total development costs,” the congressionally chartered, wholesale bank said in a release.

The FHLBNY also announced that its Homebuyer Dream Program, which will provide down-payment and closing cost assistance to low- and moderate-income first-time homebuyers, is expected to launch in July.

The program will provide a maximum grant up to $15,000: up to $14,500 per household, with an additional $500 towards the defrayment of homeownership counseling costs.

The FHLBNY’s First Home ClubSM program will continue to disburse grants to enrolled households, but will stop accepting new enrollments March 30.

“Our housing mission is at the core of both our business and our culture, and is key to our strategy,” said José R. González, president and CEO of the FHLBNY. “The Affordable Housing Program and our homeownership programs are integral to this housing mission, and we look forward to working with our members and our local partners to ensure these programs are able to make a difference in communities across our region.”

The FHLBNY will hold training sessions on both the AHP and the Homebuyer Dream Program. A session in Puerto Rico is slated for March 26 in San Juan’s Popular Center.

More information on these training sessions, as well as dates, locations and registration information, is available at the following links:

AHP Training Sessions
Homebuyer Dream Program Training Sessions

Federal recovery funds to boost Puerto Rico growth to 4.2% in 2020

SAN JUAN – The release of $1.5 billion in Community Development Block Grant – Disaster Recovery (CDBG – DR) Program funds following Hurricane Maria will boost Puerto Rico’s economy, which should grow 4.2 percent for fiscal year 2020 and remain in positive territory until 2022, according to new estimates by economic research and consulting firm Estudios Técnicos Inc.

“According to the Consolidated Plan of this federal program, about $1 billion of these funds will be destined to the construction and restoration of housing, so we expect that, by the second half of the year, an increase in housing construction investment will be seen, and with it, an increase in cement sales, as well as in construction employment. We also expect increases in the retail sale of construction materials and home supplies,” Estudios Técnicos President Graham Castillo said in a statement.

Graham Castillo Pagán, JD, president and COO of Estudios Técnicos Inc. and its Market Strategies Division (Courtesy)

Castillo indicated that the arrival of these funds gives greater certainty to his firm’s revised economic projections, which point toward an increase in economic activity of 4.2 percent in fiscal 2020 and 2.1 percent in 2021, with a 20.2 percent and 15.2 percent rise in investments those years, respectively.

The positive impact of the federal recovery funds would run through 2022 when it is estimated that growth would be 1.7 percent. For current fiscal 2019, Puerto Rico’s economic growth will be 3.1 percent, according to the firm’s revised estimates.

“We hope that the release of an additional $8 billion will be announced soon, which will improve the economic activity on the Island and the social conditions of low and moderate income people with housing needs resulting from Hurricane Maria. A particularly needy group is the elderly population,” Castillo said.

Castillo emphasized the need for a plan for sustained economic development that incorporates innovative projects in areas of opportunity for Puerto Rico. Estudios Técnicos estimates that among the sectors that are most likely to contribute to the economy are manufacturing; advanced services including technology and health and financial services; as well as agriculture and tourism.


HUD approves $1.5 billion in disaster recovery funds for Puerto Rico

FEMA approves $61 million in additional grants to Puerto Rico

SAN JUAN – The Federal Emergency Management Agency (FEMA) has awarded $61 million in additional funds to Puerto Rico to cover costs related to Hurricane María.

These awards bring the amount of funds obligated under FEMA’s Public Assistance program to $5.4 billion.

The latest grants approved are as follows:

  • Nearly $33 million to the Puerto Rico Public Housing Administration for emergency protective measures.
  • Nearly $17 million to the Puerto Rico Public Housing Administration to relocate public housing projects in Ciales.
  • Nearly $4 million to the Inter American University of Puerto Rico for emergency protective measures.
  • More than $2 million to the Puerto Rico National Guard to repair hurricane-damaged buildings.
  • Nearly $2 million to the Puerto Rico Aqueduct and Sewer Authority for water monitoring expenses.
  • Nearly $2 million to the Puerto Rico Department of Transportation for permanent work on roads.
  • More than $1 million to the municipality of Yauco for emergency protective measures.

Emergency protective measures are actions taken to eliminate or lessen immediate threats either to lives, public health or safety, or significant additional damage to public or private property in a cost-effective manner.

FEMA works with Puerto Rico’s Central Office for Recovery, Reconstruction and Resiliency, or COR3, through the agency’s Public Assistance program to obligate recovery funds to private nonprofit organizations, municipalities and agencies of the Government of Puerto Rico for expenses related to hurricanes Irma and María.

Assistance is available for debris removal, life-saving emergency protective measures and the repair, replacement or restoration of disaster-damaged facilities. The Public Assistance program also encourages protection of these damaged facilities from future events by providing assistance for hazard mitigation measures during the recovery process.

FEMA obligates funding to the applicant for projects through COR3. For applicants to receive the awarded funds, they must provide required documentation to ensure conformity with local and federal requirements.

“FEMA and COR3 continue to work together to expedite recovery funding and reimbursement of all eligible costs,” Thursday’s release reads.

Foundation for Puerto Rico starts emergency resilience program

SAN JUAN – Foundation for Puerto Rico (FPR), a nonprofit that fosters social and economic development, has signed an agreement with the island’s Housing Department to lead preparations for emergency situations, such as natural disasters, as part of the nonprofit’s “Whole Community Resilience Planning Program.”

The foundation’s efforts center around inserting the island into the global economy via its programs, as well as to promote Puerto Rico not only as a tourism destination, but also its investment potential, while focusing on the visitor economy by making an impact on the tourism sector.

The signed agreement kicks off the Whole Community Resilience Program, which is part of the foundation’s numerous initiatives to address the island’s recovery after the historic 2017 hurricane season.

As part of the program’s first phase, the foundation explained it is building a working group to assist communities in developing plans to “prevent, prepare and handle emergency situations, including natural disasters.”

FPR is bringing together government, community, nongovernmental and nonprofit organizations “that have the knowledge and experience in the different focus areas of the program, specifically: housing, health and environment, education, infrastructure and economic development,” the foundation said in a press release, adding that among those helping draft long-term resilience plans as part of the working group are the Puerto Rico Community Foundation and the Puerto Rican Planning Society. 

“These working group partnerships are crucial to achieving a more comprehensive and inclusive process, and will result in higher quality and sustainable plans,” said Annie Mayol, president and COO of FPR.

The president and COO of Foundation for Puerto Rico, Annie Mayol, left, holds a blueprint for a resilience-plan target area. (Courtesy photo)

Puerto Rico’s Housing Department assigned $37.5 million from the U.S. Department of Housing and Urban Development’s Community Development Block Grant for Disaster Recovery (CDBG-DR) program. The allocation is a result of a joint “Action Plan” by both agencies to fund activities and programs aimed at the recovery of communities affected by hurricanes Irma and Maria.

The program’s first phase consists of collecting and publishing the data needed to “determine and inform communities” about their current situation and vulnerabilities, FPR explained. That process will be followed by the publication of the “Notification of Availability of Funds” (NOFA), a document that will “describe the participation parameters for communities, and the selection criteria to receive funds for the development of their plans.”

Maria Jaunarena, the executive vice president of FPR, described the foundation’s objectives succinctly: “We have served and will continue to serve as a liaison, especially after Hurricane Maria, to support communities around the island so they can have access to updated and reliable data, in addition to information to create their own plans with the financing and necessary tools that will allow them to prepare, mitigate risks, quickly manage, and recover from emergencies, including natural disasters.”

Puerto Rico Housing Secretary Gil Enseñat was quoted as saying that the initiative “will allow eligible communities to develop planning and management policies to streamline housing and infrastructure repair, as well as revitalize the economy,” adding that the foundationwill lead the process to help communities understand their real needs across sectors based upon the best available data. This way, we can continue to take positive steps forward, for the recovery and reconstruction of Puerto Rico.”

For more information about the Whole Community Resilience Program, visit

Foundation for Puerto Rico Teams with Skift Foundation in Visitor Economy Recovery Initiatives


Housing to Broaden CDBG-Funded Programs

Editor’s note: The following originally appeared in the Nov. 8-14, 2018, issue of Caribbean Business.

By Nov. 18, the Puerto Rico Housing Department is slated to submit an amendment to an action plan submitted earlier this year to federal authorities that would increase the number of programs that will be funded through $20 billion in Community Development Block Grants (CDBG).

Puerto Rico’s reconstruction program is one of the largest with more than 110,000 homes either having undergone or undergoing reconstruction after hurricanes Irma and Maria destroyed the lion’s share of the infrastructure. “Among our national objectives is to eliminate slums…deal with people’s needs,” noted Puerto Rico Housing Secretary Fernando Gil Enseñat during a presentation to the Associated General Contractors-Puerto Rico Chapter.

The federal government has allocated more than $20 billion to Puerto Rico in CDBG funds. Housing already completed an action plan in July that discusses the distribution of some $1.5 billion coming before year’s end. The governor signed the grant agreement to distribute funding to 19 programs.

However, Gil Enseñat said the amendment, to be completed this month, proposes the distribution of $8.2 billion through nine programs that will be added to the 19 already in the original action plan. All new programs are infrastructure-related. After Housing turns in the amendment to the action plan, it must wait 45 days for approval.

The action plan is slated to be amended again in the future. “We are going to distribute an additional $1.9 billion for power-grid projects. This money is not going to the [Puerto Rico Electric Power Authority,] but is for the energy sector,” he said. An additional $8.3 billion, he added, will be for mitigation projects.

The funds will be distributed either directly by Housing or by delegating them through a memorandum of mutual understanding for all or some aspect of each program to a so-called “subrecipient,” or nonprofit group, or through a partnership.

Gil Enseñat said the plan proposes the distribution of $520 million for economic development programs, including business financing, small-business incubators, a workforce training program, revolving construction and commercial loans, as well as tourism and marketing programs.

Among the new programs, the government is proposing the distribution of $2.1 billion for single-family home repairs, reconstruction and relocation, and $436 million for community energy and water resiliency installations.

The plan also has a “title clearance” program in which homeowners who do not have title deeds can exchange them for homes for which they will have title deeds. About $40 million will be allocated to this program. Another $10 million is proposed for rental assistance.

Another program consists of a “mortgage catch,” in which a family who got behind with their mortgage payments after the hurricanes will be able to qualify for $20,000. The government is proposing the use of $100 million for this program.

Some $5 million is being proposed for a home-resilience innovation competition to allow institutions such as University of Puerto Rico to propose ideas for resiliency, he said.

HUD to make $1.5 billion disaster grant available to Puerto Rico

SAN JUAN – U.S. Housing Secretary Ben Carson and Puerto Rico Gov. Ricardo Rosselló announced Thursday, the “formal execution” of a $1.5 billion grant agreement “to help citizens in Puerto Rico to recover from Hurricanes Irma and Maria,” according to a release issued by Carson’s department.

The U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant—Disaster Recovery (CDBG-DR) Program requires grantees to develop recovery plans. The grants support such disaster recovery activities as housing redevelopment and rebuilding, business assistance, economic revitalization, and infrastructure repair. Grantees are required to spend the majority of these funds in “most impacted” areas as identified by HUD, however.

HUD said it will issue administrative guidelines “shortly for use of the funds to address grantees’ long-term recovery needs, particularly in the area of housing recovery.”

“Today, HUD and Puerto Rico are moving forward to speed recovery on the island,” said Carson. “Now that we have a framework in place, implementing Puerto Rico’s disaster recovery program can move full steam ahead.”

“We are grateful for the great working relationship we have established with the Department of Housing and Urban Development and for their continuous consideration in terms of the housing, infrastructure, and economic revitalization needs of the American citizens living in Puerto Rico,” said Rosselló. “The Island continues to recover from the passage of hurricanes Irma and Maria, but with the trust and support of HUD we will definitely rebuild better and stronger than ever. The People of Puerto Rico thank Secretary Ben Carson and Deputy Secretary Pam Patenaude for their committed attention to the recovery of the Island.”

Puerto Rico identified several housing, infrastructure and economic development recovery needs arising from hurricanes Irma and Maria. Puerto Rico’s disaster recovery action plan includes the following activities:

    • Housing ($1 billion) – Puerto Rico is investing more than $1 billion to restore the island’s severely damaged housing stock. As part of the plan, Puerto Rico intends to provide up to $120,000 to rebuild destroyed homes for each qualified homeowner and up to $48,000 to repair each eligible damaged property. Additional housing investments include funding for rental assistance ($10,000,000), specifically for properties serving the elderly and other vulnerable households. Puerto Rico has also proposed a $36 million Home Emergency Resilience Program that provides up to $6,000 per household for individual solar appliances to help families.
    • Economic Revitalization ($145 million) – Puerto Rico’s recovery plan provides $145 million for several activities to help revitalize the post-disaster economy, grants of up to $50,000 for eligible businesses. The plan also targets grants of up to small business incubators and accelerators ($10,000,000) awards of up to $2,500,000 for each eligible incubator operation, a workforce training program ($10,000,000) awards of up to $2,000,000 to train eligible Section 3 residents, and a construction and commercial revolving loan program ($35,000,000) that will provide up to $1,000,000 per loan to eligible businesses.
  • Infrastructure ($100 million) – To support the repair of damaged infrastructure on the island, Puerto Rico intends to target $100 million to match federal investments through the Federal Emergency Management Agency’s (FEMA) Public Assistance and Hazard Mitigation Grant Program projects.

Read Puerto Rico’s recovery plan.

On Sept. 8, 2017, President Trump signed the Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017. The act appropriated $7.4 billion in CDBG-DR funding for major disasters declared in 2017.

On Feb. 1, HUD allocated $1.5 billion of that appropriation to Puerto Rico to address unmet needs on the island. The action plan approved Thursday will put these funds to work.

On April 10, HUD allocated another $18.5 billion to “further support recovery in Puerto Rico and to rebuild communities impacted by Hurricanes Maria and Irma and to protect them from major disasters in the future. HUD will shortly publish program rules to guide Puerto Rico and others on the use of those funds,” HUD said.


Home Sweet Home, By Contract: Slicing the housing program pie

Editor’s note: This story first appeared in the July 26 – Aug. 1 print issue of Caribbean Business.

espite alleged irregularities in the granting of Tu Hogar Renace’s management contract, the complex framework behind the effort to guarantee thousands of Puerto Rican families have a home that meets “minimal habitable standards” is on track. However, there are concerns over the effectiveness of controls over the federal funds granted by the initiative, which is subsidized by the Federal Emergency Management Agency (FEMA).

Time is of the essence for Puerto Rico’s Vivienda brigades because a cost-sharing exemption is set to expire in less than two months. Local Housing Secretary Fernando Gil Enseñat summed up to Caribbean Business what, in his opinion, have been the achievements in the execution of the Sheltering & Temporary Essential Power Program (STEP) he oversees, along with the organization PM Rising Phoenix, formerly Adjusters International.

“In the beginning, before the work began, there were a few days when there were some [court] rulings that affected…the receipt of applications. After the court acted on the first argument immediately taken to the appellate [court] and declared the work not canceled, and that [the Court of Appeals] was going to go deeper to see the case as such, we again rounded up the requests and the intake of all applicants for the STEP or Tu Hogar Renace service,” said Gil Enseñat, referring to the challenge presented by AECOM, a contractor interested in invalidating the “contract awarded to Rising Phoenix.

Housing Secretary Fernando Gil Enseñat, center, speaks to Hurrican Maria survivors.

As recently as July 13, and after several procedural errors by the Housing Department’s Bidding Review Board, the Court of Appeals received the agency and its project manager’s allegations. So, together with AECOM’s document in opposition, the court will finally put an end to the controversy, which was first reported by Caribbean Business.

AECOM currently manages the same program for the U.S. Virgin Islands, and its execution has been criticized by USVI Gov. Kenneth Mapp. “They have to bring their game up; their game is slow,” Mapp said during a July 12 press conference. He is hoping to speed up repairs by hiring APTIM, another major contractor, but only “if they are prepared to accept the fee schedule in the AECOM contract.”

In the case of Puerto Rico, repairs appear to be going full steam, judging by the most recent numbers provided by Housing, figures that can also be found on the website Six months after Hurricane Maria hit, the program had barely managed to repair 300 homes, according to a press release issued by FEMA. Eleven months after the storm, Tu Hogar Renace has completed minor repairs on 31,875 of the 122,000 homes approved, which so far amounts to a cost of $306,470,040. The faster pace in great part has to do with adjustments made by Housing to the procedures, based on information collected from its seven construction managers at service areas throughout the island. As of this writing, the average repair cost was $9,614.75, less than half the $20,000 limit established for program participants.

“Their production is…735 to 1,000 houses per day. In Louisiana, the last time this program was deployed, 14,000 homes were done in a year, with seven contractors as well. Thus, this is the largest STEP program FEMA has seen. The feedback has been super-positive,” the Housing official said.

Questionable impact on economy

The Housing Department estimates the Tu Hogar Renace program has injected nearly $1 billion into the local economy because, in addition to the money assigned for home repairs, it has employed more than 14,000 workers during the rebuilding effort. Gil Enseñat said the economic impact is reflected as a blip in retail, as well as in motor vehicle sales.

At presstime, Caribbean Business’ attempts to obtain the specific source of this figure and a breakdown of the items to which this billion-dollar injection was directed were not successful. However, sources with direct knowledge of the reconstruction program question that amount. They said its operational flowchart includes multiple foreign contractors, which can delegate much of their responsibility through a chain of subcontracting services for a salary of no less than $8.25 an hour, which results in much of the money not staying on the island.

“The problem is the dignity of us Puerto Ricans and why our leaders don’t do better business to defend the interests of a people bankrupt and disadvantaged after the hurricane,” questioned a construction-industry executive, who asked to remain anonymous, adding that local businesses are placed in a disadvantaged position in that they assume a large part of the workload, making less than this type of work is worth.

“To turn Puerto Rico’s recovery into an economic development platform, we have to transform the current contracting trends,” tweeted Deepak Lamba-Nieves, research director, and Churchill G. Carey Jr., chair in Economic Development Research at the Center for a New Economy (CNE) think tank. The expert shared a chart, titled “Accumulated Post-Hurricane Maria Expenditures in Puerto Rico,” broken down by contractor, which shows a marked difference between what stateside contractors have been granted, about $4.5 billion, versus local ones, which have been awarded about $500,000,000 in contracts as of June 20. The CNE is analyzing official Puerto Rico government data on the island’s recovery after last year’s hurricane season to then publish its findings on a yet-to-be-determined date.

Contractor pricing

One of the most criticized issues in the Tu Hogar Renace program has been the price established for items included in the repair process. Some of these are valued at almost 50 percent more than their market price. For the Housing secretary, this alleged inflation has an explanation, when comparing Puerto Rico to the USVI, another territory that mimics cost structure in the local market.

“The [USVI] has geographical and legal circumstances that are very similar to those of Puerto Rico. The Jones Act increases the cost of products in Puerto Rico by around 20 percent, especially construction and construction goods, which have increased about 30 percent,” the secretary said, adding that pricing was established by contractors based on the market value.

“After we were given the prices, we proceeded to use a mathematical formula to discard everything illusory or unreal in terms of prices that were too high or too low. After that, the market price was averaged, and that is what is paid to all contractors around the island,” said Gil Enseñat, who expressed he was extremely pleased with the work done so far and hopes the process will be used by FEMA as an example to follow in future disaster responses.

The rates include a minimum 10 percent profit margin for the contractor, plus 10 percent of general expenses, which include permits, fees and insurance.

Dubious inspection invoicing amendment

From an administrative point of view, if the trend in the average investment of $9,600 per household continues, about $1,171,200 will have been spent on minor repairs. This sum includes both the cost for materials and labor, as well as the operating expenses of Puerto Rican contractor Caribe Tecno; stateside-based firms SLS, James W. Turner Construction and Excel Contractors; and local and stateside joint ventures (JV) F&R and BLDM JV, Yates-Bird LLC / JV and 4 Contractors JV.

Since it was announced these seven construction managers would be awarded a combined $1.5 billion, residents, political figures and construction-industry representatives have appealed to the press to denounce what they call a scheme akin to disaster capitalism.

One of the moves alleged to benefit everyone except aid applicants is the inspection process. Several sources with knowledge of this process turned to Caribbean Business to detail what they believe is an overbilling scheme that consists of unlimited changes to the requirements to approve a final inspection, with the objective allegedly being that up to four reviews of the work is produced. Final inspections are billed at a rate of $425 each, while initial inspections cost $575, or a total $1,000 per household.

After examining the contracts that establish these rates, Caribbean Business identified irregularities in the language of the agreement between Housing and Rising Phoenix, specifically, an amendment signed June 7.

“The [Department of Housing] DOH shall pay the program manager for the ‘inspection’ services based on the fixed unit prices set forth in Exhibit V. The parties acknowledge that the total number of ‘inspections’ represents the maximum number of any combination of initial site property visits and final inspections that may be invoiced to the DOH by the program manager during the term. Any increase in the total cost of ‘inspections’ will require an amendment to the agreement,” reads the amendment.

The exhibit referred to in the amendment, “Schedule of Fixed Unit Prices, Fixed Rates and Lump Sums,” shows that $75 million is assigned for the inspection of 75,000 properties, or $1,000 for each unit. That figure does not account for the fact there are now more than 122,000 households under the program nor does it specify a cap on the total allowed to be billed.

More than 65,000 families await repair and final inspection of their home. The inspections include the presence of a representative of the Housing project manager and an inspector from the corresponding construction manager responsible for the repairs.

“Because of so many failures that have occurred in the construction processes, a bureaucratic system was created in which a representative of the contractor is present in the final inspection to find a solution in case a flaw is found that puts a home in a position where it wouldn’t pass final inspection. At the organizational level, it is still inefficient,” one source stressed.

“The one who’s changing the rules almost daily is Adjusters [Rising Phoenix]. That caused a lot of homes to be hung [to fail inspection]. For me, it’s a way to justify why you’re going to charge what you’re billing for inspections. This project lacks a clear rubric to establish the quality of the work. There are some practices that are not clear; the evaluation in many cases is not clear,” another source said.

Moreover, the tablet used to register the construction work forces the inspector to select that both the initial and the final inspections were completed, even if it this was not the case. Specifically, these options appear on lines 57 and 58 of the digital system intended to log the entire process, data that both Housing and FEMA have access to and, according to the department’s secretary, no more than $1,000 is paid even if multiple registered inspections appear in the system.

“I have to verify well, but it doesn’t exceed $1,000. There’s no limit, but only up to a cap is paid. It’s part of the risk of doing things right, and the risk is taken by the contractors. If they exceed [the cap], it’s not paid. If they have to go more than once [for inspection], only the initial and final [inspections] are paid,” Gil Enseñat said when shown the document.

HUD approves $616 million Florida disaster recovery plan

Florida Gov. Rick Scott and U.S. Housing Secretary Ben Carson (Screen capture of

SAN JUAN – U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson has approved a disaster recovery plan to help Floridians recover from Hurricane Irma. In November, HUD allocated $616 million to support long-term recovery efforts in the state.

The plan is funded through HUD’s Community Development Block Grant—Disaster Recovery (CDBG-DR) Program, which requires grantees to develop a “thoughtful recovery program informed by local residents,” according to the department’s release.

“It’s great news that we were able to secure critical funding from HUD that will directly benefit the families who were most affected by last year’s storms. This $616 million will enable communities to build new affordable housing and to replace homes lost in the wake of last year’s hurricane season. Through this program, we can continue to move forward with long-term affordable housing solutions for displaced families as well as provide grants to businesses who were impacted by the storm,” Florida Gov. Rick Scott was quoted saying in the release.

Several housing and economic development recovery needs arising from Hurricane Irma were identified, the release reads, listing the following programs designed to address them:

  • Housing Repair Program ($273.3 million) will rehabilitate housing occupied by low- and moderate-income families that was damaged by Hurricane Irma. The Florida Department of Economic Opportunity (DEO) will centrally manage the following activities on behalf of eligible homeowner and rental property owner applicants:
    • Repairs to, reconstruction or replacement of housing units damaged by Hurricane Irma, which may include bringing the home into code compliance and mitigation against future storm impacts, including elevation.
    • The completion of work to homes that have been partially repaired.
    • Repairs to, or replacement of, manufactured homes impacted by Hurricane Irma.
    • Temporary housing assistance based on individual household needs and their participation in the Housing Repair Program.
  • Workforce Affordable Rental New Construction Program ($100 million) will facilitate the creation of affordable rental housing though a partnership with DEO and the Florida Housing Finance Corporation by leveraging CDBG-DR funds with low-income housing tax credits as well using CDBG-DR funds for zero-interest loans for smaller developments.
  • Land Acquisition for Affordable Workforce Housing ($20 million) provides funding for the purchase of land for development into affordable housing, especially in areas of the state where the scarcity of developable land makes it difficult to construct properties that can be rented at an affordable rate for the community’s workforce.
  • Voluntary Home Buyout Program ($75 million) encourages risk reduction through the voluntary purchase of residential properties in high flood-risk areas. Communities that participate in this program are encouraged to develop plans for the reuse of the acquired land to further reduce flood risk and/or serve as a recreational space for the public.
  • Recovery Workforce Training Program ($20 million) will bolster workforce training throughout the state with the goal of growing the skilled labor force needed to support the long-term recovery, primarily in the housing construction field.
  • Business Recovery Grant Program ($60 million) provides funding for eligible business owners who are seeking reimbursement for the cost of replacing equipment and inventory damaged by Hurricane Irma.
  • Business Assistance to new Floridians from Puerto Rico ($6 million) provides business plan guidance, accounting services, licensing information and other resources to support assistance in assimilating to the business climate in the State of Florida.

In April, HUD also allocated an additional $791 million of CDBG-DR funding to Florida for unmet needs, infrastructure and mitigation purposes. The department said it will “shortly issue requirements governing those funds, and Florida, along with other states, will be required to submit plans addressing their use.”