It has been three years and 145 days since Hurricane Maria struck the island. In other words, Puerto Rico has entered its fourth year of reconstruction. The amount of time that has gone by could suggest that recovery is fully underway. The reality on the ground, however, is very different.
To highlight just one example, of the 89,942 severely damaged homes, construction has been initiated for a total of only 1,164 homes under the government’s R3 program. Though we can’t discount the effect the earthquakes and the pandemic has had on reconstruction efforts, there are many other reasons for the lack of progress, including a flawed coordination process between local and federal authorities and a relentless insistence by the island’s Oversight Board of imposing strong austerity measures that erode the island’s ability to respond in times of increased needs.
Despite the billions of dollars Congress has appropriated, the needs of the island largely remain unmet. There is little doubt that the slow pace in the release of funds has dampened Puerto Rico’s recovery efforts. Though part of the delay could be attributed to national disapproval over how Puerto Rico managed its finances in the past, that rhetoric has unfairly veered beyond its fiscal crisis and snowballed into the more toxic idea that Puerto Rico is incapable of running its own government. Capitalizing on that narrative, the Trump Administration appointed federal monitors in multiple agencies with unclear authorities, resulting in a highly bureaucratic and inefficient process that has hindered aid from reaching its intended recipients.
In light of the most recent funding approval from the Department of Housing and Urban Development (HUD), we take this opportunity to explain the funding process behind HUD’s Community Development Block Grant (CDBG) program.
The long road to release funds
Congress has appropriated funds for HUD’s CDBG program in Puerto Rico through different legislative vehicles. These include:
- The Continuing Appropriations Act of 2018 and the Supplemental Appropriations for Disaster Relief Requirements Act of 2017 (L. 115-56), appropriated $7.4 billion
- The Bipartisan Budget Act of FY2018 (L. 115-123) appropriated $28 billion
- The Additional Supplemental Appropriations for Disaster Relief Act of 2019 (L. 116-20) appropriated $2.4 billion
The process typically unfolds like this: Congress appropriates federal funding to support and help communities recover from natural disasters. The relevant federal agency – in this case, HUD – issues a notice with guidance on eligibility and use of funds. The grantee then responds with a plan of action to be approved by HUD. Once HUD and the grantee reach a final agreement, total obligated funds are disbursed to the recipient.
In Puerto Rico, shortly after the hurricanes, former-Governor Ricardo Rosselló established the Central Office of Recovery, Reconstruction, and Resiliency (COR3) to oversee disaster recovery efforts and implement Puerto Rico’s Economic and Disaster Recovery Plan. He also designated the Puerto Rico Department of Housing (“Vivienda”) as the primary recipient for HUD’s CDBG funding, essentially delegating the local agency the authority to administer and manage CDBG funds, as well as comply with funding requirements.
Notices from HUD came in the following order:
- On February 9, 2018, the Office of the Assistant Secretary for Community Planning and Development at HUD published a notice in the Federal Register that allocated $1.5 billion for Puerto Rico’s response to address unmet needs and disaster-related impact to infrastructure, housing, or economic revitalization in the most impacted and distressed areas.
- On August 14, 2018, HUD allocated $8.2 billion to address unmet needs.
- On January 27, 2020, HUD allocated $8.3 billion for mitigation activities in Puerto Rico.
- On January 27, 2020, HUD allocated an additional $278 million for unmet infrastructure needs.
After unusual delays in approval and disbursement of these funds, in 2019, then HUD Secretary Ben Carson publicly indicated Puerto Rico “has a history of fiscal malfeasance,” and in response, the agency is “putting additional financial controls in place to ensure this disaster recovery money is spent properly.” The financial controls included “enhanced monitoring of expenditures and other measures designed to ensure Puerto Rico’s legal and prudent use of the funds.” In line with that announcement, HUD appointed a Federal Financial Monitor, Robert M. Couch, to oversee the grant administration and disbursement process of disaster recovery funds. Separately, the White House appointed Coast Guard Admiral Peter J. Brown to serve as the liaison between the Executive and Puerto Rico.
The Trump administration used oversight as an excuse for punishment and put obstacles in place that no other jurisdiction had to comply with. It may be too soon to know what procedural changes will occur under the new Biden Administration but HUD’s most recent press release suggests there will an effort to remove onerous funding conditions that were uniquely imposed on the island.
In December 2020, Vivienda submitted its fifth amendment to Puerto Rico’s Disaster Recovery Action Plan to accelerate the release of the $8.2 billion in mitigation funds. In response, HUD approved a portion of funds and advised Vivienda to revise other sections of the plan to meet notice requirements. After HUD completes its final review, the Department will issue a grant agreement before releasing funds. Below is a running list of the total CDBG funds that have been appropriated, allocated, approved, and released for Puerto Rico.
Click image to enlarge
A Future of Possibilities
Undoubtedly, rebuilding communities come with a number of challenges. But up until this point, Puerto Rico’s residents are confronted with scrambled explanations of what is otherwise already a complicated bureaucratic process, framed merely from the perspective of federal support, without a clear clarification of how funding ties to Puerto Rico’s collective recovery.
While many have focused solely on the dollar value of what Puerto Rico has received thus far, we must be careful not to conflate reconstruction funding with long-term economic growth. To be sure, reconstruction funding will be of the essence in the coming years but these temporary dollars do not properly fix structural problems that, unless corrected, will continue to hinder socioeconomic success.
At this point in time, it is necessary to ensure Puerto Rico has the ability to absorb and manage reconstruction funds so that the focus is less about the overall price tag, and more about where these monies are invested.
As we look to the future, we need to focus on establishing the right processes and practices that ensure an effective reconstruction process. A successful recovery will remain elusive unless there is a collective commitment to espouse a self-sustainable economy that can survive when disaster aid interventions cease.