SAN JUAN, Puerto Rico — A year after Hurricane Maria devastated Puerto Rico, federal aid is starting to trickle into the island’s economy, spurring hope that reconstruction will leave the U.S. territory better off than it was before the disaster.
Private enterprise and nongovernmental organizations are leading the way in rebuilding the battered economy, which has been contracting since 2006 — long before Maria and its predecessor, Hurricane Irma, caused destruction on the island.
But even the most optimistic entrepreneurs say federal money needs to make its way to projects on the island if a resilient economy is to be built.
Congress appropriated $20 billion in Community Development Block Grants for disaster relief (CDBG-DR), which are managed by the Department of Housing and Urban Development, but only $1.5 billion has been allocated to projects in Puerto Rico.
The bureaucratic process reflects the experience of many Puerto Ricans over the past year, who in dealing with the Federal Emergency Management Agency (FEMA) found red tape that slowed emergency recovery efforts.
“If it’s true that the government of Puerto Rico has to learn from the lessons that Maria left us, the government of the United States must also [learn those lessons],” said Sen. Thomas Rivera Schatz (R), the president of the Puerto Rico Senate.
“It’s come to light that FEMA sent personnel that wasn’t necessarily the most capable, it’s come to light that they didn’t recruit enough people in some areas, it’s come to light that there have been delays precisely because of the bureaucracy,” Rivera Schatz added. “Bureaucracy affects us. And when it’s bureaucracy at the federal level added to the bureaucracy of the state government, then the municipal governments suffer the consequences.”
Small towns face difficult road back
Puerto Rico is divided into 78 municipalities that range in population from nearly 400,000 in the case of the capital, San Juan, to less than 2,000 for the island municipality of Culebra.
While the larger cities have enough staff to file paperwork and cut through federal red tape, smaller towns hard hit by the hurricanes were often unable to access all the emergency help FEMA had available.
María Melendez, the mayor of Ponce, Puerto Rico’s second largest city, said she stretched her staff to help smaller neighboring municipalities file the necessary paperwork to get FEMA benefits.
“What the municipal governments are saying is true. The delay that they’ve observed and complained about was also suffered by the state government,” she said.
In Cayey, a mountain town of about 50,000 inhabitants halfway between San Juan and Ponce, locals were forced to take matters into their own hands in the weeks after Hurricane Maria.
Elliot Pacheco, a pharmacy owner in Cayey, set up camp in his store for the two weeks following the hurricane.
“Our main concern was communication. We couldn’t process the scripts, so we didn’t know if the medicine was covered by a health plan. So what I did as owner is I told my staff, ‘Give them their pills. I really don’t care. I’ll do something after we get the communications back on,’ ” said Pacheco.
A year later, Pacheco has two large tanks of diesel for his rooftop electric generator and four different internet connections, including a satellite uplink.
“If you want to survive in this kind of situation you have to be prepared. Your building has to be prepared, you have to have personnel that is prepared, a preparedness plan to see which employees can come, which are most vulnerable and might not come. Maria taught us a big lesson, to prepare,” he said.
Federal aid doesn’t always fit need
Puerto Rico’s private sector is taking the preparedness lesson beyond physical readiness.
Puerto Rico entered the 2017 hurricane season saddled with over $72 billion in public debt. In 2016, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which named a fiscal control board to oversee the island’s finances and approve its yearly budgets.
With a sputtering economy and a declining population — the island has lost about 10 percent of its population to the mainland over the last decade — business and industry was faltering.
The hospitality industry was first boosted by the sheer number of FEMA workers on the island, but supplies were difficult to get and service schedules depended on the availability of electrical generators.
Federal aid programs often didn’t fit the needs of the island. A FEMA-supported Small Business Administration program to provide loans to business owners, for instance, was shunned by Puerto Rican entrepreneurs because they weren’t sure they’d be able to repay the loans.
But a home-grown program started by the Foundation for Puerto Rico, a nongovernmental organization incubator, found that small grants helped keep businesses open and Puerto Ricans employed.
Sixty-four percent of the program’s beneficiaries were in the food and beverage industry, and only 7 percent ended up closing.
To help businesses apply for the federal grant money, Puerto Rico’s government teamed up with private enterprise.
In June, Puerto Rico Secretary of State Luis Gerardo Rivera Marín and a group of representatives from different business sectors announced the creation of the Puerto Rico Business Emergency Operations Center. The group was modeled after similar institutions in places like Florida and Louisiana, to coordinate reconstruction efforts between government and the private sector.
“We learned with the hurricanes that vital sectors of our socioeconomic structure, we have constant interaction. You know, government, private sector, NGOs. So the point is here, how do we maximize those synergies? Who should do what?” said Roberto Pando, the health-care industry’s representative to the Business Emergency Operations Center.
Gov. Ricardo Rosselló (D) said the fiscal control board imposed by PROMESA had some benefits in terms of forcing his administration to present a fiscal plan, which it did in August, and it fit in with his campaign promise of slashing the size of government.
He added that the CDBG-DR structure, which provides grants for specific projects, would benefit from increased participation by the private sector.
“I do think that private sector, non-for-profits are going to be leading that effort. We’re trying to make government smoother, faster but certainly non-for-profits and the private sector are leaner and they can execute quicker and they can innovate and we really want to leverage that opportunity,” Rosselló told The Hill.
All told, the island’s economy could receive anywhere between $30 and $45 billion in reconstruction funds.
“Yeah, $30 billion is a lot, but I don’t think it’s commensurate with the disaster, and it’s been slow in arriving,” said Federico de Jesus, a Democratic consultant and former deputy director of the Puerto Rico Federal Affairs Administration.
Waiting on grant funds
Still, while the fiscal control board and Puerto Rico’s bondholders have a say in how the island government spends its budget, CDBG-DR funds are outside their scope.
That’s not generating confidence among some Republicans in Washington, who support the board’s fiscal oversight role in the wake of Puerto Rico’s financial crisis.
“The question you have to ask is, can the oversight board have an effective voice in it to make sure it’s managed properly? Theoretically, of course. Human beings can be competent. Human beings can also screw it up. I hope the latter doesn’t happen,” said Rep. Rob Bishop(R-Utah), chairman of the House Natural Resources Committee, which oversees the territories.
Democrats see a different picture, where the Republican-led Congress has focused its oversight of the disaster on the territorial government’s fiscal past, not on the federal government’s handling of the emergency response.
In the month following Hurricane Katrina in 2005, 1,126 congressional floor statements mentioned the disaster, while in the month following Maria, only 256 floor statements touched on the hurricane, according to information from Quorum, a public affairs software company.
Both natural disasters happened in poor areas of the country, at a time when Congress and the White House were controlled by Republicans, and both generated criticism over FEMA’s handling of the response.
“During the Bush administration, the Republicans that served at that time took their cues from the president, and the president realized that they did mess up after Katrina, he took responsibility,” said Rep. Ruben Gallego (D-Ariz.), the ranking member of Natural Resources Subcommittee on Indian, Insular and Alaska Native Affairs.
“We still have to know what happened in Puerto Rico post Hurricane Maria. I was on the phone along with [Rep. Stephanie] Murphy [D-Fla.] three days after landfall. Northcom and FEMA were still not able to get assets there,” he said.
“There needs to be an actual investigation about what happened,” added Gallego.
Criticism from Washington of Puerto Rico’s government handling of the response has met its own critics on the island.
“It was something almost comical to hear Washington politicians say they didn’t want Puerto Rican politicians involved in electrical power, while they themselves want to get into it,” said Rivera Schatz.
BY RAFAEL BERNAL – 09/20/18
Alison Spann contributed.