House evaluates bill to create recovery trust fund for towns
By The Star Staff
The Puerto Rico House of Representatives is evaluating a bill that would create a trust fund that would help the island’s 78 municipalities finance the repair of structures damaged by hurricanes Irma and Maria in 2017.
Most of the towns are complaining about the high level of red tape and slow pace in the disbursement of federal recovery funds.
Under the bill, the proposed trust, which would be able to accept funds, would be under the custody of the Economic Development Bank (BDE by its Spanish initials).
House Bill 421, known as the Recovery Trust for Municipal Projects Act, states that the Fiscal Agency and Financial Advisory Authority and the Treasury Department will provide an initial $5 million contribution to the proposed trust, which will also be able to receive from time to time federal funds, investments, reinvestments, and contributions from the Legislature. Mayors Association President Luis Javier Hernández said the proposed trust should be under the custody of a private bank and not under BDE custody.
“This would bring certainty and attract private investment to the fund,” he said at a hearing of the House Municipal Autonomy, Decentralization and Regionalization Committee.
While most of the projects to repair structures damaged by the 2017 hurricanes are being financed by either the Federal Emergency Management Agency (FEMA) or with Community Development Block Grant-Disaster Recovery (CDBG-DR) funds, municipalities must pay a matched portion, usually 10%, of the project costs.
Most of the 78 municipalities are in dire financial straits after the federal Financial Oversight and Management Board opted to repeal contributions that towns received each year from the government’s general fund.
Rebuilding structures and infrastructure has been a major headache for towns, which must go through the web of paperwork and requirements to access funds that have already been obligated.
“If you want to know what bureaucracy is like, visit the FEMA offices. I assure you that you will be as scared as I am,” Hernández said. “At this juncture, we will be 10 years validating a project.”
Last week, Coamo Mayor Juan Carlos García Padilla warned about the slowness in the disbursement of recovery funds. He said that if the Puerto Rico Housing Department, which manages CDBG funds, continues delaying payments to municipalities from the Non-Federal Matching Program (NFMP) funds, thousands of reconstruction projects funded by FEMA funds to rebuild hurricane-damaged structures could be stalled around the island.
FEMA approves 90% of the reconstruction costs of the damaged facilities and the municipalities pay the remaining 10% with their funds or through the Housing Department matching program, the NFMP, created to help the island’s mayors complete the costs of projects that, otherwise, they would not be able to carry out.
“In Coamo alone there are 178 projects claimed to FEMA [related to] damages by Hurricane Maria for a total of $75 million,” García Padilla said. “In each of these, FEMA contributes 90% of the costs and already has obligated funds for 137 of the projects pending the disbursement of the 10% share.”
Of the 137, the Housing Department pre-qualified 92 projects for the 10% matching payment but has not issued any payments.
“Due to the slowness of the process, we began to use municipal funds, but the money is running out and the program has not disbursed a single penny,” García Padilla said. “Our call is for the process to be streamlined so that the money reaches Coamo and the other municipalities, and the reconstruction work from Irma and Maria can be completed.”