Puerto Rico gets extension on FEMA aid

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Puerto Rico has requested and received an additional year from the federal government to submit reconstruction plans as officials prepare for a Supreme Court hearing Tuesday and a congressional hearing the following week on proposed changes to the law that created the island’s Oversight Board.

Commonwealth officials filed a request Thursday with the Federal Emergency Management Agency for a 12 month extension to the Oct. 11 deadline for submitting cost estimates.

Sergio Marxuach, policy director of the Center for a New Economy based in San Juan, Puerto Rico

Brian Tumulty, The Bond Buyer

Last month FEMA and the commonwealth announced an extension through Nov. 30 of the deadline for residents to file claims for household disaster damage.

FEMA said the delay involves fixed cost estimates to fund permanent repair, replacement, and mitigation projects in accordance with the Stafford Act. “To date, the federal government has already provided more than $20 billion towards response and recovery efforts in Puerto Rico,” FEMA said in a statement Friday, noting that emergency repairs following Hurricanes Maria and Irma “were made to meet current industry standards wherever possible.” Because of the state of significant disrepair of Puerto Rico’s infrastructure prior to the 2017 hurricanes, “many of the repaired systems are already in better condition than they were before the storms,” FEMA said.

The two actions undercut the commonwealth’s complaints of federal delays in dispersing money, said Cate Long, a partner of Puerto Rico Clearinghouse.

“It means all the yelling they’ve been doing about FEMA not giving them the money is all wrong,” Long said. “Because if they haven’t complied with federal requirements to document damage. Consistently, they have sent mixed messages to Washington on everything.”

Sergio Marxuach, public policy director of the Center for a New Economy, said the delay, at least in part, is because the commonwealth and FEMA signed an agreement to use alternative procedures for producing cost estimates under the federal Stafford Act Section 428.

“That methodology, according to the GAO, has never been used for estimating 100% of what FEMA calls large scale public works projects,” Marxuach said. “So I think there could be a problem there on both sides. FEMA has used it only once for [Hurricane] Sandy and it was only a small fraction of all the public works projects.”

The House Natural Resources Committee, meanwhile, is meeting Oct. 22 to consider removing the infrastructure revitalization section from the federal legislation that established the Puerto Rico Financial Oversight and Management Board.

The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) established the Oversight Board to restructure the commonwealth’s debt, improve its financial practices and promote economic growth.

But the infrastructure section hasn’t been effective, according to a spokesman for the House committee, who noted that the original executive director, Noel Zamot, resigned in frustration and the Oversight Board doesn’t seem inclined to name a replacement.

Long agrees that portion of the PROMESA legislation has been a failure. She said the commonwealth could independently take basic initiatives such as issuing property deeds to homeowners and businesses who have had difficulty qualifying for federal aid and to facilitate property sales.

Long posted a copy of the Natural Resources Committee’s discussion draft on Twitter.

In addition to removing the infrastructure revitalization section of PROMESA, the discussion draft proposes to define essential public services that the Oversight Board should not cut, territorial relief for unsecured public debt and the appointment of an Office of Reconstruction coordinator for Puerto Rico as well as a revitalization coordinator for Puerto Rico Electric Power Authority.

It also requires more transparency through the creation of a Puerto Rico public credit comprehensive audit commission.

And it designates that any document, record, or information relating to the public debt of the Commonwealth of Puerto Rico or any of its territorial instrumentalities, including any document relating to any public offering, funds obtained are spent, or contract or agreements with a creditor, shall be— ‘(1) classified as a public document; and ‘(2) made accessible to any interested party.”

Marxuach said he thinks the draft legislation’s proposed appointment of an overall reconstruction coordinator and a PREPA revitalization coordinator are meant as a substitute for the elimination of PROMESA’s section on infrastructure revitalization.

Marxuach said his hunch is that the Oversight Board doesn’t have the expertise to promote infrastructure development and that the two proposed new positions would make up for it in other ways.

“I don’t know if it’s going to facilitate things or make them more complicated, to be completely honest,” he said.

The Natural Resources Committee could significantly revise the discussion draft.

No timeline has been announced for committee approval of a bill or sending it to the House floor for a vote.

Any bill passed by the House would need broad bipartisan support to be considered by the Senate.

Meanwhile, the U.S. Supreme Court hears oral arguments Tuesday on the legitimacy the debt restructuring being imposed on Puerto Rico by a Financial Oversight and Management Board whose members were not confirmed by the U.S. Senate.

A ruling is not expected for at least a few months.

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