Puerto Rico was still recovering from Hurricane Maria’s bruising, when a magnitude 6.4 earthquake rocked the island last week causing $120 million in losses and leveling 559 homes in the southwestern region of the U.S territory, according to the preliminary estimate included with the major disaster declaration petition.
This figure, however, doesn’t include the harm to public infrastructure like schools, roads, bridges and the ailing electric grid, which the executive director of Puerto Rico’s Electric Power Authority (Prepa), José Ortiz, said sustained about $50 million in damages, or the estimated daily regional economic impact which oscillates between $16.8 to $21 million, according to economist Gustavo Vélez.
In the petition, Gov. Vázquez stated that a preliminary evaluation by the U.S. Geological Survey (USGS) calculated the damages at $838 million, which represents 1 percent of the island’s gross domestic product (GDP).
An estimate by economist José Alameda calculated the preliminary impact to be in the ballpark of $1.7 billion, factoring in the loss of GDP and the 30-day aftershock scenario of the USGS, but he didn’t rule out the possibility of it exceeding $2 billion.
Acknowledging the island’s vulnerable situation, and the delay on the arrival of federal recovery funds after Hurricane Maria slammed the island over two years ago, Ottmar Chávez, the executive director of the Central Office for Recovery, Reconstruction and Resiliency (COR3), felt more confident that this time around the government’s response to the emergency would be more timely and effective.
“I feel more confident and optimistic because for this event we have the knowledge and team to handle the recovery,” Chávez stated in an interview with THE WEEKLY JOURNAL.
“As for the recovery of Maria, since my arrival six months ago, we have accelerated the pace of work. We’re not satisfied, neither the federal or the local government. We continue to fight for the reconstruction process that the people deserve. At this juncture, it’s important that we remain calm. FEMA is working with us. The National Guard and other groups are offering support. The government is committed to making this response as efficient as possible to ensure that the residents of the southern areas receive the help they need.”
After the quake, whose tremors were felt as far north as San Juan, even though the epicenter was off the island’s southern coast, the Financial Oversight and Management Board (FOMB) authorized the disbursement of $260 million for emergency expenses related to the quake. Four days later, Gov. Vázquez announced the immediate disbursement of $2 million for the hard-hit towns of Ponce, Peñuelas, Guánica, Utuado, Guayanilla and Yauco.
Nearly 8,023 people have taken refuge in 42 government and non-governmental shelters located in 14 municipalities, while hundreds more are sleeping outside their homes, some in cars and others in tents, out of fear of the structures in which they live. At least eight people were injured and one person was killed when a wall collapsed on him at his residence in Ponce.
On Monday, almost a week after the earthquake, although Prepa reported power was restored to 99 percent of its customers, they were urging them to save energy as to minimize power outages. Their request is in response to having the largest plant of the system, Costa Sur, which produces a quarter of the island’s electricity, still offline.
Public schools certified as safe are set to resume classes on Jan. 22. As of Monday, engineers had inspected 388 of 856 schools, indicated state secretary Elmer Román in a press conference on the earthquakes. Classes had been scheduled to start on Jan. 9, after the holiday break, but that date has been pushed back due to the sequence of seismic events that started on Dec. 28 and even collapsed the Playa Ventana rock formation, in Guayanilla.
Despite the initial declaration of a state emergency, and the parade of politicians visiting the affected areas, evacuees and even some mayors have bemoaned the state government’s slow response to the emergency.
Chávez explained that the government is taking the necessary steps to ensure access to federal emergency aid. Last week, President Donald Trump issued a state of emergency declaration which allows the island to tap into funds for simple life provisions like food, water and folding cots. According to the Stafford Act, the total amount of assistance may not exceed $5 million but FEMA clarified that this is not a “hard limit” and, if needed, the president can authorize an extension.
Last Saturday, the governor requested a major disaster declaration to gain access to individual help, such as the $500 in assistance, temporary shelter and unemployment assistance, and psychological help. It also provides funds for debris removal, repairs of bridges and other structures as well as hazard mitigation assistance to implement initiatives to prevent or reduce long term risk to life and property from natural hazards.
In the aftermath, $2.4 billion were disbursed for individual assistance and other $14 billion for repairs, including $5 billion for the reconstruction of the grid’s transmission and distribution lines, and over $4 billion roads and bridges.
Although Chávez, doesn’t know when Trump will issue the major disaster declaration, he explained that contrary to Maria, there is an administrative structure in place to help request and allocate federal funds.
The proposed HELP Act is now under review of the Senate. The legislation was introduced to address FEMA’s slow disbursement of prevention funds
“Prior to the hurricane, this office didn’t exist. But now we have a structure to guide municipalities, agencies and nongovernmental organizations through the process,” he indicated, while highlighting his good working relationship with FEMA officials.
Recognizing the magnitude of the task, COR3 plans to expand its team by the end of the year to 400 or 500 workers, from the 125 employees it currently has. “In fact, FEMA in Puerto Rico has more than 2,300 employees and more than 80 percent are Puerto Ricans who were not here before Maria.”
While FEMA and COR3 work on reconstruction efforts, the Department of Housing and Urban Development (HUD) continues to delay the allocation of $8.2 billion of Community Development Block Grants for Disaster Recovery assigned by Congress to assist in the island’s recovery after the havoc caused by Hurricanes Irma and Maria.
Despite the intervention of resident commissioner Jenniffer González, chair of the Puerto Rico Republican Party, HUD secretary Ben Carson has not released the needed funds.
As Puerto Rico weathered the quakes, top Democrats, including House Speaker Nancy Pelosi, blasted the Trump administration again for withholding the money unlawfully and called on officials to “cease and desist that illegal activity”, while questioning whether the federal government will give Puerto Rico what it needs to recover this time, reported The Washington Post.
Challenging Economic Environment
For economist Vélez, the earthquakes laid bare the government’s shortcomings. Without qualms, the president and CEO of Inteligencia Económica said that public officials didn’t learn much from Maria and that they are using this emergency for political gain in a prelude to the next election cycle.
Codes consider magnitudes up to 6.5. The strongest local earthquake reached 6.4
“They learned nothing. Two years and four months later and nothing has been done. Everything remains the same. We didn’t organize effectively to request federal aid. We haven’t privatized Prepa and haven’t eliminated the inventory tax,” Vélez insisted.
He also warned that if the emergency isn’t handled properly, the municipalities affected by the quakes could suffer an exodus of people and become ghost towns. Poverty levels in the southern towns affected by the tremors oscillates between 50 to 63 percent, highlighted Vélez, who estimated that these six towns represent 8 or 10 percent of the aggregate economic activity. If the cost of the day of the big quake was calculated in $210 million, then the daily regional impact oscillates between $16.8 to $21 million, without computing the social cost of displacement and uncertainty or damaged infrastructure.
“The quake hit the poorest, the most vulnerable,” Gustavo insisted. “If there had been, at least, an effort to start rebuilding... this wouldn’t have found us so weak. This economy is very fragile, particularly the energetic system.”
Despite the grim forecast, there is light at the end of the tunnel.
Alameda, for instance, suggested that the government should plan social and economic policies recognizing the country’s vulnerabilities, depoliticize the public sector and give special attention to food security, because the island imports most of the provisions it consumes.
More than $3 million in losses from hotel booking cancelations
“Puerto Rico is a patient who has a significant structural chronic disease. It needs another type of structure. Even with the reconstruction aid, if the economy surges 1 or 2 percent it will remain on the negative side because we had dropped 6 percent... It is not the result of an investment over an investment. It is the result of divestment to try to mitigate the impact of that economic downturn,” Alameda argued.
Vélez, on the other hand, suggested that the government needs to define its priorities, privatize Prepa, take measures to expedite its exit from the bankruptcy-like process it initiated under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act to restructure its $70-billion plus debt load, and create a climate of investment where investors feel safe.
“With Vázquez, the frictions with the Board have subsided. It is time to restructure Prepa’s debts, the central government and the Highway and Transportation Authority so we can emerge from Title III, which was the Board’s objective for this year,” he indicated.