The government of Puerto Rico underscored the role of cooperatives, or co-ops, in streamlining the island’s recovery and resilience, and highlighted opportunities to access hefty sums through federal funds.
Last week, key industry members of the public and co-op sectors gathered in the San Juan premises of the Public Corporation for the Supervision and Insurance of Cooperatives of Puerto Rico (COSSEC by its Spanish acronym) to discuss reconstruction projects nearly four years after hurricanes Irma and Maria devastated the island.
Presently, Puerto Rico has access to roughly $10 billion obligated by the federal government in the form of the Community Development Block Grant for Disaster Relief program (CDBG-DR), with $8.3 billion pending, or an additional 41 percent. “The mitigation funds are for issues of resilience, a better Puerto Rico, and are not necessarily tied to hurricanes, but can be used for other emergencies and to improve the infrastructure of Puerto Rico,” said Housing Secretary William Rodríguez Rodríguez.
In terms of reconstruction, the secretary noted that co-ops can assist the agency by becoming subcontractors to enhance the Home Repair, Reconstruction, or Relocation Program (R3). With 20,000 R3 projects in the pipeline, Rodríguez motioned to the co-op leaders present in the meeting and stated that “we need a lot of manpower for these jobs as we now finally have access, so we will be allocating the necessary funds.”
“All those who are in the reconstruction sector or related to the reconstruction sector, there are multiple opportunities and we want to be facilitators through the [Cooperative Development] commissioner so that you receive first-hand information about everything, not necessarily about the processes that we will be running, but our subcontractors will be running, such as municipalities,” Rodríguez said, adding that $1 billion have been identified for municipal projects, with more funding to come, “so it is very important that we count on you in this initiative.”
Likewise, Manuel A. Laboy Rivera —the executive director of the Central Office of Recovery, Reconstruction and Resilience (COR3)— underscored that the agency’s strategic goals include: accelerating disbursements, advancing proposals, finishing project formulations, achieving goals with the Federal Emergency Management Agency (FEMA) to seal projects, working with an organization that has the resources to accelerate rebuilding, decentralizing data, and actively working with each sub-recipient, for which co-ops would be useful allies.
For instance, Rodríguez highlighted that the cooperative movement has been a crucial help in advancing the Buyer’s Assistance Program, of which co-ops comprise 40 percent.
“And not only do they occupy 40%, but they have become our right hand in the orientation and outreach process. I would tell you that almost 100% of the cases do not make mistakes, there are no signs that can be raised in the process of presenting the cases. This is an example of how the cooperative movement can join our program in an extremely efficient way and they have always said present, unlike other sectors of the financial area, which have presented a little more slowness or opposition in the process. Cooperatives have always been present and have contributed significantly to our programs," he stated.
As an example of the benefits co-ops can reap from inserting themselves into the multiple programs available, the secretary pointed to Sagrada Familia Cooperative, Camuy Coop, and the Jesús Obrero credit union, which received over $2 million in federal funds for projects concerning resilience, renewable energy, and financing for small and medium-sized enterprises, among other causes. “Cooperatives have said ‘present’ and have received, as in this case, $2.2 million to accelerate business incubators in Puerto Rico,” Rodríguez affirmed.
Moreover, Fundador Rosario —president of the Cooperative of Professionals of the Electrical Industry of Puerto Rico and the Caribbean (Electricoop)— stressed that the co-op model was vital for him and his associates to participate in the island’s recovery process.
“In the cooperative model, we found the tools we needed to insert ourselves in this reconstruction process… What we want in this part of cooperativism is to shake hands and be able to insert ourselves. I see a great opportunity for good incentives,” he noted.
Co-ops like Electricoop can also benefit from the $1.9 billion aimed at improving the island’s electric grid and bolstering energy resilience for communities through the integration of renewable energy.
“In the past week, the federal government rules were lowered. Now, we are working with an action plan that is going to provide a significant amount to strengthen Puerto Rico’s electric power system, mainly aimed at creating renewable energy sources that do not use fossil fuel and making an important collaborator in COR3 on the subject of matching funds,” Rodríguez stated. “This is going to be a great engine to help Puerto Rico rebuild its electrical system.”
For her part, Mabel Jiménez Miranda, interim executive president at COSSEC, said that “we want cooperatives to be included in the rebuilding of Puerto Rico. Cooperatives have proven to be resilient and we have this alternative, which is cooperatives, to modernize Puerto Rico forwards. Our role is more regulatory, but we are available to help you, to guide you and if you need any service from the corporation, we are at the best disposal.”
Millions More Through the U.S. Treasury
In addition to CDBG-DR funds, the U.S. Treasury announced last month the allocation of $47 million for Puerto Rican co-ops through its Community Development Financial Institutions (CDFI) Fund.
The funding corresponds to the CDFI Rapid Response Program and is part of the federal stimulus legislation approved in December 2020 to offset the impact of the COVID-19 pandemic. This allocation is also the largest in the history of the CDFI program.
“This significant allocation of resources by the CDFI Fund recognizes and validates the historic work that credit unions have performed in the areas of financial inclusion and community development in Puerto Rico. This million-dollar investment seeks to strengthen the sector’s capacity to continue serving communities marginalized by the traditional financial system. The awarded cooperatives will be able to use the funds to increase their lending activity, launch new products and services, acquire new technologies, and continue to support the economic revitalization of the communities in which they operate,” said Pablo DeFilippi, executive vice president of affiliation and institutional relations at Inclusiv, formerly known as the National Federation of Credit Unions for Community Development.
He added that ever since Inclusiv began promoting the CDFI model in Puerto Rico, “we have seen that credit unions have responded with great enthusiasm, as this model is very much aligned with the traditional role that these institutions have played in Puerto Rico. At this time, 32 savings and credit cooperatives already have CDFI accreditation and another 20 are in process. Very soon Puerto Rico will have one of the highest concentrations of CDFIs in the United States.”
Villalba Bets on Co-Op Movement
The mayor of Villalba, Luis J. Hernández Ortiz, recently convened with members of Electricoop as part of the effort to generate local alternatives to work with the electrical system in the power distribution lines and present them to the municipalities of Puerto Rico and LUMA Energy, the company in charge of the island’s electric energy transmission and distribution.
“Specifically, this cooperative entity seeks to be a realistic and effective option before the brigades that are arriving from other places and that do not know the reality of the Puerto Rico electrical system. Many of the members of Electricoop were part of the Electric Power Authority (PREPA) at some point and have the knowledge and experience,” Hernández said.
“I firmly believe in the co-op movement. In fact, our energy project here in Villalba (Consorcio Energético de la Montaña), together with other municipalities, also seeks to become a cooperative system. In fact, this is how it works successfully in the United States and in other countries, where the generation is provided by one cooperative and the service is provided by another. In the particular case of Electricoop, what we are planning is for them to be in charge of maintenance and routine work in areas where there are personnel problems,” the mayor added.
On June 3, Gov. Pedro Pierluisi and Mayor Hernández, reported the allocation of $5 million to design the micro-grid that the Consorcio Energético de la Montaña proposes to cover the municipalities of Orocovis, Villalba, Morovis, Barranquitas, and Ciales.
Similarly, the signing of an agreement was announced in which PREPA cedes to the Consortium, in usufruct, the Toro Negro de Villalba Hydroelectric Power Plant. The latter is estimated to produce about 10 megawatts (MW) of electricity of the roughly 130 MW proposed for the micro-grid, which would be complemented with solar energy projects distributed among the participating municipalities.
“With this initiative, once again the Municipalities continue to generate proposals and solutions to the country’s problems. That is why we are constantly advocating for the fair allocation of resources so that we can achieve more. Now, we propose it for the electrical system, and in the past, we have done it successfully in infrastructure, such as roads, schools, and other issues. Our commitment goes on,” Hernández asserted.