Special Report: In Puerto Rico, a housing crisis U.S. storm aid won’t solve

Faded U.S. flag and Puerto Rican flag are stuck into a mound of earth near the remains of Angel Colon's house after it was destroyed during Hurricane Maria in September 2017, in Comerio, Puerto Rico

By Nick Brown

CANOVANAS, Puerto Rico (Reuters) – Among the countless Puerto Rico neighborhoods battered by Hurricane Maria is one named after another storm: Villa Hugo. The illegal shantytown emerged on a public wetland after 1989’s Hurricane Hugo left thousands homeless.

About 6,000 squatters landed here, near the El Yunque National Forest, and built makeshift homes on 40 acres that span a low-lying valley and its adjacent mountainside. Wood and concrete dwellings, their facades scrawled with invented addresses, sit on cinder blocks. After Maria, many are missing roofs; some have collapsed altogether.

Amid the rubble, 59-year-old Joe Quirindongo sat in the sun one recent day on a wooden platform – the only remaining piece of his home. Soft-spoken with weathered skin and a buzzcut, Quirindongo pondered his limited options.

“I know this isn’t a good place for a house,” said Quirindongo, who survives on U.S. government assistance. “Sometimes I would like to go to another place, but I can’t afford anything.”

Villa Hugo reflects a much larger crisis in this impoverished U.S. territory, where so-called “informal” homes are estimated to house about half the population of 3.4 million. Some residents built on land they never owned. Others illegally subdivided properties, often so family members could build on their lots.

Most have no title to their homes, which are constructed without permits and usually not up to building codes. The houses range in quality and size, from one-room shacks to sizable family homes. Many have plumbing and power, though not always through official means.

The concentration of illegal housing presents a vexing dilemma for local and federal authorities already overwhelmed by the task of rebuilding an economically depressed island after its worst natural disaster in nine decades.

Puerto Rico Governor Ricardo Rosselló has stressed the need to “build back better,” a sentiment echoed by U.S. disaster relief and housing officials. But rebuilding to modern standards or relocating squatters to new homes would take an investment far beyond reimbursing residents for lost property value. It’s an outlay Puerto Rico’s government says it can’t afford, and which U.S. officials say is beyond the scope of their funding and mission.

Yet the alternative – as Villa Hugo shows – is to encourage rebuilding of the kind of substandard housing that made the island so vulnerable to Maria in the first place.

“It’s definitely a housing crisis,” said Fernando Gil, Puerto Rico’s housing secretary. “It was already out there before, and the hurricane exacerbates it.”

In Puerto Rico, housing is by far the largest category of storm destruction, estimated by the island government at about $37 billion, with only a small portion covered by insurance. That’s more than twice the government’s estimate for catastrophic electric grid damage, which was made far worse by the shoddy state of utility infrastructure before the storm.

Puerto Rico officials did not respond to questions about how the territory estimated the damage to illegally built homes.

Maria destroyed or significantly damaged more than a third of about 1.2 million occupied homes on the island, the government estimates. Most of those victims had no hazard insurance – which is only required for mortgage-holders in Puerto Rico – and no flood insurance. Just 344,000 homes on the island have mortgages, according U.S. Census Bureau data.

Officials at the U.S. Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) acknowledged the unique challenges of delivering critical housing aid to Puerto Rico. Among them: calculating the damage to illegal, often substandard homes; persuading storm victims to follow through on application processes that have frustrated many into giving up; and allocating billions in disaster aid that still won’t be nearly enough solve the island’s housing crisis.

By far the most money for Puerto Rico housing aid is expected to come from the U.S. Department of Housing and Urban Development (HUD).

HUD spokeswoman Caitlin Thompson declined to comment on how the agency would spend billions of dollars in disaster relief funds to rebuild housing, or how it planned to help owners of informally built homes. Two HUD officials overseeing the agency’s Puerto Rico relief efforts, Todd Richardson and Stan Gimont, also declined to comment.

But the disaster aid package currently under consideration by the U.S. Congress would provide far less housing aid than Puerto Rico officials say they need. Governor Rosselló is seeking $46 billion in aid from HUD, an amount that dwarfs previous allocations for even the most destructive U.S. storms.

That’s nearly half the island’s total relief request of $94 billion.

The U.S. House of Representatives instead passed a package of $81 billion, with $26 billion for HUD, that still needs Senate and White House approval. The money would be divided between regions struck by several 2017 hurricanes – including Maria, Harvey in Texas and Irma in Florida – as well as the recent California wildfires. Congress could also decide to approve additional aid later.

A house destroyed during Hurricane Maria in September 2017 is seen in Utuado, Puerto Rico February 1, 2018.

FILE PHOTO – A house destroyed during Hurricane Maria in September 2017 is seen in Utuado, Puerto Rico February 1, 2018. REUTERS/Alvin Baez

‘MY MOTHER IS SCARED’

A generation ago, Maria Vega Lastra, now 61, was among the estimated 28,000 people displaced by Hurricane Hugo. Neighbors helped her build a new home in what would become Villa Hugo, in the town of Canóvanas.

Her daughter, 34-year-old Amadaliz Diaz, still recalls her older brother grinning as he sawed wood for the frame of their self-built, one-floor house, with a porch and three bedrooms.

Now, Vega Lastra’s roof has holes in it, and her waterlogged wooden floorboards buckle with each step.

Vega Lastra has been staying with her daughter, who lives in Tampa, as the family waits on applications for FEMA aid. The agency initially denied her application in December, saying it could not contact her by phone, Diaz said.

Vega Lastra is returning to her home this week, uncertain if its condition has gotten worse. Her daughter bought her an air mattress to take with her.

“My mother is scared,” Diaz said. “I hope the government helps her. I work, but I have three kids to take care of.”

The island’s housing crisis long predated the storm. According to Federal Housing Finance Agency data, Puerto Rico’s index of new home prices fell 25 percent over the last decade, amid a severe recession that culminated last May in the largest government bankruptcy filing in U.S. history.

Legal home construction, meanwhile, plummeted from nearly 16,000 new units in 2004 to less than 2,500 last year, according to consultancy Estudios Tecnicos, an economic data firm.

A 2007 study by environmental consultant Interviron Services Inc, commissioned by the Puerto Rico Builders Association, found that 55 percent of residential and commercial construction was informal. That would work out to nearly 700,000 homes.

That figure might be high, said David Carrasquillo, president of the Puerto Rico Planning Society, a trade group representing community planners. But even a “very conservative” estimate would yield at least 260,000 illegally built houses, he said.

Generations of Puerto Rican governments never made serious efforts to enforce building codes to stop new illegal housing, current and former island officials said in interviews. Past administrations had little political or economic incentive to force people out of neighborhoods like Villa Hugo.

Former Governor Rafael Hernandez Colon, in office during Hurricane Hugo, said he tried to help informal homeowners without policing them. “Our policy was not to relocate, but rather improve those places,” Hernandez Colon said in an interview.

Subsequent administrations advocated similar policies; none made meaningful headway, partly because of Puerto Rico’s constant political turnover.

Today, informal communities provide a stark contrast to San Juan’s glittering resorts and bustling business districts. San Juan Mayor Carmen Yulin Cruz pointed to poor barrios like those near the city’s Martín Peña Channel, hidden behind the skyscrapers of the financial hub known as the Golden Mile.

“It’s not something I’m proud of, but we hide our poverty here,” Cruz said in an interview.

RECOVERY DILEMMA

The task of rebuilding Puerto Rico’s housing stock ultimately falls to the territory government, which has no ability to pay for it after racking up $120 billion in bond and pension debt in the years before the storm.

That leaves the island dependent on U.S. relief from FEMA, the SBA and HUD.

The SBA offers low-interest home repair loans of up to $200,000. FEMA provides homeowners with emergency grants, relocation assistance and other help. HUD is focused on long-term rebuilding efforts, working directly with local agencies to subsidize reconstruction through grants.

FEMA’s cap for disaster aid to individuals is $33,300, and actual awards are often much lower. Normally, FEMA eligibility for housing aid requires proving property ownership, but the agency says it will help owners of informal homes if they can prove residency.

How exactly to help gets complicated. For example, someone who builds their own home with no permits on land they own is more likely to be treated as a homeowner, said Justo Hernandez, FEMA’s deputy federal coordinating officer. Squatters who built on land they didn’t own, however, would likely only be given money to cover lost items and relocate to a rental, he said.

Several Villa Hugo residents said they received money from FEMA, but many didn’t know what it was for and complained it wasn’t enough.

Lourdes Rios Romero, 59, plans to appeal the $6,000 grant she got for repairs to her flooded home, citing a much higher contractor’s quote. Neighbor Miguel Rosario Lopez, a 62-year-old retiree, showed a statement from FEMA saying he was eligible for $916.22, “to perform essential repairs that will allow you to live in your home.”

Without money for major changes, most homeowners said they planned to combine the aid they might get from FEMA with what little money they could raise to rebuild in the same spot.

FEMA does not police illegal building. Code enforcement is left to the same local authorities who have allowed illegal construction to persist for years.

Quirindongo is planning to buy materials to rebuild his Villa Hugo home himself with about $4,000 from FEMA. It will be the third time he has done so, having lost one home to a 2011 flood, another to a fire.

“I just want to have something that I can say, ‘This is mine,’” Quirindongo said.

GIVING UP

Many others appear to have given up on FEMA aid because the agency’s application process is entangled with a separate process for awarding SBA loans to rebuild homes.

FEMA is legally bound to assess whether applicants might qualify for SBA loans before awarding them FEMA grants. If an applicant passes FEMA’s cursory eligibility assessment, they are automatically referred to SBA for a more thorough screening.

Applicants are not required to follow through on the SBA process – but they cannot qualify for FEMA aid unless they do. FEMA only provides a grant when the SBA denies the applicant a loan.

FEMA said it has referred about 520,000 people out of 1.1 million total applicants so far to the SBA. But as of Monday, only 59,000 followed through with SBA applications. Of those, some 12,000 later withdrew, SBA data shows.

“As soon as people see SBA they say, ‘I give up, I don’t want a loan – I can’t afford a loan,’” FEMA’s Hernandez said.

SBA spokeswoman Carol Chastang said the agency is working with FEMA to educate flood victims on available benefits and the application process, including sending staffers to applicants’ homes.

330,000 VACANT HOMES

Before the storm hit, Puerto Rico already had about 330,000 vacant homes, according to Census Bureau 2016 estimates, resulting from years of population decline as citizens migrated to the mainland United States and elsewhere. Puerto Ricans are American citizens and can move to the mainland at will.

Puerto Rico and federal officials have considered rehabilitating the vacant housing for short- and long-term use, along with building new homes and buying out homeowners in illegally built neighborhoods, according to Gil and federal officials.

Rosselló, the Puerto Rican governor, has said the rebuilding plan must include a fleet of properly built new homes. Gil, the housing secretary, said the administration would like to build as many as 70,000 properties.

HUD officials declined to comment on whether the agency would finance new housing. Its Community Development Block Grant program allows for local governments to design their own solutions and seek HUD approval for funding.

The cost of constructing enough new, code-compliant properties to house people displaced by Maria could far exceed the available federal aid. Making them affordable also presents a problem.

Puerto Rico’s subsidized “social interest housing,” geared toward low-income buyers, typically provides units that sell in the mid-$100,000 range, with prices capped by the government. That’s beyond the means of many displaced storm victims.

Gil offered little detail on a solution beyond saying it will include a mix of new development, buyout programs for owners of illegally built homes and other options.

The answer will come down to how much Washington is willing to pay, he said. He invoked the island’s territorial status and colonial history as a root cause of its poor infrastructure and housing stock before the storm.

“It is precisely because we have been neglected by the federal government that the island’s infrastructure is so weak,” he said.

Many Puerto Rico officials continue to advocate for bringing relief and legitimacy to squatter communities like Villa Hugo, rather than trying to relocate their residents.

Canovanas Mayor Lornna Soto has been negotiating with island officials to provide property titles to Villa Hugo’s population. The vast majority still don’t have them.

“It’s long overdue to recognize that they are not going anywhere and their communities need to be rebuilt with proper services,” Soto said.

Diaz said she supports her mother’s decision to return to Villa Hugo, regardless of what aid the government ultimately provides.

“I grew up there,” Diaz said. “Everyone knows us there.”

(Reporting by Nick Brown in Canóvanas, Puerto Rico; editing by Brian Thevenot)

U.S. agency says will keep providing water, other essentials in Puerto Rico

A car is partially buried under the remains of a building, after Hurricane Maria hit the island in September, in Humacao, Puerto Rico January 25, 2018.

By Nick Brown

NEW YORK (Reuters) – The U.S. Federal Emergency Management Agency said on Wednesday it would continue providing water, meals and other essentials to hurricane-ravaged Puerto Rico despite earlier reports its humanitarian mission in the U.S. territory would end on Wednesday.

“There was never, and is not now, a decision to stop distributing commodities on the island,” FEMA said in a written statement on Wednesday evening.

Puerto Rico is struggling to recover from Hurricane Maria, which hit on Sept. 20. The storm killed dozens and left the entire island without power at a time when it was already trudging through the largest government bankruptcy in U.S. history, with some $120 billion in combined bond and pension debt.

Some Puerto Rican and U.S. politicians had criticized FEMA this week after NPR reported on Monday that FEMA’s mission in Puerto Rico was coming to an end, citing a spokesman for the agency.

On Tuesday, FEMA reversed course, saying the initial Jan. 31 end date had been relayed in error.

Democratic U.S. Senator Bill Nelson, speaking on the Senate Floor on Monday, had said it would be “unconscionable” and “a travesty” to cut off aid in Puerto Rico, where nearly a third of the island’s 3.4 million U.S. citizens still lack power more than four months after the storm.

Eventually, FEMA will hand over responsibility for humanitarian aid to Puerto Rico’s government.

Amid the confusion over the timing of that transition, Puerto Rico’s public safety director, Hector Pesquera, said on Tuesday his administration was still negotiating with FEMA on the timing of the handover.

“We have yet to finish the discussions about when the transition should start,” Pesquera said. “It is important to note that this transition period should last at least two weeks.”

(Reporting by Nick Brown; Editing by James Dalgleish)

Florida communities scramble to help displaced Puerto Ricans

Puerto Rican Debora Oquendo, 43, makes a phone call to a doctor for her 10-month-old daughter in a hotel room where she lives, in Orlando, Florida, U.S., December 4, 2017.

By Robin Respaut and Alvin Baez

KISSIMMEE, Florida (Reuters) – At Leslie Campbell’s office in the central Florida city of St. Cloud, the phone will not stop ringing.

Director of special programs for the Osceola County School District, Campbell helps enroll students fleeing storm-ravaged Puerto Rico.

Her job has been a busy one. Since hurricanes Irma and Maria devastated the Caribbean in September, over 2,400 new students have arrived in the district. That is enough to fill more than two typical-sized elementary schools. Dozens more youngsters show up weekly.

“We’re just inundated, from the minute we come in, to the minute we leave,” said Campbell, who helps families obtain transportation, meals and clothing.

Across the country, state and local officials are scrambling to manage an influx of Puerto Ricans, a migration that is impacting education budgets, housing, demographics and voter rolls in communities where these newcomers are landing.

Florida, already home to more than 1 million Puerto Ricans, is on the front lines. About 300,000 island residents have arrived in the state since early October, according to Florida’s Division of Emergency Management. The influx is nearly 2.5 times the size of the Mariel boat lift that brought 125,000 Cubans ashore in 1980.

Some Puerto Rican arrivals have passed through Florida on their way to New York, Pennsylvania, Texas and other states. Some may eventually return home. But many will not. The island is still reeling months after Hurricane Maria, a Category 5 storm, wreaked catastrophic damage to homes, businesses and infrastructure. Nearly 40 percent of residents still lack electricity. The economy has been devastated.

For Florida, the inflow of Puerto Ricans is altering public budgets and perhaps the political calculus in a state that President Donald Trump won by a slim margin in 2016. Puerto Ricans, who are U.S. citizens, are on pace to overtake Cuban-Americans within a few years as the state’s largest Latino voting bloc. Many criticized the Trump administration’s hurricane response as inadequate.

Politicians are taking notice. Florida’s Republican Governor Rick Scott has reached out to these newcomers. The state has opened reception centers where Puerto Ricans can apply for food stamps and Medicaid, the federal healthcare system for the poor. Scott has asked for an additional $100 million in state spending to house arriving families, many of whom are doubled up with relatives or packed into aging hotels.

Washington, meanwhile, continues to wrestle with the question of how to help Puerto Rico, having long rejected the idea of a federal bailout for the insolvent U.S. territory, which filed for a form of bankruptcy in May. Congress appears unlikely to grant anywhere near the $94.4 billion the territory’s leaders estimate it would take to rebuild.

As federal lawmakers dither, state and local taxpayers are watching the tab to resettle islanders grow.

Statewide, more than 11,200 students from Puerto Rico and the U.S. Virgin Island have enrolled in Florida public schools since the storms, according to the governor’s office. Most arrived after a deadline that determines state funding based on enrollment, resulting in an estimated loss for local districts of $42 million during the 2017 fall semester, a Reuters analysis shows.

Requests for public assistance climbed by 5 percent in Florida during the last three months of 2017, compared to the same period in 2016, according to state figures. Federal food stamp issuance, driven by victims of hurricanes Irma and Maria, jumped 24 percent or $294 million over the same period.

The state is also seeing more extremely ill patients from Puerto Rico.

Keyshla Betancourt Irizarry, 22, came to Florida in October on a humanitarian flight with her mother and brother. Suffering with the blood cancer Hodgkin’s Lymphoma, Betancourt was deteriorating fast on an island whose healthcare system is in tatters.

Now living in Orlando, she is on Florida’s Medicaid plan, which pays for her radiation treatments. The family has no plans to return to the territory.

“I cannot get the best medical help in Puerto Rico, and it has become even worse after Hurricane Maria,” Betancourt said.

Medicaid patients cost the federal government more on the mainland than in Puerto Rico, because Washington caps Medicaid funding sent to its territories. Such costs will only grow if Congress fails to stabilize Puerto Rico, said Juan Hernandez Mayoral, former director of the Puerto Rico Federal Affairs Administration, which represents the territory in Washington.

“You can pay for it in the 50 states or you can pay much less in Puerto Rico,” Hernandez said. “The hurricane has sped up the migration.”

A Reuters photo essay (http://reut.rs/2AQmzh6) captures images of displaced Puerto Ricans in Florida.

CLASSROOM SQUEEZE

Central Florida was one of the country’s fastest-growing regions even before the disasters as Puerto Ricans fleeing a sputtering economy flocked here for jobs in the booming tourist trade. An estimated 360,000 have settled in the area, the largest concentration in Florida.

The Osceola County school district has enrolled thousands of new students in recent years, including nearly 2,700 in 2015-2016 alone. To accommodate them, the district hired more bilingual teachers, converted offices into classrooms, added portable units and built a new middle school. In 2016, voters approved a half-cent sales tax to provide more funding.

Hurricane Maria has compounded the urgency.

“We have students coming without clothes or records. Some are exhibiting symptoms of post-traumatic stress,” said Kelvin Soto, an Osceola County school board member. “We’re handling it well, but it’s straining our resources.”

Recent arrivals include Felix Martell and his five-year-old daughter Eliany, who settled in Ocala, Florida, about 80 miles (129 kilometers) northwest of Orlando. Martell is the sole caretaker for the child after his wife died two years ago. He worried Eliany’s education would suffer in Puerto Rico due to lengthy school closures following Maria.

Father and daughter are now living in a run-down hotel paid for by the Federal Emergency Management Agency. Martell has yet to find a job. Still, he said there is no turning back.

“The girl has learned more in three weeks of school here than in the entire semester on the island,” he said. “I am concentrating on her future.”

TIGHT HOUSING

A shortage of affordable housing is acute for Puerto Rican emigres.

The Community Hope Center, a nonprofit in Kissimmee, Florida, south of Orlando, has been besieged with requests for shelter, according to Rev. Mary Downey, the executive director.

“People are calling us and saying, ‘we’re homeless now,'” Downey said. “It’s awful. There is simply not enough housing to meet the needs.”

Central Florida housing is a bargain compared to places such as New York or San Francisco, but it is beyond the reach of many newcomers lacking savings or jobs. Homes under $200,000 sell quickly, and Orlando-area rents are growing faster than the national average. Local officials say the situation could worsen as families that are doubling and tripling up eventually seek their own places.

Deborah Oquendo Fuentes, 43, and her 11-month-old baby girl Genesis Rivera share a FEMA-paid hotel room in Orlando after fleeing Puerto Rico in October. Oquendo, who found a part-time job that pays minimum wage, fears they will be homeless when that assistance runs out this month.

“I don’t have enough money to move to another place,” Oquendo said. “I feel alone, and I’m afraid.”

(Reporting by Robin Respaut and Alvin Baez; Editing by Marla Dickerson)

Trump Cabinet officials to visit Puerto Rico to assess recovery

Trump Cabinet officials to visit Puerto Rico to assess recovery

By Roberta Rampton

WASHINGTON (Reuters) – Two members of President Donald Trump’s Cabinet are set to visit Puerto Rico on Tuesday to assess the U.S. territory’s rebuilding in the three months since Hurricane Maria devastated homes, businesses and the power grid.

Homeland Security Secretary Kirstjen Nielsen and Housing and Urban Development Secretary Ben Carson will travel to Puerto Rico, where about a third of the island’s 3.4 million residents are still without power, hundreds remain in shelters, and thousands have fled to the U.S. mainland.

The visit comes as Republicans in the U.S. House of Representatives on Monday were planning to unveil a disaster aid package totaling $81 billion, according to a senior congressional aide. Some of that aid would go to Puerto Rico, but also to states like Texas and Florida that were hit by other hurricanes and to California, which is grappling with wild fires.

Even before Maria savaged Puerto Rico, the island was contending with $72 billion in debt. Puerto Rican Governor Ricardo Rossello has asked the federal government for a total of $94.4 billion in aid, including $31.1 billion for housing and $17.8 billion to rebuild its ruined power grid.

The Federal Emergency Management Agency (FEMA) has so far approved more than $660 million in aid for individuals in Puerto Rico as well as more than $450 million in public assistance.

Nielsen and Carson will receive detailed briefings on rebuilding efforts and see how federal aid is helping residents to recover, a DHS official said.

Nielsen, who oversees FEMA, and Rossello are slated to hold a news conference.

The visit comes as Congress prepares to vote on a tax overhaul bill that Puerto Rican officials have said they fear will hurt the commonwealth’s pharmaceutical manufacturing sector – the cornerstone of the island’s economy – at a time when Puerto Rico can least afford to lose jobs and tax revenue.

Puerto Rico’s government has said 64 people died because of the hurricane, but after multiple media estimates of dramatically higher figures, Rossello on Monday ordered an official review of the death toll.

(Reporting by Roberta Rampton; Editing by Leslie Adler)

FAA approves AT&T drone in Puerto Rico for cellular service

(Reuters) – The U.S. Federal Aviation Administration on Friday said it had approved a request by AT&T Inc to use a new drone known as the Flying Cow or Cell on Wings to help restore cellular service in Puerto Rico in the wake of Hurricane Maria.

The Pulse Vapor 55 drone functions like a cell tower in the sky, providing voice, data and internet service, the FAA said. It flies up to 200 feet above the ground, covering an area of 40 square miles.

Puerto Rico’s wireless and broadband communications networks, along with its power grid, were devastated after Hurricane Maria made landfall in September. The U.S. territory has struggled to regain communications services. As of Thursday, 39 percent of cell sites remained out of service, the U.S. Federal Communications Commission said.

The drone resembles a miniature helicopter and is fitted with LTE radios and antennas and is tethered to ground-based electronics and power systems, the FAA said.

The FAA exemption was needed because the drone exceeds the 55-pound weight limit required to operate under the government’s small drone rule. AT&T will use the drone as a temporary cell service solution while it rebuilds permanent infrastructure on the island.

In another innovative effort to restore communications in Puerto Rico, experimental communications balloons provided by Alphabet Inc, in collaboration with AT&T and T-Mobile US Inc, began operating in October.

The “Project Loon” balloon project is delivering limited internet connectivity to LTE enabled phones in the hardest-hit areas of Puerto Rico and Alphabet said on Nov. 9 the project had delivered basic internet connectivity to more than 100,000 people on the island.

The FCC approved Alphabet’s application to provide emergency cellular service to Puerto Rico using up to 30 balloons.

The company said it did not expect to use that many, however, since each balloon can provide internet service to an area of roughly 5,000 square kilometers, or 1,930 square miles. Puerto Rico’s area is 3,515 square miles.

The Loon project is part of an innovation lab within Alphabet that the company calls X, previously known as Google X.

(Reporting by David Shepardson; Editing by Tom Brown)

White House plans to seek another $45 billion in U.S. hurricane aid

White House plans to seek another $45 billion in U.S. hurricane aid

By David Shepardson

WASHINGTON (Reuters) – The White House plans to ask the U.S. Congress on Friday for about $45 billion in additional aid for disaster relief to cover damage from hurricanes that struck Puerto Rico, Texas and Florida and other disaster damage, a congressional aide said on late Thursday.

The request would be significantly short of what some government officials say is needed.

Puerto Rico Governor Ricardo Rossello on Monday requested $94.4 billion from Congress to rebuild the island’s infrastructure, housing, schools and hospitals devastated by Hurricane Maria. The state of Texas earlier this month submitted a request for $61 billion in federal aid.

Last month, Congress approved $36.5 billion in emergency relief for Puerto Rico and other areas hit by recent disasters and said it planned to seek another round of funding after it reviewed requests from federal agencies and state and U.S. commonwealth governments.

Puerto Rico sought $31.1 billion for housing, followed by $17.8 billion to rebuild and make more resilient the power grid.

Senator John Cornyn, a Texas Republican, said late Thursday at a congressional hearing his staff had been briefed on the White House that would be released on Friday that he called “wholly inadequate” but he did not disclose the precise amount.

He said the White House had also “short-changed” funding for wildfires that have struck the western United States. The October disaster assistance bill included $576.5 million for wildfire-fighting efforts.

The White House did not immediately respond to a request for comment late Thursday.

(Reporting by David Shepardson; Editing by Sandra Maler)

North American commercial property insurance rates seen rising sharply in 2018

- Interstate highway 45 is submerged from the effects of Hurricane Harvey seen during widespread flooding in Houston, Texas, U.S. August 27, 2017.

By Suzanne Barlyn

(Reuters) – North American commercial property insurance rates could rise by as much as 25 percent during 2018 for properties that suffered catastrophe losses this year, according to a report on Monday by insurance brokerage Willis Towers Watson.

The commercial property insurance market, which has been soft during recent years, is now heading toward a correction, largely due to hurricanes Harvey, Irma and Maria, which together triggered one of the most destructive hurricane seasons in history, Willis Towers Watson said.

Rates for commercial properties that were not damaged, but located in catastrophe-prone areas, may increase between 10 and 20 percent, while the cost of coverage for properties in other locations could increase by up to 5 percent, Willis Towers Watson said.

Insurers around the globe are looking to raise rates after what is likely to have been their most costly quarter on record. American International Group Inc & AIG. said on Friday it would pursue double-digit rate increases and bolster reinsurance, following $3 billion in third-quarter catastrophe losses.

Hurricanes Irma and Maria alone caused as much as $135 billion in insured losses, according to modeling firm AIR Worldwide. Earthquakes in Mexico could cost billions more.

Other insurers pursuing rate increases include the Travelers Companies Inc and Chubb Ltd .

“The marketplace is going to react, and buyers need to be ready,” Willis Towers Watson wrote in the report. Insurers will have a clearer sense of their losses when policy renewals begin next year, the company said.

Auto liability rates may increase between 3 and 8 percent as insurers continue to ratchet up rates because of higher accident rates due to distracted driving and rising costs to fix damaged vehicles, Willis Towers Watson said.

Most buyers of cyber insurance, which covers certain damages if a company is hacked, will face modest increases when they renew, triggered by growth in the sector. “The cleanest risks may still see low single-digit decreases,” the report said.

 

(Reporting by Suzanne Barlyn in New York; Editing by Matthew Lewis)

 

Puerto Rico governor knocks U.S. Army Corps response to restoring power after hurricane

Cars drive under a partially collapsed utility pole, after the island was hit by Hurricane Maria in September, in Naguabo, Puerto Rico

By Nick Brown and Jessica Resnick-Ault

NEW YORK (Reuters) – Puerto Rico Governor Ricardo Rossello said the U.S. Army Corps of Engineers lacked urgency in restoring power to the storm-hit island, and that it was pushing the clean-up effort down the road.

The Army Corp was tasked as the leading federal agency to oversee power restoration in Puerto Rico about a week after the U.S. territory was devastated by Hurricane Maria.

Speaking to Reuters on a trip to New York, where he plans to meet Governor Andrew Cuomo, Rossello deflected to the Army Corps some of the criticism his administration has faced since Maria made landfall on Sept. 20.

Rossello and the island’s power authority, PREPA, were criticized for initially declining to seek so-called mutual aid from other U.S. public power utilities after the storm knocked out electricity to all of Puerto Rico’s 3.4 million residents.

That decision has become a focal point because it partly spurred PREPA to sign a no-bid contract with private firm Whitefish Energy Holdings – a deal Rossello canceled on Sunday after an uproar over its provisions.

Rossello has since sought mutual aid from utilities in New York and Florida.

But the initial decision to forgo it, he said on Thursday, was due in part to an understanding with the Army Corps that it could help restore power to Puerto Rico within 45 days, and would foot the bill at a time when the island’s bankrupt government could not afford to shell out much cash.

Six weeks after the storm, only about 30 percent of the island’s grid has been restored.

“We are very unsatisfied with the urgency the Corps” has shown, Rossello said. “Everything that has been done right now has been done by PREPA or the subcontractors PREPA has had.”

Jeff Hawk, a spokesman for the Army Corps, said in an emailed statement that “contracts usually take days to a couple of weeks, so we are moving quickly.”

Rossello also said he had some concerns about new parameters laid out on Tuesday by the federal board managing Puerto Rico’s finances, which would require his administration to submit a revised draft of a fiscal turnaround plan for the island by Dec. 22.

“We are in the process of answering to the board some of our concerns with the timelines,” Rossello said, adding that some of the parameters “are appropriate, and some are not, given the lack of information and the level of devastation in Puerto Rico.”

Puerto Rico filed the largest government bankruptcy in U.S. history this year to restructure $72 billion in debt.

Rossello said the revised plan would be centered around a strategy of reducing the size of government, boosting private sector partnerships, and reforming education and healthcare systems.

 

(Reporting by Nick Brown; Editing by Chizu Nomiyama and Susan Thomas)

 

Puerto Rico moves to cancel Whitefish power contract after uproar

: A pickup truck from Montana-based Whitefish Energy Holdings is parked as workers (not pictured) help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico October 25, 2017.

By Ginger Gibson and David Gaffen

WASHINGTON/NEW YORK (Reuters) – Puerto Rico’s government power company said on Sunday it will cancel a $300 million contract with a tiny Montana company to restore power to the storm-hit U.S. territory after an uproar over the deal.

The contract between Whitefish Energy Holdings and Puerto Rico’s bankrupt power utility came under fire after it was revealed last week that the terms were obtained without a competitive public bidding process. Residents, local officials and U.S. federal authorities all criticized the arrangement.

The cancellation could further complicate Puerto Rico’s most pressing challenge from the territory’s worst storm in 80 years – restoring power to its 3.4 million residents. Nearly six weeks after Hurricane Maria devastated the island, only about a quarter of homes and businesses have power, and the utility has set a goal of having 95 percent of power back by the middle of December.

Several other utilities have been involved in recovery efforts, but Whitefish said they had more than 350 people on the island. Puerto Rico Electric Power Authority’s (PREPA) Director Ricardo Ramos said that he had to consider the “delay risk” of agreeing to cancel the contract. The territory has reached out to officials in Florida and New York, which have already sent people to Puerto Rico, to send more crews in the event that Whitefish departs.

Whitefish said in a statement it was “disappointed” in the decision, adding that it will “only delay what the people of Puerto Rico want and deserve – to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster.”

Earlier on Sunday, Puerto Rico’s Governor, Ricardo Rosselló had called for the contract with Whitefish to be canceled, and PREPA’s Ramos said he had accepted the governor’s recommendation.

“Following the information that has emerged, and with the goal of protecting public interest, as governor I am asking government and energy authorities to immediately activate the clause to cancel the contract to Whitefish Energy,” Rossello said in a statement.

Ramos, in a press conference Sunday, noted that the initial enthusiasm from residents over Whitefish employees coming to the island had shifted in the last several days after media reported the details of the contract.

“As soon as this whole issue was interpreted by the tabloids that PREPA has given away $300 million to a company with little experience…if you read that, and you have no light and no water that perception changes abruptly to the extent that the last four days they’ve been throwing stones and bottles” at workers, Ramos said.

Ramos said contract terms with Whitefish meant that the cancellation would become effective 30 days from notice and, signaling potential intricacies, explained that there were “a lot of logistics involved. I believe they have people on the way here.”

“The contract is not canceled as of yet. I am writing today a letter to the board of directors of PREPA asking for a resolution that will allow me to cancel the contract,” Ramos said.

Whitefish, which has a full-time staff of two, said it would complete any work that PREPA wanted it to, and noted their initial efforts “exceeded all other efforts by other parties.”

They said they completed work on two major transmission lines that crossed the island’s mountainous interior, and that PREPA’s decision to contact them “only sped up the repairs.”

Criticism increased after a copy of the contract with PREPA surfaced online on Thursday night and raised more questions, particularly over language blocking oversight of costs and profits.

Ramos noted that the federal contracting process is a long one, and that PREPA “could not wait.”

Workers from Montana-based Whitefish Energy Holdings help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico October 25, 2017.

FILE PHOTO: Workers from Montana-based Whitefish Energy Holdings help fix the island’s power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico October 25, 2017. REUTERS/Alvin Baez/File Photo

APPEAL TO NEW YORK, FLORIDA

Efforts to restore power have been bumpy. It took more than a week for a damage assessment to be completed, and PREPA did not immediately ask for what is known as “mutual aid,” whereupon utilities send workers in droves to restore power to hard-hit areas.

Residents have been forced to rely on diesel generators and most of the island remained in darkness.

Eventually, the U.S. Army Corps of Engineers was put in charge of power restoration. Rosselló said he had reached out to Florida and New York in part because of a delay in the arrival of brigades from the Army Corps.

Speaking to CNN, New York Governor Andrew Cuomo said he could send hundreds of work crews to Puerto Rico to assist with the repair work. Florida Governor Rick Scott’s office said he and Rossello “have talked frequently regarding Hurricane Maria recovery. Governor Scott is proud to offer any guidance, advice and assistance they may need.”

PREPA declared bankruptcy in July. It has a $9 billion debt load caused by years of unsuccessful rate collection efforts, particularly from municipal governments and state agencies, and a lack of investment in equipment and maintenance.

The Puerto Rican government is bracing for the possibility that Whitefish would sue for breach of contract if the cancellation is approved, according to sources familiar with discussions. The government already paid Whitefish $8 million and does not expect the U.S. Federal Emergency Management Agency to reimburse that sum, the sources said.

 

(Additional reporting by Tracy Rucinski, Jessica Resnick-Ault, Dan Bases and Nick Brown; Editing by Lisa Von Ahn and Mary Milliken)

 

Tiny Montana firm’s Puerto Rico power deal draws scrutiny

A pick up from Montana-based Whitefish Energy Holdings is parked as workers (not pictured) help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico October 25, 2017. REUTERS/Alvin Baez

By Susan Heavey, Richard Cowan and Scott DiSavino

WASHINGTON/NEW YORK (Reuters) – Federal emergency officials raised “significant concerns” on Friday about a $300 million contract between Puerto Rico’s storm-hit power utility and a tiny Montana firm, as Democratic lawmakers stepped up calls for an investigation of the deal.

The Federal Emergency Management Agency said in a statement that after its initial review it “has not confirmed whether the contract prices are reasonable” under the agreement between Puerto Rico Electric Power Authority and Whitefish Energy Holdings, a two-year-old firm with just two full-time employees.

The contract between PREPA and Whitefish was awarded without a competitive bidding process.

Whitefish spokesman Ken Luce said the deal was secured when its chief executive and co-owner, Andy Techmanski, flew to Puerto Rico on Sept. 26, six days after Hurricane Maria tore into the bankrupt U.S. territory and knocked out power to all 3.4 million residents.

The contract, and the slow restoration of power on the island, has raised questions about who is effectively managing PREPA’s response to the hurricane, as about 75 percent of homes and businesses still lack electricity after several weeks.

Jose Roman, interim chairman of Puerto Rico’s Energy Commission, said the commission is looking into how Whitefish got the contract as part of a larger investigation to “determine the prudence of the actions of PREPA; not just the Whitefish contract,” he said.

PREPA did not respond to requests for comment.

Puerto Rico’s financial oversight board earlier this week said it would appoint an emergency manager to oversee PREPA, though that has met with pushback from Governor Ricardo Rossello, who may challenge such an effort in court.

It took more than a week after Maria hit the island for a damage assessment to be completed by PREPA, the chronically underfunded state utility. Eventually, FEMA put the U.S. Army Corps of Engineers in charge of short-term power restoration.

 

ZINKE: I HAD “NOTHING TO DO” WITH CONTRACT

A growing number of U.S. lawmakers have raised questions about the contract, the slow pace of power restoration, and Interior Secretary Ryan Zinke’s connections with Whitefish.

Representative Raul Grijalva, the senior Democrat on the Natural Resources Committee, and Representative Peter DeFazio, the top Democrat on the Transportation Committee, asked the Department of Homeland Security’s inspector general in a letter to investigate the contract’s execution, its terms, and “whether there was any political impetus behind the contract.”

The representatives noted that Whitefish is based in Zinke’s hometown and that Zinke’s son once worked for Whitefish. The letter also stated that a Whitefish financial backer, HBC Investments, was founded by Joe Colonnetta, a contributor to President Donald Trump’s campaign, as well as “many other Republican candidates.”

Zinke said in a release that “I had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico.” After the initial contract was awarded, “I was contacted by the company, on which I took no action,” he said.

White House spokesman Raj Shah said that the administration’s “understanding” was that the contract was awarded solely by PREPA, and they are “not aware of any federal involvement” in the deal.

U.S. Senate Democrats urged FEMA and the U.S. Army Corps of Engineers in a letter to unify efforts to restore power on the island.

They also called on FEMA and PREPA to name a top official to oversee all electrical contracts, and urged federal officials to more quickly clear crews from two companies, Fluor Corp <FLR.N> and PowerSecure, so they can begin restoration work.

Several utilities are involved in restoration, including Fluor, Whitefish, JEA, New York Power Authority, and others. Whitefish and its subcontractors have more than 300 people on the island, Luce said.

Techmanski first got in touch with PREPA following Hurricane Irma, during a bidding process to repair damages from that storm, which hit Puerto Rico two weeks before Maria, Luce said.

A copy of the contract surfaced online Thursday night, raising more questions, particularly over language blocking oversight of costs and profits.

“In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA administrator, the Comptroller General of the United States or any other authorized representatives have the right to audit or review the cost and profit elements,” said the document, published by several media outlets, whose authenticity was confirmed by Democratic staffers for the Natural Resources Committee.

House Democratic Leader Nancy Pelosi called for the immediate termination of the contract, saying “no federally-funded contract should be immune from routine oversight or circumvent a federal audit.”

Costs listed for hourly wages ranged in the hundreds of dollars and daily per diems of more than $330 for accommodations and nearly $80 for food, according to the “bid schedule” published online. The document put the cost of one-way airline flights for employees at $1,000.

Luce defended the deal, saying the company welcomed an audit or questions from Washington. “The contract was done in good faith with PREPA,” he said.

Rossello has also defended the contract, even as he ordered an audit. Initial results of the audit are expected to be released later on Friday, according to NBC News.

 

(Reporting by Susan Heavey, Richard Cowan, Timothy Gardner; additional reporting by Scott DiSavino, Jessica Resnick-Ault and Nicholas Brown; editing by Tom Brown and Diane Craft)