Reducing Municipal Debt Service, and Taking on Collapsing Municipal Public Infrastructure. Ouch.

February 14, 2020

Good Morning! In this morning’s eValentines Blog, we consider an agreement Puerto Rico has reached with some of its municipal bondholders which could reduce its debt service in excess of 50%, thereby easing the process for the Commonwealth to emerge from its quasi-chapter 9 municipal bankruptcy, according to the PROMESA Board; then we venture north to the chilly but turbulent waters in the Motor City.

Reducing Puerto Rico’s Costly Debt Service. Puerto Rico reached an agreement with some municipal bondholders, which is projected to cut its debt service by 56% and make it easier for the commonwealth to emerge from its quasi-chapter 9 municipal bankruptcy, according to the PROMESA Financial Oversight and Management Board. In exchange, the PROMESA Board agreed to drop its challenge that $6 billion in bonds were invalid because they exceeded legal debt limits, with this most recent agreement following in the wake of one struck with a smaller a smaller group of bondholders: together, the two agreements allow Puerto Rico to reduce its debt service by about two-thirds, to $39.7 billion from $90.4 billion, and reduce its maximum annual debt service by 70%, to less than $1.5 billion a year. The new agreement comes in the wake of ones already reached by the PROMESA Board with retirees and public unions, with the agreements due to be part of an amended quasi chapter 9 plan of debt adjustment the Board will file by the end of this month: the next steps are hearings and a final confirmation hearing scheduled for October. Here, the new bondholder agreement was approved by most of the members of the PROMESA Oversight Board; however, it appears certain to encounter opposition from the Governor, other debtors, and groups opposed to proposed changes including pension cuts.

In a statement, Oversight Board Chair Jose Carrion described the agreement as more favorable than earlier proposals, claiming it would completely resolve legacy debt in two decades, noting: “It has significantly more support from bondholders, further facilitating Puerto Rico’s exit from the bankruptcy that has stretched over three years.” PROMESA Board Executive Director Natalie Jaresko, as part of the same statement, said that the support enhances Board’s ability to exit bankruptcy this year “and to the beginning of a true economic recovery.” Under the proposed new agreement, the pact would cut some $35 billion in debt and other liabilities by 70%, to $11 billion from $24 billion, and it appears to have garnered the support of holders of $8 billion of bonds. As proposed, general obligation bondholders would realize an average 29% cut, while the reduction for holders of Puerto Rico Public Buildings Authority bonds would average 23%. Commonwealth creditors would receive $10.7 billion in new debt, half in general obligation municipal bonds and half in COFINA Junior Lien bonds, as well as $3.8 billion in cash.

While the PROMESA Board agreed to not challenge the legality of $6 billion in bonds, it will continue to challenge others, including ones issued by the Employee Retirement System, and the Board will seek to recover fees earned by banks, law firms and other parties related to bonds issued in excess of Puerto Rico’s constitutional debt limit.

Aging Motor City Public Infrastructure. The conditions of seawalls along Detroit’s riverfront in the wake of the collapse of a dock has raised apprehensions with regard to the city’s aging public infrastructure—especially at a time when the Trump Administration’s much ballyhooed and promised infrastructure remains nowhere to be seen. The city has directed inspectors to send correction orders to riverfront property owners, and has issued more than 500 blight tickets. The Michigan Department of Environment, Great Lakes and Energy staff inspected a pond at the end of last month at a site on the Detroit River, a site with a previous history of contamination, where construction aggregate spilled following a dock collapse last Thanksgiving. The city’s inspectors have found worrisome seawall and waterfront conditions across the length of Detroit’s riverfront in the wake of a dock collapse at a contaminated riverside site where the state has determined company cleanup efforts have been inadequate.

Indeed, the city has inspected all 152 properties along the Detroit River in the wake of the aggregate spill near Historic Fort Wayne and issued approximately $195,000 in fines for more than 500 blight violations on five plots of land, with the sudden burst of inspections coming amidst over increased demands for action and state concerns over perceived gaps in response plans by the site’s owner and the limestone storage and shipping company which operated there. Indeed, in the wake of last November’s Revere Dock collapse, conditions have deteriorated, sending limestone construction aggregate material into the river—creating both health and public safety apprehensions. The former Revere Copper and Brass Inc. property has been, for decades, listed as contaminated due to past use of uranium and other dangerous chemicals in the 1940s and 1950s for the Manhattan Project, research and development undertaking during World War II and completed in 1956 that produced the first nuclear weapons. It was led by the United States with the support of the United Kingdom and Canada.

An environmental cleanup in the late 1990s removed most contamination, but some remains, according to the Michigan Department of Environment, Great Lakes and Energy. Authorities discovered in the wake of the collapse that the site owner since 2015, Revere Dock LLC, had for months been allowing illegal limestone storage, without a permit. Tenant Detroit Bulk Storage is now moving those materials off the site to come into compliance, according to Jessica Knight, chief enforcement officer for Detroit’s Buildings, Safety Engineering and Environmental Department. A firm representing Revere Dock noted: “Both the city and Revere Dock have asked Detroit Bulk Storage to remove the aggregate currently stockpiled on site…They are removing material daily and reporting on progress to the city and Revere Dock.” Mayhap the response from Revere Dock and Detroit Bulk Storage has been spurred as fines levied by the city now are in excess of $83,000 in fines as of Thursday—and it faces a suit filed by the city in late January. Indeed, at the end of last month, Mayor Mike Duggan noted the city needs more aggressive inspections: “Our (Buildings, Safety Engineering and Environmental Department (BSEED)), they are out now on the riverfront walking every single site, writing tickets…We had a couple things happening. One is, the people (at the Revere Dock site) didn’t have the permit. But the other thing is, with the rising water levels coming from climate change…it’s eroding the shorelines across the state.”

Indeed, lakeshore erosion in Michigan from high water levels prompted state legislators in December to urge Gov. Gretchen Whitmer to declare a state of emergency; while, for the Motor City, the issue is aggravated, because, according to the Michigan Department of Environment, Great Lakes, and Energy: “Much of the Detroit River shoreline is contaminated from historic fill materials and legacy industrial operations.”

Mayor Duggan noted: “We’re going to have to shore a lot of them up,” referring to property along the city’s waterfront: (The Revere Dock) case should not have happened, but we’re making darn sure it doesn’t happen again.”

Three or four BSEED property maintenance division inspectors traversed the length of the river in December and January, according to Ms. Knight, who said the building department does not normally inspect seawalls for stability, but decided to do so annually after the Revere Dock collapse, and consulting with the U.S. Army Corps of Engineers on methodology. BSEED also said it will inspect the Detroit River-adjacent properties and buildings annually instead of the usual every two years. Previously, no governmental entity was responsible for ongoing maintenance and inspection of seawalls and other waterfront structures in Detroit, according to Don Reinke, Chief of Compliance and Enforcement for the Corp’ Detroit District, which is responsible for permitting along navigable waterways, which requires keeping structures in working order; however, Corps regulations do not mandate inspections, and where cost is a factor, according to Mr. Reinke. BSEED was instructed to look for sinkholes—such as the growing, 12-foot-deep one on the Detroit Bulk Storage site—as well as erosion on the land side of the seawalls; storage of heavy materials on the land’s edge; shifting in seawall concrete; and other potential warning signs. As of Thursday, BSEED had issued more than 500 tickets to five properties for property maintenance violations on coastal lots, including unlawful storage of items outside commercial buildings, failure to maintain the premises, lack of certificate of compliance, unlawful occupancy of buildings, and unsafe conditions. Altogether, the City of Detroit has issued more than 500 blight tickets after inspecting all 152 properties along Detroit’s riverfront in the wake of the Nov. 26 Revere Dock collapse. It rendered more than $195,000 in fines as of Thursday.

The seawall problems are being handled separately from property rules, because the former was out of BSEED’s purview until now, according to Knight. The city sent warning letters, dubbed “correction orders.” Problem spots included overflow of water onto land, collapse or failure of the seawall and aggregate pushing up to the seawall causing it to be unsound, she said. The properties had until Feb. 3 to respond to the letters with independent engineering assessments of the stability of their seawalls. As of Thursday, Knight said, the city received six of these reports out of 152. Warning letters to be sent Monday will give property owners a seven-day extension. After that, the city would start fining them. If that does not work, litigation could be a next step, as with Revere Dock. Nick Leonard, the Executive Director of the Great Lakes Environmental Law Center, called the extent of seawall concerns “a bit surprising…I knew a lot of the docks and seawalls were from very old facilities…but I didn’t realize until we really started to look into this problem how grave it was and how multifaceted it was,” adding the Detroit-based nonprofit has seen local governments step in to fill holes in inspections as concerns over shoreline integrity mount around the Great Lakes.

The Michigan Dept. of Environment, Great Lakes, & Energy(EGLE)  is assessing water samples taken last month from inside and outside an original 5-foot silt curtain Revere Dock installed around the collapse site to contain the materials. Revere Dock’s next deadline was Friday to submit an updated short-term response plan, and the agency expected to receive those additional details soon. The state called a first version filed with the state last month “inadequate,” and a second, filed two weeks later, failed to do enough to halt erosion into the river; did not adequately assess a growing, 12-foot-deep sinkhole; and included a plan for geotechnical measuring on the site which was assessed as “inappropriate.”

If there is good news, it is that the spill, at least so far, in a state where the terrible health and safety issues in Flint are in the back of many minds and hearts, the spill has, at least so far, not harmed drinking water quality, based on its testing and that of the Great Lakes Water Authority. EPA officials did find uranium, lead, and other chemicals during testing at the site in late December. One, a soil sample of lead, surpassed EPA’s threshold for removal management, according to EGLE. The state also noted its previous testing there “showed no radiation above background levels.”

The Fiscal, Physical, and Political Challenges of Municipal Provision of Safe Drinking Water

February 11, 2020

Good Morning! In this morning’s eBlog, we consider the threat of a drinking water public health crisis in Detroit, where city leaders are drafting a measure to request to the Governor to declare a public health crisis in the wake of Detroit’s action to cut off water for some of its citizens in poverty.  

In the wake of emerging from the largest municipal bankruptcy in the nation’s history, the city’s utility, the Detroit Water and Sewer District (DWSD) faced complex challenges, including the struggle by low income families to pay their water bills, even as the DWSD struggled to fund critical infrastructure investments—a fiscal and physical challenge as the city dealt with unpaid water bills as bad debt expenses, and, ergo, hiking double-digit rate increases on other ratepayers. By the fateful summer of 2013, the District’s challenges were exacerbated by complaints related to widespread water shutoffs instituted in response to delinquent accounts.

Recent research from the University of Michigan has determined that low-income households across metro Detroit are unable to afford their water bills: the research determined there was an affordability gap: families are paying more for water than they can actually afford—not actually a surprise, as water poverty within the City of Detroit has been a known issue for several years; however, a new survey of houses across Wayne, Oakland, and Macomb counties aimed to investigate whether the water affordability gap exists outside of the city limits too—with one of the researchers affirming the results were conclusive: “What we found is there are people struggling everywhere.” (According to EPA, an affordable water bill is about 4.5 percent of a household’s monthly income.) The research found that low-income metro Detroiters were paying about 10 percent of their incomes on water each month—or, as they self-reported, they were paying $45.08 more on water a month than they could actually afford. But the risk to health and safety from a potential water cutoff was so significant that families, instead, cut back on other vital necessities: the researchers reported that 84 percent of residents surveyed said they cut back on monthly expenses to pay their water bills, while 51 percent of households reported switching off between water and energy bills when they were unable to afford to pay both at the same time, emphasizing the need for a comprehensive rate assistance program. However, the Michigan’s legal framework restricts options for utilities to address water affordability.

Nevertheless DWSD has developed a model  focused on providing financial relief to customers and to ensure that they are not left without water service, drafting a measure to ask Gov. Gretchen Whitmer to declare a public health crisis in Detroit in order to halt water shutoffs for poverty-stricken residents, with the City Council’s legal staff, under the leadership of President Pro Tem Mary Sheffield, preparing a resolution to urge the Governor to take action, warning that the controversial practice of terminating water service to thousands of Detroit residents “poses an imminent danger to public health.” In addition, a separate measure will ask the city and the DWSD to institute a moratorium on shutoffs until there is consensus with regard to a long-debated ordinance for water affordability. President Pro Tem Sheffield noted: “All of the water rights advocates are demanding that we submit and pass a resolution urging the governor to declare a crisis,”adding the declaration of a state of emergency could trigger potential state fiscal help—or, as she put it: “We have a Governor who is willing, I believe, to address the issue.”

As proposed, the effort would mark the latest call for a public health declaration to aid the poor in the Motor City in the wake of water rights advocates and a group of attorneys who have made similar pleas in recent years on an issue which gained national attention six years ago when about 33,000 homes in the city had their water cut off as part of the city’s desperate effort to recover from its fiscal crisis.

Last year, Detroit shut off water to 23,000 residential accounts; by the last day of 2019, 12,500 had not been restored.

On Tuesday, Tiffany Brown, a spokesperson for Gov. Whitmer, said that the Governor’s office does not want to speculate on a potential resolution from the city: if and when the office receives any communication, she said it will be reviewed.

In the nonce, DWSD is taking steps toward expanding eligibility for its regional assistance program and doubling the pot of money for customers at risk of a shutoff, with Detroit Water Department Director Gary Brown advising the Detroit News that he is asking the Council to approve a resolution which would permit the Great Lakes Water Authority, the Metro region’s governing water provider, to vote on increasing the allocation for its Water Residential Assistance Program (WRAP), “doubling the dollars available for those in need” in Detroit.

Under an agreement reached as part of Detroit’s chapter 9 municipal bankruptcy debt resolution, the DWSD is leasing the city’s water and sewer system for $50 million per year. As part of the agreement, it also provides the assistance fund for struggling customers. The changes would increase the WRAP allocation for Detroit from about $2.4 million to $5 million annually. Ms. Brown reports that the program, launched in March 2015, and has helped 16,000 people with their water bills, and now the city is also planning to ask the DWSD board to broaden eligibility, by allowing those at 200% of the federal poverty level to take advantage of the assistance fund, noting: “There is no Detroiter that should be seeing a service interruption, if they ask for help…The hard part is getting people to come in and ask for the help before a service interruption.”

At present, the water department has 226,404 active residential accounts and close to 94% of its customer base has accounts in good standing as of the end of last month according to Bryan Peckinpaugh, a spokesman for DWSD—and, even of the remainder, not all are at risk for service interruption: water customers are considered delinquent if they are 60 days behind and owe $150. Customers are at risk of shutoff if unpaid balances reach $750, water officials have said.

Denise Fair, Detroit’s Chief Public Health Officer, said the Detroit Health Department “has found no association between service interruptions and an epidemic of any reportable communicable disease…We encourage any Detroiter at risk of service interruption to contact the water department immediately to get connected to programs that can assist.”  That appears to be a signal change from three years ago, when a panel of health experts called for a declaration of a public health emergency in the city, accusing city health officials of ignoring a study which linked water shutoffs and water-related illnesses.

Currently, the city’s water authority pays the city $50 million annually lease its water assets; that agreement provides the authority to take over finances and collection “if we’re not bringing in the dollars necessary to support the system.”

Brown said that over the last six years, the water department has reduced the number of shutoffs by about 80%, but warned that if the Council proposal does go through, it would create a hardship for the 94% of residential water customers who do pay bills on time, fearing that those customers would see bills in the $300 to $400 range, up from the current average of $75 per month and water rates “would inevitably go up for everybody.”

Putting American Lives & Property at Risk

February 10, 2020

Good Morning! In this morning’s eBlog, we consider what appears to be a double standard with regard to the federal response to protecting American lives and public safety in the U.S. territory of Puerto Rico in the wake of a series of earthquakes.

Impeding Public Safety of U.S. Citizens. Puerto Rico Governor Wanda Vázquez Garced said that the PROMESA Board has imposed a halt to the use of the government’s emergency fund by not reviewing more than 50 requests made by the Executive Branch to purchase supplies and hire services for the victims of the January 7th earthquake or terramoto. Gov. Vázquez Garced explained that although the unelected PROMESA Board had authorized access to $260 million of the emergency fund, as of January 31st,  the Board must approve each disbursement–adding additional layers of cost and bureaucracy–even as it puts more lives and property at risk. According to the Governor, the unelected Oversight Board has not acted swiftly in processing the requests, and it has refused to temporarily extend access to any of these funds absent its approval. The Governor said this led her to instruct the Puerto Rico Office of Management and Budget to continue using the emergency fund, even if they do not have the Board’s approval, noting: “The Board has more than 50 requests from agencies and municipalities on hold. They have not approved the purchase of food…After January 31, every emergency request must be approved by the Board.” The Governor added that if shelters need water, the Board must also authorize that request.

Edward Zayas, the spokesperson for the unelected PROMESA Board, denied that the Board was holding disbursements, and, contrary to the Governor’s allegations, he said the Board has only received four requests from the government—requests which he claimed had been addressed the same day they were submitted—adding that the Board is only asking the government to file a response to a document, which consists of eight questions, so that the Board knows how the funding will be spent prior to proceeding with a disbursement. Moreover, he claimed the funds had not been halted—and that the period granted to use those funds without approval ended January 30th, asserting: “So far, only four requests have been submitted, and all four have been approved expeditiously: the Board wants to make sure the money is used exclusively for earthquake recovery.” Said spokesperson also denied that Puerto Rico had asked to extend the period to use the emergency fund without authorization, as Gov. Vázquez Garced claimed. However, Puerto Rico OMB Director Iris E. Santos Díaz insisted that Puerto Rico has submitted requests to purchase portable toilets, tents, and to rent buildings where they can temporarily receive students whose schools were damaged by the earthquakes that started in late December, adding: “I have several requests from (the Department of Correction and Rehabilitation, the Department of Family Affairs, and the Emergency Management Bureau, still pending,”

In response, a FEMA official indicated that FEMA would reimburse an unspecified “good part” of these expenses, noting: “Our intention, and need, is to use the emergency fund for these preliminary expenses. Once it is completed and they define what the disaster declaration will cover for these municipalities, we can ask for a 75 percent reimbursement. Right now, we need to be able to use the emergency fund.”

It seems unimaginable that FEMA would act this way in any state. As Gov.Vázquez Garced noted: “This emergency is not over. The earth is still shaking. The earthquakes will continue as the U.S. Geological Survey reported, adding such quakes could last for years…The southern and southwestern areas are still in emergency,” before not responding to any other questions, because she said she had to return to Washington, D.C. to hold several meetings with representatives of federal entities, including the White House.

Motor City Low Income Tax Relief

February 7, 2020

Good Morning! In this morning’s eBlog, we consider a pioneering initiative by Detroit Mayor Mike Duggan to reduce the tax debt of low-income Motor City residents facing foreclosure.

Modifying a Threat of Municipal Tax Foreclosure? Legislation, called “Pay as You Stay,” which would significantly cut the tax debt of low-income Detroit homeowners cleared a Michigan Senate committee this Wednesday, leading Detroit Mayor Mike Duggan to describe the proposal as one which could help “tens of thousands” of owners facing tax foreclosure.  Those who qualify for the program would have interest and fees eliminated; the remainder of their debt would be capped at 10 percent of their home’s assessed property value. Mayor Duggan noted: “Today, we reached a major milestone in our efforts to keep Detroiters in their homes with the passage of the Pay as You Stay legislation out of the Michigan Senate Finance Committee…I would like to thank Chairman Jim Runestad and the bipartisan support of the committee members who have worked closely with us on this bill for the last several weeks,” adding he especially appreciated the efforts of Senator Stephanie Chang, whose efforts were critical in today’s successful vote. As well as City Council members Janee Ayers, and Andre Spivey for their active support.”

The effort was adopted on a 5-1 vote, clearing it for consideration by the full Senate; on the floor; to move the bill to the full Senate, only Sen. Kevin Daley (R-Lum) voting no. The full Senate could vote next week—which, together with the overwhelming 106-1 passage in the House would pave the way for swift implementation. Under the provisions, low-income Detroiters who qualify do not have to pay property taxes.

Nevertheless, some low-income housing advocates have argued the yearly application process for the city’s Poverty Tax Exemption is cumbersome and that too many low-income families are not aware of the program or how to apply.

At present, in Michigan, municipalities cannot simply erase or reduce property tax bills retroactively—even in an owner can prove he or she would have qualified for the break in the past. The effort, designed as a temporary program, is focused on helping to erase back taxes for those residents who would have qualified. To participate, homeowners would have to qualify for the Poverty Tax Exemption. If enacted, the program would stop taking new applicants effective a year from next July: A retroactive exemption that would wipe away all debt for up to three years.

Many Motor City homeowners on payment plans are struggling with debt despite the dramatic reduction in tax foreclosures; nevertheless, last fall, nearly one in four Detroit homeowners owed more in delinquent property taxes than they did three years earlier, notwithstanding that they were part of low-interest plans designed to help them get out of debt and avoid foreclosure. The Detroit News had reported after an investigation that the city overtaxed homeowners by at least $600 million due to failing to reassess properties downward in the wake of the Great Recession.

While, unlike most cities in the nation, Detroit relies more on income than property tax revenues: income tax revenues account for 20 percent of the city’s revenues, compared to 17 percent for property taxes.

Two years ago, Detroit collected 80.1 percent of the property taxes it levied on its property owners, marking the highest collection rate achieved by the city in six years, up from 78.0 percent of property taxes it reported in the previous fiscal year. Nevertheless, the Motor City’s property tax collection rate is still well below the 95.1 percent rate it claimed for fiscal year 2007. In fiscal year 2013, when the city declared chapter 9 municipal bankruptcy, it fell to 68.3 percent. Indeed, the city’s property tax collection rate is well below that of other cities in Michigan.

As a result of not collecting about 22 percent of the taxes Detroit levied in FY2016, Detroit would have lost $43.5 million except for a state law that shifts the burden. The Michigan law mandates local governments to turn over their delinquent property tax accounts to a Delinquent Tax Revolving Fund run by either the county or state, in return for which the city receives an upfront payment of the entire amount of unpaid taxes. Detroit turns its unpaid accounts over to Wayne County, which then is permitted to retain all the eventual proceeds from fees, fines, interest, and the eventual sale of tax-foreclosed properties.

Seeking Shelter from the Presidential Political Storm

February 6, 2020

Good Morning! In this morning’s eBlog, we consider President Trump’s threat to veto legislation by Congress to provide earthquake relief and assistance to the U.S. territory of Puerto Rico.

Impeding Puerto Rico’s Chances for Recovery? The White House yesterday formally threatened to veto a House bill that would provide $4.7 billion dollars in additional funding for earthquake or terramoto relief in Puerto Rico—legislation the House is scheduled to act on this week, with the President’s Office of Management and Budget reporting the President would veto what it termed the “misguided” bill, citing the administration’s past efforts to assist the U.S. territory in recovery efforts, albeit not noting President Trump’s breief visit where he threw paper towels as his contribution. The Trump administration raised questions about the prudence of providing additional aid to the Puerto Rican government, while the President’s office of Management and Budget accused House Democrats of rushing the legislation. The White House issued a statement: “Neither Puerto Ricans, nor the American taxpayers benefit when emergency aid is misallocated, lost, or stolen through waste, fraud, and abuse,” adding: “Puerto Rico has a long history of inadequate financial controls over regular government operations, which forced the Congress to appoint a financial control board in 2016…Multiple high-profile cases of corruption have marred distribution of aid already appropriated and have led to ongoing political instability on the island.”

Rep. Nita Lowey (D-N.Y.), who introduced the bill, yesterday said in a statement that the legislation would “help families and communities recover from these devastating earthquakes and puts Puerto Rico on a better path to long-term recovery.” The legislation would also establish requirements with regard to how and when the Trump administration disperses aid to Puerto Rico, a feature that likely frustrated the White House. The President has long expressed skepticism with regard to providing significant amounts of aid to Puerto Rico, even as he has, simultaneously awarded high marks to his administration for its response to Hurricane Maria and pointing to tens of billions of dollars already allocated to the island. Hurricane Maria crippled island infrastructure for months, and a government-commissioned study found that nearly 3,000 people died as a result of the hurricane. The most recent round of terramotos has damaged critical infrastructure and left hundreds of thousands of residents without power.

The recent appointment of retired U.S. Coast Guard Rear Admiral Peter Brown as the federal disaster aid coordinator for the U.S. territory of Puerto Rico could mark a key step for the territory’s fiscal and physical recovery—especially the acceleration of federal assistance—which had been an exceptionally slow process under the previous HUD management. His takeover—along with last Friday’s House vote on a new round of $4.67 billion in federal disaster aid to deal with the aftermath of recent terramotos could mark a critical step. Unlike the mid-January appointment of Robert M. Couch by HUD Secretary Ben Carson to serve as the Federal Financial Monitor for Puerto Rico and U.S. Virgin Islands, Rear Admiral Brown appears likely to have y will have czar-like oversight of all federal aid. Moreover, the new appointment finally resolves the Trump administration’s long hold-up, which it stated was due to concerns about financial corruption, reporting, last August that it was planning to appoint a federal administrator. Secretary Carson noted that Admiral Brown “has an extensive background with decades of private and public sector experience dealing with financial reporting, risk management, and executing the law…Robert will be an asset in supporting HUD’s mission to continue aiding recovery efforts in Puerto Rico while ensuring that appropriated funds are used in a responsible manner and for their intended purpose.” It appears, moreover, that Admiral Brown has higher-level White House connections as President Trump’s third homeland security and counterterrorism adviser—and experience: he formerly served as Commander of the Seventh Coast Guard District covering Southeast states and the Caribbean. House Appropriations Committee Chairwoman Nita Lowey (D-NY), whose committee has reported legislation the House could act on as early as this week for a new round of $4.67 billion in disaster aid to deal with the aftermath of recent earthquakes, noted: “Our fellow Americans in Puerto Rico have urgent needs following recent earthquakes…While President Trump has finally released some of the aid Congress has already appropriated for hurricanes, more support is clearly needed.” Chair Lowey described the new funding as “targeted assistance to help families and communities recover from these devastating earthquakes and puts the island on a better path to long-term recovery.” The assistance includes $3.26 billion in Community Development Block Grant–Disaster Recovery money for restoration work and mitigation improvements to infrastructure and housing along with $1.25 billion road and bridge repairs, as well as $100 million for schools and other educational facilities, $15 million to improve the resilience of the electrical grid, and $6.75 million cybersecurity and earthquake risk analysis.

It remains unclear what the Senate might do—or when it might act.

The Steep & Politically Challenged Puerto Rican Road to Recovery

February 5, 2020

Good Morning! In this morning’s eBlog, we consider the ongoing political, discriminatory, fiscal, and physical recovery challenges to the U.S. territory of Puerto Rico—with our blog, mayhap ironically, delayed by a University power outage.

Shaking Up Puerto Rico’s Chances for Recovery. The recent appointment of retired U.S. Coast Guard Rear Admiral Peter Brown as the federal disaster aid coordinator for the U.S. territory of Puerto Rico could mark a key step for the territory’s fiscal and physical recovery—especially the acceleration of federal assistance—which had been an exceptionally slow process under the previous HUD management. His takeover—along with last Friday’s House vote on a new round of $4.67 billion in federal disaster aid to deal with the aftermath of recent terramotos could mark a critical step. Unlike the mid-January appointment of Robert M. Couch by HUD Secretary Ben Carson to serve as the Federal Financial Monitor for Puerto Rico and U.S. Virgin Islands, Rear Admiral Brown appears likely to have y will have czar-like oversight of all federal aid. Moreover, the new appointment finally resolves the Trump administration’s long hold-up, which it stated was due to concerns about financial corruption, reporting, last August that it was planning to appoint a federal administrator. Secretary Carson noted that Admiral Brown “has an extensive background with decades of private and public sector experience dealing with financial reporting, risk management, and executing the law…Robert will be an asset in supporting HUD’s mission to continue aiding recovery efforts in Puerto Rico while ensuring that appropriated funds are used in a responsible manner and for their intended purpose.” It appears, moreover, that Admiral Brown has higher-level White House connections as President Trump’s third homeland security and counterterrorism adviser—and experience: he formerly served as Commander of the Seventh Coast Guard District covering Southeast states and the Caribbean. House Appropriations Committee Chairwoman Nita Lowey (D-NY), whose committee has reported legislation the House could act on as early as this week for a new round of $4.67 billion in disaster aid to deal with the aftermath of recent earthquakes, noted: “Our fellow Americans in Puerto Rico have urgent needs following recent earthquakes…While President Trump has finally released some of the aid Congress has already appropriated for hurricanes, more support is clearly needed.” Chair Lowey described the new funding as “targeted assistance to help families and communities recover from these devastating earthquakes and puts the island on a better path to long-term recovery.” The assistance includes $3.26 billion in Community Development Block Grant–Disaster Recovery money for restoration work and mitigation improvements to infrastructure and housing along with $1.25 billion road and bridge repairs, as well as $100 million for schools and other educational facilities, $15 million to improve the resilience of the electrical grid, and $6.75 million cybersecurity and earthquake risk analysis.

It remains unclear what the Senate might do—or when it might act.

Terrible Terramotos: How are they shaking up Puerto Rico’s Children?

February 4, 2020

Good Morning! In this morning’s eBlog, we consider the ongoing political, discriminatory, fiscal, and physical recovery challenges to the U.S. territory of Puerto Rico.

Shaking Up Puerto Rico’s Public Schools. Puerto Rico Secretary of Education Eligio Hernández Pérez has announced that as many as a quarter of Puerto Rico’s public schools will not open this semester in the wake of the series of physical and fiscal terramotos. The Secretary noted the Puerto Rico Department of Education is working on a plan to have all schools ready for the upcoming school year, the number which will still be unready to accept students awaits further analysis; nevertheless, the Department projects that as many as three-quarters of the schools will open by the end of this month, with Secretary Hernández Pérez noting: “No one in Puerto Rico is going to miss the semester. We have already completed 20 weeks (of classes) and we have the options to continue.” Hos statement came as the Department anticipated announcing a list of 103 additional schools which will reopen this week, after, last week, another 228 were announced. The head of the Interagency School Inspection Committee, Carlos Pesquera, reported that today the inspection of all public schools in the country will be completed, and all certifications are expected to be ready at the end of the week. Of the schools which have already been inspected and certified, 411 were declared fit to reopen, 223 are partially fit, and 69 are not—albeit, the Secretary has not specified the names of those schools deemed unsafe, albeit noting that not all those that have been declared unsafe are located in the southern zone, the area most affected by the recent earthquakes, since the inspections have revealed pre-existing problems in the schools due to lack of maintenance or other infirmities which have not been fully addressed in the wake of Hurricanes Irma and Maria. Hector Pesquera, the former Superintendent of the Puerto Rico Police and the Puerto Rico Commissioner of Safety and Public Protection, noted: “The impact on school infrastructure by the (seismic) event is not as significant as the fact that pre-existing conditions were detected,” stressing that a plan will be put together to ensure improvements are made to ensure safety. As many as a score of public schools in the southern part of the island will be subject to additional evaluation to detect and see how to correct what he deemed “vulnerabilities” in case of more earthquakes. In the nonce, Secretary Hernández said that different options have been established to give continuity to the educational services for children from impact schools, such as online education, the use of curricular modules, which could be offered in other schools, or in alternative spaces, such as community centers, hotels, halls of university institutions, or private offices.