A long-awaited economic recovery may be on the horizon for Puerto Rico, as the new Biden administration and the Department of Housing and Urban Development (HUD) take serious steps towards freeing up billions in disaster relief funds previously held up from the island under the previous administration.
In early February, Biden’s White House announced its intent to speed up the distribution of more of the $60 billion in funds first allocated by Congress for Puerto Rico in 2017 after hurricanes Irma and Maria destroyed much of the island’s infrastructure. Only about $17.6 billion of these funds had made it to the island at the time of the announcement, according to the Miami Herald—in other words, less than a third in over three years.
Recent steps by The Department of Housing and Urban Development (HUD) indicate the new administration means to make good on its word. On April 19, the Department of Housing and Urban Development announced in a press release that it had removed several of the “onerous restrictions” to relief funds.
These nixed restrictions included a federal financial monitor review process, as well as 30 pages of relief application restrictions unique to the island that were not imposed on other U.S. states hit by disasters.
The department also announced its own obligation of $8.2 billion in Community Development Block Grant Mitigation (CDBG-MIT) funds for the island. The CDBG-MIT program is particularly focused on making disaster-stricken areas more resistant to future disasters, according to HUD.
“Since its first days, the Biden-Harris Administration has prioritized action to enable stronger recovery for Puerto Rico,” said HUD Secretary Marcia L. Fudge. “The actions taken by HUD today will unlock access to the funds Puerto Rico needs to recover from past disasters and build resilience to future storms while ensuring transparency and accountability. We are committed to an ongoing partnership with Puerto Rico to empower the island’s communities and help them build back better.”
HUD’s announcement followed its investigations into why the relief money was held up in the first place. The department reported that the previous administration placed unprecedented hurdles in the distribution process, causing delays in the funds approved by Congress. One HUD official called the Trump administration restrictions “poison pills,” according to The Washington Post, intended to indefinitely entangle applications for the relief funds in bureaucratic red tape.
Shortly after the 2017 disaster, former President Trump expressed concerns both publicly and privately that relief funds would be misused or mismanaged. The Post reported that he told White House Chief of Staff John F. Kelly and Office of Management and Budget Director Mick Mulvaney that he didn’t want “a single dollar” of relief funds going to the island—in stark contrast to the money provided to U.S. states like Florida and Texas after similar natural disasters.
But Biden’s statements and HUD’s actions represent a dramatic shift in tone from the previous administration. Since the early days of his presidential campaign, Biden has emphasized his desire to speed up Puerto Rico’s recovery process.
Biden’s 2020 campaign website listed “Recovery, Renewal, and Respect for Puerto Rico” as one of the administration’s priorities and outlined a detailed plan for improving the island’s economic standing.
Biden’s Puerto Rico campaign plan prioritized infrastructure and economic recovery, pushing for “a full recovery and infrastructure reconstruction to modern standards” as well as “investing in Puerto Rico’s future through economic development initiatives and support for families.” The campaign aims to expand access to education and workforce training for the island’s residents.
On the campaign trail, Biden also indicated support for debt relief from the federal government for Puerto Rico. Bloomberg reported in September 2020 that Biden called for an end to fiscal austerity on the island, as well as an audit of Puerto Rico’s debt of almost $75 billion and forgiveness of hundreds of millions in FEMA loans.
The administration’s public statements—and HUD’s subsequent action—indicate Biden intends to follow up on at least some of his Puerto Rico campaign promises. “The president has made clear … that it is a priority for his administration to release this funding. We are working to do so.” White House Press Secretary Jen Psaki said during a February press briefing.
In 2017, Puerto Rico experienced a worst-case scenario during a two-week period when two different hurricanes, Irma and Maria, wreaked widespread damage on the island’s infrastructure and homes and caused thousands of deaths. An analysis from the Rand Corporation highlights the extent of the destruction, citing a struggling government, healthcare services, and businesses, as well as wastewater pollution, landslides, and extensive power-grid failure.
As mentioned above, recovering from the one-two punch of these hurricanes has been a slow process for the already economically struggling island—made even more difficult after the COVID-19 pandemic and a series of earthquakes hit in 2020. Since this series of disasters began, the island’s population has dropped significantly as residents fled the devastation for the mainland U.S.
But the change in administration means Puerto Rico’s chances of economic recovery have significantly brightened. On April 27, Puerto Rico’s governor Pedro R. Pierluisi expressed optimism towards the island’s recovery under the Biden administration and indicated that HUD’s actions had freed up considerably more access to relief funds.
“Puerto Rico deserves to be treated fairly and on equal footing with other states of the Union that have suffered through natural disasters,” Pierluisi said in a press release. “Today, because of her commitment, Puerto Rico has access to 89 percent of the disaster relief funds appropriated through HUD.”
As we’ve noted before, the island’s tourism economy already also shows promising signs of recovery. As more and more Americans get vaccinated, many have set their sights on Puerto Rico for their summer vacations. One analysis found that the island was the most-Googled tourist destination earlier this year.
Others are interested in a more permanent relocation—financial analysts suggest that post-pandemic trends show investors moving to Puerto Rico, driven by the island’s individual and corporate tax incentives. Luxury real estate and boat companies reported an unprecedented spike in sales earlier this year, citing an increased demand among American businessmen and other professionals moving to the island.
All signs point to a significant recovery ahead. If you are interested in investing in the island’s bright future, check out our Puerto Rico investment opportunities.