The Trump Administration and leading U.S. House of Representatives Republicans yesterday proposed legislation that could provide an extraordinary $4.9 billion in loans to Puerto Rico and other jurisdictions for lost revenue and unplanned expenses due to Hurricanes Maria, Irma, and Harvey. Most of the monies could go to Puerto Rico.
The proposal was added to the appropriations bill for the disasters requested a week ago by the Trump Administration and expected to be considered in the House this week and the Senate next week.
The proposal came after lobbying by Puerto Rico Governor Ricardo Rossello Nevares and recommendations of the PROMESA-established and federally named Puerto Rico Financial Oversight and Management Board.
The governor of the U.S. Virgin Islands followed Rossello’s original lead for a special Federal loan with a request for $225 million.
Yesterday, Rossello reduced his unreleased, original requests for the loan to a public request for $4.9 billion. The fiscal control board also reiterated its public advocacy of the assistance for the territorial government’s liquidity.
The legislation provides for lending for lost revenue and unbudgeted expenses over a 180-day period.
The Secretary of Homeland Security could make the loans in consultation with the Secretary of the Treasury, who could set terms and conditions, including eligible uses.
Payment of prior debts would reportedly not be one of the uses that the Trump Administration intends.
The legislation also provides that $150 million of the $4.9 billion can be used for required territorial matching of other Federal disaster assistance. President Trump has waived the otherwise required 25% local cost-share in the case of Puerto Rico for emergency relief, such as rescuing people and providing food, water, and electrical generators, and for debris removal, but he has not waived it for repairing and replacing infrastructure. A waiver for rebuilding infrastructure better able to withstand natural disasters would require an amendment of existing law.
Loans could also be cancelled under the legislation.
One and a half percent of loan amounts could be used for administrative expenses incurred in connection with the loans.
The $4.9 billion would be provided to a Federal Emergency Management Agency (FEMA) program that can make similar loans to local governments of up to $5 million. Local governments in Florida and Texas could apply for these loans but only Puerto Rico and the Virgin Islands would be eligible for larger loans.
Additionally, any level of government in the territories would be eligible for the loans.
Most loans under the existing programs have been cancelled. Further, most loans approved by FEMA have not been drawn down by localities or fully drawn down.
The legislation also includes $1.27 billion more for the Nutrition Assistance Program for Puerto Rico — the less generous equivalent for what is commonly called Food Stamps for the States, the District of Columbia, and other territories, including the Virgin Islands.
The President’s Office of Management and Budget, further, asked agencies to identify other needs for assistance due to the hurricanes by October 25th.
Gov. Rossello said this morning that the loans were one of three requests for special assistance that he is making. The others are $4.6 billion in additional funding for other disaster programs and assistance for rebuilding infrastructure in Puerto Rico in addition to that provided for by existing law.
The new proposed assistance in the bill is in addition to $12.77 billion previously requested for FEMA, another $16 billion to cancel FEMA’s debt to the Treasury for for the National Flood Insurance Program, and $576.5 million to fight wildfires. Reportedly, only 5,600 homes in Puerto Rico have flood insurance in a deep reduction of this insurance in the past.