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Exclusive: Trump boosts disaster aid for Puerto Rico rebuild

[November 03, 2017] By Roberta Rampton

WASHINGTON (Reuters) - U.S. President Donald Trump on Thursday agreed to expand the use of disaster aid to help rebuild Puerto Rico's power grid and other infrastructure wrecked by Hurricane Maria, the White House said.

In a unique agreement recognizing both the massive devastation on the island and its dire financial problems, aid from the Federal Emergency Management Agency (FEMA) for infrastructure projects will be released in a faster, more flexible way than is typical after disasters, a senior White House official told Reuters.

The plan, agreed to with Puerto Rico Governor Ricardo Rossello, will also provide for third-party advisers to estimate how much money is requires for big-ticket projects, and how it is spent - a provision aimed at protecting taxpayer dollars in what is expected to be a massive, long-term effort to rebuild the island.

"We're doing it in a way that grants flexibility, but also imposes a mutually agreed upon set of controls," the official said in an interview.

The new agreement will see FEMA cover 90 percent of the costs for rebuilding public infrastructure, up from the typical level of 75 percent.

Puerto Rico - home to 3.4 million Americans - is in bankruptcy, struggling with $72 billion in debt. Its finances were put under federal control last year.

Six weeks after Hurricane Maria hit, only about 30 percent of Puerto Rico's power grid has been restored. Private sector estimates of total damage from Maria have ranged as high as $95 billion.

The White House is expected to deliver a new request for disaster aid to the U.S. Congress in mid-November to help defray costs from Maria and two other major hurricanes - Harvey and Irma - as well as damage caused by wildfires in the western United States.

It is not yet clear how big the federal tab for Puerto Rico will be.

"Obviously it's going to be a big dollar figure," the official said. "I know there won't be any balking at the amount of money needed from the administration."
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Workers of Puerto Rico's Electric Power Authority (PREPA) repair part of the electrical grid after Hurricane Maria hit the area in September, in Manati, Puerto Rico October 30, 2017. REUTERS/Alvin Baez

FLEXIBLE PROCEDURES

Even with FEMA covering 90 percent of the costs, it could be difficult for the territorial government to put up its 10 percent. On top of its fiscal constraints, the storm has ground its economy - and tax revenues - to a halt.

The federal government provided a $150 million loan in an aid package approved by Congress last month that can be used to help cover its share, the official said.

"We didn't want to create the precedent of giving 100 percent in the grant program and then disincentivizing good stewardship," the official said.

The federal government will also use relatively new procedures created in 2013 after Hurricane Sandy known as "Section 428" in the Stafford Act, the law that provides for federal disaster aid.

"It's not been used on this scale before," the official said.

The procedures will allow Puerto Rico to estimate the costs of big projects up front - with help from third-party advisers - and draw down from approved grants, eliminating the slow and cumbersome process of being reimbursed for upfront spending on each segment.

The agreement will also allow Puerto Rico to access hazard mitigation grants - normally tapped only outside of disasters - while rebuilding the creaky power grid and other infrastructure so that the structures are more resilient to future hurricanes.

"We're going to build them back smarter," the official said.

(Reporting by Roberta Rampton; Editing by Cynthia Osterman and Lisa Shumaker)

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