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6 towns get go-ahead to use $19M in community disaster loan funds

Six towns affected by the earthquakes that rattled Puerto Rico in January recently got the go-ahead from the Federal Emergency Management Agency to tap into a combined $19 million in Community Disaster Loans (CDL) to rebuild.

Guayanilla, Mayagüez, Ponce, Salinas, Santa Isabel and Villalba will be able to tap into the operational funds meant to assist municipal administrations that have a significant loss of income caused by a major disaster, which affects their ability to provide essential municipal services.

The loan amounts approved for each municipality were: $3 million for Guayanilla; $5 million for Mayagüez and Ponce; $2.7 million for Salinas; $3.3 million for Santa Isabel and $4.7 million for Villalba, said Ottmar Chávez, executive director of the Central Office of Recovery, Reconstruction and Resiliency, known as COR3, which works with FEMA.

“This aid is in addition to the alternatives available under FEMA for the municipalities that have suffered damages and large losses from the earthquakes. The CDL loan offers financial relief to municipal administrations that need to provide certain basic services, but whose expenses are not eligible under other FEMA programs,” Chávez said.

The CDL funds may be used for existing essential municipal services or to expand those functions to meet disaster-related needs, he said.

“FEMA has provided support since the seismic events began, and these funds are certainly another sign of our commitment to the people of Puerto Rico,” said José Baquero, federal coordinator of disaster recovery for Puerto Rico and the U.S. Virgin Islands.

“We will continue to provide the necessary assistance so that our municipalities and their communities can recover,” he said.

As established by CDL regulations, the amount may not exceed the accrued loss of income estimated for the fiscal year of the disaster and the three subsequent fiscal years; 25% of the operational expenses of the municipal government budget for the fiscal year in which the disaster occurred; or the maximum of $5 million granted by the CDL Program.

To qualify for a CDL loan, municipalities must demonstrate a significant loss — greater than 5% — of tax revenue and other income for the fiscal year or the next as a result of the disaster and must not be in default of loan payments.

Additionally, municipal governments must ensure that state laws do not ban municipalities from taking on debt as a result of a federal loan.

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This story was written by our staff based on a press release.

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