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Puerto Rico’s rebuilding experience shines light on US disaster preparedness

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SAN JUAN, Puerto Rico — Luis Herrera, engineer for the city of Caguas in Puerto Rico, is literally building bridges in the wake of Hurricane Maria.

The Bairoa Bridge in Caguas is both a professional and personal priority for Mr. Herrera, given that the original structure destroyed by the storm was a major conduit for traffic in the area and he lives just a few blocks from where the bridge is being rebuilt.

But the challenges he faces in rebuilding fallen parts of Caguas, located due south of San Juan, are indicative of the struggles across the island of Puerto Rico since it was devastated by Maria in September — and in other parts of the United States still trying to recover from the catastrophes of 2017 and rebuild in a resilient and sustainable manner ahead of the next natural disasters.

Caguas’ rebuilding efforts are hampered by the need to interact with two key entities: the Federal Emergency Management Agency and Integrand Assurance Co., the local insurer that provides the city’s insurance coverage, Mr. Herrera said during an infrastructure tour organized by Zurich North America and Washington-based consultancy Fuentes Strategies L.L.C. in early April.

While FEMA’s eastern federal lands highway division has done an “excellent job” on the Bairoa Bridge project, rebuilding money has generally been slow to arrive, he said.

Between $40 billion to $50 billion will be funded for disaster relief efforts in Puerto Rico, according to a FEMA spokesperson.

More than $10 billion has been funded to Puerto Rico for the disaster recovery efforts for hurricanes Irma and Maria since the disaster declaration was signed for Irma on Sept. 10, but there are no specific deadlines for the allocation of the remainder of the funds.

Mr. Herrera has estimated about $62 million in damages to 92 buildings and other structures in Caguas, which has so far received only about $1 million to date from Integrand.

“The insurance company has not done their job,” he said. “They don’t want to sit and discuss the estimate with us.”

“The problems that I’m having, all the municipalities are having them,” Mr. Herrera added.

Meanwhile, the 2018 hurricane season is fast approaching, and that terrifies Gary Soto, operations manager for the Puerto Rico Electric Power Authority.

“For the next season, I’m very scared,” he said during a tour of a PREPA power plant in Monacillo, Puerto Rico. “It’s going to be a big challenge if anything happens.”

The commonwealth’s power system plunged into darkness when Maria struck, with the southern part of the island where its two key generating facilities are located suffering a direct hit, resulting in power outages to about 70% of PREPA’s roughly 1.5 million customers at its height. While power was restored to most customers within weeks, thousands remain without power in some areas.

“That’s a very big setback if we had another situation like Maria or even a small storm,” he said.

“We’ve had storms that have not entered the island and have caused blackouts.”

The ongoing challenges to rebuild in Puerto Rico are indicative of what the rest of the United States will continue to contend with: an aging infrastructure that will repeatedly be challenged by more frequent and intense natural catastrophes, experts say.

“Puerto Rico’s infrastructure is an example of what’s happening across the entire United States, where there’s been a history of a lack of investment in our infrastructure and having a lot of infrastructure becoming outdated and coming to the end of its useful life,” said Paul Horgan, head of North America commercial insurance for Zurich North America in New York.

In 2017, the American Society of Civil Engineers assigned a D-plus grade to the U.S. infrastructure and estimated it would cost about $4.59 trillion to improve the country’s infrastructure.

The insurer released a paper in April called Rebuilding Infrastructure: The Need for Sustainable and Resilient Solutions, which emphasizes the importance of sustainable planning and resilient building as the severity and frequency of severe weather events increase.

“There is no part of the United States that is not exposed to severe weather,” Mr. Horgan said, citing not just the 2017 hurricanes, but winter storms in the Northeast and droughts and wildfires in other parts of the country, which he said underscore the need for resiliency.

“Talking sustainability often sounds expensive to people, but the reality is it’s not,” Mr. Horgan said. “The additional costs on the front end are usually minimal to build something back or build something in a sustainable way. Rebuilding to a resilient standard doesn’t automatically translate into substantially higher costs. It really translates into thoughtful rebuilding (and) preplanning.”

The impact of climate change should be one of the factors taken into consideration when rebuilding infrastructure, said Thomas Lewis, adviser to the Zofnass Program for Sustainable Infrastructure at Harvard University and president of Morristown, New Jersey-based engineering and consulting services company Louis Berger.

“Even if Maria never happens again in Puerto Rico, if you build back to a sustainable level, a more resilient level, it will pay for itself in lower operations and maintenance costs through its life cycle,” Mr. Lewis said. “But it takes a longer view. It takes that discipline.”

Investors want two key things when considering potential opportunities: simplicity of doing business and certainty of returns, said Robert Murray, Zurich’s global head of surety, based in Owings Mills, Maryland.

Puerto Rico faces challenges in attracting investors, according to a deep dive into a World Bank report on the ease of doing business in 190 jurisdictions around the world. The commonwealth scored 64th overall, but much lower on key metrics such as dealing with construction projects, protecting minority investors and enforcing contracts.

Institutional investors might prefer double-digit rates of return, which are harder to get in some aspects of infrastructure, but green bond and social impact investors are willing to accept a low rate of return, Mr. Lewis said.

“These other (infrastructure) areas that have historically not seen as much private investment interest … need to be part of the toolbox, especially in a place like Puerto Rico,” he said.