Puerto Rico's conundrum: Shortage of affordable housing and slow reconstruction

A growing affordable housing crisis and a slow post-hurricane reconstruction process have created a precarious situation for residents in Puerto Rico nearly five years after Hurricane Maria damaged 60 percent of occupied housing units on the island.

Now that local officials have access to $18.3 billion in federal housing recovery funds, the Puerto Rico-based nonpartisan think tank Center for a New Economy published an analysis Thursday suggesting that the best way to ensure that such funds are effectively invested toward addressing Puerto Rico's housing needs is by looking granularly and focusing on neighborhoods.

"That's how we can better serve the needs of a specific place, of a particular community," Deepak Lamba-Nieves, research director at the Center for a New Economy and co-author of the analysis, told NBC News in Spanish.

"That’s the difference between a reconstruction project that just seeks to build things versus a reconstruction project that seeks to rebuild and revitalize the social fabric of a neighborhood," he said.

Lamba-Nieves, alongside Center for a New Economy research fellow and co-author Raúl Santiago-Bartolomei, started examining housing reconstruction trends in 2017 during Maria's aftermath when more than 725,000 families were grappling with damaged homes.

They first focused on whether FEMA’s individual assistance program, meant to help the most vulnerable, was reaching those in need.

Initially, it was almost impossible for those who lacked proper home ownership documents, meeting FEMA’s standards, to access any financial assistance, Lamba-Nieves said. While there was some overlap between poverty and lack of home ownership documents, the researchers found that poor households and disadvantaged families living in Puerto Rico's "special communities" were largely not excluded from accessing the financial aid.

However, many did not receive enough aid to fully cover home damage expenses, according to the analysis.

"Design flaws" in the program, Lamba-Nieves said, spotlighted deeper housing issues that pre-dated the hurricane. Land tenure and home titling issues are common, "partly due to the fact that Puerto Rico has consistently failed to produce sufficient affordable housing units for a large portion of the population," the analysis reads.

After months of advocacy from community groups in Puerto Rico, FEMA considered such longstanding housing issues and ended up adjusting its proof of home ownership requirements, allowing more families to access aid.

Despite resolving that hurdle, the needs of families living under the federal poverty line were not fully met after experiencing higher “pending housing needs,” described as the difference between FEMA damage estimates and the aid granted, Lamba-Nieves and Santiago-Bartolomei's findings show.

Not receiving enough aid to pay for home damages disproportionately put these families at higher risk of displacement, especially since they are more unlikely to qualify for other forms of aid.

Glimpse of 'worrisome' pattern

After years of analyzing the impact that high “pending housing need” patterns had in San Juan metropolitan area neighborhoods with a high concentration of poor families, the researchers saw higher levels of deterioration in these communities, furthering socioeconomic segregation.

"We found that worrisome," Lamba-Nieves said. "These kinds of programs are supposed to serve those who lack home insurance, the most disadvantaged, to help them with immediate housing needs post-disaster."

With the help of Elora Lee Raymond from Georgia Tech’s School of City and Regional Planning, the Center for a New Economy is currently working on a research project measuring the displacement caused by unmet housing needs in Puerto Rico.

Access to jobs, education and safety often decrease for residents living in communities that are rapidly deteriorating, according to the analysis.

Roughly a year after Trump-era restrictions unique to Puerto Rico and stalling hurricane aid were lifted, the U.S. territory gained access to $18.3 billion in federal housing recovery funds. Since then, the island has used only a little under $824,000.

With most of the money still available, local officials should prioritize "infrastructure improvements, community lifelines, hazard mitigation, workforce development, and local business aid spending programs" in deteriorating neighborhoods facing higher displacement threats, according to the analysis.

Simultaneously, “the government of Puerto Rico should prioritize locating affordable units, financed with federal recovery dollars” in areas researchers deemed as "high-opportunity" — where residents have greater access to jobs, education and safety.

According to the analysis, this could potentially help curb growing socioeconomic segregation, particularly at a time when low-income families are struggling to find affordable homes following a 22 percent increase in housing prices from 2018 to 2021.

Currently, a rise in short-term rentals in Puerto Rico is also limiting affordable housing opportunities for residents, particularly in "high-opportunity" areas.

Early findings of another ongoing research project at the Center for a New Economy shows that for every 10 percent increase in a neighborhood's total number of short-term rentals units:

  • Median rents increase by at least 5 percent.

  • Unit purchase price (in dollars per square foot) increases by 23 percent.

  • Sales volume in a neighborhood increases by 1 percent.

While Puerto Ricans on the island face a wide range of housing needs, it is important for residents to remain vigilant to ensure that the local government effectively leverages the historic amount of federal housing recovery funds they have access to, Lamba-Nieves said.

"Something that keeps me up at night is whether we are taking advantage of the opportunity we have to rethink our housing system," he said. "To recover beyond reconstruction, we have to start at the local level. We have to think about how to revamp communities."

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