COR3 launches Working Capital Advance for municipalities

On May 23, 2022, Governor Pedro R. Pierluisi and COR3 executive director Manuel Laboy announced the Working Capital Advance (WCA) pilot, designed to advance liquidity to municipalities and start permanent reconstruction works when there is no cash on hand.

WCA grows out of revisions to Chapter 7 of the Federal Disaster Recovery Funds Management Guidelines on disbursements and cash management. It is an advance — for now exclusive to municipalities — of 25% of money already obligated by FEMA for the project they select and qualify. Obligating is not disbursing: first FEMA obligates; WCA advances a slice of that obligation so work can begin.

COR3 estimated about 1,700 eligible permanent municipal projects, with FEMA obligation of 1.5 billion. If 25% of that total were disbursed, municipalities could receive up to 375 million to start. The release sets a 7-to-10-business-day disbursement and a progress report 90 days after receiving funds.

Chapter 7 changes from mid-June were also announced, after the 2019 Agreement was eliminated in September 2021, to ease validation of disbursement requests. Among the adjustments: the municipal insurance offset will follow project progress, not hit all at once. Trainings on WCA and Chapter 7 would start in early June for COR3 staff and then subrecipients. The program is voluntary and was to begin in June 2022.

Pierluisi and Laboy highlighted forward municipalities — Jayuya, Orocovis, Yabucoa and San Lorenzo, among others — and four efficiency keys: an experienced recovery lead, aligned teams, balance between municipal staff and contractors, and timely documentation. Announcing a 375 million ceiling does not mean that money already went out: it is the estimate if 25% of eligible obligations were advanced under the pilot.