Looking East

Rebuilding

On July 9th, the government of Puerto Rico published Transformation and Innovation in the Wake of Devastation: An Economic and Disaster Recovery Plan for Puerto Rico. This document presents for public comment a comprehensive plan not only to repair the damage caused by Hurricanes Irma and Maria, but also to rebuild the island’s infrastructure and economy in a way that corrects a number of systemic issues that have long held back human and economic development.

The plan outlines 20 measures to “repair and rebuild resilient residential housing,” with a total estimated cost of more than $50 billion dollars. The bulk of this cost comes from reconstructing damaged homes and relocating vulnerable communities. Critically, the plan also calls for the formalization and registration of the island’s informal properties.

By some estimates the majority of Puerto Rico’s houses are informal, built without permits by people who are technically squatting on government or private land. These homes are often more vulnerable to storm damage than structures that are built to code, and post-disaster rebuilding is more difficult because they typically lack insurance and the documentation needed to access FEMA aid. Another issue, given the government’s financial state, is the fact that these properties generate no tax revenue.

Formalizing land records would have important financial implications beyond increasing territorial revenue. It would also improve the island’s ease of doing business score at a time when the government needs to attract real estate investment. Puerto Rico’s land administration system functions well in some respects. With a fully digitized registry and cadastre, the World Bank gives Puerto Rico high marks (seven out of eight) for reliability of infrastructure. But the island’s overall quality of land administration score trails not only the mainland but the regional average for Latin America and the Caribbean. This is largely due to Puerto Rico’s poor showing on the geographic coverage index. This section is scored based on four questions:

• Are all privately held land plots in the economy formally registered at the immovable property registry?
• Are all privately held land plots in the largest business city formally registered at the immovable property registry?
• Are all privately held land plots in the economy mapped?
• Are all privately held land plots in the largest business city mapped?

The answer to all of these questions is “no,” scoring Puerto Rico zero out of eight points in this section. Even a four out of eight would put PR’s overall score in line with the mainland US. An eight out of eight would make Puerto Rico’s overall land administration quality score comparable to those of Canada, Australia, and Germany instead of Honduras and the West Bank and Gaza.

Data

In order for the government to plan and execute the housing recovery, it must have accurate data on property ownership, condition, and occupancy. As the report acknowledges, “the creation of a central source of data related to the housing stock, including title, permits, land use, property tax and location will be crucial in the recovery effort.” Once it has been created, the database will also have to be kept current and registry operations streamlined in order to maximize the potential land administration gains.

The government’s report estimates that the process of collecting this housing sector data will cost $30-50 million, and formalizing and correcting titles will cost $800 million. It is unclear how long all of this work is expected to take, but given the size of Puerto Rico’s informal sector and the fact that it takes on average more than six months to file and record a deed in Puerto Rico, it will probably take years using traditional surveying methods.

Innovation in Odisha

The need for formalization in Puerto Rico is extremely high but the resources and time available are limited. This makes the island an excellent candidate for using new, more efficient tools and techniques to conduct the data gathering and mapping as quickly and inexpensively as possible without compromising accuracy. In developing its own strategy, Puerto Rico can look to the innovative land titling program currently under way in the Indian state of Odisha. Like Puerto Rico, Odisha has a large informal sector and extreme weather, creating a financially devastating cycle of destruction and rebuilding. A recent article from Thomson Reuters’ Place initiative provides a dramatic account of the role land rights play in this cycle:

Every year, Neelabeni and her family await the monsoon with trepidation in their mud-and-brick home in an informal settlement near the coast in the eastern Indian state of Odisha. Nearly every year, cyclones that brewed in the Bay of Bengal would damage the nearly 300 homes in their settlement in Gopalpur town, tearing the tin and thatch roofs and smashing the flimsy walls.This year however, Neelabeni - who goes by one name - is looking forward to the monsoon, as she and her neighbours will start building pucca, or permanent homes, when the rains stop. Nearly every family has received a title, or patta, under an ambitious programme to give land rights to about 1 million people living in slums across Odisha. They will also receive a loan with which to build their homes. "We have always lived in a kutcha (temporary) home, and we would spend all our savings on building a new home every year after the rains. Now we will build a proper home," she said.

The Odisha land titling program, created as a partnership between the state government, Tata trusts, and the Omidyar Network, is reportedly the largest such program in history. Providing titles for the approximately 250,000 slum households in Odisha would have taken nearly a decade using traditional survey and mapping methods. But the program is on pace to do the work in about a year, issuing 200,000 land titles by the end of 2018. The key to this effort is the use of new technologies, notably drones, combined with on-the-ground interviews to establish who lives where.

While the drone technology being used in Odisha is important, the community interview method should not be overlooked. The government of Odisha accepts affidavits as evidence of property ownership and is flexible in accepting any kind of government-issued ID. This method has already seen a trial of sorts in Puerto Rico. Overwhelmed by the number of claims being made by people without formal titles in the aftermath of Hurricane Maria, FEMA began accepting affidavits as evidence of property ownership, though not in a consistent, systematic fashion.

More to Come

If these techniques can be used to formalize 200,000 properties in Odisha in a single year, they can be scaled up to formalize the estimated 260,000 to 700,000 informal properties in Puerto Rico. But drone surveys and community interviews are only one example of innovative tools that can be used in Puerto Rico. We will explore some of these in greater depth in subsequent posts.

Item HOU 11 of the draft recovery plan states that Puerto Rico must “develop and adopt a common address system” that “Improves ability of emergency responders to locate properties. Improves ability of planners and social service providers to map and analyze urban problems and develop solutions. Improves efficiency of mail delivery and simplifies operations of other entities that rely on property addresses to provide or bill for services.” The estimated cost is $75-$200 million. Puerto Rico could instead adopt an existing system like What3Words to provide a comprehensive and detailed geospatial addressing system for the island. What3Words has already been adopted by the governments of Mongolia and the Ivory Coast.

Satellite imagery and IoT sensors can be used to create more accurate risk maps, helping the government identify vulnerable communities that must be relocated and helping to set wind and flood insurance premiums.

Puerto Rico has an opportunity to reform its land laws. This could take several forms. One would be to offer a form of qualified title during the formalization process. If community mapping and attestations are used to establish property ownership, qualified titles could be issued that would not mature into full titles until a mandatory waiting period had passed without a challenging claim being issued.

Another important legal tool --and one that has been used successfully in Puerto Rico before-- is the Community Land Trust (CLT) model. In a CLT, community members own their houses but not the land underneath them, which they lease from the trust, a non-profit corporation. This allows the residents to build equity, but the trust ensures that housing remains affordable by controlling resale prices.

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