The deputy director of economic development for PathStone Corporation and a LISC Rubinger Fellow, Javier E. Zapata-Rodríguez has an insider's view on how the fallout from hurricane Maria has shaped economic development in Puerto Rico, the imperative of supporting small business on the island, and how Puerto Ricans have galvanized to build resiliency for themselves, two years after the megastorm made landfall.
Javier E. Zapata-Rodríguez is the deputy director of economic development for PathStone Corporation, a 50-year-old community development and human service organization with offices in Puerto Rico. He specializes in supporting small businesses on the island, and in the aftermath of hurricane Maria, his and his team’s work has focused on helping hundreds of enterprises recover and develop resiliency.
Zapata-Rodríguez is also a 2019 Rubinger Fellow. For his fellowship project, he has been aggregating disparate data about the impact of Maria, to inform resiliency strategies for entrepreneurs going forward. His findings are also helping shape a documentary about the impact of the hurricane on Puerto Rico’s small business community, shining a light on the human stories behind the numbers—numbers that can obscure the range and depth of people’s experiences, aspirations and hard work.
In his capacity as a PathStone leader, Zapata-Rodríguez, is also a trustee for LISC’s Kiva micro-lending matching program in Puerto Rico, and is supporting our work to rehabilitate baseball fields in communities whose fields were wiped out by the hurricane.
On the second anniversary of Maria’s landfall in Puerto Rico, Zapata-Rodríguez spoke with LISC about how the hurricane has affected economic development, the imperative of nurturing small business on the island, and how Puerto Ricans have galvanized to build resiliency for themselves.
In the aftermath of hurricanes Maria and Irma, you have focused on recovery and building resiliency for entrepreneurs. Where are your organization and the people you serve now, two years later?
Basically, we are still a long way from recovery. The energy system is still very fragile in parts of Puerto Rico. We are not in a position to withstand another hurricane—and since we are in the middle of hurricane season, we are already facing that. Thankfully, the storms that have come close to Puerto Rico this year haven’t hit us directly.
But we have learned a lot about what needs to happen to become more resilient. There has been progress, especially in communities where people have come together to support each other. We are learning that, as Puerto Ricans, we have to take care of ourselves. There’s a sense of unity that has come from this.
Puerto Rico has endured some intense political upheavals recently. In July, the governor resigned in response to protests over corruption and revelations that he had funneled millions in federal recovery contracts to his political allies. How has that affected your work?
Well, even before Maria, we experienced a serious economic downturn. The hurricane, and the political instability, have magnified the problem. The political situation creates a sense of impotence for people. Our system of municipal government is struggling. This kind of unrest also makes it much harder when we’re talking to potential investors. Investing here is seen as a much riskier proposition. There’s a lack of confidence, and transparency. And that has had a big impact on the flow of capital.
How have you had to adapt your strategy as a result of the hurricane?
There has been a lot of attention paid to housing—from the blue tarps [given out by FEMA to stand in for walls and roofs destroyed by the hurricanes] to rebuilding homes, and rightly so. Small business, though, has gotten the short end of the stick. It’s not seen as essential. But without it, the economy can’t survive. And without recovery services, and access to capital, small businesses struggle to survive.
The major form of federal aid for small business after the hurricane has been SBA disaster emergency loans. These are helpful in some ways, but loans may not be the best recovery resource for all businesses. We saw an urgent need for grants to help them stabilize and give them the best shot at survival—without the need to repay.
If a food truck, for example, loses a refrigerator in the hurricane, they can’t sell food. So we’ll give them a $5,000 grant to get a new fridge and some working capital for supplies. We generally provide grants of about $3,000 to $10,000 and we’ve given out a total of $300,000 plus. Wells Fargo Diverse Community Capital funding has helped us with this.
We also offer technical assistance. These kinds of investments give small businesses a better probability of surviving and providing a service to the community while generating income for their household. It also brings an immediate sense of normalcy, which is also important.
Apart from trying to rebuild what was there before, what have individual businesses been able to do to become more resilient?
They have had to be very innovative. We worked with an agricultural business where the farmer had a lake that flooded the crops as a result of the hurricane. They used the grant money to dredge the lake and create a barrier around it to prevent flooding in the future. Other businesses that had equipment and machinery on the first floor of their building have moved it to a higher floor. Others have done rehab, like installing roofs or equipment that can better withstand extreme weather and flooding.
You’re also supporting small enterprises that are in the business of creating resiliency for others.
That’s right. In conjunction with LISC, we provided capital to InverSOL, solar inverter business producing a small, solar-powered generator that can be used in emergencies and isn’t dependent on the grid. It’s a Puerto Rican-owned company employing local people whom we have also trained. Supporting alternative energy projects is part of our strategy so that our island can become more resilient, little by little.
How does renovating baseball fields through the Play Ball Again initiative fit in with your other work?
This is another kind of recovery. It’s a beautiful project that will help communities rebuild and allow boys and girls that used to play on fields, and now can’t because of the damage the hurricane did, return next season. The fields are a social focal point for so many communities. It is really one of the most uplifting projects I have worked on.
What have you learned from the research for your Rubinger Fellowship project?
First, that there was a lack of rapid response and that’s prompting us to ask why did it happen that way, and what can we do better next time. We learned that the municipalities* were actually in a better position to help people than the federal or state governments. (*The 79 municipal governments or municipios in Puerto Rico function like county administrations on the mainland U.S.)
Second, we are understanding more about the medium-term response. We know that federal funds have been very slow to get here, and only about $5 to $8 billion of the more than $40 billion allocated for recovery have been disbursed. They’re practically stuck at this point, for a variety of political reasons, at the state level—we know what happened with the governor—and in the executive branch of the federal government. Just recently, $500 million that was supposed to come to Puerto Rico for the recovery was diverted to continue building the wall between Mexico and the U.S. So we’re digging into those issues, to see how they unfolded and how it could be done better next time.
It’s very hard to get accurate numbers about what’s happened in Puerto Rico, and what the situation was before the hurricane. Even regarding the number of people who died as a direct or indirect result of Maria. You can find figures anywhere from several hundred to 5,000. And there are no concise numbers about how many people are still living under blue tarps. If you ask the housing department, you get one number. If you ask FEMA, you get another number. But wherever you go around in Puerto Rico, you see a lot of blue tarps. That’s another example of how we need better information in order to prepare for a future disaster..
Many people have left the island or been relocated from their neighborhoods in the aftermath of the hurricanes. Do you see depopulation affecting local small business and community networks?
It’s definitely raising a lot of issues for economic development. Puerto Rico lost around 150,000 people after Maria. Less people mean less market for small businesses. On top of that, the government is downsizing a lot of its services, like schools. So you get a domino effect with depopulation.
Still, some of the communities we work with are organizing better. I’m also on the board of an organization called Barrio Eléctrico, which works with solar power. We’re seeing people creating microgrid projects and looking for partners that can provide them to communities. We see people working to become more resilient at the local level.
What do envision for the long term in Puerto Rico?
We will see an uptick in economic indicators in the medium term because of the federal funding that will be coming in, however slowly. But once that funding dries up, we will be left in a precarious situation again, with a fragile economy. The real risk is the lack of vision for the long term and the lack of investment and capital flowing into the island.
Also, a lot of the contracts for deploying federal money are going out to American-owned companies. Some of those companies subcontract to native businesses, but at the end of the day, most of the money gets recirculated back to the U.S. The research we’ve done for the Rubinger project reflects this. We just got a grant from the Economic Development Agency to help us assist native small businesses boost their capacity to win federal contracts.
How has the Rubinger Fellowship helped you personally?
The connections with the other fellows help me see I’m not alone. We’ve been so busy with the work in Puerto Rico that I don’t always have the chance to take in the work of other people in our field. Being part of the fellowship has been a very uplifting experience.
It’s also helping us tell the stories of the people behind the numbers. For every small business and every blue tarp, there’s a person who is struggling to recover. This project will help make some of those voices heard.
They come from all corners of the country, and all share a deep commitment to helping their communities thrive. Meet the 2019 Fellows.
