I guess I don't see how using 1-3 million dollars to operate an educational center is nonsensical. It's a central area between major universities, fairly flat terrain, northwestern coast so it's generally not going to see the worst of the storms and also has some existing infrastructure.
With that said it's a tragedy that they aren't going to rebuild the telescope in it's original glory.
It's 40 minutes from San Juan, which is on a relatively small island on the ocean.
And hurricanes have a habit of hitting there.
PR deserves great local institutions, but it is less accessible than most places that have much larger nearby population.
Areceibo already WAS a world class telescope and was closer to an international airport than many other observatories.
The only valid point you've made is about hurricanes and earthquakes. However I haven't seen any discussion as to how those effect contruction costs at that site vs others.