HUD officials knowingly failed 'to comply with the law,' stalled Puerto Rico hurricane relief funds

Lawmakers questioned why HUD kicked off a funding process for 17 states affected by disasters — but left out Puerto Rico.
Image: Puerto Rico
A man walks by a house with the blue tarp that was used to protect the roof damaged by Hurricane Maria in San Juan, Puerto Rico, on Sept. 18, 2019.Ricardo Arduengo / AFP - Getty Images file

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By Nicole Acevedo

Two top officials with the Department of Housing and Urban Development admitted at a congressional hearing this week that the agency knowingly missed a legally required deadline that would have made desperately needed hurricane relief funding available to Puerto Rico.

HUD’s chief financial officer, Irv Dennis, and David Woll, the department's principal deputy assistant secretary for community planning and development, made the admission Thursday before a House Appropriations subcommittee.

The two told bewildered lawmakers that the agency missed the congressionally mandated deadline to issue a notice that would have kicked off a monthslong process to help Puerto Rico get billions in federal housing funds Congress allocated after Hurricane Maria devastated the island in 2017.

“HUD did fail to comply with the law,” said Rep. David Price, D-N.C., said at the hearing.

The housing agency was supposed to issue funding notices to 18 states affected by disasters on Sept. 4. They published all the notices except Puerto Rico’s. The publication of the notice would have allowed Puerto Rico to start drafting a plan that would create the structures needed to manage the much-needed funds.

Two years after Maria, Puerto Rico has received a third of the roughly $43 billion Congress allocated toward hurricane recovery efforts such as rebuilding tens of thousands of homes with damaged roofs, many still covered with blue tarps.

“American communities have been waiting far too long for the relief and recovery assistance,” said Rep. Nita Lowey, D-N.Y., adding that such funding delays were unlawful.

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Woll admitted that HUD had “no statutory authority” to miss such a deadline.

Woll and Dennis, in defending why HUD felt compelled to delay the distribution of funds, echoed previous talking points from HUD Secretary Ben Carson, President Donald Trump and other members of his administration in citing "alleged corruption" and "fiscal irregularities" as well as “Puerto Rico's capacity to manage these funds."

Woll brought up events this summer that led to the resignation of Ricardo Rosselló as governor amid mass protests triggered by political scandals, as well as the island’s decadelong financial crisis, in justifying HUD’s decision to stall Puerto Rico’s funding process.

Rep. Katherine Clark, D-Mass., stressed that during Puerto Rico’s political unrest no indictments were issued against the island’s housing secretary, Fernando Gil-Enseñat, or the department he leads, known as Vivienda.

Both Clark and Woll agreed that Gil-Enseñat is an “honorable head of housing.”

A home destroyed by Hurricane Maria in Aibonito, Puerto Rico on Sept. 19, 2018.Angel Valentin / Getty Images file

Woll also said that HUD missed the deadline because it was waiting for an audit from the agency’s Office of Inspector General into “Puerto Rico's capacity to manage these funds” and the appointment of a financial monitor to oversee the disbursement of housing funds.

HUD officials have suggested that the audit will include revelations regarding Puerto Rico’s ability to manage billions of dollars in housing and disaster relief funds.

However, a letter from HUD Inspector General Rae Oliver Davis to Carson stated that the office never said the audit “would have serious or significant findings” and did not recommend that HUD should withhold funding to Puerto Rico.

“As the HUD Inspector General’s letter clearly states, HUD officials misled congressional staff about the conclusions of the IG’s review of Vivienda’s capacity to administer disaster recovery funds in an attempt to justify their violation of the law,” Rep. Norma Torres, D-Calif., who brought up the letter during the hearing, told NBC News. “This is unacceptable and I fully expect the department to look into why their staff lied to Congress.”

Jeremy Kirkland, counsel to HUD’s inspector general, defended Davis’ remarks during the hearing, saying that the Office of Inspector General never told HUD that Puerto Rico’s capacity review would reveal grave findings that would prevent them from issuing a funding notice.

Kirkland said that the audit, which is in the process of being drafted, found that Puerto Rico’s housing department should improve financial and procurement controls as well as develop processes to prevent duplication of benefits and increase their staff.

“These challenges exist because Vivienda is a newly appointed grantee with no experience administering CDBG-DR funds,” said Kirkland about the island’s ability to manage certain housing and mitigation funds.

So far, Puerto Rico has received only the first $1.5 billion of a total of $20 billion granted through the agency’s Community Development Block Grant-Disaster Recovery Program, or CDBG-DR, for infrastructure repairs and rebuilding homes.

Experts have anticipated that the flow of housing funds will be paralyzed until HUD appoints a financial monitor for Puerto Rico.

“No one more than Puerto Ricans want oversight, but what we’ve seen so far doesn’t work,” Miguel Soto-Class, founder and president of the Center for a New Economy, a nonpartisan think tank, previously told NBC. “We don’t want punishment disguised as oversight.”

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