Congress Withholds Millions from HUD for Illegally Delaying Billions in Puerto Rico Disaster Aid

The Department of Housing and Urban Development will have to forgo nearly $20 million in congressionally appropriated funds until it lifts an illegal hold on billions of dollars in disaster relief money for Puerto Rico.

The move to prohibit HUD from accessing part of its funding is an effort by lawmakers to force the department to begin allowing the island nation access to roughly $10 billion, aid that had been appropriated by Congress after the area was hit by devastating storms. HUD unliterally delayed that money for 3.5 months.

Lawmakers, specifically House Democrats, threatened earlier this month to partially defund HUD over its decision to circumvent Congress and illegally delay the aid intended for large mitigation projects and electrical grid modernization that would better prepare Puerto Rico for future natural disasters.

As appropriators negotiated the final versions of the budget that Congress is expected to pass this week, they tucked a provision into the massive 2,371-page, $1.4 trillion budget that denies HUD $19 million until the hold on the U.S. territory's aid is lifted.

"We're determined to show that we're serious about this and we're using the tools we have," Rep. David Price (D-NC) told Newsweek. He chairs an appropriations subcommittee that's been battling with HUD over this issue for months. "If this administration is going to behave in unprecedented ways to hold up legitimate processes, we're going to have to figure out ways to influence that. It's just as simple as that."

Congress withholds HUD funding Puerto Rico aid
An American flag and Puerto Rican flag fly next to each other in Old San Juan a day after the Puerto Rican Governor Alejandro Garcia Padilla gave a televised speech regarding the government's $72 billion debt on June 30, 2015 in San Juan, Puerto Rico. Photo by Joe Raedle/Getty

The $19 million would be used for an initiative by HUD meant to modernize its financial systems and strengthen their ability to responsibly handle funds, something Price said is of importance to the CFO.

HUD has withheld the Puerto Rico aid by refusing to release what is essentially the guidelines for how the island nation can begin the process of applying for the money, which starts by submitting a mitigation plan for approval.

The deadline for HUD to provide the guidelines to Puerto Rico was September 4, a stipulation added into an earlier supplemental bill over concerns from lawmakers about the slow disbursement of previously appropriated funds. The department adhered to the deadline for nine states and the U.S. Virgin Islands—everyone except Puerto Rico.

HUD has contended that the large amount of money could disappear as a result of corruption, given the U.S. territory's past financial mismanagement and political unrest this summer with the ouster of its governor. They've conceded to lawmakers they're violating the law by unliterally blocking the flow of aid, but said they want to protect taxpayers. The department has also highlighted Puerto Rico's less-than-one percent use of the $1.5 billion in relief it currently has at its disposal.

Democrats, including Price, assert the corruption justification is moot because there are checkpoints and oversight measures in place to monitor how Puerto Rico would spend the money.

In a statement, the department did not address Newsweek's questions about a timeline for when it will allow Puerto Rico to begin applying for the funds. It did, however, ridicule Democrats for withholding some of the department's funding.

"House Democrats have tried everything they can to keep HUD from implementing policies that protect the American taxpayer," Brad Bishop, a HUD spokesman, told Newsweek. "They are withholding funds that would make the agency more efficient, effective, and accountable, because HUD refuses to release Puerto Rico's [Community Development Block Grant – Disaster Recovery] funds without any financial controls being put in place? The irony is not lost here."

The idea to target those specific funds for HUD was actually that of the Republican-led Senate, Price said, and the ability to include it into the budget was the culmination of "cooperation" among appropriations staffers in both chambers and parties.

In addition to the $10 billion being illegally delayed, HUD is also withholding an additional $8 billion because it refused to sign a grant agreement for an approved action plan for a separate tranche of unmet needs money. Price believed the island nation continues to be unfairly targeted by HUD, leaving them no other remedies.

"We already got a promise from [HUD Secretary Ben Carson]—that wasn't good enough. We already got a deadline in the bill—that wasn't good enough," Price said. "I don't like this. I don't think we should have to do this."