HUD Withholds $18 Billion In Disaster Aid From Puerto Rico, Lawmakers Threaten To Fight Back By Denying Agency Funds

The U.S. Department of Housing and Urban Development is withholding an additional $8 billion in unmet needs disaster relief from Puerto Rico—two times the amount the department is already illegally delaying—and Congress wants answers.

The holdup of the additional money, which lawmakers recently discovered, is further stalling the island nation's ability to recover from Hurricanes Maria and Irma in 2017 and to prepare for future natural disasters.

In total, HUD is delaying the release of two tranches of aid worth roughly $18 billion that Congress appropriated for the U.S. territory. The money is a mixture of mitigation and unmet needs funds designed to upgrade infrastructure and help residents better embrace the effects of Mother Nature, such as hardening electrical grids or rebuilding homes, businesses and bridges in a stronger manner. But HUD fears the funds could fall victim to corruption.

As a result, Democrats are contemplating whether Congress may need to explore more "drastic moves" to force HUD to release one portion of the money and to provide answers for the other. Lawmakers are considering suing the agency or—the more likely scenario—using the appropriations process to defund a portion of the federal agency.

The delays, which lawmakers chalk up to a political game, have one prominent local official furious.

"It puts the Puerto Rican people at the mercy of the next hurricane," San Juan Mayor Carmen Yulín Cruz told Newsweek in an interview. "It puts the Puerto Rican people at the mercy of inefficient, bureaucratic idiots that really are doing this out of spite. It's vengeful behavior simply because the federal government and the Trump administration could not get it done."

HUD has illegally withheld—which the department has acknowledged—roughly $10 billion in mitigation funds from Puerto Rico for 3 months, money that is meant to beef up its infrastructure in anticipation of future devastating storms.

The two aid portions are part of HUD's Community Development Block Grant – Disaster Recovery (CDBG-DR) Program. Department officials conceded to lawmakers in October they were singling out Puerto Rico and illegally withholding a batch of congressionally appropriated money from 2018—$8.3 billion for mitigation projects and roughly $2 billion for electrical grids—by not providing the territory with guidelines to apply for the grant money and submit an action plan. The HUD officials testifying said they ignored the mandated September 4 deadline lawmakers included in a June supplemental bill over fears the money would succumb to corruption and be misused by Puerto Rican officials. Once approved and a grant agreement is signed, Puerto Rico could begin receiving the money.

Thursday marked more than three months since HUD was supposed to begin the process of allowing Puerto Rico to apply for one of the withheld aid batches—about $10 billion—and 22 months since the funds were signed into law.

HUD withholding billions Puerto Rico disaster aid
Jose Javier Santana holds a Puerto Rican flag he found on the ground after Hurricane Maria passed through on October 6, 2017 in Utuado, Puerto Rico. Photo by Joe Raedle/Getty

Rep. David Price (D-NC) accused HUD of "singling out Puerto Rico once again" with the second tranche of delayed money, which was on the brink of being delivered to Puerto Rico until the department in recent weeks suddenly chose not to approve the island nation's grant agreement. An aide for Price, who chairs an appropriations subcommittee that oversees HUD, said they've been notified by HUD that it signed the grant agreements for each state receiving the same tranche of funds—minus the U.S. Virgin Islands and Puerto Rico.

Price said he's been offered no explanation by HUD as to why the grant agreements for the two U.S. territories were not signed, despite HUD giving their action plans the green light. The move has left him to wonder whether the White House may have played a role. The HUD officials who testified to Price in October said they would allow Puerto Rico to apply for the first tranche of illegally delayed aid "very soon" and claimed the decision to withhold it was based on HUD's overall concerns about corruption—not a directive from Secretary Ben Carson.

After the publication of this story, HUD provided the following statement, attributed to an unnamed department spokesman. The department noted that Puerto Rico has only spent a fraction of the funds they already have access to.

"The Administration has taken historic action to help the people of Puerto Rico recover from Hurricane Maria. Given the Puerto Rican government's history of financial mismanagement, corruption, and other abuses; we must ensure that any HUD assistance provided helps those on the island who need it the most. This process must be handled in a prudent manner with strong financial controls to mitigate the risk to Federal taxpayers. In addition, it is worth noting that Puerto Rico already has access to $1.5 billion and has so far only spent $5.8 million—less than one percent of those funds."

HUD illegally withholding Puerto Rico disaster aid
President Donald Trump (L), holds an African American History Month listening session attended by nominee to lead the Department of Housing and Urban Development (HUD) Ben Carson (R) and other officials in the Roosevelt Room of the White House on February 1, 2017 in Washington, D.C. Photo by Michael Reynolds - Pool/Getty

HUD did not address Newsweek's questions about who determined the two tranches of aid should be withheld or why Puerto Rico and the Virgin Islands' grant agreements were not signed. The White House did not respond for comment.

"They're asking for it, wouldn't you say?" Price told Newsweek in an interview on the prospects of defunding a portion of the agency. He chairs the appropriations subcommittee responsible for overseeing HUD.

"What the legal options might be, we need to consider. But what we do know, appropriations bills do offer leverage," Price said. "The best approach is not to have this problem. But if you do have it, you write a deadline into the bill. If that's ignored, then you start thinking about more drastic moves, like withholding funds for something HUD wants."

In October, the HUD officials would only go so far as to say Puerto Rico could begin applying for the funds "very soon."

"The other day, I had a mayor call me and ask, 'could we sue the federal government for their inefficiency, bureaucracy and ineffectiveness?'" Cruz claimed.

The corruption argument by HUD and Republicans is moot, Democrats like Price have said, because Congress placed safeguards that require the money to be monitored by HUD as it's dispersed. HUD's Office of Inspector General also pledged to conduct audits as additional oversight.

"I think all of us who are scratching our heads over this are wondering whether maybe all this traces back to some kind of order from the top or desire to please the president. We just don't know," Price said.

Throughout his tenure, Trump has made false claims about the U.S. territory, such as inflating the amount of hurricane relief aid and refusing to acknowledge the high death toll of Hurricane Maria. He's also feuded with Puerto Rican leaders, like Cruz and ousted Governor Ricardo Roselló.

And Price and his Democratic colleagues aren't the only ones who are casting doubts on HUD's motives.

HUD withholding billions Puerto Rico disaster aid
San Juan Mayor Carmen Yulin Cruz speaks to the media as she arrives at the temporary government center setup at the Roberto Clemente stadium in the aftermath of Hurricane Maria on September 30, 2017 in San Juan, Puerto Rico. Photo by Joe Raedle/Getty

"It's blatant racism," Cruz, San Juan's mayor, told Newsweek. "It's blatant discrimination."

She doesn't like the way HUD handles its disaster block grant program to begin with, much less when the department singles out Puerto Rico.

Cruz said she feels the entire system is designed to help big businesses and powerful people profit from the misfortunes of those whose communities were devastated by tragedy, rather than operate as a system that aims to weed out corruption. She said local governments are required to choose from a certain list of contractors or companies to complete the major projects that they outline in action plans for HUD, which are required in order to receive the federal grants.

"For anyone from the federal government to be talking about corruption with the most corrupt president of the United States sitting on a chair an inch away from being impeached," Cruz added, "it's really the pot calling the kettle black."

Prior arguments show that HUD contends that recent events are why, in part, they need to keep a close eye on such a large amount of money. The department maintains financial monitors on the island and has reiterated its concerns over Puerto Rico's recent political unrest with Roselló's ouster and a debt crisis that has for years handicapped the local government.

Cruz doesn't buy HUD's concerns, however, citing the safeguards that Congress put in place to have the aid routinely monitored for fraud or waste.

When aid is withheld from an island nation that's been devastated by hurricane after hurricane year after year, Cruz explained, those who don't live in Puerto Rico fail to realize the real-world effects that will have on local communities. And when HUD officials continue to offer few or no explanations, she feels it only hinders their preparation for the next Hurricane Maria.

"People die because of the federal government's and Trump's ineffectiveness," the mayor said. "People continue to die."

The graphic below, provided by Statista, shows that Puerto Rico is fourth worse affected globally in terms of fatalities caused by extreme weather.

Extreme weather events fatalities Statista
Deaths caused by extreme weather events. Statista

This article was updated to include an infographic. It was further updated to include a statement from HUD.

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