Disaster aid to Virgin Islands housing agency suspended over spending failures
HUD says the territory has used less than a third of $1.9 billion in hurricane recovery funds nearly nine years after Irma and Maria.
By Daniel Okafor · Business Editor
3 min read
The U.S. Department of Housing and Urban Development has suspended disaster recovery funding for the U.S. Virgin Islands Housing Finance Authority, citing alleged financial misconduct and years of slow spending. The decision puts new pressure on a territory where residents are still dealing with damage from two Category 5 hurricanes in 2017.
Housing Secretary Scott Turner said Monday that the Virgin Islands received $1.9 billion in disaster recovery money after the storms but has spent only $570 million. HUD said in a July 20 letter to the authority that the delays have kept about $1.3 billion in congressionally approved aid from reaching Virgin Islanders.
According to HUD, an ongoing investigation found financial mismanagement, weak anti-fraud safeguards, false certifications and improper payments at the housing authority. The agency said the authority may challenge the suspension by requesting a hearing.
The housing authority’s director and spokesperson did not immediately respond to requests for comment, according to the Associated Press.
Hurricane Irma hit the U.S. Virgin Islands in September 2017 as a Category 5 storm. About two weeks later, Hurricane Maria, also a Category 5 storm, struck St. Croix, leaving the territory with extensive rebuilding needs.
HUD’s July 20 letter said the authority’s record showed severe problems in managing federal money. The department said the authority had finished two of 95 planned single-family rental rehabilitation projects and none of 329 planned single-family and multifamily housing projects.
The investigation also found that, as of May, the authority had spent 2% of its electrical grid recovery money, according to HUD. At the same time, the department said the authority had used more than half of the grant funds assigned for administrative costs.
HUD also accused the authority of seeking $6.2 million in disaster-related reimbursements that the Federal Emergency Management Agency had already paid. Turner, in a post on X, accused authority officials of choosing “kickbacks” instead of helping families recover.
The department pointed to the federal conviction of the authority’s former chief operating officer, who oversaw disaster recovery programs and is now in prison on charges that included fraud and money laundering. Turner said on X that the former official raised the price of a lumber contract for rebuilding hurricane-damaged homes from $3 million to $4.5 million and received a $107,000 kickback, while the lumber was left outside and became unusable.
The suspension follows turmoil at the authority earlier this year. In February, its executive director resigned while local lawmakers were questioning why about $4.2 million had not been used ahead of a September deadline, according to the Associated Press.
At that hearing, Sen. Kurt Vialet criticized the former director and said lawmakers were frustrated by the lack of building, according to the St. Thomas Source.
This story draws on original reporting from Fortune.