Washington - The Donald Trump administration officially imposed yesterday new requirements that will complicate access to billions of dollars in funds to pay off Puerto Rico's reconstruction debt.
In publishing the Federal Register notice on the use of $8,285 million in Community Development Block Grant for Disaster Recovery Program (CDBG-DR) funds for mitigation projects, U.S. Housing Department (HUD) Secretary Ben Carson announced steps to direct the disbursement of another $8,221 million authorized 11 months ago.
But at the same time, the Trump administration reaffirmed its distrust of the island's government and, when setting the guidelines for the use of mitigation funds, Carson described it as a "high risk" grant recipient.
"The administration has outlined reforms for the grant agreement to Puerto Rico in order to protect resources. President Trump is committed to helping the people of Puerto Rico while also ensuring that taxpayer dollars are not wasted," said Chase Jennings, spokesman for the White House Office of Management and Budget (OMB).
Carson, meanwhile, in announcing the appointment of attorney Robert Couch as Federal Financial Monitor to oversee the CDBG-DR funds released for Puerto Rico and the U.S. Virgin Islands, said that "now that proper financial controls are in place, implementing the second phase of Puerto Rico's disaster recovery program can move forward with an extension to its line of credit."
According to Resident Commissioner in Washington, Jenniffer González, the disbursement of the $8.221 billion will be divided into several parts, starting with a package of about $1 billion.
At a time when Puerto Rico is facing a new emergency triggered by the earthquakes, mainly in the southern area of the island, and Congress intensifies pressure on the White House, HUD has only made available $1,507 billion of the nearly $20.5 billion approved for the island after Hurricane María. The Housing Department warns, however, that the Puerto Rican government had only used $10.8 million of those funds as of last December.
Given the imminent publication of the Federal Register Notice on the use of the $8.285 billion -HUD had a legal deadline to publish the notice in September- the Puerto Rican government will need the Oversight Board's certification that CDBG-DR projects comply with the island's fiscal plans and budget.
They also require the Puerto Rican government to comply with the goals to have a database on the registration of lots and properties and to guarantee that the information provided byindividuals is true, to prevent fraud, abuse, and loss of money. Many families had problems claiming federal assistance due to a lack of property titles.
The Trump administration's demands for theuse of the $8.285 billion in mitigation projects include dropping the executive order - signed by former Governor Ricardo Rosselló Nevares – mandating to pay those working on disaster relief $15 an hour.
Until they publish the guidelines on the other $1,932 billion in mitigation funds approved by Congress to improve the power grid, the Federal Register Notice does not allow the Puerto Rican government to use the $8,285 billion package for those purposes. And this includes the use of another $304 million authorized by Congress to Puerto Rico to match the costs of works related to CDBG-DR funds.
However, since HUD does not seem to trust the Puerto Rican Housing Department to handle the funds, major complications in accessing the $8.285 billion in relief funds may come through administrative processes.
On one hand, it requires the Puerto Rican government to have a technical assistance agreement with HUD, to submit documentation for each disbursement of funds, to compile information about its audits, to identify the resources to maintain and operate the proposed projects and the responsible entities.
The local government must also certify that it has hired or is in the process of hiring the necessary personnel to effectively implement the projects financed with CBDG-DR mitigation funds.
Once HUD requires the Puerto Rican Department of Housing to hire a person for a specific position, a part of CDBG-DR funds for mitigation projects will be restricted until they prove that the position has been filled.
The Puerto Rico Department of Housing must also submit -within 90 days- the monitoring plan to oversee those entities that were entrusted with the projects.
The steps taken by OMB and HUD to release CDBG-DR funds were announced to Commissioner González in advance. But, HUD did not warn island authorities about the new restrictions.
Wanda Vázquez Garced indicated that they will evaluate the notice on the use of the $8.285 billion.
"When we receive those funds, we are going to do things right,” said Governor Vázquez Garced.
Nydia Velázquez (New York) indicated that the House majority will fight the efforts of the Trump administration to put new obstacles in the access of these funds and that she is considering a lawsuit.
However, the same congressional bill that allocated these CDBG-DR funds in February 2018 prevents the disbursement of the $8.285 billion for mitigation projects until FEMA and the government of Puerto Rico reach a final agreement on the cost estimate for the permanent reconstruction work to be financed by FEMA under Section 428 of the Stafford Act.
That agreement should have been ready by October 11. But, they haven´t set a new deadline yet.
While these restrictions on the use of CDBG-DR funds were being imposed - in a decision that spills over into the debate over Puerto Rico - the Government Accountability Office (GAO) determined that the White House violated the law by stopping military assistance to Ukraine, which is at the heart of the impeachment process against President Donald Trump.
"Faithful execution of the law does not permit the president to substitute his own policy priorities for those that Congress has enacted into law," GAO said.
GAO initiated a preliminary investigation, according to attorney Juan Carlos Albors, PPD candidate for Washington Resident Commissioner, to determine if there has been a "confiscation" of funds for the island.
For Sergio Marxuach, public policy director of the Center for a New Economy (CNE), GAO's report on Ukraine mainly points out that the new restrictions that HUD wants to impose on Puerto Rico may represent a violation of the law.
"They are making the same mistakes that Congress is pointing out (to Trump) in the impeachment process. They are replacing the public policy vision of Congress," Marxuach said.