It was raining almost non-stop for 11 days over Puerto Rico’s southern and southwestern towns. A surge of water flooded near 50 residences in the Parcelas Pole Ojea in Llanos Costa neighborhood, in Cabo Rojo. This was in 2008. But the flood mitigation project for which the U.S. Department of Housing allocated $3,093,000 through the CDBG-DR funds, has not yet been completed in 2019.

Elba Ledesma, a dressmaker whose house is next to the baseball park, still keeps the pictures that show that the water reached her waist and covered her car up to the windows. Community leader Marisol Guardarrama remembers that there were people who had to be rescued in boats. Cows, goats and horses drowned, and the stench due to water accumulation covered the community for more than a week.

There were families who left their homes and never returned. None of the remaining residents would like to go through that nightmare again.

Cabo Rojo was one of 25 municipalities that were declared a disaster zone by then President George W. Bush. Nearly 630 people in Puerto Rico had to take refuge as a result of the floods caused by the bad weather, anticipating what later became Hurricane Kyle.

Like Cabo Rojo, there are nine other municipalities that, 11 years after the disaster, still have unfinished projects, including bridges, housing purchases and debris demolition, waiting for the Puerto Rico Housing Department to negotiate contracts and disburse the remaining amount of the subsidy.

According to the monthly reports published by the U.S. Department of Housing and Urban Development (HUD) Puerto Rico received a grant of $29,982,887 to address the 2008 disaster. As of May 2019, it still maintained a balance of $7,149,226 of these funds, or 24%. For this reason, the government of Puerto Rico has been classified by the federal authorities as slow spender.

“We’re concerned that this important outstanding balance still remains. In fact, we have classified the territory as a slow spender of this grant,” said one of HUD’s spokespeople, Brian Sullivan, in writing.

“Being listed as an entity that spends money slowly generates a substantially greater technical assistance process from HUD,” HUD Public Affairs Specialist Gloria Shanahan explained in a separate statement.

Since 2018, the Housing Department has been the recipient agency of the CDBG and CDBG-DR funds. But, when funds were originally allocated for these floods in early 2009, they were handled by the Office of the Commissioner of Municipal Affairs (OCAM, for its initials in Spanish,) until 2017, and then by the Office for Socioeconomic and Community Development (Odsec, for its initials in Spanish) from 2017 to 2018.

Memo from HUD Inspector General reveals problems in the handling of funds

A memorandum issued by HUD’s Office of the Inspector General on Nov. 17, 2017 warned of Odsec’s lack of capacity to manage CDBG disaster recovery funds. A month earlier, the Puerto Rican government had proposed that Odsec manage the new funds that would be allocated to the island for the recovery after Hurricanes Irma and María.

Among the reasons for the slowness in the use of the funds allocated in 2008, the document mentions the change of personnel at the responsible agencies after each electoral cycle, which requires new training and technical assistance.

It also points to the time it takes to obtain construction and building permits and environmental reviews.

The Housing Secretary Fernando Gil admitted that OCAM did not have the capacity to handle the subsidy quickly.

“Many times, (the slowness in spending money) has to do with the capacity of the agency itself; if they are very small agencies handling several things at the same time. That came from OCAM, which later became Odsec, and now to us,” he said.

Gil also accepted that the transition of tasks to his agency, through Law 162 of 2018, has taken time and is not yet complete. This, despite the fact that the legislation was signed in July 2018 and Housing should have been ready to handle a new subsidy that is estimated will reach $19.0 billion. The amount of money that Puerto Rico expects from CDBG-DR related to Hurricane María is more than 600 times in comparison to what was received for the disaster caused by the rains of 2008.

“The transition, as such, was impeded for several reasons, and there are still things and accounts that could not be closed, but the vast majority is on track,” he said.

The agency indicated that the accounts were shifted from Odsec to the Department of Housing in December 2018. The Department of Housing alleged that in January 2019, they published an amendment to reassign funds and add new projects, but that it is waiting from the Lajas municipal government to submit its documentation to be able to send this to HUD.

“The process to upload all documentation to the system started and we expect to complete it this week,” the agency said in a written statement.

HUD’s concerns about the fiscal irregularities in Odsec led to the imposition of strict conditions and financial controls over the use of the new CDBG-DR funds that began to arrive on the island as part of the recovery process related to hurricanes Irma and María.

As the agency stated when approving the amended Action Plan for the disbursement of $8.200 billion, “this greater control will include a better monitoring of expenses and other measures designed to guarantee the legal and prudent use of funds by Puerto Rico.” HUD did not want to specify the measures and conditions being evaluated before granting these subsidies.

Municipalities explain their reasons

The flip-flopping of entities handling the funds has been one of the factors mentioned by the mayors for the delay in the disbursement of money, which has set back the work. Added to that is the time taken by the different federal agencies and the government of Puerto Rico — including the U.S. Corps of Engineers, the U.S. Fish and Wildlife Service, the Department of Natural and Environmental Resources, the Environmental Quality Board and the Highways Authority — in granting the corresponding environmental and construction permits to move the process forward.

The municipalities that have unfinished projects are Adjuntas, Arroyo, Cabo Rojo, Lajas, Maunabo, Naguabo, Patillas, Utuado, Villalba and Yauco.

“As of today, we have a big problem and it’s that the government of Puerto Rico (the Housing Department) has not been able to complete the final phase of the CDBG-DR contracts and that means that we have not received the project reimbursements, and that we have not been able to allocate what we have left to spend,” said Villalba Mayor Luis Javier Hernández-Ortiz.

The Mayor explained that the recipient of the HUD funds, in this case the Housing Department, establishes contracts with the municipalities to hand over the money they need to carry out the works. “Before this was done by OCAM. Under this administration, it went to Odsec for a year, and then to the Housing Department. That’s where it came to a halt. Because Housing did not have the structure, it was not possible to renew many contracts that were due and that created a dislocation.”

The dislocation that Hernández referred to took place in the time that elapsed between the transfer of responsibilities from Odsec to Housing, from July 2018 until the end of May 2019, when the agency’s staff began to meet with the mayors to resume the signing of the contracts. Without signed contracts, the municipality cannot conduct bidding processes and pay contractors for the projects.

In Villalba, the project consists of the acquisition of three houses for the relocation of families affected by the floods of 2008. The Municipality has already purchased the structures and transferred them to the families. The refund has yet to arrive.

“The Municipality of Villalba has had to ‘lend’ Housing $300,000 to prevent the project from coming to a halt, with a commitment that once they renew the contracts and resolve the internal situation they have, they will reimburse me for those expenses,” said Hernández-Ortiz.

The Municipality of Lajas, meanwhile, has pending the replacement of four bridges in the Lajas Arriba neighborhood as a flood mitigation measure. As explained by Mayor Marcos   Irizarry, the bridges are old and have a cylinder in the middle that clogs up with runoff, causing the water to overflow and flood the community. That’s what happened in 2008.

“The project has not been completed for several reasons. The design has been changed several times due to environmental impact issues and then came María, but we are ready to do the bids. I think there is very little left to be done, but everything is delayed in that agency (Housing,)” said Irizarry.

“All of our expectations depend on the federal and local governments. Since I am not part of this (political) administration, usually, this type of project does not get immediate attention,” he said.

Nine of the 10 municipalities that have not yet completed their projects are currently run by Popular Democratic Party (PDP) administrations.

Housing denied any political discrimination.

“With regards to the handling of this grant by the Department of Housing, the amendment presented at the beginning of the year was approved by HUD, fulfilling the period of citizen participation; the municipalities, for the most part, presented the schedule of projects and their proposals adjusted to the new amendment and we are close to signing all contracts,” the agency said in writing.

In Naguabo, the process for the acquisition of two houses for families that suffered from flooding in 2008 has yet to be completed. The project includes the demolition of the structures where those people still reside.

“It was a seven family project. The acquisition and purchase process took so long that many families changed their minds and others moved to the United States. Only two families remain, for which we have not completed the project,” said the mayor of Naguabo, Noé Marcano-Rivera.

He explained that when they were going to buy the houses, the contractor raised the price and they had to start the acquisition process over again.

Meanwhile, Patillas Mayor Norberto Soto, pointed to a stalemate in the signing of contracts between Housing and the Municipality due to the changes of the agencies overseeing the CDBG-DR funds, and the delay in the disbursement of the funds, as the reasons why eight houses that were flooded when the rains of 2008, have not yet been demolished.

“With the changes from office to office, the government has affected the municipalities,” Soto said.

“I signed the contracts more than two months ago, but those funds have not yet been disbursed and we have not been able to finish the demolition of those houses,” he said.

Due to the interruption of the disbursements in Cabo Rojo, in July 2018, Mayor Ramírez Kurtz filed a lawsuit arguing political discrimination by the executive director of Odsec, Jesús Vélez-Vargas. He alleged that Vélez-Vargas, politically motivated, refused to order the disbursement of close to $2 million of the CDBG-DR funds for the flood mitigation project in Pole Ojea. The lawsuit was settled out of court when Housing took over the administration of the funds.

Although some of the contracts between Housing and the Municipality were recently signed, the mayor indicated that he is still waiting for a signature to open the project to bids. “The project should be completed a year after the contract is signed,” he said.

Meanwhile, the community leader of the Parcelas Pole Ojea, says she gets anxious every year when the rainy season approaches. Although such a rainy event has never happened again — not even with Hurricane María — Guardarama fears that it could happen any time.

“The young people from around here left after María. The majority of the community is elderly, and many are bedridden. Every time they say there is an atmospheric event, it stresses me out,” she said.