Dive Brief:
- HUD is suspending funding to the Virgin Islands Housing Finance Authority, claiming that the agency misused disaster relief funds that were supposed to be used to rebuild housing and other infrastructure damaged by two major hurricanes in 2017, according to a 13-page letter that HUD released Monday.
- VIHFA “violated its obligations to distribute and manage taxpayer funds lawfully,” and lacks proper fraud controls, per the letter. HUD said it “will not accept this record of empty promises and abject failures” and is suspending funding pending the outcome of the Office of the Inspector General’s investigation into the U.S. territory’s agency and its officers, directors and employees.
- In a Tuesday news release shared with Multifamily Dive, VIHFA said that it has been working to address the issues raised by HUD and is committed to continue working with the agency to address any outstanding concerns.
Dive Insight:
HUD allocated $1.9 billion to VIHFA to help rebuild following Hurricanes Irma and Maria, but nine years later, most residents still do not have the housing and electricity they were promised, according to the agency’s release.
Over the past nine years, VIHFA was slated to bring 1,643 multifamily facilities online via rehabilitation and new construction as part of its direct recovery efforts using some of the disaster relief funds. However, only 319, or 19%, have been completed in that time, and none of the single-family and multifamily housing that was supposed to be built as part of its mitigation effort has been built, according to HUD’s release.
The Virgin Islands’ disaster recovery office created the Envision Tomorrow program to provide permanent housing repair and reconstruction for homeowners impacted by the hurricanes. However, contractors said that millions of dollars worth of unpaid invoices are stopping construction and leaving residents waiting, The Virgin Islands Consortium reported in January.
In addition, former VIHFA Chief Operating Officer Darin Richardson, who oversaw much of the agency’s disaster recovery work, is in federal prison for fraud, money laundering and criminal conflicts of interest, according to HUD’s release. He solicited a bribe from a contractor managing lumber, inflated the value of the contract and then allowed that lumber to rot, rendering it unusable.
In March, Richardson was sentenced to 36 months in prison for using his position “to engage in a series of fraudulent and self-dealing transactions for his personal financial gain,” according to a press release from the Justice Department.
VIHFA said in its release that it recognizes the importance of accountability, transparency and responsible stewardship of federal resources, and it will provide any information HUD requests.
“While the correspondence references findings from prior years, many of the issues identified have already been the focus of significant corrective actions taken by the Authority in recent years to strengthen internal controls, improve operational procedures, and enhance compliance with federal requirements,” according to the release.
Interim Executive Director and Chief Financial Officer Valdez Shelford said VIHFA takes its responsibility as a steward of federal housing and community development funds very seriously.
"Over the past recent years, we have implemented substantial corrective measures, strengthened our compliance framework, and remained committed to continuous improvement,” Shelford said in the release. “We welcome the opportunity to provide HUD with additional documentation of the progress that has been made and to address any remaining concerns."
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