The Virgin Islands Housing Finance Authority said Tuesday it has already taken significant steps to correct many of the issues cited by the U.S. Department of Housing and Urban Development after the federal agency moved to immediately suspend the authority from participating in future procurement and non-procurement transactions pending an investigation.
In its first public response since HUD issued the suspension notice, VIHFA said it is reviewing the agency’s correspondence and intends to work collaboratively with federal officials to resolve any remaining concerns. The authority emphasized that many of the findings referenced by HUD stem from prior years and said they have already been the focus of extensive corrective actions designed to strengthen internal controls, improve operations and enhance compliance with federal requirements.
“VIHFA takes its responsibility as a steward of federal housing and community development funds very seriously,” Interim Executive Director and Chief Financial Officer Valdez Shelford said in a statement. “Over the past recent years, we have implemented substantial corrective measures, strengthened our compliance framework, and remained committed to continuous improvement.” Shelford said the authority welcomes the opportunity to provide HUD with additional documentation of those efforts and address any remaining concerns identified by the agency.
The response comes a day after HUD notified the authority that it was being suspended from future federal procurement and non-procurement transactions while the department investigates what it described as evidence of serious program violations involving federal disaster recovery grants. As reported Monday by the Source, the suspension does not automatically terminate existing grants but could jeopardize future funding and limit the authority’s ability to receive additional federal awards while the matter remains unresolved.
HUD’s suspension letter, however, paints a sharply different picture of the authority’s performance. The department said its investigation uncovered what it described as widespread financial mismanagement, inadequate fraud controls, false certifications and improper payments. It further alleged that, nearly nine years after the Virgin Islands received approximately $1.9 billion in disaster recovery funding following hurricanes Irma and Maria, less than one-third of those funds have been spent. The letter also cited delays in housing construction, questioned the authority’s spending priorities and referenced the federal conviction of a former VIHFA executive involved in a disaster recovery kickback scheme as part of the agency’s rationale for the suspension.
Shelford said VIHFA has maintained ongoing communication with HUD throughout the corrective action process and will continue cooperating by providing any additional information requested. The authority said it remains confident that the progress made in recent years will receive full consideration as HUD completes its review.
The suspension, however, is not a final determination. Under federal procedures, VIHFA has the opportunity to contest HUD’s findings and present additional information before the matter is resolved. HUD’s notice suspended the authority’s participation in future procurement and non-procurement transactions pending the outcome of the investigation, while existing grants continue to be governed by the terms of their current agreements.
The authority also stressed the broader implications of the federal action, noting that HUD funding supports housing, disaster recovery, community development and economic development programs throughout the territory. Officials said their priority is minimizing any disruption to residents, subrecipients, staff and ongoing projects while the review continues.
“We understand the concerns this news has generated within our community,” Shelford said. “Our priority remains serving the people of the Virgin Islands while ensuring that all programs are administered with integrity, accountability, and in accordance with federal requirements.”
