Feds suspend key aid for WAPA, U.S. Virgin Islands

Bloomberg News

The Department of Housing and Urban Development cut off one of the biggest sources of federal aid to the U.S. Virgin Islands Water and Power Authority and the islands' government. 

HUD announced Monday it was suspending Community Development Block Grant funding due to the authority's record of slow use of the funds, its chief operating officer being convicted of fraud and money laundering and its false certifications and failure to maintain proper financial management of CDBG funds. 

A total of $1.9 billion in CDBG funds were approved for the U.S. Virgin Islands in the aftermath of two major hurricanes in 2017, said HUD Deputy Secretary Andrew Hughes in a letter to the authority. "That's more than $20,000 per United States Virgin Islands resident. Nine years later, due to [the VI Housing Finance Authority]'s blatant mismanagement of these critical disaster funds, USVI citizens still do not have the housing and electrical power they were promised nearly a decade ago."

USVI Gov. Albert Bryan Jr. responded that neither he nor his office had received notification from HUD and he first learned about the suspension through a television news report. 

Many of the issues referenced in the letter were identified years earlier and were addressed, he said. Bryan said he is committed to accountability and transparency and looks forward to working with HUD on corrective efforts. 

"These resources support families, communities and projects that remain essential to the territory's continued recovery," Bryan said. 

"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," the VIHFA said in a statement.

Only 2% of the money allocated for electrical grid recovery had been spent through May 2026, HUD reported. Many of the other categories of spending were below 20%, and some below 10%. 

"The Trump administration is changing the game when it comes to who we entrust with taxpayer dollars," said HUD Secretary Scott Turner. "Organizations riddled with corruption, mismanagement, and crime will no longer be allowed to squander billions." 

WAPA, which has been in dire financial straits for years, didn't immediately respond to a request for a comment. 

While audited figures from the last few years have not been released, it is believed that WAPA and the central U.S. Virgin Islands government has more than $1.6 billion in bond debt outstanding. 

The islands' economy has been troubled for at least 20 years and its population declined 14.6% from 2014 to 2024, according to the U.S. Census. 

The islands' government has 30 days in which to appeal HUD's aid suspension.