The Financial Oversight and Management Board for Puerto Rico (FOMB) has issued an “approved with observations” determination for two contracts between the Puerto Rico Housing Finance Authority (PRHFA) and the municipalities of San Juan and Bayamón, clearing the way for the acquisition and rehabilitation of more than 100 residential properties under the federal HOME‑ARP program.
Under the proposed agreements, San Juan will acquire and rehabilitate 52 scattered‑site residential units, while Bayamón will rehabilitate 55. Each municipality will receive $15 million in federal HOME‑ARP funds, a one‑time allocation created by the U.S. Department of Housing and Urban Development (HUD) under the American Rescue Plan Act to address housing needs stemming from the COVID‑19 pandemic.
In a recent letter to PRHFA Executive Director Ricardo Álvarez Barreto, FOMB General Counsel Jaime A. El Koury said the Board’s review found the agreements consistent with the certified Fiscal Plan, but emphasized that the approval does not constitute a legal or procurement review.
The contracts carry a 17‑year term, and PRHFA certified that all costs will be covered through HUD’s line of credit. Municipalities must submit certified construction payment requests, which PRHFA will review for compliance before drawing down federal funds. Disbursements will flow through PRHFA’s local HOME accounts before being transferred to the HOME‑ARP concentration account for payment.
The Board noted that PRHFA has sufficient budgeted federal funds for fiscal year 2026 to support the agreements but cautioned that its determination does not account for future encumbrances over the life of the contracts.
The Board issued one formal observation tied to federal environmental compliance. Both municipalities completed only a Tier 1 broad‑level environmental review, which HUD requires to be supplemented with Tier 2 site‑specific reviews as individual properties are selected.
The Board recommended that PRHFA closely monitor and update the environmental review record to ensure each property undergoes the required site‑specific assessment under 24 CFR Part 58. Maintaining complete documentation, it said, will be essential to demonstrating compliance with HUD program rules. PRHFA must notify the Board of any budgetary changes and request a re‑review if modifications occur.
