Municipality of Aguadilla, Aguadilla, Puerto Rico

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-12-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                            U.S. Department of Housing and Urban Development
                                                            District Office of the Inspector General
                                                            Office of Audit, Box 42
                                                            Richard B. Russell Federal Building
                                                            75 Spring Street, SW, Room 330
                                                            Atlanta, GA 30303-3388
                                                            (404) 331-3369

                                                              Audit Related Memorandum
December 12, 2000                                             01-AT-241-1801

MEMORANDUM FOR:                 Carmen Cabrera, Director, Community Planning and Development
                                    Division, 4ND

FROM:          Nancy H. Cooper
               District Inspector General for Audit-Southeast/Caribbean, 4AGA

SUBJECT:       Municipality of Aguadilla
               Aguadilla, Puerto Rico

We completed a review of a complaint about the Municipality of Aguadilla’s use of Community
Development Block Grant (CDBG) funds. The funds were allocated for the “Paseo de la Real
Marina,” also known as the Waterfront project. The complaint alleged that, as part of the project,
the Municipality demolished a historic building known as the “House of Redeemer Fathers”
(Casa Parroquial) despite the community’s opposition to the demolition. The complaint also
alleged that the Mayaguez Regional Office of the Institute of Puerto Rican Culture had officially
begun the process to include the building in the National Register of Historic Places.


The Waterfront project is an effort to revitalize the urban center and bay area of the Municipality
of Aguadilla by eliminating a row of structures in the downtown area and creating a pedestrian
walkway along the oceanfront. In addition, plans are to construct a private marina and widen the
existing two-lane road. Private investors will build the marina while the Puerto Rican Highway
Authority will finance the expansion of the road.

The multi-year project was funded with $3,848,989 of CDBG funds from 1993 to 1997.
According to the Municipality, it had disbursed $2,777,271 of CDBG funds on the Waterfront
project as of March 9, 2000. Each year, the Municipality certified that it complied with
environmental and preservation policies and procedures.

     Visit the Office of Inspector General on the World Wide Web at http://www.hud.gov/oig/oigindex.html


Title 24 Code of Federal Regulations (CFR), Part 58.5 requires CDBG recipients to comply with
the National Historic Preservation Act (NHPA) of 1966, as amended, particularly Sections 106
and 110. The Municipality assumed these responsibilities when it executed HUD’s Request for
Release of Funds and Certification form 7015.5.

Section 106 of the NHPA requires recipients to take into account the effect of an undertaking on
any district, site, building, structure, or object that is included or eligible for inclusion in the
National Register of Historic Places. Recipients shall afford the Advisory Council on Historic
Preservation a reasonable opportunity to comment with regard to such undertaking. Section 110
(2) requires recipients to establish a preservation program for the identification, evaluation, and
nomination to the National Register of Historic Places to ensure the protection of historic
properties under their jurisdictions. It also states that such properties that are listed or that may
be eligible for the National Register are managed and maintained in a way that considers the
preservation of their historic, archaeological, architectural, and cultural values and to give special
consideration to the preservation of such values. Section 110 (k) states that each Federal agency
shall ensure that the agency will not grant a loan, loan guarantee, permit, license, or other
assistance to an applicant who, with the intent to avoid the requirements of Section 106, has
intentionally affected a historic property to which the grant would relate. An exception would be
made if the agency, after consultation with the Council, determines that circumstances justify
granting such assistance despite the adverse effect created or permitted by the applicant.

Title 24 CFR, Part 58.72 (c) states that when HUD has approved a Request for Release of Funds
but subsequently learns that a recipient failed to comply with a clearly applicable environmental
authority, HUD shall impose appropriate remedies and sanctions applicable to the particular
program (CDBG). Part 570.913 provides remedies for noncompliance with the CDBG Program
including termination or reduction of payments to the recipient.

                                    OBJECTIVE AND SCOPE

Our objective was to determine if the Municipality complied with its environmental
responsibilities with respect to the demolition of the Casa Parroquial. To accomplish this, we
interviewed the Municipality’s staff, HUD personnel, officials from the State Historic
Preservation Office (SHPO), and the Advisory Council on Historic Preservation. We also
reviewed the Municipality and HUD files pertaining to the demolition of the building.


The Municipality did not comply with the procedures required in Section 106 of the NHPA. It
did not provide adequate evidence to demonstrate that it: (1) identified the historic properties
affected by the Waterfront project; (2) assessed the effect the Waterfront project would have on
historic properties; and (3) properly consulted the SHPO. As a result, on August 24, 1998, the
Municipality started the demolition of the Casa Parroquial, a property designated eligible for the
National Register, in violation of HUD’s CDBG regulations.


On March 23, 1998, the SHPO wrote the Municipality of Aguadilla that it had knowledge of the
Municipality’s plans to expropriate and demolish properties for the Waterfront project that might
be eligible for inclusion in the National Register of Historic Places. The letter specifically
mentioned the Casa Parroquial and the Masonic Lodge. The term “eligible” for inclusion in the
National Register means both properties formally determined as such by the Secretary of the
Interior, and all other properties that meet the National Register criteria. Upon inquiry, Mrs.
Lilliane Lopez, Director of the Puerto Rico SHPO, confirmed to us that the Casa Parroquial met
the criteria for inclusion in the National Register. It was a structure over 50 years old, and was a
house of worship where historic records and artifacts were kept, (i.e., baptismal records), and had
particular architectural characteristics.

In an April 2, 1998, response to the SHPO, the Municipality said it intended to comply with
applicable Federal requirements which included consulting with the SHPO on the Waterfront
project. The Institute of Puerto Rican Culture notified the Municipality on April 29, 1998, that,
although the Casa Parroquial was not officially included in the National Register of Historic
Places, it was a resource of architectural and/or historical value.

On April 14, 1998, the Municipality met with the SHPO. The Municipality was represented by
H. Calero Consulting Group Inc. (consultant) and an architect. Both the architect and the
consultant notified the Mayor by letter on April 23 and May 1, 1998, respectively, that the SHPO
recommended the Municipality assess each of the properties to be demolished for its historic
value. The consultant’s letter specifically mentioned the Casa Parroquial as an example of the
properties involved.

On June 5, 1998, the consultant submitted the Municipality’s master plan for the Waterfront
project to the SHPO. The SHPO informed the Municipality on August 24, 1998, that the plan
was preliminary, did not show all construction and demolition planned, and did not assess each
property to be demolished for its historic value.

Meanwhile, on August 14, 1998, another opposing entity, the Jose de Diego Cultural Center in
Aguadilla applied for a court order to prevent the demolition of the Casa Parroquial by the
Municipality. The Municipality objected to the petition for the court order. At an August 24,
1998, preliminary hearing, the district judge dismissed the application for the court order from
the Cultural Center. On the same day, the Municipality started the demolition of the Casa

The SHPO became aware of the demolition and on September 10, 1998, reminded the Mayor that
he had been previously informed that the Casa Parroquial might be eligible for the National
Register of Historic Places. The SHPO stated that it appeared the Municipality used CDBG
funds for the demolition in violation of Section 106. The SHPO copied the National Advisory
Council and HUD on its letter, and declined further involvement. SHPO instructed the Mayor to
consult with the National Advisory Council on any future matters relating to the Waterfront


The case was appealed and on May 28, 1999, the appellate court’s judgment stated that the first
court should have allowed the injunction to protect the structure. The appellate judge concluded
that the Municipality infringed upon the Cultural Center’s right of due process when it
prematurely acted on the judge’s decision by demolishing the building.

The Municipality’s demolition of the Casa Parroquial was done with full knowledge of the
objections of State officials, Municipality officials, and private citizens. To illustrate, HUD
received several complaints about the Casa Parroquial, the historic jail, and other buildings of
historic value being slated for demolition. The complaints came from the former Mayor,
members of the Municipal Assembly, the President of the Independent Party-Aguadilla
Committee, and community members. HUD referred these complaints to the Mayor of the

We conclude that the Municipality failed to comply with Section 106 of the National Historic
Preservation Act with regard to the Casa Parroquial by demolishing it before it could be
considered for historic significance and preservation. At a minimum, the Municipality should
have: (1) assessed each of the properties in the project site as was recommended by the SHPO
using the National Register criteria; (2) assessed the effect that the Waterfront project would
have on the identified historic properties; and (3) afforded the SHPO or the Advisory Council an
opportunity to comment. Because the Act clearly prohibits giving any federal funds or grants to
a municipal entity in violation of this statute, HUD should reclaim funds provided for the
Waterfront project.

Excerpts from the Municipality’s comments to our draft report follow. Appendix A contains the
complete text of the comments.

                                   AUDITEE COMMENTS

•   “… a small group of 10-12 individuals hardly seems to be a true representation of
    ‘community opposition.’ A more accurate representation of the community are the hundreds
    of citizens who supportively participated in over 15 workshops and meeting that were held….

•   “…the Municipality has complied with the citizen participation requirements established in
    24 CFR….Not once did the alleged complainers use any of these mechanisms to express their

•   “We believe that the complaints are politically motivated and are not a representation of an
    honest concern over the preservation of historic properties….

•   “…The subject property was not catalogued as a historic building at the time of


•   “The Municipality of Aguadilla did take into account the effect the subject undertaking
    would have on sites that are included in the Registry by obtaining a certified copy of the list
    of properties that were included at the time and by researching a catalogue published by the
    SHPO in which the agency lists buildings and sites that are under evaluation for the period
    between 1995-2000. None of the subject properties were listed.            …architectural and
    historian experience was one of the advertised selection criteria required from the group of
    consultants that would develop the Master Plan.

•   “We firmly believe that we have afforded both SHPO and the Advisory Council on Historic
    Preservation a reasonable opportunity to comment with regard to the subject undertaking, but
    …we have been denied a consultation….

•   “The Master Plan for the … project was submitted to the SHPO as requested on May 5, 1998.
    … SHPO did not officially request an architectural inventory of the properties within the
    project site until a letter dated August 24, 1998, more than three months after the Master Plan
    had been submitted for their review. [This was] the same date of the court hearing when the
    injunction was dismissed and the property was subsequently demolished. We had no idea of
    the content on this letter until almost a week after the property was demolished.”


Documentation gathered during our review suggested the SHPO did not deny the Municipality a
consultation process. SHPO withdrew from the consultation process only after demolition of the
structure. The Municipality had begun the consultation process; they should not have
demolished the structure before culminating this process.

The auditee’s comments regarding submission of the master plan to SHPO on May 5, 1998, is
incorrect. According to the record, the master plan was submitted one month later on June 5,
1998. The Municipality’s statement that SHPO did not officially request an architectural
inventory of the properties until the August 24, 1998, letter is also untrue. Consultant letters as
early as April 23, 1998, from architect Emilio Martinez, informed the Municipality of SHPO
recommendation for an inventory of affected properties. A letter dated May 1, 1998, from
Calero Consulting Group, Inc. also conveys SHPO’s recommendation mentioning specifically
the Casa Parroquial. The Municipality neither followed SHPO’s recommendation nor sought
alternative procedures in consultation with SHPO. The Casa Parroquial was demolished before
preparing the inventory recommended by SHPO.


We recommend that you:

               A. Consult with the SHPO and the Advisory Council on Historic Preservation to
                  determine whether they believe Federal assistance should be granted despite
                  the adverse effect created by the applicant.

               B. Determine if the Municipality complied with the environmental requirements
                  pertaining to other structures located in the waterfront project site.

Unless otherwise justified based on discussions with the Council, we recommend you:

              C. Require the Municipality to reimburse, from non-Federal funds, the
                 $2,777,271 charged to the Waterfront project as of March 9, 2000, plus any
                 additional costs incurred to date.

              D. Require the Municipality to reprogram the remaining project funds of
                 $1,071,718 ($3,848,989 -$2,777,271) into an eligible CDBG Program activity.

              E. Monitor the Municipality’s future compliance with the environmental
                 requirements for projects funded by HUD. In case of non-compliance, initiate
                 sanctions, corrective actions or other remedies specified in program
                 regulations, agreements or contracts with HUD.

A     Auditee Comments
B     Distribution


    Attachment A
      Page 1 of 7


    Attachment A
      Page 2 of 7


    Attachment A
      Page 3 of 7


     Attachment A
       Page 4 of 7


     Attachment A
       Page 5 of 7


     Attachment A
       Page 6 of 7


     Attachment A
       Page 7 of 7


                                                                                 Attachment B
                                                                                   Page 1 of 2


The Honorable Carlos Mendez, Mayor, Municipality of Aguadilla
Director, Office of Community Development, Municipality of Aguadilla
Secretary, S
Deputy Secretary, SD (Room 10100)
Chief of Staff, S (Room 10000)
Assistant Secretary for Administration, S (Room 10110)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room 10120)
Deputy Assistant Secretary, Office of Public Affairs, S, (Room 10132)
Deputy Assistant Secretary for Administrative Services, Office of the Executive Secretariat, AX
    (Room 10139)
Deputy Assistant Secretary for Intergovernmental Relations,
Acting Deputy Chief of Staff, S (Room 10226)
Deputy Chief of Staff for Policy, S (Room 10226)
Deputy Chief of Staff for Programs, S (Room 10226)
Special Counsel to the Secretary, S (Room 10234)
Senior Advisor to the Secretary, S
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S (Room 10220)
General Counsel, C (Room 10214)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Office of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E (Room 5100)
Director, Office of Departmental Equal Employment Opportunity, U
Chief Procurement Officer, N (Room 5184)
Assistant Secretary for Public and Indian Housing, P (Room 4100)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Office of the Chief Financial Officer, F (Room 2202)
Chief Information Officer, Q (Room 3152)
Acting Director, HUD Enforcement Center, X, 1250 Maryland Avenue, SW, Suite 200
Acting Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y, 1280 Maryland Avenue, SW, Suite
Inspector General, G (Room 8256)


                                                                              Attachment B
                                                                                Page 2 of 2

Secretary's Representative, 4AS
Area Coordinator, Puerto Rico Area Office, 4NS
Director, Office of Community Planning and Development, 4ND
Audit Liaison Officer, 3AFI
Audit Liaison Officer, Office of CPD c and Indian Housing, PF (Room P8202)
Departmental Audit Liaison Officer, FM (Room 2206)
Acquisitions Librarian, Library, AS (Room 8141)
Counsel to the IG, GC (Room 8260)
HUD OIG Webmanager-Electronic Format Via Notes Mail (Cliff Jones@hud.gov)
Public Affairs Officer, G (Room 8256)
Associate Director, Resources, Community, and Economic Development Division, U.S. GAO,
  441 G Street N.W., Room 2T23, Washington DC 20548 ATTN: Stanley Czerwinski
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Dan Burton, Chairman, Committee on Government Reform,
  United States House of Representatives, Washington DC 20515-6143
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform,
  United States House of Representatives, Washington, DC 20515-4305
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212,
  O'Neil House Office Building, Washington, DC 20515-6143
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street, NW,
  Room 9226, New Executive Office Bldg., Washington, DC 20503
Sharon Pinkerton, Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug
  Policy and Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515
Director, Office of Federal Housing Enterprise Oversight, O, 1700 G Street, NW, Room 4011,
  Washington, DC 20552