22 Municipalities Doubling Construction Fees on Federal Projects: Fiscal Board Demands They Stop
The Fiscal Oversight Board (FOMB) sent letters to 22 municipalities in Puerto Rico demanding they stop the practice of charging inflated construction permit fees on federally funded projects. According to the FOMB, these municipalities are charging between 100% and 200% more than standard fees when they detect that funding comes from federal sources like FEMA or CDBG-DR funds 1.
The most emblematic case is Guayanilla, where the company Siemens reported that the municipality charged it $23.4 million in permits for a FEMA-funded energy infrastructure project — a figure representing more than triple the amount corresponding to published fee schedules 12.
Context: a systemic pattern
The practice of inflating municipal fees on federal projects is not new, but the magnitude revealed by the FOMB has surprised even the most critical observers of local government. The 22 identified municipalities include both small towns and mid-size cities, and the practice crosses party lines 1.
The mechanism is simple: when a contractor or federal agency requests a building permit and the municipality identifies the project as federally funded, it applies a special fee significantly higher than what it would charge for an equivalent private project. In some cases, municipalities argue that federal projects require more inspections or oversight, but the FOMB has determined that these arguments do not justify the documented overcharges 1.
El Vocero reported that the FOMB considers this practice a violation of both the Autonomous Municipalities Law and federal regulations on the use of reconstruction funds. The Board has given the municipalities a 30-day deadline to submit correction plans and reimburse the overcharges 1.
Metro Puerto Rico expanded on the report, noting that the Siemens case in Guayanilla has triggered a parallel federal investigation, as the funds involved come from FEMA allocations for post-Hurricane Maria reconstruction 2. If the overcharge is confirmed, the municipality could face fund clawbacks and additional sanctions.
What this means for you
This practice has a direct effect on the speed and cost of Puerto Rico's reconstruction. Every dollar a municipality overcharges in permits is a dollar less available for the actual work. For an island still awaiting thousands of post-Maria and post-Fiona reconstruction projects, municipal overcharges represent a bureaucratic obstacle that delays recovery.
If you live in one of the 22 identified municipalities, ask your mayor why inflated fees are being charged and what their plan is to correct it. Federal funds are finite, and every delay or overcharge reduces what reaches your community.
How to take action / Checklist
- Check whether your municipality is among the 22 identified by the FOMB — the complete list was published in the Board's public letter.
- If you have a construction project funded with federal money, request a written breakdown of permit fees and compare it with the published standard rate.
- File a complaint with the Office of the Comptroller if you detect excessive charges in your municipality.
- Attend municipal public hearings where fee ordinances are discussed — these are your opportunity to demand transparency.
- Contact your legislator to support legislation prohibiting differentiated fees based on a project's funding source.
What comes next
The 22 municipalities have until September 2026 to submit their correction plans to the FOMB. If they fail to comply, the Board has warned it could intervene directly in municipal finances — an extreme measure but within its powers under PROMESA 1.
The Siemens case in Guayanilla will likely reach federal courts, setting a precedent on the limits of municipal fee-setting power when federal funds are involved. Meanwhile, the federal Department of Housing and Urban Development (HUD) has begun including anti-overcharge clauses in new grant agreements with Puerto Rico municipalities 2.
Sources 1 El Vocero, "JCF exige a 22 municipios que dejen de inflar tarifas de construccion en proyectos federales," August 9, 2026 2 Metro Puerto Rico, "Siemens denuncia cobro de $23.4 millones en permisos de Guayanilla para proyecto de FEMA," August 8, 2026
Sources
Reported by the CoquiList Newsroom · Facts backed by the sources cited above
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