Federal Housing Programs: What They Cost and What They Provide	 
(18-JUL-01, GAO-01-901R).					 
								 
In fiscal year 1999, the federal government provided housing	 
assistance to about 5.2 million renter households at a cost of	 
about $28.7 billion in outlays and tax credits. Of this amount,  
over $15 billion supported housing units developed under	 
production programs that no longer receive appropriations to	 
produce new or rehabilitated units. While maintaining the	 
inventory of units produced under these inactive programs is an  
important goal of the federal housing voucher program, this	 
report focuses on six programs that continue to increase the	 
number of households assisted by the federal government: the	 
housing vouch program, which is the largest source of federal	 
funds for housing assistance, and five production programs, which
currently receive federal funds to produce new or rehabilitate	 
units. GAO found that production programs are more expensive than
housing vouchers. GAO estimates that the total per-unit costs for
housing production programs are from 32 to 59 percent greater	 
than for housing vouchers in the first year and from 12 to 27	 
percent greater over 30 years. If costs were the only		 
consideration, GAO estimates would suggest that the production	 
programs reviewed in this report should be replaced with	 
vouchers. However, in many markets, production programs are the  
only sources of new affordable rental units, and use restrictions
will keep these units affordable for decades to come, limiting	 
the impact of market forces on the supply of affordable units.	 
Additionally, there are substantial differences in the housing	 
and services provided under each of the production programs that 
must be considered. Finally, in many urban areas, the production 
programs have formed an integral part of an overall community	 
development strategy. As a matter of public policy, the benefits 
of increasing the supply of affordable units, providing 	 
additional services for special needs populations, and		 
revitalizing distressed communities must be weighed against the  
alternative benefits of serving more households at a lower	 
average cost through the provision of vouchers. 		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-901R					        
    ACCNO:   A01417						        
  TITLE:     Federal Housing Programs: What They Cost and What They   
             Provide                                                          
     DATE:   07/18/2001 
  SUBJECT:   Cost analysis					 
	     Housing programs					 
	     Federal aid for housing				 
	     Low income housing 				 
	     Rental housing					 
	     Comparative analysis				 
	     HUD HOPE VI Program				 
	     HUD Low Income Housing Tax Credit			 
	     Program						 
								 

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GAO-01-901R
     
GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance

July 18, 2001 Congressional Committees Subject: Federal Housing Programs:
What They Cost and What They Provide This letter provides our interim
response to a mandate in the Quality Housing and Work Responsibility Act of
1998 (P. L. 105- 276) requesting that we compare the total per- unit costs
of various housing assistance programs, taking into account qualitative
differences in the housing and services provided. We previously briefed your
office on our key interim findings (see enc. I). This letter summarizes
these findings and discusses several of the policy issues they raise.

In fiscal year 1999, the federal government provided housing assistance to
about 5.2 million renter households 1 at a cost of about $28.7 billion in
budgetary outlays and tax credits. During the same year, almost 9 million
very- low- income renter households who qualified for housing assistance did
not receive it because of other budgetary priorities and constraints. This
year was not unusual: The federal government has never provided housing
assistance as an entitlement for all households that qualify for aid.
Instead, the Congress has traditionally appropriated funds for assisting a
specific number of new households each year, as well as for renewing
assistance for those households already served by various federal housing
programs.

Of the $28.7 billion in federal housing subsidies provided in fiscal year
1999, over $15 billion supported housing units developed under production
programs that no longer receive appropriations to produce new or
rehabilitated units. While maintaining the inventory of units produced under
these inactive programs is an important goal of federal housing policy, our
analysis for this report focused, as requested, on six programs that
continue to increase the number of households assisted by the federal
government: the housing voucher program, which is the largest source of
federal funds for housing assistance, and five production programs, which
currently receive federal funds to produce new or rehabilitated units. 2 Of
these production programs, the Low- Income Housing Tax Credit program is by
far the largest, accounting for over 80 percent of the new units produced in
1999. The six programs we analyzed are as follows:

Housing Voucher - supplements tenants? rental payments in privately owned,
moderately priced apartments chosen by the tenants.

Low- Income Housing Tax Credit - provides tax incentives for private
investment in the production of new and rehabilitated affordable housing
units consistent with state- determined housing priorities.

1 Of these 5.2 million renter households, 4.3 million have very low incomes
(50 percent or less of area median income) and 900,000 have low incomes (51
to 80 percent of area median income). 2 This analysis does not include the
HOME program because HOME funds are often used in

conjunction with other housing programs, including the ones covered in this
analysis.

United States General Accounting Office Washington, DC 20548

2 GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance HOPE
VI - revitalizes severely distressed public housing, funds community and

supportive services, and promotes mixed- income communities.

Section 202 - develops supportive housing for the elderly.

Section 811 - develops supportive housing for persons with disabilities.

Section 515 - develops family and elderly housing in rural areas, sometimes
including space for community- based supportive services.

In this letter and enclosure, we compare the total per- unit costs of
providing housing under these six programs and, for each program, identify
the share of the total per- unit cost borne by the federal government; the
assisted household; and other sources, including state and local governments
and private organizations. Finally, we compare the types of housing and
services provided and the populations served under the six programs. Our
cost comparisons for these six programs focus on national averages. More
detailed information on total per- unit costs in seven local markets appears
in enclosure I.

To make comparisons, we collected detailed information on each of the six
housing assistance programs, focusing on costs and housing characteristics.
Because there is no central database on most of these housing programs, we
contacted federal agencies, local housing authorities, and a private
research firm to construct our database. 3 In addition, we visited
representative properties in several metropolitan areas to observe
qualitative differences in the housing and services provided under each of
the programs. We also interviewed property managers and developers. To
construct cost estimates that are comparable across the six programs, we
accounted for differences in the structure and timing of the subsidies in
each program. For all six programs, we estimated the first- year costs and
30- year life- cycle costs. 4 Interviews with housing finance experts
confirmed the reasonableness of our methodology.

Comparative Cost Analysis

In summary, production programs are more expensive than housing vouchers.
Nationally, we estimate that the total per- unit costs for housing
production programs are from 32 to 59 percent greater than for housing
vouchers in the first year and from 12 to 27 percent greater over 30 years -
the life cycle we assumed for units of similar size (see table 1). 5 Our
findings were similar for seven local housing markets but were limited to

3 City Research, an urban economics research firm in Boston, analyzed the
tax credit program using a national database it constructed for a previous
study. 4 Life- cycle cost is the total cost of owning, operating, and
maintaining a property over its useful

life. In this analysis, we assume a useful life of 30 years. 5 We used two
approaches for calculating these percentages, both of which enabled us to
control

for general location (metro or nonmetro) and unit size (number of bedrooms).
In both cases, we used vouchers as the benchmark for our cost comparisons
because the voucher program is the largest federal housing assistance
program. Under the first approach, we adjusted average voucher costs for
comparability with the general location and average unit size for each of
the production programs. The results of this approach appear in table 1.
Under another approach, we compared costs across six programs for units in
the same general location with the same number of bedrooms. For example, we
found that in metro areas the first- year costs of tax credit, Section 202,
and Section 811 one- bedroom units were about 136, 141, and 138 percent
greater, respectively, than the first- year costs of one- bedroom voucher
units. Ideally, we would have controlled more fully for structural amenities
(e. g., square footage of unit, parking, and common areas) and

3 GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance

the tax credit, Section 202, and Section 811 programs - the only programs
for which we had sufficient local market data (see enc. I).

Table 1: Total Production Program Cost as a Percentage of Total Voucher Cost
Program First year Life cycle

(30 years)

Low- Income Housing Tax Credits 132% 116% HOPE VI a 159 127 Section 202 145
119 Section 811 138 112 Section 515 142 125

a HOPE VI costs include only housing- related construction costs. Source:
GAO analysis of federal, state, local, and private databases.

Our cost estimates for the production programs are conservative because they
are not adjusted to reflect the property tax abatements that localities
often provide for affordable housing. In addition, our HOPE VI estimates do
not include any funding for capital reserves; for the other four production
programs, the adequacy of the capital reserves to meet future capital needs
is unknown. Historically, however, housing production programs have
underfunded capital reserves. On the basis of very limited information, we
estimate that these omissions could increase our total costs estimates by
around 10 percent. 6

Average costs can mask considerable variation in the costs of individual
properties developed under the same program. For example, the tax credit
program has produced in the same area some units that cost about the same or
less than vouchers and other units that cost about twice as much. To
understand this wide variation in per- unit costs, more work needs to be
done on the determinants of development costs and the current cost
containment guidelines.

The federal government provides the bulk of the subsidies for all the
housing assistance programs (see table 2). When vouchers serve households of
similar average incomes in units with the same average number of bedrooms as
production programs, we estimate that the federal cost of serving households
under the production programs is from 49 to 65 percent greater than it would
be under vouchers. We estimate that the federal lifecycle cost is from 15 to
38 percent greater than under vouchers.

neighborhood characteristics (e. g., crime rate and quality of public
services such as schools), but these data were not available for most of the
programs. 6 Industry officials suggest that an annual set- aside of $200 to
$600 per unit would be required to

meet future capital needs. The 1999 American Housing Survey estimates the
national average property tax rate is $11 per $1, 000 in property value. If
these averages were applied to a worstcase scenario, under which significant
tax abatements and no payments to reserves were made, the first- year cost
would be understated by about 10 percent. This scenario is most applicable
to our data for the HOPE VI program, which include no funding for capital
reserves and virtually no allowances for property tax payments. Under the
other four production programs, many projects fund capital reserves and pay
full property taxes. For these programs, our potential understatement of
costs is likely to be less than 10 percent.

4 GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance

Table 2: Federal Cost of the Production Programs as a Percentage of the
Federal Cost of Vouchers Program First year Life cycle

(30 years)

Low- Income Housing Tax Credits 150% 119% HOPE VI a 162 124 Section 202 165
125 Section 811 149 115 Section 515 160 138

a HOPE VI costs include only housing- related construction costs. Source:
GAO analysis of federal, state, local, and private databases.

Across the six programs, the federal government and tenants pay the majority
of the total costs of federal housing assistance programs. Tenants
contribute between 18 percent (HOPE VI) and 46 percent (tax credits) of the
total housing costs in the first year. In general, households that pay a
smaller percentage of the per- unit costs either have smaller incomes or
live in units that are costlier than average (or both conditions apply, as
often happens for HOPE VI). Conversely, households that pay a higher
percentage of the per- unit costs typically have higher incomes or are
allowed to pay a larger percentage of their income for rent (or, again, both
conditions apply, as happens for the tax credit program). State and local
governments and private sources, on average, provide 10 and 14 percent for
the tax credit and HOPE VI programs, respectively, and smaller contributions
(2 to 6 percent) for the other production programs. These sources do not
contribute to the voucher program.

Observations

If costs were the only consideration, our estimates would suggest that the
production programs should be replaced with vouchers. However, in many
markets, production programs are the only sources of new affordable rental
units, and use restrictions will keep these units affordable for decades to
come, limiting the impact of market forces on the supply of affordable
units. Additionally, there are substantial differences in the housing and
services provided under each of the production programs that must be
considered. For example, under the Section 202 and Section 811 programs, the
elderly and disabled often receive services not easily provided in private
housing. These services can be particularly important for older, frailer
elderly or for those with more severe disabilities, for whom housing
vouchers are probably not a reasonable alternative. As the nation?s
population ages, production programs for the elderly may become an even more
important part of national housing policy. Finally, in many urban areas, the
production programs have formed an integral part of an overall community
development strategy, as is a goal of the HOPE VI program. As a matter of
public policy, the benefits of increasing the supply of affordable units,
providing additional services for special needs populations, and
revitalizing distressed communities must be weighed against the alternative
benefits of serving more households at a lower average cost through the
provision of vouchers.

Agency Comments

We provided a draft of this report to HUD, the U. S. Department of
Agriculture, and the National Council of State Housing Agencies for their
review and comment. Noting that the report is an interim product and does
not contain a detailed discussion of our methodology, the agencies and the
Council said they would wait to comment on our approach until they have
reviewed our final report. However, they raised several broad

5 GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance

issues, including whether we had sufficiently considered the difficulty of
using vouchers in certain markets, appropriately estimated the extent to
which replacement reserves are underfunded, and adequately accounted for the
benefits of the newer, often higher- quality housing and services provided
by the production programs compared with vouchers. HUD also suggested that
we provide an additional life- cycle analysis over a shorter time period -
such as 15 years - in part because projecting costs 30 years into the future
involves too many uncertainties. We recognized the importance of these and
other issues raised by the agencies and the Council and took them into
account in developing our methodology and analysis. While we provided some
additional discussion of these issues in this interim report in response to
the comments received, we will reserve detailed explanations for our final
report. The agencies and the Council offered additional technical comments
and clarifications, which we incorporated as appropriate.

We are planning to issue a more detailed analysis of the costs and
characteristics of federal housing assistance programs later this year. It
will expand on the information provided in this report. We performed our
work from January 2000 through May 2001 in accordance with generally
accepted government auditing standards.

If you have any further questions, please call me at (202) 512- 7631. Key
contributors to this report were Dennis Fricke, Daniel Garcia- Diaz, and
Elizabeth Eisenstadt. External consultants Denise DiPasquale and Jean L.
Cummings, City Research, and Edgar O. Olsen, Department of Economics,
University of Virginia, also contributed to this report.

Stanley J. Czerwinski Director, Physical Infrastructure

Enclosure

6 GAO- 01- 901R Costs and Characteristics of Federal Housing Assistance

List of Committees The Honorable Jack Reed Chairman The Honorable Wayne
Allard Ranking Minority Member Subcommittee on Housing

and Transportation Committee on Banking, Housing,

and Urban Affairs United States Senate

The Honorable Barbara A. Mikulski Chairwoman The Honorable Christopher S.
Bond Ranking Minority Member Subcommittee on Veteran Affairs, HUD, and
Independent Agencies Committee on Appropriations United States Senate

The Honorable Marge Roukema Chairwoman The Honorable Barney Frank Ranking
Minority Member Subcommittee on Housing and Community Opportunity Committee
on Financial Services House of Representatives

The Honorable James T. Walsh Chairman The Honorable Allan B. Mollohan
Ranking Minority Member Subcommittee on VA, HUD, and Independent Agencies
Committee on Appropriations House of Representatives

Enclosure I 7 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

Federal Housing Assistance Programs Costs and Housing Characteristics

Enclosure I 8 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

2

Contents

* Background: Housing Affordability and Federal Resources

 Methodology and Data Limitations  Program Characteristics and Costs

Enclosure I 9 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

3

Pay 30% of income for rent

Pay over 50% of income for rent*

Pay from 31% to 50% of income for rent About One- Third of Eligible Very-
Low- Income Renter

Households Receive Housing Assistance

* HUD characterizes these households as having ?worst-case housing needs.?
Sources: GAO?s analysis of program data and HUD?s analysis of American
Housing Survey, 1999.

4.3 million assisted households

4.9 million unassisted households

3.9 million unassisted households

Background: Housing Affordability and Federal Resources

Enclosure I 10 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

4

Federal Government Spent About $29 Billion for Housing Assistance in FY 1999

HOME 5% Vouchers

24% Public Housing

24% Section 8 project- based*

29% Other**

6% Tax Credits

12%

*Includes expenditures for New Construction/Substantial Rehabilitation, Loan
Management Set-Aside, Property Disposition, Section 236, Rental Assistance
Payment, and Rent Supplement.

**Includes expenditures for HOPE VI, Section 202, Section 811, Section 515,
and Section 521.

Active programs Inactive

programs

Background: Housing Affordability and Federal Resources

Enclosure I 11 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

5

Defining Total Cost of Vouchers and Production Programs Vouchers

Tenants receive subsidies to rent housing in the private market:

Total Costs = Rents + Administrative Fee

Production programs

Subsidies are used to develop properties: Total Costs = Rents + Development
Subsidies

Methodology and Data Limitations

Enclosure I 12 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

6

Estimating Total Cost of Vouchers and Production Programs Vouchers and
production programs

 Rents are paid over multiple years, and development subsidies are paid up-
front or over multiple years.

First- year costs

 Converted the present value of the development subsidies to an annual
payment and added the annual rent.

Life- cycle costs

 Added the present value of the rents over 30 years and the present value
of the development subsidies.

Methodology and Data Limitations

Enclosure I 13 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

7

The Federal Government, Assisted Household, and Other Sources Pay for Rents
and Total Development Costs

Vouchers

 Total costs are shared by the federal government and assisted household.
Federal government pays the difference between the unit?s market rent and
the household?s payment (generally 30 percent of adjusted income).

 Lower household incomes produce higher federal subsidy costs.

Production programs

 Total costs are shared by the federal government; assisted household; and
other sources, including state and local governments and private
organizations.

 Higher development subsidies respond to higher development costs in
certain markets. They may also produce lower rents and/ or additional
amenities.

Methodology and Data Limitations

Enclosure I 14 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

8

Cost Risks Over Time: Vouchers and Production Programs Rent inflation

 Vouchers: Market forces determine their costs. In tight housing markets,
rents can escalate rapidly, increasing federal costs.

 Production programs: Program regulations and development subsidies can
limit the impact of rent inflation.

Capital needs

 Vouchers: The federal government faces no long- term cost risk associated
with the underfunding of capital needs.

 Production programs: Programs have historically underfunded capital needs,
resulting in physical deterioration and additional federal costs.

Methodology and Data Limitations

Enclosure I 15 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

9

Key Housing Characteristics Influence Program Costs

 Location (neighborhood characteristics and public services)

 Building type

 Unit size

 Quality

 New construction versus rehabilitation

 Amenities and supportive services

Methodology and Data Limitations

Enclosure I 16 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

10

Estimating Cost Effectiveness of Housing Programs Data required

 With complete data on property characteristics, we could determine
programs? costeffectiveness by comparing the actual cost incurred with the
value of the housing and services provided.

Data limitations

 While we have detailed data on location, unit size, and tenant income,
data on many important characteristics, such as building type, quality,
amenities, or services, are not readily available.

Data employed

 In this presentation, we controlled for

 unit size,

 tenant income, and

 general location.

Methodology and Data Limitations

Enclosure I 17 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

11

Housing Characteristics We Can Control for: Average Unit Size

2.2 1.6

1.0 1. 0 1.8

2.4 0 1

2 3

HOPE VI Vouchers Tax credits Section 515 Secti on 811 Section 202

Average number of bedrooms

Methodology and Data Limitations

Enclosure I 18 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

12

Housing Characteristics We Can Control for: Average Gross Household Income

$9, 790 $9, 180 $9, 040 $8, 000 $8, 760 $14,150

$2, 000 $4, 000

$6, 000 $8, 000

$10,000 $12,000

$14,000 $16,000

Tax credits*

Vouchers Section 202

HOPE VI Section 515

Section 811

*The average income for tax credit households is somewhat misleading since
there are two distinct types of households. We estimate that approximately
40 percent of tax credit households received rental assistance. These
households had an average income of about $8,350 in 1999 dollars. For
households who did not receive rental assistance, we estimate an average
income of about $17,750.

Annual average income

Methodology and Data Limitations

Enclosure I 19 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

13

Housing Characteristics We Can Control for: General Location of Assisted
Units

0% 20%

40% 60%

80% 100%

All rental units

HOPE VI Vouchers Section 202 Tax credits*

Section 811 Section 515 Nonmetro

Suburban Central city

Percent of units

Methodology and Data Limitations *Tax credit units with Section 515
mortgages are excluded. If included, the share of units in nonmetro areas
would increase from 6 to 22 percent.

Enclosure I 20 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

14

Housing Vouchers Offer Choice in Existing Housing

 Provide households with choice in a wide variety of locations and building
types, including singlefamily homes.

 Property median age is about 35 years.

 Do not generally pay for supportive or social services.

Program Characteristics and Costs

Enclosure I 21 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

15

Voucher Program: Suburban Walk- Up Apartment

Size: One- and two- bedroom units

Age: About 30 years Location: Baltimore Program Characteristics and Costs

Enclosure I 22 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

16

Voucher Program: Three- Story Central City Apartment

Size: Two-bedroom units

Age: 80 years Location: Boston Program Characteristics and Costs

Enclosure I 23 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

17

$0 $2, 000

$4, 000 $6, 000

$8, 000 $10, 000

National Metr o Nonmetr o Federal Tenant

$7,870 $8,350 $5,660

$0 $40,000

$80,000 $120, 000

$160, 000 $200, 000

National Metro Nonmetro Federal Tenant Cost of Vouchers Varies by General

Location

First year Life cycle

Program Characteristics and Costs $160,580 $170,370

$115,500 Note: About 7 percent of all vouchers are used in federally
subsidized properties, primarily tax credit and Section 515 properties. We
estimate that the subsidy cost associated with these properties would add
around $200 in the first year and about $2,600 over the life cycle to the
total cost of vouchers.

Enclosure I 24 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

18

States Target Tax Credits to Address Housing Priorities

 Serve different populations in a wide variety of locations and building
types.

 Produce new or rehabilitated housing.

 Respond to state- determined housing priorities.

 Offer supportive and social services by property, not by program.

Program Characteristics and Costs

Enclosure I 25 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

19

Tax Credits: Central City High- Rise Apartment

Size: Efficiency; one-, two-, and three- bedroom units

Age: Newly constructed in 1995

Location: San Francisco Program Characteristics and Costs

Enclosure I 26 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

20

Tax Credits: Suburban Single- Room Occupancy for the Homeless

Size: One-room units Age: Rehabilitated in 1999

Location: Baltimore Program Characteristics and Costs

Enclosure I 27 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

21

Tax Credits: Rural Walk- Up Apartment

Size: One- and two- bedroom units

Age: Newly constructed in 1995

Location: Lake Pointe, Conway, AR Program Characteristics and Costs

Enclosure I 28 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

22

$0 $2, 000

$4, 000 $6, 000

$8, 000 $10, 000

$12, 000 Adjusted metro

voucher Tax credits

Federal State/ local/ private Assisted household

First year

Note: Cost estimate of tax credits does not account for the subsidy cost of
property tax abatements or any underfunding of replacement reserves. Tax
credit properties that received Section 515 loans are excluded from this
analysis. Program Characteristics and Costs

Total and Federal Per- Unit Costs Are Higher for Tax Credits Than for
Vouchers

 Voucher cost is adjusted to reflect smaller average unit size and higher
average household income under tax credits.

 First- year total cost is about 32% greater for tax credit units than for
adjusted vouchers. (Life- cycle cost is about 16% greater.)

 Federal cost is about 50% greater for tax credit units than for vouchers.
(Life- cycle federal cost is about 19% greater.)

$7,710 $10,200

Enclosure I 29 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

23

HOPE VI Replaces and Revitalizes Distressed Public Housing

 Serves households in blighted urban neighborhoods, predominantly in town
houses and walk- up apartments.

 Transforms distressed and obsolete public housing through demolition and
new construction.

 Leverages public and private funds.

 Promotes mixed- income communities and economic development.

 Provides comprehensive supportive and social services.

Program Characteristics and Costs

Enclosure I 30 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

24

HOPE VI: Central City Walk- Up Apartments

Size: One-, two-, three-, and four- bedroom units

Age: Phased construction, 1997- 2001

Location: Atlanta Program Characteristics and Costs

Enclosure I 31 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

25

HOPE VI: Central City Town House Apartments

Size: One-, two-, three-, and four- bedroom units

Age: Phased construction, 1998-2000 Location: Boston

Before After Program Characteristics and Costs

Enclosure I 32 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

26

HOPE VI: Central City Town House Apartments

Size: One-, two-, three-, and four-bedroom units

Age: Newly constructed in 2000

Location: Baltimore Program Characteristics and Costs

Enclosure I 33 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

27

HOPE VI: Children?s Computer Laboratory and New Local Business

Service: On-site learning center Location: El Paso

Service: Newly located retail pharmacy store Location: Baltimore Program
Characteristics and Costs

Enclosure I 34 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

28

HOPE VI Takes Proactive Role in Economic Development by Locating Properties
in Poor, Mostly Minority Neighborhoods With Little Homeownership

50% 81%

14% 20% 40%

51% 22%

45% 43% 38%

55% 15%

28% 60%

16% 0% 30%

60% 90%

Poverty Minority Homeowners HOPE VI

Vouchers Tax credits Section 202 Section 811

Percent of population in census tract

Note: Data for Section 515 are not readily available. Program
Characteristics and Costs

Enclosure I 35 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

29

$0 $2, 000

$4, 000 $6, 000

$8, 000 $10,000

$12,000 $14,000

$16,000 $18,000

Adjusted metro voucher

HOPE VI Housing- related

costs only HOPE VI - All

costs* Federal State/ local/ private Tenant Total and Federal Per- Unit
Costs Are Higher

for HOPE VI Than for Vouchers

First year

Program Characteristics and Costs

 Voucher cost is adjusted to reflect larger average unit size and lower
average household income under HOPE VI.

 First- year total housing- related costs are about 59% greater for HOPE VI
units. (Life- cycle cost is about 27% greater.)

 Federal cost for housing- related expenses is about 62% greater for HOPE
VI units. (Life- cycle federal cost is about 24% greater.)

 When all costs for HOPE VI are included, first- year total cost is about
81% greater than vouchers, and federal cost is about 62% greater.

Note: Cost estimate of HOPE VI does not account for the subsidy cost of
property tax abatements or the funding of replacement reserves. * This
estimate of total cost includes the costs of remediation, demolition,
construction of housing and community facilities, relocation, and
community-based planning and participation, most of which are not applicable
to the other housing programs.

$8,610 $13,730 $15,580

Enclosure I 36 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

30

Section 202 Provides Predominantly New Housing for the Elderly

 Serves only the elderly in a wide variety of locations, primarily in
elevator buildings.

 Produces mostly new housing.

 Provides one- bedroom units.

 Makes supportive and social services available.

Program Characteristics and Costs

Enclosure I 37 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

31

Section 202: Suburban Elevator HighRise Apartments for the Elderly

Size: 86 one-bedroom units Age: Newly constructed in 1997 Location:
Baltimore Program Characteristics and Costs

Enclosure I 38 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

32

Section 202: Suburban Elevator Apartments for the Elderly

Size: 59 one-bedroom units Age: Newly constructed in 1996 Location: Fort
Worth Program Characteristics and Costs

Enclosure I 39 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

33

$0 $2, 000

$4, 000 $6, 000

$8, 000 $10, 000

$12, 000 Adjusted national

voucher Section 202

Federal State/ local/ private Tenant Total and Federal Per- Unit Costs Are
Higher

for Section 202 Than for Vouchers

First year

Note: Cost estimate of Section 202 does not account for the subsidy cost of
property tax abatements or any underfunding of replacement reserves. Program
Characteristics and Costs

 Voucher cost is adjusted to reflect smaller average unit size and lower
average household income under Section 202.

 First- year total cost is about 45% greater for 202 units. (Life- cycle
cost is about 19% greater.)

 Federal cost is about 65% greater for 202 units. (Life- cycle federal cost
is about 25% greater.)

$6,480 $9,420

Enclosure I 40 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

34

Section 811 Provides New and Rehabilitated Housing for Persons With
Disabilities

 Serves persons with disabilities in a wide variety of locations, primarily
in group homes and independent living projects.

 Provides both new and rehabilitated housing.

 Makes supportive and social services available.

Program Characteristics and Costs

Enclosure I 41 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

35

Section 811: Suburban Independent Living Project for Persons With Mental
Disabilities

Size: 15 one-bedroom units Age: Rehabilitated in 1998 Location: Baltimore
Program Characteristics and Costs

Enclosure I 42 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

36

Section 811: Suburban Single- Family Group Home for Persons With Mental
Disabilities

Size: One of two three- bedroom homes

Age: Rehabilitated in 1999 Location: Fort Worth Program Characteristics and
Costs

Enclosure I 43 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

37

Total and Federal Per- Unit Costs Are Greater for Section 811 Than for
Vouchers

First year

Note: Cost estimate of Section 811 does not account for the subsidy cost of
property tax abatements or any underfunding of replacement reserves. Program
Characteristics and Costs

 Voucher cost is adjusted to reflect smaller average unit size and lower
average household income under Section 811.

 First- year total cost is about 38% greater for 811 units. (Life- cycle
cost is about 12% greater.)

 Federal cost is about 49% greater for 811 units. (Life- cycle federal cost
is about 15% greater.)

$6,480 $8,930

$0 $2, 000

$4, 000 $6, 000

$8, 000 $10,000

Adjusted national voucher

Section 811 Federal State/ local/ private Tenant

Enclosure I 44 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

38

Section 515 Makes Housing Available in Rural Areas

 Primarily serves families and the elderly in rural areas, generally in
walk- up apartments.

 Provides mostly new housing.

 Supportive and social services vary with the properties and populations
served.

Program Characteristics and Costs

Enclosure I 45 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

39

Section 515: Rural Walk- Up Apartment for the Elderly

Size: One-bedroom units Age: Newly constructed in 1998

Location: Wachusetts, MA Program Characteristics and Costs

Enclosure I 46 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

40

Section 515: Rural Housing for Families

Size: Two-bedroom units

Age: Newly constructed in 1994

Location: Nelsonville, OH Program Characteristics and Costs

Enclosure I 47 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

41

Total and Federal Per- Unit Costs Are Higher for Section 515 Than for
Vouchers

First year

$0 $2, 000

$4, 000 $6, 000

$8, 000 Adjusted nonmetro

voucher Section 515

Federal State/ local/ private Tenant

Note: Cost estimate of Section 515 includes tax credits but does not account
for the subsidy cost of property tax abatements or any underfunding of
replacement reserves. For 515 properties without tax credits, average total
cost decreases to about $6,920 in the first year. This is about 35 percent
greater than vouchers and 20 percent greater over the life cycle. At $6,920,
the federal cost is about 50 percent greater than vouchers and 28 percent
greater over the life cycle. Program Characteristics and Costs

 Voucher cost is adjusted to reflect smaller average unit size and lower
average household income under Section 515.

 First- year total cost is about 42% greater for 515 units. (Life- cycle
cost is about 25% greater.)

 Federal cost is about 60% greater for 515 units. (Life- cycle federal cost
is about 38% greater.)

$5,190 $7,360

Enclosure I 48 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

42

Comparison of Total Cost Between Production Programs and Vouchers After
Adjustments for Unit Size

100% 132% 138% 142% 145%

159% 100%

116% 112% 125% 119% 127%

0% 20%

40% 60%

80% 100%

120% 140%

160% Vouchers Tax credits Section 811 Section 515 Section 202 HOPE VI

First- year Life- cycle

Program Characteristics and Costs

Production program cost as percent of voucher cost

Enclosure I 49 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

43

132% 142% 126%

147% 127%

139% 140% 154%

123% 116% 130%

118% 126% 115% 116% 125%

0% 20%

40% 60%

80% 100%

120% 140%

160% 180%

Metro Baltimore Boston Chicago Dallas/ Fort Worth

Denver Los Angeles New York First year Life cycle Comparison of Total Cost
Between Tax Credits and

Vouchers After Adjustments for Unit Size, by Location

Program Characteristics and Costs

Tax credit cost as percent of voucher cost

Enclosure I 50 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

44

145% 154% 130%

168% 122%

136% 146% 162%

132% 118% 109% 102% 141%

106% 119% 126%

0% 20%

40% 60%

80% 100%

120% 140%

160% 180%

Nation Baltimore Boston Chicago Dallas/ Fort Worth

Denver Los Angeles

New York First year Life cycle Comparison of Total Cost Between Section 202
and

Vouchers After Adjustments for Unit Size, by Location

Program Characteristics and Costs

Section 202 cost as percent of voucher cost

Enclosure I 51 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

45

138% 136% 137% 160%

139% 126%

149% 183%

150% 121% 103% 113% 134%

113% 112% 108% 0% 20%

40% 60%

80% 100%

120% 140%

160% 180%

200% Nation Baltimore Boston Chicago Dallas/ Fort

Worth Denver Los

Angeles New York

First year Life cycle Comparison of Total Cost Between Section 811 and

Vouchers After Adjustments for Unit Size, by Location

Program Characteristics and Costs

Section 811 cost as percent of voucher cost

Enclosure I 52 GAO- 01- 901R Costs and Characteristics of Federal Housing
Assistance

(391005)

46

$3, 000 $6, 280

$4, 200 $4, 440 $2, 910 $4, 510

$10,210 $6, 930 $6, 620

$4, 658 $0 $2, 000

$4, 000 $6, 000

$8, 000 $10,000

$12,000 Tax Credits HOPE VI Section 202 Section 811 Section 515

Adjusted voucher Production program Comparison of Federal Cost for
Production Programs and

Vouchers Adjusted for Unit Size and Household Income

Program Characteristics and Costs

Federal cost
*** End of document. ***