Public Housing: HUD and Public Housing Agencies' Experiences with
Fiscal Year 2000 Plan Requirements (31-MAY-02, GAO-02-572).	 
                                                                 
The Quality Housing and Work Responsibility Act of 1998 was	 
designed to improve the quality of public housing and the lives  
of its residents. Since fiscal year 2000, housing agencies	 
managing low-rent or tenant-based Section 8 units have been	 
required to develop and submit five-year and annual plans. As of 
January 2002, 98 percent of public housing agency plans for	 
fiscal year 2000 had been submitted and approved. The Department 
of Housing and Urban Development (HUD) had mixed views about the 
fiscal year 2000 plan process and its value. The field locations 
that responded to GAO's survey reported that their review of	 
fiscal year 2000 plans was hampered by several factors, including
difficulty in transmitting data between public housing agencies  
and HUD. Most field locations responded that public housing	 
agencies are implementing their plans but acknowledged that there
may be some problems, particularly in fulfilling requirements	 
related to resident participation in the process. The eight	 
public housing agencies GAO visited had differing views on the	 
usefulness of the planning process, the level of resources	 
required to prepare the plans, the sufficiency of HUD's guidance 
on completing the plans, and the difficulty of meeting the	 
resident participation requirement.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-572 					        
    ACCNO:   A03411						        
  TITLE:     Public Housing: HUD and Public Housing Agencies'	      
Experiences with Fiscal Year 2000 Plan Requirements		 
     DATE:   05/31/2002 
  SUBJECT:   Federal legislation				 
	     Housing programs					 
	     Low income housing 				 
	     Program evaluation 				 
	     Public assistance programs 			 
	     Public housing					 
	     HUD Section 8 Tenant-Based Program 		 
	     Public Housing Capital Fund			 
	     Public Housing Operating Fund			 

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GAO-02-572
     
A

Report to Congressional Committees

May 2002 PUBLIC HOUSING HUD and Public Housing Agencies? Experiences with
Fiscal Year 2000 Plan Requirements

GAO- 02- 572

Letter

May 31, 2002 Congressional Committees The Quality Housing and Work
Responsibility Act of 1998, commonly referred to as the Public Housing
Reform Act (P. L. 105- 276), was major legislation designed to improve the
quality of public housing and the lives of public housing residents. The act
included over 80 provisions that revised key requirements related to the
Department of Housing and Urban Development?s (HUD?s) low- rent housing and
tenant- based Section 8

housing assistance programs. 1 The act also gave public housing agencies
more flexibility and discretion in using funds to address the needs of
lowincome families and encouraged resident involvement in housing
management.

In an effort to ensure that public housing agencies remained accountable to
HUD while exercising these new flexibilities, Section 511 of the act created
a new requirement. Beginning in fiscal year 2000, housing agencies managing
low- rent or tenant- based Section 8 units have been required to develop and
submit five- year and annual plans. Agencies were required to obtain
resident participation in developing these plans. The five- year plan is to
describe the public housing agency?s mission and long- range goals, while
the annual plan is to identify objectives and strategies for achieving

these goals and to detail the agency?s policies and procedures. The annual
plan also serves as an application to HUD for some grant funding for
agencies with low- rent units. Since housing agencies that administer
tenant- based Section 8 units only do not receive this type of funding, they
do not use the plan as a grant application. Once a public housing agency has
submitted its plans to HUD, HUD must review the plans to ensure that they
contain the appropriate information, and either approve them or disapprove
them, and notify the public housing agency of deficiencies in the plans that
need to be addressed before the plans can be approved.

Section 511 also required us to audit and review a sample of these public
housing agencies plans to provide an overview of how the process has worked
so far. As agreed with your offices, to fulfill this requirement

1 These programs provide funding to housing agencies with two types of
units. Low- rent units, commonly called public housing units, are housing
units in buildings managed by public housing agencies for low- income
families. Tenant- based Section 8 units are housing units in privately owned
rental housing. Through the Section 8 program, public housing agencies make
subsidy payments to owners on behalf of the assisted family.

within the required deadline we determined: (1) the status of public housing
agencies? fiscal year 2000 plans, (2) HUD?s experiences with the fiscal year
2000 plan process and opinions concerning the value of the plans, and (3)
selected public housing agencies? experiences with and opinions regarding
the fiscal year 2000 plan process. We examined HUD?s experiences to provide
information on the universe of plans filed, as well as HUD?s perspective on
the process, while selected housing agencies? experiences were examined for
insight into agencies? perspectives on the planning process. In January
2002, in fulfillment of the act?s requirement,

we briefed your offices on our key findings. We have enclosed the slides
from that briefing in appendix I. Also, as you requested at our briefing, we
are providing information on the status of the fiscal year 2001 plans and
any significant changes in the plan review process.

To determine the status of fiscal year 2000 plans, we analyzed information
from HUD?s databases and interviewed HUD officials. In examining HUD?s
experiences with the plan process, we surveyed HUD?s 43 Public and Indian
Housing field offices and 2 troubled agency recovery centers (hereafter
referred to as field locations). These field locations were responsible for
reviewing and approving submitted plans. Ninety- six percent of these
locations responded to our survey.

To gather detailed information on selected public housing agencies?
experiences with the process, we visited eight agencies that we selected
based on factors including size and geographic location, as shown in

table 1.

Table 1: Eight Public Housing Agencies Visited Name and location of public
housing agency Size of public housing agency

Moorhead Housing Authority (Minn.) Small Bernalillo Housing Authority (N.
Mex.) Small Tullahoma Housing Authority (Tenn.) Medium Muskegon Housing
Commission (Mich.) Medium Miami Beach Housing Authority (Fla.) Large
Bridgeport Housing Authority (Conn.) Large Atlanta Housing Authority (Ga.)
Extra- large Phoenix Housing Authority (Ariz.) Extra- large Note: We
designated public housing agencies as small if they managed 249 or less
units, medium if they managed 250- 1, 250 units, large if they managed
1,251- 6,599 units, and extra- large if they managed 6,600 or more units.

Source: HUD databases.

Results in Brief Most fiscal year 2000 public housing agency plans had been
submitted and approved as of January 24, 2002. Of the 4,144 required fiscal
year 2000 plans, 98 percent had been submitted to and approved by HUD. The

remaining 2 percent had either not been submitted, had been disapproved
because of deficiencies, or were being reviewed by HUD. Of these 89 plans
either not submitted or not approved, 76 were from public housing agencies
that provide only tenant- based Section 8 housing, and 13 were associated
with agencies that provide low- rent housing or a combination of the two
types. HUD is considering withholding a portion of funding from public
housing agencies that did not submit or have approved their fiscal year 2000
plans.

HUD had mixed experiences and opinions regarding the fiscal year 2000 plan
process and its value. Field locations that responded to our survey reported
that their review of fiscal year 2000 plans was hampered by a number of
factors, such as problems transmitting data between public housing agencies
and HUD. For the fiscal year 2001 process, HUD took actions to address some
problems identified during the fiscal year 2000 process. The field locations
believed that the planning process was

valuable in helping them identify public housing agencies? needs. However,
our survey found that few field offices believed that the plans were very
important to tenant- based Section 8- only public housing agencies relative
to setting operational priorities. Narrative responses in the survey

indicated that this was because tenant- based Section 8- only agencies do
not own or maintain physical assets and do not use their plans as an
application for HUD funding. A majority of field locations responded that

public housing agencies are implementing their plans but acknowledged that
there may be some problems, particularly in fulfilling requirements related
to resident participation in the plan process. It is too early to tell
whether HUD?s actions will resolve problems experienced during the

review of the fiscal year 2000 plans, so we are not making recommendations
at this time.

The eight public housing agencies we visited had varying experiences and
opinions regarding the fiscal year 2000 plan process. Their views differed
on the usefulness of the planning process, the level of resources required
to prepare the plans, the sufficiency of HUD?s guidance on completing the
plans, and the difficulty of meeting the resident participation requirement.
Larger public housing agencies generally had more positive comments than
smaller public housing agencies. In commenting on a draft of this report,
HUD generally agreed with its contents.

Background Under the United States Housing Act of 1937, as amended, Congress
created the federal public housing program to assist communities in

providing decent, safe, and sanitary dwellings for low- income families.
Today, more than 4,100 public housing agencies provide housing for lowincome
households. Over 3,100 agencies operate low- rent or a combination of low-
rent and tenant- based Section 8 units, and about 1,000 provide housing
through tenant- based Section 8 units only. Public housing agencies are
typically municipal, county, or state agencies created under state law to
develop and manage public housing units for low- income families. Housing
agencies that participate in the low- rent program contract with HUD to
provide housing in exchange for federal grants and subsidies. HUD provides
funding to agencies to operate and repair lowrent units through the
Operating Fund and the Capital Fund. The Operating Fund provides annual
subsidies to housing agencies to make up the difference between the amount
they collect in rent and the cost of operating the units. The Capital Fund
provides grants to public housing agencies for the major repair and
modernization of the units.

Under the tenant- based Section 8 program, eligible households select their
own units in the private housing market and receive subsidies to cover part
of the rent. Public housing agencies that participate in the tenant- based
Section 8 program enter into contracts with HUD and receive HUD funds to

provide rent subsidies to the owners of private housing on behalf of the
assisted households.

Fiscal year 2000 was the first year that public housing agencies were
required to submit a five- year plan and an annual plan. This requirement
only applies to public housing agencies that receive HUD funds to provide
housing under the low- rent or tenant- based Section 8 programs. The
fiveyear plan describes the agency?s mission and its long- range goals and
objectives for achieving its mission over the subsequent 5 years. The annual
plan details the agency?s immediate objectives and strategies for

achieving these goals, as well as the agency?s policies and procedures. For
agencies that manage low- rent units, the annual plan also serves as the
application for the capital fund and public housing drug elimination grant
programs. 2 HUD distributes these grants on a formula basis. 3 The Public
Housing Reform Act sets forth requirements governing the

submission, review, and approval of agency plans. Plans must be submitted to
HUD 75 days before the start of the agency?s fiscal year. In addition, the
plans are to be developed by the public housing agency in consultation with
a resident advisory board and be consistent with other HUD- required
community planning documents. Public housing agencies are also required to
hold a public hearing on the plans and to address comments received

during the hearing before submitting the plans to HUD. HUD, in turn, must
review submitted plans to determine that they contain the information
required by the act, agree with information from other data sources
available to HUD such as community planning documents, and comply with other
applicable laws. HUD must issue a written notice either approving or
disapproving the plans within 75 days of its receipt of the

plans. If HUD does not meet this deadline, plans are considered approved. 2
The Public Housing Drug Elimination Program (PHDEP) grant provides funds for
safety and security activities and was discontinued in fiscal year 2002. 3 A
formula grant is one in which each public housing agency receives funds
based on a predetermined formula.

Most Public Housing For fiscal year 2000, 4,055 required plans had been
submitted to and

approved by HUD, and 89 required plans had not been approved. 4 The 89
Agencies Have unapproved plans were in varying stages: 53 plans had not been
submitted; Approved Fiscal Year 34 plans had been submitted, disapproved due
to cited deficiencies, and not

2000 Plans, and HUD Is yet resubmitted with the deficiencies corrected; and
2 plans were in the

Considering Sanctions process of being reviewed by HUD. Of the housing
agencies that should

have had approved plans but did not, 76 provide housing through tenantbased

against Those That Do Section 8 units only. The remaining 13 manage low-
rent units only or

Not a combination of low- rent and tenant- based Section 8 units.

HUD is considering sanctions against all public housing agencies that do not
have approved fiscal year 2000 agency plans. Since agencies that manage low-
rent units use the annual plan as the application for their capital fund and
public housing drug elimination formula grants, HUD does not plan to release
the fiscal year 2000 formula grants to agencies without approved plans.
Although these grant funds have been committed to the agencies based on the
formula allocation, the funds have not been released to agencies without
approved fiscal year 2000 plans and are not available for those agencies?
use. According to a HUD official, any agency that manages low- rent units
and did not submit its annual plan to HUD by September 30, 2001, may lose
its capital fund and public housing drug

elimination program formula grants for fiscal year 2000. Fourteen public
housing agencies may lose about $2.6 million in fiscal year 2000 capital
fund grants and one of these agencies may also lose a $39,426 public housing
drug elimination program grant. 5 HUD is considering a similar sanction for
those public housing agencies

that administer only tenant- based Section 8 units and do not have approved
fiscal year 2000 plans. While tenant- based Section 8- only agencies make up
24 percent of all housing agencies, they represent 85 percent of agencies
without approved plans. For these agencies, HUD could withhold a portion of
the administrative fees these public housing agencies receive for managing
the tenant- based Section 8 program. In addition, HUD requires

4 Data for the 4,144 required plans for fiscal year 2000 are as of January
24, 2002. On March 27, 2002, HUD provided the following information on 4,204
fiscal year 2001 agency plans: 3,355 plans had been approved, 623 plans had
either been disapproved or not received by HUD, 196 plans were in the
process of being reviewed, and 30 plans were either submitted as part of a
consortia or were exempt from the fiscal year 2001 agency plan requirement.

5 The public housing agencies? receipt of operating funds was not affected
by the status of their plans.

these public housing agencies to have approved fiscal year 2000 plans to be
eligible for additional Section 8 vouchers in fiscal year 2002. HUD Field
Locations

The majority of HUD field locations reported that they experienced some Had
Mixed Views

problems with the fiscal year 2000 plan review process but were able to
complete almost all reviews. Some of these problems were addressed in
Regarding the Fiscal

the fiscal year 2001 process. A majority of respondents reported that the
Year 2000 Review

fiscal year 2000 plans were useful in helping HUD field locations identify
Process but Believe

certain housing agency needs but believed the plans were more important to
housing agencies with low- rent units than to housing agencies that Plans
Have Value and

administer only tenant- based Section- 8 units. Most respondents also Are
Generally Being

believed that agencies are implementing their fiscal year 2000 plans, but
many also believed that agencies are having difficulty implementing some
Implemented portions of the plans.

HUD Field Locations Seventy- four percent of field locations that responded
to our survey

Experienced Problems with reported problems or difficulties with the fiscal
year 2000 plan review and Fiscal Year 2000 Plan

approval process. For example, over 50 percent of respondents said that
Review but Approved

the electronic transmission of plans from housing agencies to HUD and the
Almost All Plans

conversion of plans into a readable format once received at HUD had a
negative or very negative effect on their ability to review and approve
plans. Respondents also reported that HUD- provided guidance on the plan
process was less than adequate. One respondent reported that

headquarters guidance at the beginning of the process was not very good and
was delayed in getting to the field locations, while another reported that
changing rules made it difficult to know what the housing agencies should do
and what the field locations should look for in reviewing plans.

Changes that have been made for the 2001 plan process suggest that lessons
learned and experience gained during the first year resulted in some
improvements, but it is too early to determine whether these changes have
fully resolved the problems. For example, several respondents reported that
technical data transmission and conversion problems were less frequent for
fiscal year 2001. They also reported that HUD headquarters had streamlined
guidance and provided it in a timelier manner. HUD headquarters officials
also cited several initiatives undertaken as a result of lessons learned
during the first year, including developing a database to better track
agency plan information, hiring a new

contractor to manage the database, and providing consolidated guidance in
the form of a desk guide to assist housing agencies and field locations.
Respondents reported that, for fiscal year 2000, almost half of the plans
reviewed had to be resubmitted by the housing agencies because of
deficiencies. The majority of field locations said that deficiencies
requiring correction and resubmission commonly occurred in the plans?
sections

documenting capital improvement needs, the housing needs of the community,
and the fulfillment of resident participation requirements. Among the
problems with capital improvement sections were the omission or
incompleteness of required documentation, such as plans for the use of the
agency?s capital funds. Regarding the sections on determining housing needs,
some agencies submitted data sources on housing availability that were
unclear or conflicted with other local planning documents. Regarding the
sections describing resident participation, one field location that has a
large number of small housing agencies in its jurisdiction reported that its
agencies had trouble finding residents willing to participate in the
planning process and that this was reflected in their plans.

HUD Field Locations Between 60 and 72 percent of survey respondents
indicated they found the

Generally View Plans as plans helpful in identifying public housing agency
needs relative to setting Valuable but Less Important

operational priorities, developing resident participation, and planning to
Section 8- only Agencies

strategically. Some also reported that the planning process helped field
locations provide technical assistance to housing agencies on identified
problem areas. For example, one respondent reported that the plan review
process enabled the field locations to provide technical assistance to
public

housing agencies in the areas of setting priorities and effective strategic
planning. Responses to our survey suggested that field locations think that
the plans are more important for agencies with low- rent units than for
agencies with only tenant- based Section 8 units. Specifically, about 70
percent of respondents thought the plans were important in setting
operational priorities for agencies that maintain low- rent units, while
only 40 percent thought they were important in setting operational
priorities for agencies with tenant- based Section 8 units only. One
respondent commented that operating a tenant- based Section 8 program has
substantially different planning needs than operating a low- rent housing
program. According to this respondent, because tenant- based Section 8 units
are located in privately- owned housing, there is no ?physical asset? for
the tenant- based Section 8 agency to maintain, and other problems with
being a landlord or

owner are not present. The fact that the plan serves as a grant application
for agencies that operate the low- rent program, but not for agencies that
operate the tenant- based Section 8 program only, may also contribute to the
respondents? opinion that plans are less important to these agencies.

Field Locations Believe About 72 percent of respondents believed that, for
the most part, housing

Agencies Can Implement agencies can implement the plans they developed,
submitted, and had

Their Plans but Are Having approved. At the same time, about 54 percent of
respondents said housing Some Problems

agencies are having difficulty implementing the resident participation
requirement. A recurring theme from several respondents was that housing
agencies had difficulty getting residents interested in forming or
participating on resident advisory boards. Several respondents emphasized
that getting participation in small and tenant- based Section 8 only housing
agencies was especially difficult. In addition, some respondents said that
it is difficult to get residents appointed to the housing agencies? board of
directors in some areas, as is required.

Public Housing Staff at the eight public housing agencies we visited
described varying

Agencies We Visited experiences with the fiscal year 2000 plan process. For
example, some

found the process useful, while others did not; some found HUD guidance Had
Differing

helpful, while others did not. Generally, larger agencies had more positive
Experiences with the

responses than did smaller agencies. While the information collected on
Fiscal Year 2000 Plan

our visits cannot be generalized to the universe of public housing agencies,
it provides insight into individual public housing agencies? concerns.
Process

The public housing agencies we visited held varying views on the usefulness
of the fiscal year 2000 process. Four had positive experiences, two did not,
and two had no comment. One of the larger agencies told us that the first
year of the plan process was useful because it forced the

agency to review and update its policies. This agency also uses the plan as
a training aid for newly hired staff and believes the plan is useful as a
vehicle for obtaining resident input. The other larger agency said that the
plan is useful in the agency?s strategic planning. In contrast, the two
small agencies we visited reported that they did not find the process
useful: One said that it took time away from the staff?s essential day- to-
day operational duties. The other said it perceived no value in the plan
process.

Although the amount and type of resources that agencies devoted to the plan
process for fiscal year 2000 varied, seven of the eight public housing

agencies we visited told us they used additional staff or resources in
developing their fiscal year 2000 plans. Three of the eight used consultants
to develop their plans. One extra- large agency hired an additional staff
person specifically to coordinate development of its fiscal year 2000 plans.
In contrast to the other seven public housing agencies we visited, a medium-
sized agency told us that it did not spend significantly more staff time or
additional resources preparing the plans because most of the required
updating of operational policies had been completed earlier. All eight
housing agencies we visited expressed some frustration with the

quantity or quality of HUD guidance for the first year, particularly
regarding the agency plan template that HUD provided electronically to serve
as a guide to developing and formatting the agency plans. Although each of
the eight agencies had some negative feelings about the template, some

balanced their comments with positive remarks. For example, one extralarge
agency told us that the template provided guidance for formatting the plan
submission. A large agency we visited told us that the template was
sufficiently easy to use and added that, in its opinion, HUD had improved
the template for fiscal year 2001. On the other hand, one of the small
agencies told us that the template does not give individual housing agencies
the flexibility to describe unusual situations relating to local needs. In
addition, one of the medium- sized agencies told us that the template was
not user friendly.

Agencies also had mixed experiences with the resident participation
requirement for the fiscal year 2000 plan. For example, one extra- large
public housing agency, with a widely dispersed housing inventory and

several different types of resident populations, had a positive experience.
Staff at this agency said that the resident participation requirement
brought together a cross- section of residents that would otherwise not have
met and provided these residents with an appreciation of the competing needs
of resident populations and the commensurate difficulty the housing agency
faced in meeting those needs. The other extra- large agency told us that its
experience with this requirement was positive because the planning process
generally encouraged resident participation. In contrast, one of

the small agencies told us that resident apathy made it difficult to meet
this requirement. Observations Our work raised questions about the relative
value and burden of the

planning process for two groups of public housing agencies. Survey responses
highlighted questions about the value of the plans to those

agencies that administer only tenant- based Section 8 units, while comments
received during our visits to eight agencies suggested that small agencies
may find less value in the planning process and that the process puts a
greater burden on their resources. As we did not visit a representative
sample of small public housing agencies, further examination of these
agencies? experiences, including those that provide housing only through the
tenant- based Section 8 program, would be needed

to determine the value of annual plans to these agencies. As agreed with
your offices, we are planning to further investigate the challenges facing
small housing agencies, especially the impact and benefits of regulatory

and administrative requirements. As many of the smaller agencies provide
housing only through the tenant- based Section 8 program, this work might
also provide some insights into the usefulness and applicability of the
plans for this type of public housing agency.

Scope and The mandate in Section 511 of the Quality Housing and Work
Responsibility

Methodology Act of 1998 required that we review and audit a representative
sample of

the nation?s housing agencies that are required to submit agency plans. This
is a universe of over 4,000 housing agencies. When we met with you and your
office to clarify our reporting requirements under the mandate, we agreed
that available resources and reporting deadlines would not

permit us to review and audit a representative sample of these housing
agencies and their plans. We also agreed that a survey of HUD field
locations to assess HUD?s management of the fiscal year 2000 agency plan
process would serve as a proxy to auditing the universe of housing agencies,
as each HUD field location has direct knowledge of all housing agencies
within its respective jurisdiction and was responsible for reviewing and
approving those agencies? plans. We agreed to supplement this survey by
collecting data on the status of all required plans and by visiting a
nonrepresentative sample of public housing agencies to gain insight into
particular agencies? experiences.

To determine the status of plans submitted to and approved by HUD for fiscal
year 2000, we interviewed HUD Public and Indian Housing policy development,
Grants Management Center, and program officials. We also obtained data from
several Public and Indian Housing databases on public

housing agencies and fiscal year 2000 approved plans. We analyzed the data,
discussed it with HUD staff, and resolved any discrepancies in the data with
HUD staff.

To assess HUD?s management of the fiscal year 2000 agency plan review
process, we developed an automated survey instrument that we posted on our
Web site. We requested that all 43 HUD Public and Indian Housing field
offices and both troubled agency recovery centers complete the survey. These
HUD field locations are responsible for reviewing and approving

agency plans. We sent E- mail messages asking officials at these field
offices and recovery centers to fill out the questionnaire. We received
responses from 41 field offices and both troubled agency recovery centers,
which is a 96 percent response rate. Field locations responding to our
survey were responsible for reviewing 4,033 or about 97 percent of the plans
required to be submitted in fiscal year 2000. Our survey results reflect the
information provided by the HUD officials. We did not

independently verify the field locations? responses to our questions. During
the design of the questionnaire, we pretested our questionnaire with
officials from two field offices and modified it on the basis of the
feedback and comments we received during the pretests. In addition, we
obtained comments on the questionnaire from HUD?s Office of Public and
Indian Housing.

To assess selected public housing agencies? experiences with the fiscal year
2000 agency plan process, we visited eight geographically dispersed agencies
with low- rent and tenant- based Section 8 units. We selected the eight
housing agencies based on criteria such as size and performance designation,
which determines the type of plans each agency is required to submit. We
interviewed the executive director or other staff responsible for preparing
the agency plans, residents, and resident board members. We also reviewed
documents supporting the agencies? fiscal year 2000 plans. In addition, we
contacted public housing industry groups to obtain their

constituents? perspectives on the first year of the required planning
process.

We conducted our review from January 2001 through March 2002 in accordance
with generally accepted government auditing standards.

Agency Comments We provided a draft of this report to HUD to obtain
comments. On May 2, 2002, the deputy assistant secretary for policy,
programs, and legislative

initiatives, Office of Public and Indian Housing, provided oral comments.
HUD generally agreed with the draft and provided editorial and clarifying
comments that were incorporated in the report, as appropriate.

We are sending copies of this report to interested congressional committees
and members of Congress; the secretary of HUD; and other interested parties.
We also will make copies available to others upon request. In addition, the
report will be available at no charge on the GAO Web site at http:// www.
gao. gov.

If you have further questions, please call me at (202) 512- 7631. The key
contact and other contributors to this report are listed in appendix II.

Peter F. Guerrero Director, Physical Infrastructure

List of Congressional Committees The Honorable Barbara A. Mikulski
Chairwoman The Honorable Christopher S. Bond Ranking Minority Member
Subcommittee on VA, HUD and Independent Agencies Committee on Appropriations
United States Senate

The Honorable James T. Walsh Chairman The Honorable Alan B. Mollohan Ranking
Minority Member Subcommittee on VA, HUD

and Independent Agencies Committee on Appropriations House of
Representatives

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 Marge Roukema Chairwoman The Honorable Barney Frank Ranking
Minority Member Subcommittee on Housing

and Community Opportunity Committee on Financial Services House of
Representatives

Appendi xes Briefing Slides to Congressional Staff on HUD and Public Housing
Agencies? Experiences

Appendi x I

with Fiscal Year 2000 Plan Requirements Public Housing Agency Plans HUD and
Public Housing Agencies? Experiences

with FY 2000 Plan Requirements Briefing January 2002

Outline

 Briefing Purpose  Methodology  Background Information Review Results 
Observations

2

Briefing Purpose

This briefing provides the results of our review, mandated by the Public
Housing Reform Act, of public housing agency (PHA) plans and the plan
process. We assessed

 the status of PHAs? fiscal year 2000 plans,  HUD?s experiences with the
fiscal year 2000 plan process,

and  selected PHAs? experiences with the fiscal year 2000 plan

process. 3

Methodology - Status of Plans and HUD Plan Review Process

To determine the status of plans submitted to and approved by HUD for fiscal
year 2000, we

 interviewed HUD Public and Indian Housing officials:  Office of Policy 
Field Operations  Grants Management Center.  analyzed information from
HUD?s databases on PHAs and

approved plans. To assess HUD?s experience with the fiscal year 2000 agency
plan

review process, we  surveyed all 43 HUD public and Indian housing field
offices

and both troubled agency recovery centers from AugustOctober 2001.

4

Methodology - PHAs? Experiences

To assess PHAs? experiences with the fiscal year 2000 plan process, we

 contacted industry groups, and  visited eight PHAs and reviewed documents
supporting their

plans.*

Site Visits: Eight Public Housing Agencies PHA name and location PHA

Type of plan Size required Moorhead Housing Authority (Minn.) Small
Streamlined Standard

Bernalillo Housing Authority (N. Mex.) Small Troubled Tullahoma Housing
Authority (Tenn.) Medium Streamlined Standard

Muskegon Housing Commission (Mich.) Medium Troubled Miami Beach Housing
Authority (Fla.) Large Standard Bridgeport Housing Authority (Conn.) Large
Standard Atlanta Housing Authority (Ga.) Extra Large Streamlined Standard

Phoenix Housing Authority (Ariz.) Extra Large Streamlined Standard *The
results of our visits can not be generalized to the universe of over 4,000
PHAs, but they provide insight into

5 specific PHAs? concerns.

Background - Universe of PHAs

There are over 4,000 public housing agencies (PHAs). Of these, 1,544 have a
combination of low- rent and tenantbased Section 8 units; 1,625 have low-
rent units only; and 999 have tenant- based Section 8 units only.*
Approximately 70 percent of all types of PHAs are small.

Universe of PHAs, by Type of Units and Size

1800 1600

1400 1200

Extra large ( 10000 or more units) 1000

800 Large ( 1250- 9999 units)

600 Medium ( 250- 1249 units)

400 Small ( 249 or less units)

200 0

Combination: Low- rent

Section 8 low- rent and

units only units only

Section 8 units *Tenant- based Section 8 units are housing units in
privately owned rental housing. Through the Section 8 program, PHAs

6 make subsidy payments to owners on behalf of the assisted family. Low-
rent units are housing units in public housing that

is managed by PHAs for low- income families.

Background - The Public Housing Reform Act

The Public Housing Reform Act*  was major legislation designed to improve
the nature of public

housing and the lives of public housing residents,  included about 80
provisions that revised key requirements

related to HUD?s public housing and tenant- based Section 8 housing
assistance programs,

 gave PHAs more flexibility and discretion in using funding to address
needs of low income families, and

 encouraged resident involvement in housing management by requiring
resident advisory boards.

* The Quality Housing and Work Responsibility Act of 1998 7

Five- year submit to HUD two plans.

Plan Submission PHA Plans

frequency Purpose

plan Once every 5 fiscal years

Annual plan Each fiscal year

Background - PHA Plans

The standard PHA annual plan includes the following 18 components:

 Housing needs  Conversions of public housing

 Financial resources  Home ownership programs

 Policies on eligibility, selection,  Community service and
selfsufficiency

and admissions programs

 Rent determination policies  Crime and safety measures

 Operations and management  Pet policies and rules

policies  Civil rights certification

 Grievance procedures  Audit results

 Capital improvement needs  Asset management

 Demolition and disposition  Additional information and

 Designation of housing attachments (includes resident

participation requirements such as formation of resident advisory board)

9

Background - PHA Plans

The number of components and other information a PHA is required to include
in its annual plan depends on the PHA?s performance designation and/ or
size.*

Type of Public Housing Agency FY 2000 Annual Plan Required PHA plan type
Eligibility requirements Required plan components

Standard PHA plan Standard- performing and All 18 components. 250 units or
more of housing. Streamlined PHA plan High- performing. 10- 12 components.
Less than 250 units and non- troubled. Section 8 only. Troubled PHA plan
Troubled. All 18 components, with At risk of being troubled. some additional
information. . *For FY 2000, HUD based PHAs? performance designation (high
performing, standard performing, or troubled) on

10 HUD?s Public Housing Assessment System or a predecessor system. A PHA is
designated as troubled if its

performance falls below a HUD determined threshold

Background - PHA Plans

PHAs must  submit 5- year and annual plans to HUD for fiscal year 2000.

Plans were due 75 days before the beginning of the PHA?s fiscal year,

 develop plans in consultation with a resident advisory board,  ensure
plans are consistent with other HUD- required

community planning documents, and  hold a public hearing on plans and
provide a 45- day notice of

the hearing. 11

Background - PHA Plans

HUD must  issue a written notice either approving or disapproving the

plans within 75 days. If HUD does not meet this deadline, plans are
considered approved.

 review PHA- submitted plans to ensure that they  contain information
required by the act (that all appropriate

components are addressed),  agree with information from other data sources
available to

HUD such as community planning documents, and  comply with other applicable
laws.

12

Background - PHA Plans

To facilitate the plan development and review process, HUD  managed its
review of fiscal year 2000 agency plans through

its 43 Public and Indian Housing field offices and 2 troubled agency
recovery centers (TARCs).

 issued guidance establishing requirements and procedures for plan
submission and review.

 HUD required plans in order for PHAs to receive FY 2000 capital fund
program (CFP) and public housing drug elimination program (PHDEP) formula
grants.

 developed a plan template or form. The template  is available on HUD?s
Web site for all PHAs to download,

and  lists the 18 components, with instructions for completing

each component. 13

Background - PHA Plans FY 2000 Agency Plan Review and Approval Process

PHAs download template from HUD?s Web site. PHA completes template and
electronically submits its PHA plan to HUD's central office. PHA also mails
in the signed certifications to appropriate field office. Field office
accesses HUD?s PHA plan Web site to retrieve and review the plan.

Field office reviews plan.

Plan approved: Plan not approved:

Field office notifies PHA. Field office notifies PHA

of plan?s deficiencies. PHA revises and resubmits plan. Field office
continues its review. Plan resubmitted as many times as necessary.

14

Review Results - Status of Plans

Ninety- eight percent of required PHA plans for fiscal year 2000 had been
submitted and approved (as of 1/ 24/ 02).

 76 of the plans that have not been approved are for PHAs with only tenant-
based Section 8 units.

Status of Required 5- Year and Annual Plans (4,144 as of 1/ 24/ 02) a

Tenant- based Section 8- only (76)

Low- rent/ combined Approved

Not approved (13)

(4, 055) (89)

a Forty- nine PHAs were exempt from submitting fiscal year 2000 plans
because they did not operate federal low- rent or Section 8 tenant- based
voucher programs.

Source: GAO analysis of HUD data. 15

Review Results - Status of Plans

The 89 fiscal year 2000 plans that had not been approved (as of 1/ 24/ 02)
were in various stages:

 2 plans were in the process of being reviewed by the field office.

 The 2 plans belong to PHAs with only tenant- based Section 8 units.

 34 plans had been submitted and disapproved due to deficiencies.  28
belong to PHAs with only tenant- based Section 8 units.

 53 plans had not been submitted.  46 belong to PHAs with only tenant-
based Section 8 units.

16

Review Results - Status of Plans

A HUD official stated that field offices have contacted all PHAs without
approved plans in an effort to obtain fiscal year 2000 plans. The official
added that 14 LowRent/ Combined PHAs that did not submit fiscal year 2000
plans by September 30, 2001, may forfeit their fiscal year 2000 formula
grant funds.

 Fourteen PHAs may forfeit about $2.6 million in capital fund program
grants.

 One PHA also may forfeit a $39,426 public housing drug elimination program
grant.

17

Review Results - Status of Plans

A HUD official noted that, as tenant- based Section 8- only PHAs do not
receive formula funds, HUD could not take the same action against the 76
tenant- based Section 8- only PHAs that do not have approved fiscal year
2000 plans. To address this issue, HUD

 could withhold a portion of the administrative fees tenantbased Section 8-
only PHAs receive for managing the program, pending submission and approval
of the required plans, and

 requires PHAs to have an approved fiscal year 2000 plan in order to apply
for additional Section 8 vouchers for fiscal year 2002.

18

Review Results - HUD?s Experience with Plan Process

Seventy- four percent of HUD field offices that responded to our survey
reported they experienced problems with the fiscal year 2000 review process.
Specific problems included

 data transmission delays. Technical problems occurred during the following
steps:  PHAs? transmission of plans to HUD headquarters.  HUD
headquarters? transmission of plans to HUD field

offices.  HUD headquarters? posting of plan approval notification.

 a general lack of guidance from HUD headquarters, including  delayed
guidance on how to review plans.  changing guidance on how to help PHAs
complete plans.

19

Review Results - HUD?s Experience with Plan Process

HUD took action to address reported problems for fiscal year 2001 plan
submissions. Specific changes included

 developing a new database to track plan approval and hiring a contractor
to manage it, and

 providing more timely guidance, such as a field office desk guide for
reviewing the plans.

20

Review Results - HUD?s Experience with Plan Process

Survey respondents reported that 49 percent of the fiscal year 2000 agency
plans had to be resubmitted. The most common deficiencies for which plans
had to be resubmitted related to PHAs? completion of the following plan
components:

 capital improvement needs.  statement of housing needs.  resident
participation requirement.

21

Review Results - HUD?s Experience with Plan Process

A majority of HUD field offices that responded to our survey said plans were
useful in helping the field office identify a number of PHA needs.

Plans Moderately to Extremely Useful in Identifying Specific PHA Needs
(percentage of field offices)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

0% Priorities Strategic

Community

Resident Technical

planning

participation

involvement in assistance in plan process

plan process

Source: GAO Survey of HUD Field Offices and Troubled Agency Recovery Centers
22

Review Results - HUD?s Experience with Plan Process

A higher percentage of field offices responded to our survey that the plan
was important in helping PHAs set management priorities for low- rent units
than for Section 8 units because many components of the plan do not apply to
the Section 8 program.

Plan Is Important for Setting Management Priorities for Types of Units
(percent of field offices)

50% 40%

Low- rent

30%

housing units Section 8 units

20% 10%

0%

Very or extremely important Slightly or not important Source: GAO Survey of
HUD Field Offices and Troubled Agency Recovery Centers

23

Review Results - HUD?s Experience with Plan Process

A majority of field offices responded to our survey that PHAs are
implementing their fiscal year 2000 plans. The most commonly cited problem
areas concerned the following plan components.

Plan Components PHAs Reported Difficulty In Implementing (percentage of
field offices)

60% 50% 40% 30% 20%

10% 0%

Resident Capital

Statement of participation

improvement housing needs

plans

Source: GAO Survey of HUD Field Offices and Troubled Agency Recovery Centers
24

Review Results - HUD?s Experience with Plan Process

Field offices reported the following reasons for PHAs? problems implementing
particular plan components:

 Resident participation: Resident apathy made it difficult for some PHAs,
especially small and Section 8- only PHAs, to fulfill this requirement.

 Capital improvement plans: PHAs were affected by funding constraints or
shortages.

 Statement of housing needs: Small and rural PHAs with limited resources
had difficulty gathering the relevant information, such as local
demographics.

25

Review Results - PHAs? Experiences

Groups representing PHAs generally agreed that their members found the plan
process quite difficult for fiscal year 2000, the first year. Problems cited
included the following:

 PHAs were unable to obtain meaningful information from HUD on reasons
plans were disapproved.

 Some PHAs found it hard to establish resident advisory boards.

 Small PHAs lacked the resources and staff to complete the plans.

26

Review Results - PHAs? Experiences

PHAs? assessment of the usefulness of the plans varied at the eight PHAs we
visited. Larger PHAs generally had more positive assessments than smaller
PHAs.

 Positive remarks: The process and plans  helped the PHA get other local
funding,  forced the PHA to review and update policies,  gave PHA
residents a vehicle for input, and  are used for strategic planning, as a
training aid, and as an

information source for HUD field offices.  Negative remarks: The process
and plans

 took time away from other duties, and  are not used.

27

Review Results - PHAs? Experiences

The PHAs we visited could not quantify their precise investments in
developing plans. However, the majority of PHAs said preparing the plans
required additional staff time or resources.

On the other hand, one PHA said it did not spend significantly more staff
time or resources preparing the plans because most of the required updating
of policies had already been completed before HUD provided guidance for
plans.

28

Review Results - PHAs? Experiences

The PHAs? we visited assessment of the helpfulness of HUD?s template also
varied.

 Positive remarks: The template  provided guidance for formatting,  was
sufficiently easy to use, and  was improved for fiscal year 2001.

 Negative remarks: The template  lacked flexibility,  did not
sufficiently define terms such as ?affordability? and

?quality?, and  was not user friendly, as PHAs had to go to several HUD

sources to complete it. 29

Review Results - PHAs? Experiences

PHAs? we visited assessment of the resident participation requirement also
varied.

 Positive remarks: The resident participation requirement  brought a
cross- section of residents together, and  encouraged resident
participation.  Negative remark: The resident participation requirement

 was difficult to sustain because of resident apathy. 30

Observations

At PHAs and HUD offices we visited, we observed that the burden and value of
the plans varied.

 Smaller PHAs we visited viewed the process and plans  as consuming a
larger portion of their resources, and  as having limited value.

 Most HUD field offices and some larger PHAs we visited viewed the plans 
as a valuable tool to help PHAs define their strategic vision

and monitor their progress toward management goals, and  as having limited
value to tenant- based Section 8- only

PHAs. 31

Observations

HUD made changes for fiscal year 2001 plans, including  improved the
template,  simplified plans for small PHAs, and  modified requirements for
tenant- based Section 8- only PHAs.

32

Observations

While the vast majority of PHAs have submitted and had their fiscal year
2000 plans approved, tenant- based Section 8- only PHAs have a higher rate
of noncompliance. Tenant- based Section 8- only PHAs are

 24 percent of all PHAs, and  85 percent of PHAs without approved plans.

HUD has recently determined that it can sanction tenant- based Section 8-
only PHAs that fail to submit plans. HUD

 could withhold a portion of the administrative fee, and  requires an
approved fiscal year 2000 plan for PHAs to be

eligible for additional vouchers for fiscal year 2002. 33

Appendi x II

Contact and Staff Acknowledgments GAO Contact Carol Anderson- Guthrie (214)
777- 5600 Acknowledgments In addition to the individual named above, Johnnie
Barnes, Sherrill Dunbar, Gloria Hernandez- Saunders, Miko Johnson, John
McGrail, Luann Moy, Don

Watson, and Alwynne Wilbur made key contributions to this report.

(395003)

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Appendix I

Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
Agencies?

Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
Agencies?

Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Experiences with Fiscal Year 2000 Plan Requirements

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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Appendix I Briefing Slides to Congressional Staff on HUD and Public Housing
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Appendix II

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