Elderly Housing: Project Funding and Other Factors Delay
Assistance to Needy Households (30-MAY-03, GAO-03-512).
According to the Department of Housing and Urban Development
(HUD), the most widespread and urgent housing problem facing
elderly households is affordability. About 3.3 million elderly
renter households in the United States have very low incomes (50
percent or less of median area income). The Section 202
Supportive Housing for the Elderly Program provides capital
advances (grants) to nonprofit organizations to develop
affordable rental housing exclusively for these households. GAO
was asked to determine the role of the Section 202 program in
addressing the need for affordable elderly housing and the
factors affecting the timeliness of approving and constructing
new projects.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-512
ACCNO: A07043
TITLE: Elderly Housing: Project Funding and Other Factors Delay
Assistance to Needy Households
DATE: 05/30/2003
SUBJECT: Federal grants
Housing for the elderly
Housing programs
Low income housing
Program evaluation
Rental housing
HUD Section 202 Supportive Housing for
the Elderly Program
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GAO-03-512
A
Report to the Special Committee on Aging, U. S. Senate
May 2003 ELDERLY HOUSING Project Funding and Other Factors Delay
Assistance to Needy Households
GAO- 03- 512
Letter 1 Results in Brief 3 Background 5 Section 202 Is an Important
Source of Housing for Elderly
Households with Very Low Incomes 8 Section 202 Projects Reviewed Generally
Did Not Meet Guidelines for Timeliness 13
Various Factors Can Impede the Timely Processing of Projects 18
Conclusions 25 Recommendations 25 Agency Comments and Our Evaluation 26
Appendixes
Appendix I: Scope and Methodology 28
Appendix II: Budget Information for the Section 202 Program 30 Section 202
Appropriations 30 Section 202 Unexpended Balances 31
Appendix III: Data Issues Concerning the American Housing Survey 33
Appendix IV: Federal Housing Programs and the Elderly 41 Housing
Production Programs That Develop Elderly Housing 41 Target Households 43
Annual Housing Production Levels 44
Appendix V: Section 202 Program Data 46
Appendix VI: Survey of HUD Field Office Representatives 56
Appendix VII: Survey of Section 202 Sponsors and Consultants 64
Appendix VIII: Comments from the Department of Housing and Urban
Development 70
Tables Table 1: HUD Income Categories 7 Table 2: Field Office Performance
in Approving Projects for
Construction within 18 and 24 Months 16 Table 3: Field Office Performance
and Problems with Funding
Issues 21 Table 4: Annual Appropriations for the Housing for Special
Populations Account in Fiscal Years 1998- 2002 31 Table 5: Annual Balances
of Unexpended Appropriations for
Section 202 in Fiscal Years 1998- 2002 32
Table 6: Housing Units Occupied by Homeowner and Renter Elderly Households
in 2001 35 Table 7: Income Categories for Elderly Homeowner and Renter
Households in 2001 36 Table 8: Elderly Renter Households with Very Low
Incomes by
Subsidy Status and Rent Burden in 2001 37 Table 9: Moderate or Severe Rent
Burden of Unassisted Very Low
Income Elderly Renter Households by Region in 2001 37 Table 10: Number of
Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in Metropolitan Areas in 2001 38
Table 11: Proportion of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in Metropolitan Areas in 2001 39
Table 12: Number of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001
39 Table 13: Proportion of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001
40 Table 14: Active Federal Rental Housing Production and Insurance
Programs by Household Type Served and Program Rent Levels 43 Table 15:
Approximate Volume of New Production of Housing Units
by Active Federal Rental Housing Programs 45 Table 16: Distribution of
Section 202 Projects, Capital Advance
Funds, and PRAC Funds, by Fiscal Year and Construction Approval Status 46
Table 17: Status of Metropolitan and Nonmetropolitan Projects in
Gaining Construction Start Approval, Projects Funded in Fiscal Years 1998
to 2000 47 Table 18: Field Office Performance in Approving Projects to
Start
Construction, All Projects Funded in Fiscal Years 1998 to 2000 48 Table
19: Field Office Performance in Approving Metropolitan
Projects to Start Construction, All Metropolitan Projects Funded in Fiscal
Years 1998 to 2000 50 Table 20: Field Office Performance in Approving
Nonmetropolitan
Projects to Start Construction, All Nonmetropolitan Projects Funded in
Fiscal Years 1998 to 2000 52
Table 21: Average Duration of Stages of Section 202 Project Development,
Projects Funded Fiscal Years 1998 to 2000 That Were Approved to Start
Construction 54 Table 22: Factors Cited by HUD in Approved Time Extensions
for
Section 202 Projects Funded in Fiscal Years 1998 to 2000 55
Figures Figure 1: U. S. Homeowners and Renters in 2001 5 Figure 2: Housing
Cost Burdens of Very Low Income Elderly
Renter Households in 2001 9 Figure 3: Units Developed under Section 202
Compared with All
Units Occupied by Very Low Income Elderly Renter Households, 1985 to 2001
12 Figure 4: Section 202 Project Processing 14 Figure 5: Average Elapsed
Time for Completed Section 202 Projects Funded in Fiscal Years 1998 and
1999 17
Figure 6: Section 202 Unexpended Fund Balances as of End of Fiscal Year
End 2002 18 Figure 7: Survey Responses* Insufficient Capital Advances and
Other Project Funding Issues 20 Figure 8: Survey Responses* Field Office
Staff Issues 22 Figure 9: Survey Responses* HUD Program Administration
Issues 23
Abbreviations
AHS American Housing Survey AMI area median income BMIR below- market
interest rate DAP Development Application Processing System FHA Federal
Housing Administration HFA housing finance agencies HUD Department of
Housing and Urban Development PRAC project rental assistance contract REMS
Real Estate Management System
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May 30, 2003 Let er t The Honorable Larry Craig
Chairman The Honorable John Breaux Ranking Minority Member Special
Committee on Aging United States Senate
According to the Department of Housing and Urban Development (HUD), the
most widespread and urgent housing problem facing elderly households is
affordability* that is, finding housing that is not too expensive relative
to household income. 1 In 2001, there were about 26 million households
nationwide in which the householder or householder*s spouse was 62 years
or older. 2 Of these elderly households, about 3.3 million were renters
with very low incomes, which HUD defines as 50 percent or less of area
median income. The Section 202 Supportive Housing for the Elderly Program
(the Section 202 program) provides funds to nonprofit organizations to
develop affordable rental housing exclusively for very low income elderly
households that are not receiving other forms of housing assistance. In
fiscal year 2002, the Section 202 program received about $783 million in
appropriations to fund, among other things, the construction of over 6,000
rental units.
The Section 202 program provides two types of financial support to
nonprofit sponsors that develop and operate projects. First, project
sponsors receive a capital advance, or a grant, to cover land and
construction costs for projects of modest design that comply with HUD*s
minimum property standards. HUD determines the amounts of capital advances
using its published development cost limits, adjusted for areas with high
construction costs. HUD*s policy is to have the capital advance
cover total development costs without the need for sponsors to obtain
additional funding from other sources. Second, after the project is
completed and elderly tenants move in, the sponsor receives monthly 1 U.
S. Department of Housing and Urban Development. Housing Our Elders.
(Washington, D. C.: 1999). Also see Commission on Affordable Housing and
Health Facility Needs for Seniors in the 21st Century. A Quiet Crisis in
America: A Report to Congress. (Washington, D. C.: 2003).
2 A householder is the person whose name is on the lease, deed, or
mortgage. We chose 62 years to be consistent with HUD*s definition of
elderly.
rental assistance payments to defray some of the operating expenses. The
combination of a debt- free project and rental assistance payments enables
project sponsors to offer units at rents that are generally equal to 30
percent of the renter*s income. Section 202 also has requirements to
ensure that sponsors make the appropriate supportive services, such as
housekeeping and transportation, available to elderly tenants. Each year
HUD announces the availability of Section 202 funds. Potential project
sponsors submit their applications for these funds to HUD*s field offices.
An application includes the description of the sponsor*s nonprofit status,
past experiences in providing housing and supportive services, and the
housing needs of the elderly in the market area to be served. Once the
applications are ranked according to criteria published in the Federal
Register, field offices make their selection recommendations to HUD
headquarters. If HUD headquarters approves these recommendations, HUD
reserves funds for these proposed projects and sends notification letters
to
project sponsors. Between the time HUD sends notification letters and
approves the start of construction, the sponsors* must complete, and HUD
must approve, design plans and other documentation. These actions are
referred to as project processing. Generally, 45 of HUD*s 81 field offices
are responsible for processing Section 202 projects.
HUD*s guidelines stipulate that HUD field offices and project sponsors
should complete project processing within 18 months of the date the
funding is awarded. 3 However, the field offices may grant extensions of
up to 6 months. Delays in processing hold up the distribution of funds and
contribute to the program*s annual unexpended balances. 4 Between fiscal
years 1998 and 2002, for example, the program*s unexpended balances
increased from about $4.8 billion to $5.2 billion. Delays in processing
also hinder efforts to provide much- needed housing to very low income
elderly renter households.
This report addresses the role of the Section 202 program in responding to
the housing affordability needs of elderly renter households with very low
incomes and the program*s timeliness in processing projects for
construction and expending appropriated funds. As agreed with your
3 These guidelines are based on HUD regulation (24 C. F. R. 891.165). 4
Unexpended balances include cumulative budget authority that has not been
spent (outlayed) and that may be carried over from one year to the next.
These balances may include either obligated or unobligated funds.
offices, our report discusses: (1) the role of the Section 202 program in
meeting the housing needs of elderly renter households with very low
incomes, (2) the extent to which Section 202 projects meet HUD*s time
guideline for project processing, and (3) the factors that keep Section
202 projects from meeting HUD*s time guideline for project processing.
To address these objectives, we analyzed data from the American Housing
Survey and other sources on the affordability of rental housing for very
low income elderly households and the levels of assistance the Section 202
program provides. 5 In addition, we reviewed HUD program and budget data,
surveyed all HUD field offices that process Section 202 projects,
conducted site visits at selected offices, surveyed and interviewed
project sponsors and consultants experienced in working with the Section
202 program, and observed a HUD training program on processing Section 202
projects. Unless stated otherwise, our analysis focused on Section 202
projects funded between fiscal years 1998 and 2000. Lack of reliable
program data prevented us from reviewing all Section 202 projects funded
before fiscal year 1998. Appendix I provides detailed information on our
scope and methodology. We conducted our work primarily in Washington, D.
C., between May 2002
and March 2003, in accordance with generally accepted government auditing
standards.
Results in Brief As the only federal housing program that targets all of
its rental units to very low income elderly households, Section 202 is an
important source of
affordable housing for these households. Because very low income elderly
households often have difficulty affording market rents, program funding
is directed to localities based in part on their proportions of elderly
renter households that have a housing affordability problem* that is, that
pay over 30 percent of their income for rent. Nationwide, about half of
the 3.3 million elderly renter households with very low incomes have a
housing affordability problem and do not receive government housing
assistance.
5 The survey, which the Bureau of the Census conducts for HUD, collects
data on the nation*s housing in odd- numbered years. The national sample
covers approximately 55,700 housing units. All numerical estimates derived
from the American Housing Survey have sampling errors of +-10 percent or
less of the value of those numerical estimates, unless otherwise noted.
All percentage estimates have sampling errors of +-6 percentage points or
less, unless otherwise noted.
Section 202 insulates tenants in housing units subsidized by the program
from increases in housing costs by limiting rents to 30 percent of
household income. Section 202 provided housing for an estimated one- fifth
of the 1.3 million renter households that received government housing
assistance. Even with the program*s exclusive focus on these households,
Section 202
has reached less than 8 percent of eligible households. And though some
other federal programs provide more rental housing for the elderly, they
do not focus exclusively on the very low income group.
More than 70 percent of Section 202 projects funded between 1998 and 2000
were delayed* that is, these projects took longer than the 18 months set
out in HUD*s guidelines to proceed from the date of the funding award to
the date of HUD*s approval to start construction. However, a majority of
projects were approved for construction within 24 months, or 18 months
plus the 6- month discretionary extension. Projects located in
metropolitan
areas were more than twice as likely as projects in nonmetropolitan areas
to exceed the 18- month guideline. Further, projects that exceeded the 18-
month guideline ultimately took an average of 11 months longer to finish
than projects that met the time guideline, and these delayed projects
contributed to the program*s unexpended fund balances. At the end of
fiscal year 2002, 14 percent of the Section 202 program*s $5.2 billion in
unexpended funds was associated with projects that had not yet been
approved for start of construction after 18 months.
Several factors impeded the timely processing of projects, according to
project sponsors, consultants, and HUD field office staff. First, despite
HUD*s development cost policy, the capital advances that HUD awards do not
always cover the cost of developing projects. Field offices, sponsors, and
consultants reported that this factor often prolonged processing time, in
part because sponsors needed to seek additional funding. We found that
field offices that cited capital advance shortfalls and the need for
sponsors to seek outside funding were less likely to have met the 18-
month processing time guideline, compared with field offices that did not
report
these problems. Second, field offices, sponsors, and consultants reported
that inconsistent implementation of procedures HUD adopted to streamline
processing by field office staff, as well as limited training and out- of-
date guidance on processing policies and procedures, impeded timely
processing. Third, prolonged response times from HUD headquarters on
requests for additional funds or time have affected processing times,
according to project sponsors and consultants and HUD field offices.
Fourth, HUD*s project monitoring system has limitations that may impede
HUD*s ability to oversee project timeliness. Finally, field
offices, sponsors, and consultants reported that other factors* including
inexperienced sponsors and local requirements in areas such as permitting
and zoning* negatively affected processing time for some projects.
This report contains recommendations to the Secretary of HUD designed to
improve both the timeliness of project processing and program oversight.
Background Elderly households occupied about 25 percent (26 million) of
the
approximately 106 million housing units in the U. S. in 2001, according to
the Housing Survey. A large majority of these elderly households were
homeowners. The homeownership rate was considerably higher for elderly
households than for nonelderly households (fig. 1). A smaller share of
elderly households (19 percent) rented their homes. These elderly renter
households comprised about 15 percent of all renter households nationwide.
Figure 1: U. S. Homeowners and Renters in 2001 Overall
Nonelderly Elderly
(106 million) (80 million) (26 million) 32%
36% 68%
64% 19%
81%
Renters Homeowners Source: GAO analysis of the American Housing Survey,
2001.
The Housing Act of 1959 (P. L. 86- 372) established the Section 202
program, which began as a direct loan program that provided below- market
interest rate loans to private nonprofit developers, among others, to
build rental housing for the elderly and people with disabilities. In
1990, the CranstonGonzalez National Affordable Housing Act (P. L. 101-
625) modified Section 202 by converting it from a direct loan program into
a capital advance program. In addition, the 1990 act created Section 811,
another capital advance program, to produce housing specifically for
people with disabilities and limited Section 202 to housing for the
elderly.
In its current form, Section 202 provides capital advances* effectively
grants* to private nonprofit organizations (usually referred to as
sponsors or owners) to pay for the costs of developing elderly rental
housing. As long as rents on the units remain within the program*s
guidelines for at least 40 years, the sponsor does not have to pay back
the capital advance. HUD calculates capital advances in accordance with
development cost limits that it determines annually. These limits must
account for several factors, including the costs of construction,
reconstruction, or rehabilitation of supportive housing for the elderly
that meets applicable state and local housing and building codes. HUD
must, by statute, use current data that reflect these costs for each
market area. 6 HUD*s policy is that these limits should cover the
reasonable and necessary costs of developing a project of modest design
that complies with HUD*s minimum property standards, accessibility
requirements, and project design and cost standards. Once HUD calculates a
capital advance, the amount is placed on reserve, and the funds are made
available to the sponsor. 7
To be eligible to receive Section 202 housing assistance, tenants must
have (1) one household member who is at least 62 years old and (2)
household income that does not exceed the program*s income limits. HUD has
established general income categories that it and other federal agencies
use to determine eligibility for many federal rental housing assistance
programs (table 1). 8 These amounts are subject to adjustments in areas 6
12 U. S. C. 1701q( h)( 1). 7 In addition, HUD requires a minimum capital
investment (generally not to exceed $10, 000) to assure the sponsor*s
commitment to the housing. 8 These other agencies include the Internal
Revenue Service within the Department of the Treasury and Rural Housing
Service within the Department of Agriculture. Both of these agencies
administer affordable rental housing programs.
with unusually high or low incomes or housing costs and are published.
Only very low income households* those with incomes below 50 percent of
the area*s median income* are eligible for the Section 202 program.
Table 1: HUD Income Categories Income category Percent of area median
income
Low income 80% Very low income 50% Extremely low income 30% Source: HUD.
Note: HUD does not officially refer to this category as *extremely low
income,* but the term is commonly used by housing experts to describe
households that have incomes that do not exceed 30 percent of area median
income.
Very low income households in Section 202 projects generally pay 30
percent of their income for rent. Because tenants* rent payments are not
sufficient to cover the property*s operating costs, the project sponsor
receives an operating subsidy from HUD, called a project rental assistance
contract. Under the project rental assistance contract, HUD pays the
difference between the property*s operating expenses (as approved by HUD)
and total tenant rental receipts. 9 Section 202 rental assistance is a
project- based subsidy and, as such, is tied to rental units. The
households receiving assistance can benefit from a project- based subsidy
only while living in Section 202 units.
For fiscal year 2002, Congress appropriated about $783 million for the
Section 202 program to fund the construction of over 6,000 new units as
well as new multiyear rental assistance contracts, service coordinators,
renewals of expiring rental assistance contracts, and other activities as
authorized by Section 202. From year to year, the Section 202 program has
carried balances of unexpended appropriated dollars. According to HUD, in
fiscal year 2002, the unexpended balance for Section 202 was approximately
$5.2 billion. About 41 percent of this balance was for capital advance
funds and 59 percent for rental assistance funds. Generally, some of the
program*s unexpended funds have not yet been awarded to projects,
9 The term on rental assistance contracts is 5 years, although HUD has
authorized these contracts for as long as 20 years. After these contracts
expire, HUD renews them for 5 years, subject to the availability of funds.
and others are attributable to projects that have not begun construction.
Once construction begins, funds are expended over several years during the
construction phase and during the term of the project rental assistance
contract. See appendix II for additional budgetary data for the Section
202
program. Section 202 Is an
Section 202 is the only federal housing program that targets all of its
rental Important Source of
units to very low income elderly households. Because these households
often have difficulty affording market rents, program funding is directed
to Housing for Elderly localities based in part on their proportions of
elderly renter households
Households with Very that have a housing affordability problem* that is,
that pay over 30 percent
Low Incomes of their income for rent and do not receive housing
assistance. Nationwide,
about 1.7 of the 3.3 million elderly renter households with very low
incomes have a housing affordability problem. Section 202 insulates
tenants in housing units subsidized by the program from increases in
housing costs by limiting rents to 30 percent of household income. The
program is a significant source of new and affordable housing for very low
income elderly households: in 2001, 1.3 million such households received
government housing assistance (about 40 percent of the total), and Section
202 provided housing for roughly one- fifth of them. Even with the
program*s exclusive focus on the very low income elderly, Section 202 has
reached only a small share of eligible households. Though some other
federal programs provide more housing for the elderly, they do not focus
exclusively on these renter households.
Section 202 Targets Very Congress specifically intended the Section 202
program to serve very low
Low Income Elderly income elderly households and to expand the supply of
affordable housing
that can accommodate the special needs of this group. 10 HUD takes into
Households and Makes
account the level of need for the kind of housing Section 202 provides
when Supportive Services
allocating program funds to the field offices. Thus, the criteria for
Available
allocating funds to the offices include, among other things, the total
number of very low income elderly renters in the area and the number in
this group that pay more than 30 percent of their incomes for rent.
HUD*s allocation formula takes into account the amount of rent households
pay in relation to their income. According to the American Housing Survey,
10 12 U. S. C. 1701q( a).
in 2001 about 1.7 million households paid over 30 percent of their income
for rent. 11 HUD classified the *rent burden* these households face as
either *moderate** between 31 and 50 percent of household income* or
*severe** more than 50 percent of household income. As figure 2
illustrates, about 35 percent (over 1 million) of all elderly renter
households with very low incomes had severe rent burdens, and about 15
percent (about 500,000) had moderate rent burdens. 12 For detailed data on
housing needs of these households, including data for metropolitan and
nonmetropolitan areas, see appendix III.
Figure 2: Housing Cost Burdens of Very Low Income Elderly Renter
Households in 2001
35% Severe rent burden
40% 50% Rent burdened households
(1.7 million)
10%
15% Moderate rent burden Other Unassisted
Total: 3.3 million households Assisted (subsidized)
Source: GAO analysis of the American Housing Survey, 2001. Note: Other
includes households that reported zero or negative income or no rent
burden.
11 As in other surveys, estimates from the American Housing Survey are
subject to both sampling and nonsampling errors. Appendix III provides the
sampling error for all estimates presented in this report and discusses
the types of nonsampling errors that may affect the estimates.
12 The sampling error for these half a million households with moderate
rent burden was about +-78,410.
Since Section 202 provides projects with rental assistance payments that
cover a portion of the rent for each unit, the tenants themselves pay
rents that equal a percentage of their household incomes* generally 30
percent. This percentage remains constant, so the amount of rent tenants
pay increases only when household income rises, protecting them from rent
increases that might be imposed in the private housing market when, for
example, market conditions change. In contrast, low income elderly renter
households that do not receive this type of assistance* especially those
with very low incomes* are vulnerable to high rent burdens and increases
in housing costs. Most of these households have few or no financial
resources, such as cash savings and other investments, and rely primarily
on fixed incomes that may not increase at the same rate as housing costs.
Section 202 serves another important function, potentially allowing
households to live independently longer by offering tenants a range of
services that support independent living* for example, meal services,
housekeeping, personal assistance, and transportation. HUD ensures that
sponsors have the managerial capacity to assess residents* needs,
coordinate the provision of supportive services, and seek new sources of
assistance to ensure long- term support. HUD pays a small portion of the
costs of providing these services through its rental assistance payments.
13 Section 202 Provides an
Section 202 is an important source of housing for elderly households with
Estimated One- fifth of All very low incomes. 14 Between 1998 and 2001,
Section 202 approved the
Government- subsidized construction of from 3,890 to 7,350 assisted units
annually, for an average
Housing for Very Low of about 5,690 units. According to the American
Housing Survey, in 2001
about 1.3 million, or 40 percent, of elderly renter households with very
low Income Elderly Renters
incomes received some form of rental assistance in 2001 from a government
housing program, including Section 202, public housing, or housing
vouchers (fig. 2). 15 According to our analysis of HUD program data, about
260,000 Section 202 units with rental assistance contracts (assisted
units) generally served very low income elderly households through 2001.
Taken together, these two sources of data suggest that around one- fifth
of
13 Tenants can also make co- payments to defray some of the services
expenses. 14 The exact share of elderly units provided through the Section
202 program in relation to all federal housing programs cannot be
calculated because many of these programs are used in combination with
each other. 15 These programs are described in appendix IV.
the 1.3 million assisted households identified in the American Housing
Survey received assistance from Section 202. 16
Although Section 202 is an important source of affordable elderly housing,
the program reached a relatively small fraction of very low income elderly
renter households. Between 1985 and 2001 the number of units assisted
under the Section 202 program grew by about 4 percent annually, while the
number of very low income elderly renter households declined by almost 1
percent annually. Yet at any given point in this period, Section 202 had
reached no more than about 8 percent of these households that were
eligible for assistance under the program (fig. 3). Also, during this
period, many of these elderly renter households with very low incomes*
ranging from about 45 to 50 percent* had housing affordability problems.
16 Since this estimate is derived from two different sources, we cannot
give a precise percentage, and thus, this estimate is intended to be
illustrative. Appendixes I and III contain discussions of the data
limitations in both of these sources.
Figure 3: Units Developed under Section 202 Compared with All Units
Occupied by Very Low Income Elderly Renter Households, 1985 to 2001 4.0
Units in millions 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
1985 1987 1989 1991 1993 1995 1997 1999 2001 Units occupied by elderly
renters with very low income Cumulative Section 202 units Gap between
eligible households and Section 202 units
Sources: GAO analysis of HUD Real Estate Management System and HUD
tabulation of the American Housing Survey, 1985- 2001.
Other federal programs that develop rental housing generally target
different income levels, serve other populations in addition to the
elderly (including families with children and people with disabilities)
and do not require housing providers to offer supportive services for the
elderly. For example, the Low- Income Housing Tax Credit Program, the
largest of all current production programs, subsidizes the construction of
about 86,000 units annually. However, according to one source, only around
13,200 of these units are intended for the elderly* and, unlike Section
202, not all of these units serve very low income elderly renter
households. 17 In addition, these programs also do not have specific
requirements ensuring that supportive services be available to elderly
tenants. Appendix IV provides additional information on other federal
housing programs.
17 Seniors Commission 2002, 53.
Section 202 Projects According to HUD policy, Section 202 projects should
complete project
Reviewed Generally processing and be approved to start construction within
18 months after
they are funded. Overall, 73 percent of Section 202 projects funded Did
Not Meet
between fiscal years 1998 and 2000 did not meet this processing time
Guidelines for guideline. However, about 55 percent of the projects were
approved within
Timeliness 24 months. Projects located in metropolitan areas were about
twice as likely as projects in nonmetropolitan areas to take more than 18
months to
be approved. The percentage of projects approved within the specified time
frame differed widely across HUD*s field offices, with field offices
located in the northeast and west approving the lowest percentages. As
well as taking longer to complete than other projects* thus delaying
benefits to very low income elderly tenants* projects that were not
approved for construction after the 18- month time frame accounted for 14
percent of the Section 202 program*s balance of unexpended appropriations.
HUD Expects Projects to Be Once HUD has made a funding award for a Section
202 project, HUD field
Approved to Start office staff and project sponsors must complete various
tasks, meetings,
Construction within 18 and paperwork before construction can commence
(fig. 4). In this report,
Months we refer to the tasks that take place between (1) the date when HUD
sends
a funding award letter to the sponsor and (2) the date that HUD authorizes
the sponsor both to begin construction and to start drawing down the
capital advance amount (initial closing) as project processing. The
duration of the project processing period depends, in part, on project
sponsors* timeliness in submitting the required documentation to HUD*s
field office reviewers. For example, sponsors must create owner
corporations, hire consultants, obtain local permits and zoning approval,
and design architectural and cost plans, among other things. HUD field
offices must review all documentation before projects can be approved for
construction.
Figure 4: Section 202 Project Processing 18- month guideline
Application Funding
Firm Approval for
review award
commitment construction
Construction and selection
letter application
(initial begins
Sponsor Sponsor
closing) prepares
obtains and HUD
. Contractor reviews . Building permit . Architectural
HUD reviews
plans . Cost estimates . Legal and . Other required
other required documentation
documentation Source: GAO presentation based on flowchart provided by HUD.
As figure 4 illustrates, HUD*s current time guideline for project
processing is 18 months. Individual field offices have the discretion to
extend processing for up to 6 more months without approval from HUD
headquarters, but all extensions beyond those additional 6 months (that
is, 24 months after the funding award) require approval from headquarters.
After construction is authorized to begin, HUD gradually expends capital
advance funds to cover development costs incurred by the sponsor. When
construction is completed, HUD approves the final costs, and sponsors can
begin leasing to eligible tenants. Over time, sponsors draw down funds
from the reserved rental assistance amounts to support operating costs.
To help assure that field office staff and project sponsors could complete
project processing requirements within the 18- month time guideline, HUD
adopted changes in 1996 that were intended to streamline procedures. 18
One of the key changes included requiring field office staff to accept
sponsor- provided certifications of architectural plans, cost estimates,
and
land appraisals. Previously, field office staff performed detailed
technical reviews of these items. According to HUD policy, these
streamlined procedures should have been used to process all projects in
our analysis, which were funded between fiscal years 1998 and 2000.
18 HUD Notice H 96- 102.
HUD Took Longer Than 18 Most Section 202 projects that received funding
awards did not receive
Months to Approve Most approval to begin construction within the 18- month
guideline set out by
Projects for Construction HUD. Altogether, 73 percent of projects funded
from fiscal years 1998 through 2000 did not meet the 18- month guideline.
These projects
accounted for 79 percent of the nearly $1.9 billion in funding awarded to
projects during this period. The percentage of projects exceeding the
guideline remained relatively stable over the years at around 72 percent
(fiscal year 1998) to 75 percent (fiscal year 2000). During this period,
the projects located in metropolitan areas (72 percent of all projects)
were about twice as likely as projects in nonmetropolitan areas to exceed
the 18- month guideline (see app. V for more detail). 19 HUD field offices
may grant up to 6- month extensions after the 18- month guideline for
projects needing more time to gain approval to start
construction, and many projects were approved within that 6- month time
frame. HUD approved 55 percent of the projects funded from fiscal years
1998 through 2000 for construction within 24 months of the funding award*
27 percent within 18 months and 28 percent within 19 to 24 months. The
remaining 45 percent of projects took more than 24 months to be approved.
In addition, metropolitan projects were about twice as likely as
nonmetropolitan projects to take more than 24 months to gain approval to
start construction. Field Offices* Performance
We looked at the performance of the 45 individual HUD field offices that
in Meeting the Time
process Section 202 projects and found that they had varying degrees of
Guideline Varied
success in meeting the 18- month guideline. We evaluated their performance
by estimating the percentage of projects approved for construction
(project approval rate) within 18 months for each field office. Among
these offices, the median project approval rate for construction within 18
months was 22 percent (table 2), but field offices* performance varied
widely. Eight field offices had no projects that met the 18- month
guideline, while more than 90 percent of projects at one office did (see
app. V for a breakdown of
approval rates by field office). Field offices* performance varied by
region, with those located in the northeast and west being least likely to
approve
19 HUD allocates Section 202 funding among field offices using a formula
that targets funds based on the unmet needs of elderly renter households
with housing problems. Also, the program allocates 85 percent of funding
to metropolitan areas and 15 percent to nonmetropolitan areas.
projects within 18 months of the funding award. Table 2 also shows the
rate of projects approved within 24 months.
Table 2: Field Office Performance in Approving Projects for Construction
within 18 and 24 Months Median project approval rate for field offices
Within 18 months Within 24 months
All field offices 22% 60% Offices in northeast 9% 36% Offices in west 15%
41% Offices in south 34% 71% Offices in midwest 29% 71% Source: GAO
analysis of HUD*s Development Application Processing (DAP) System,
December 2002. Note: The Puerto Rico field office is included in the
median calculation for all field offices, but it is not part of any
region, according to the Bureau of the Census definition.
Delayed Projects Affect the Meeting processing time guidelines is
important because most of the delays
Program*s Production Times in total production time* that is, the time
between funding award and
and Expenditures construction completion* stem from the project processing
phase. When we compared the average total production times for completed
projects
that did not meet HUD*s 18- month processing guideline and those that did,
the delayed projects took 11 months longer than other projects to proceed
from funding award to construction completion (fig. 5). Since the average
time taken for the construction phase was very similar for all projects,
most of the 11- month difference in total production time was attributable
to the extra 10 months that delayed projects took to complete the
processing phase.
Figure 5: Average Elapsed Time for Completed Section 202 Projects Funded
in Fiscal Years 1998 and 1999
Delayed projects
24 months 12 months Total time:
36 months
Other projects
14 months 11 months Total time:
25 months
0 5 10 15 20 25 30 35 40 Months
Processing phase Construction phase Source: GAO analysis of HUD DAP
system, December 2002. Note: Projects funded in fiscal year 2000 are
excluded from this analysis because no delayed projects had completed
construction.
Delayed processing of Section 202 projects also affected the Section 202
program*s overall balances of unexpended appropriations. At the end of
fiscal year 2002, for example, HUD had a total of $5.2 billion in
unexpended
Section 202 funds (fig. 6). A relatively small part of these unexpended
funds* about 14 percent* was attributable to projects that had not yet
been approved to start construction, even though they had exceeded HUD*s
18- month processing time guideline. Consequently, none of the funds
reserved for these projects had been expended. By contrast, the remaining
86 percent of unexpended funds were associated with projects for which HUD
was in the process of expending funds for construction or rental
assistance. For example, almost half of the unexpended balances* about 48
percent* resulted from projects that had already been completed but were
still drawing down their rental assistance funds as intended under the
multiyear project rental assistance contract between HUD and the project
sponsor. (For additional details on unexpended fund balances, see app.
II.)
Figure 6: Section 202 Unexpended Fund Balances as of End of Fiscal Year
2002 14%
Projects not approved for construction after more than 18 months
14%
Other
48% 24%
Projects not approved for construction after less than 18 months
Completed projects Total: $5.2 billion Source: GAO analysis of HUD DAP
system and budget data as of September 30, 2002.
Note: Other includes projects under construction and funding for other
program purposes.
Various Factors Can Our review of projects funded from fiscal years 1998
through 2000 shows
Impede the Timely that several factors can prevent Section 202 projects
from meeting the 18-
month processing time guideline, including: issues related to capital
Processing of Projects
advances, field office practices and the training and guidance that HUD
has provided to field office staff, and HUD*s program administration and
oversight. First, despite HUD*s intent, capital advances were not always
sufficient to meet development costs. According to some sponsors and
consultants, this factor often led sponsors to seek funding from other
sources, including other HUD programs, which takes time. Second, some
field offices, sponsors, and consultants reported that some field office
staff had not fully implemented HUD*s streamlined processing procedures
and that HUD had offered only limited training and guidance to field
office staff
on processing policies and procedures. Third, additional time was needed
for cases in which HUD headquarters responded to project sponsors*
requests for additional funds or processing time. Fourth, limitations in
HUD*s project monitoring system impeded its ability to oversee project
processing. Finally, factors external to HUD, such as sponsors* level of
development experience and requirements established by local governments,
also hindered processing.
Insufficient Capital Although HUD policy intends for capital advances to
fund the cost of
Advances Caused Some constructing a modestly designed project, capital
advances have not
always been sufficient to cover these expenses. 20 HUD field staff,
project Sponsors to Seek Other
sponsors, and consultants reported that program limits on capital advances
Funding
often kept projects from meeting HUD*s time guideline for approving
projects for construction. Most field offices, and every sponsor and
consultant that we surveyed, reported that insufficient capital advances
negatively affected project processing time, and a substantial majority of
respondents indicated that this problem occurred frequently (fig. 7). Many
respondents also reported that securing secondary financing to supplement
the capital advance amount often added to processing time. According to
some sponsors and consultants, the capital advance amounts set by HUD
were often inadequate to cover land, labor, and construction costs as well
as fees imposed by local government. As a result, sponsors had to seek
secondary financing from other federal, state, and local resources*
including other HUD programs* or redesign projects to cut costs, or both.
Some sponsors and consultants said that the search for secondary financing
could add months to the construction approval process because
funding application and award cycles for other programs varied and because
sponsors had to meet HUD*s documentation requirements for every additional
funding source before the agency could authorize construction.
20 See 66 Fed. Reg. 6647 (22 Jan. 2001).
Figure 7: Survey Responses* Insufficient Capital Advances and Other
Project Funding Issues
Percent of respondents who said that factor: Factor that affects
Has moderate to timely project processing significant impact Occurs often
to always
Capital advance 89
64 insufficient to fund projects
100 90 Sponsor has difficulty designing
91 70 project within capital advance amount
90 62 Securing secondary financing
77 57 71
52 Field office representatives Sponsors and consultants Source: GAO
survey of HUD field offices and Section 202 sponsors and consultants.
HUD has recognized that the development cost limits it uses to calculate
capital advances have sometimes been inadequate and that, as a result, a
number of sponsors have had to seek additional funding to construct their
projects. According to a HUD official, the agency is currently considering
initiating a study to determine how to calculate capital advances that can
cover project development costs.
Our survey and program data showed that field offices that reported
problems with insufficient capital advances and sponsors securing
secondary financing had a lower percentage of projects that met the 18-
month time guideline than other offices (table 3). 21 The median
percentage of projects meeting the 18- month guideline was much lower for
field offices
that reported these problems than those that did not. In addition, field
offices in the northeast and west* the regions with the lowest percentage
of projects meeting the processing time guideline (see table 2 above)*
were more likely than those in the south and midwest to report having
problems with these factors.
21 We considered a field office to have a problem with insufficient
capital advances and securing secondary financing if it reported that both
of these factors occurred often to always. We considered a field office
not to have a problem with these two factors if it reported that both of
them occurred seldom or sometimes.
Table 3: Field Office Performance and Problems with Funding Issues Median
rate of projects
approved within 18 months
All field offices 22% Field offices that reported insufficient capital
advances and problems with sponsors obtaining secondary financing
Both factors are problems 18% Neither factor is a problem 40% Source: GAO
survey of HUD field offices and Section 202 sponsors and consultants.
Note: Of the 44 field offices that responded to the survey, 25 reported
having problems with both
factors and 15 reported having problems with neither factor. Three field
offices reported problems with only one of the factors, and one field
office did not respond to the questions.
Varying Field Office
Differences in the procedures field offices use to approve projects for
Practices and Inadequate
construction and the extent of staff training and experience affected
Staff Training and Guidance
project processing time. For example, most consultants and sponsors in
Affected Timely Processing
our survey responded that the unwillingness of field office staff to
implement policy changes that HUD had adopted to streamline processing
caused delays, as did insufficient training for and inexperience of field
office staff (fig. 8). About 40 percent of them also reported that these
problems occurred frequently. In addition, some consultants and sponsors
whom we interviewed told us that some field offices continued to conduct
much more detailed and time- consuming technical reviews of project plans
than HUD*s current policies require. These sponsors and consultants said
that field staff departing from program guidelines caused confusion for
sponsors about the type of information HUD required and delayed the
process of obtaining HUD*s approval to begin construction. A majority of
HUD field office representatives also reported that a lack of staff
training and experience can have a negative effect on processing time.
However,
HUD field office staff regarded these problems, as well as staff
unwillingness to implement policy changes, as infrequent problems. HUD
officials at headquarters acknowledged that some field staff were
performing technical reviews contrary to program guidelines, but the
officials did not know how many staff were doing so.
Figure 8: Survey Responses* Field Office Staff Issues Percent of
respondents who said that factor: Factor that affects
Has moderate to timely project processing significant impact Occurs often
to always
Staff lack Section 202 training 55
11 90
38 Staff lack Section 202 experience
52 7 90
38 Some staff unwilling to fully
25 2 implement streamlining procedures
76 48 Field office representatives Sponsors and consultants Source: GAO
survey of HUD field offices and Section 202 sponsors and consultants.
HUD has provided limited guidance for field office staff on processing
policies and procedures, which would ensure that all staff are up to date
on the most current guidelines and requirements. In 1999, HUD headquarters
issued a memorandum that reminded field office staff to process projects
in accordance with streamlined procedures that had been adopted in 1996,
such as replacing detailed technical review of project plans by field
office staff with sponsor- provided certifications. Yet at the time of our
review, most field office staff had not received any formal training on
Section 202 project processing. According to HUD, in 2002, the agency
required representatives from each field office to attend the first formal
training on project processing for field office staff since at least 1992.
Although HUD headquarters expected those who attended to relay what they
had learned to other staff members in their own offices, our survey showed
that by November 2002 no on- site training had occurred at about a quarter
of the field offices. Also, only two field offices (5 percent) reported
that training was relayed in a formal setting. We also found that HUD*s
field office staff was relying on out- of- date
program handbooks that did not reflect the streamlined processing
procedures. 22 Although HUD stated that the agency intended to issue 22
Handbook No. 4571.5 was issued on July 21, 1992. Handbook No. 4571.3 REV-
1 was issued on April 9, 1993.
revised handbooks in order to ensure that all field offices follow current
procedures, it had not yet done so at the time of our review. Based on
written comments in our survey, some field office staff felt that an
updated handbook would aid in the timely processing of Section 202
projects.
Administrative and The time that HUD headquarters took to make certain
administrative
Oversight Weaknesses at decisions also added to the time taken to process
Section 202 projects.
HUD Headquarters HUD headquarters must approve all requests for additional
time to
Contributed to Delays complete processing beyond 24 months after funding
award and for
additional capital advance funds. A HUD official noted that projects must
already have exceeded the 18- month time guideline, and the discretionary
6- month extension, before HUD headquarters would be called on to approve
a request for a time extension beyond 24 months. However, most of the
field office representatives and project sponsors and consultants in our
survey agreed that the time HUD headquarters took to make these decisions
further prolonged processing time, with many respondents reporting that
this issue was a frequent problem (fig. 9).
Figure 9: Survey Responses* HUD Program Administration Issues Percent of
respondents who said that factor: Factor that affects
Has moderate to timely project processing significant impact Occurs often
to always
Time spent by HUD headquarters 73
59 considering waiver requests
90 43 Field office representatives Sponsors and consultants Source: GAO
survey of HUD field offices and Section 202 sponsors and consultants.
Further, HUD*s project monitoring system was not as effective as it could
have been and may have impeded HUD*s oversight of project processing. HUD
officials stated that, to monitor project processing, headquarters has
periodically used its Development Application Processing (DAP) system to
identify projects that exceeded the 18- month processing time guideline.
In
addition, the officials stated that headquarters contacted field offices
on a
quarterly basis to discuss the status of these delayed projects. 23
Nevertheless, HUD headquarters officials have acknowledged that there are
data inaccuracies in the DAP system, and the agency has instituted efforts
to improve the system*s reliability in identifying delayed projects.
Furthermore, according to HUD, the DAP system does not collect data that
would allow both headquarters and field office staff to follow a project
through every stage of development and, as a result, many field offices
maintain their own tracking systems to monitor projects through these
stages. The lack of reliable, centralized data on the processing of
Section 202 projects has limited HUD headquarters* ability to oversee
projects* status, determine problematic processing stages, and identify
field offices that might need additional assistance. HUD officials stated
that enhancing the DAP system is a priority, but that a lack of funding
has hindered such efforts.
Issues External to HUD Finally, other factors outside of HUD*s direct
control kept some projects
Caused Some Delays from meeting time guidelines. Ninety- five percent of
field office
representatives and 90 percent of sponsors and consultants surveyed
reported that project processing time was negatively affected when project
sponsors were inexperienced. Nearly 60 percent of field offices, and
almost 40 percent of sponsors and consultants, indicated that this problem
occurred frequently. Local government requirements also negatively
affected project processing, according to about 60 percent of field
offices and about 85 percent of sponsors and consultants. About 35 percent
of field offices and about 60 percent of sponsors and consultants reported
that these requirements were frequently a problem. Also about 70 percent
of field offices, sponsors, and consultants reported that, specifically,
the local zoning process had a negative effect on project processing time,
with about 40 percent of field offices and about 50 percent of sponsors
and consultants indicating that this problem was frequent.
Most field offices, sponsors, and consultants reported that other factors,
such as community opposition and environmental issues, affected processing
times but were not frequent problems for Section 202 projects. Although
about 50 percent of field offices, and about 60 percent of
23 The agency has made some progress in approving some of these projects
for construction or canceling them if they are no longer feasible. For
example, 16 of the 169 projects that were pending construction approval at
the end of fiscal year 2002 were approved for construction by December
2002, and 6 others had their funding awards canceled.
sponsors and consultants, reported that community opposition had a
negative effect on project processing time when it occurred, less than 10
percent of field offices, and about 30 percent of sponsors and
consultants, reported such opposition to be a frequent problem. Also,
about 50 percent
of field offices, sponsors, and consultants indicated that environmental
problems negatively affect processing when they occur, but only about 20
percent of them considered environmental problems to occur frequently.
Appendixes VI and VII provides additional details on the results of our
survey of HUD field office staff, sponsors, and consultants.
Conclusions The housing affordability problems of very low income elderly
renter households* although they represent a small share of all elderly
households* are particularly acute. These households represent one of the
more vulnerable populations in the nation given their small incomes and
need for supportive services. Considering the urgent housing needs of the
Section 202 program*s target population, ensuring that its projects are
completed as soon as possible is critical. Delays in timely Section 202
processing can prolong project completion, on average, by nearly a year
and result in higher balances of unexpended funds. Awarding capital
advances that are sufficient to cover project development costs can
alleviate delays by averting the need for sponsors to seek secondary
financing or request approval from HUD headquarters for additional
funding. While sufficient capital advance funding for projects, absent
additional appropriations, can result in fewer units funded annually, it
can also result in the prompt delivery of housing assistance to needy
households and in the reduction of unexpended balances attributable to
delayed projects. In addition, issuing an updated program handbook and
providing adequate formal training can help in timely project processing
by ensuring that staff are accountable for applying and interpreting HUD
policies and procedures in a consistent manner. Finally, HUD*s project
monitoring system, in its current form, is not as effective as it can be
and may hinder HUD*s oversight. Maintaining reliable, centralized data on
the processing of Section 202 projects is essential to overseeing
projects* status as well as determining problematic processing stages.
Recommendations To reduce the time required for projects to receive
approval to start construction, we recommend that the Secretary of Housing
and Urban Development direct the Assistant Secretary for Housing to (1)
evaluate the
effectiveness of the current methods for calculating capital advances and
(2) make any necessary changes to these methods, based on this evaluation,
so that capital advances adequately cover the development costs of Section
202 projects consistent with HUD*s project design and cost standards. In
addition, to improve the performance of HUD field office and headquarters
staff in processing projects in a timely manner, we recommend that HUD
provide regular training to ensure that all field office staff are
knowledgeable of and held accountable for following current processing
procedures,
update its handbook to reflect current processing procedures, and
improve the accuracy and completeness of information entered in the
DAP system by field office staff and expand the system*s capabilities to
track key project processing stages.
Agency Comments and We provided a draft of this report to HUD for its
review and comment. In a
Our Evaluation letter from the Assistant Secretary for Housing (see app.
VIII), HUD agreed
with the report*s conclusions, stating that the report demonstrated an
excellent understanding of the importance of the Section 202 program in
delivering affordable housing to very low income elderly households. HUD
also concurred with the recommendations and provided information on how it
intends to implement them. Regarding our recommendations concerning HUD*s
capital advance formula, the agency agreed that, in some locations,
capital advances may be insufficient to cover project development costs
and that delays can result when sponsors must seek additional funds from
other sources. However, HUD also noted that
increasing the per- unit development cost limits would result in fewer
units constructed. Our draft report reached the same conclusion, but also
stated that sufficient capital advances yield important benefits, such as
the prompt delivery of housing assistance to needy households.
As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies of this report to
interested members of Congress and congressional committees. We also will
send copies to the HUD Secretary and 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.
Please contact me at (202) 512- 8678 or Paul Schmidt at (312) 220- 7681,
if you or your staff have any questions concerning this report. Key
contributors to this report were Susan Campbell, Emily Chalmers, Mark
Egger, Daniel Garcia- Diaz, Curtis Groves, Ron La Due Lake, Marc Molino,
Melissa Roye, William Sparling, and Julianne Stephens.
David G. Wood Director, Financial Markets and Community Investment
Appendi Appendi xes I x Scope and Methodology We conducted this review to
address: (1) the role of the Section 202 program in meeting the housing
needs of elderly renter households with very low incomes, (2) the extent
to which Section 202 projects meet the Department of Housing and Urban
Development*s (HUD) time guidelines for project processing, and (3) the
factors that keep Section 202 projects from meeting HUD*s time guidelines
for project processing.
To determine the role of the Section 202 program in meeting housing needs
of elderly households, we analyzed household income and rental housing
cost data from the American Housing Survey. The Bureau of the Census
performs the survey for HUD every odd- numbered year. Appendix III
provides a detailed discussion of the American Housing Survey. We also
reviewed studies that involved the housing needs of elderly households.
To determine the extent to which HUD*s Section 202 and other housing
programs serve elderly households, we used data from HUD*s Real Estate
Management System (REMS) as of the beginning of calendar year 2003.
Specifically, we analyzed information on the overall number of properties
and their associated units under Section 202 and other housing programs
that serve the needs of elderly households. Although we did not
independently verify the accuracy of the program data, we did perform
internal checks to determine (1) the extent to which the data fields were
populated, (2) the reasonableness of the values contained in the data
fields, and (3) if any aberrations existed in the data we used. We
concluded that the REMS data was reliable for purposes of this report. We
also reviewed relevant regulations, policies, and procedures for Section
202 and other active federal programs.
To explore the issue of timeliness in processing and some of the factors
that may impede timely processing, we reviewed HUD program and budget data
from HUD*s Development Application Processing (DAP) System as of the end
of calendar year 2002. Because HUD headquarters officials told us
that program data from this system was not reliable for Section 202
projects funded before fiscal year 1998, we limited our review of Section
202 projects to those funded from fiscal years 1998 to 2000. While we did
not independently verify the accuracy of the program data from this
system, we periodically discussed the accuracy and interpretation of the
data we used with HUD officials. In addition, we compared file records for
projects funded since fiscal year 1998 with the data entered in the system
for those projects by three HUD field offices that process Section 202
projects and generally found the data to be accurate. Also, we performed
internal checks to determine the extent to which the data fields in DAP
were populated and the reasonableness of the values contained in these
fields. In cases where the data were not reasonable or questions arose, we
contacted a HUD official to identify and correct errors. To determine the
reasons why HUD awarded time extensions for certain projects listed in the
system, we compiled and analyzed HUD*s published notices of these
extensions in the Federal Register.
We also used a questionnaire to survey of all HUD field offices that
process Section 202 projects. About 98 percent (44 out of 45) of the field
offices that process Section 202 projects completed the questionnaire. We
also
conducted site visits at the Greensboro and Richmond field offices to
obtain field office staff perceptions on factors that may impede timely
processing. In addition, to gain a fuller perspective on these issues, we
surveyed sponsors and consultants, identified by HUD and others, that were
experienced in working with Section 202 projects. Collectively, these
sponsors and consultants worked on approximately 260 projects since fiscal
year 1998 representing approximately 40 percent of Section 202 units
funded. In addition, we observed a HUD training session on processing
Section 202 projects in August 2002.
We conducted our work primarily in Washington, D. C., between May 2002 and
March 2003, in accordance with generally accepted government auditing
standards.
Budget Information for the Section 202
Appendi I I x Program This appendix provides information on the Housing
for Special Populations appropriations account, which provides funding for
the Section 202 and Section 811 programs. 1 In fiscal year 2002, Congress
appropriated over $1 billion for the Housing for Special Populations
account* of which $783 million was earmarked for the Section 202 program.
From year to year, the Section 202 program carries significant balances of
unexpended appropriated funds. In fiscal year 2002, the unexpended balance
for the Section 202 program was $5.2 billion.
Section 202 In fiscal year 2002, Congress appropriated over $1 billion for
the Housing
Appropriations for Special Populations appropriations account, which
provides funding for
both the Section 202 Supportive Housing for the Elderly and the Section
811 Supportive Housing for Persons with Disabilities Programs. 2 Since
fiscal year 1998, a total of $4.6 billion in appropriations were made
available for both programs (table 4). In fiscal year 2002, the lion*s
share of the appropriations for the Housing for Special Populations
account, about $783 million or 76 percent, went to the Section 202 program
to fund, among other things, capital advances and project rental
assistance contracts (PRACs) for new projects and PRAC renewals for
existing projects. 3 Since fiscal year 1998, about $3.6 billion have been
appropriated for the Section 202 program. Appropriations for the Section
202 program in nominal dollars (that is, unadjusted for inflation) have
increased since fiscal year
1998 at an average annual rate of about 5 percent. However, appropriations
for Section 202 in constant 1998 dollars have increased by an average rate
of about 2 percent annually.
1 For fiscal year 2004, HUD proposed to separate the Housing for Special
Populations account into two accounts* Housing for the Elderly and Housing
for Persons with Disabilities.
2 The period of availability for obligating Section 202 funds has been
limited in recent years. The fiscal year 2003 appropriations act, for
example, requires HUD to obligate fiscal year 2003 funds for the Section
202 program by the end of fiscal year 2006. Under 31 U. S. C. 1552, HUD is
required to disburse, and the project owner to expend, all obligated
Section 202 funds by the end of the fifth fiscal year after the period of
availability for obligation ends* in the case of Section 202 funds for
fiscal year 2003, no later than the end of fiscal year 2011. Any remaining
balance (whether obligated or unobligated) in the account after the fifth
year is to be canceled and is not available for obligation or expenditure.
3 PRACs provide rental assistance payments to a property to pay the
difference between the units* approved operating costs and the tenant
rental contributions (generally 30 percent of adjusted income).
Table 4: Annual Appropriations for the Housing for Special Populations
Account in Fiscal Years 1998- 2002
Nominal dollars in millions
Section 202 Section 811 Supportive
Housing for Special Supportive Housing
Housing for Persons Fiscal year Populations
for the Elderly with Disabilities
1998 $839 $645 $194 1999 854 660 194 2000 911 710 201 2001 994 777 217
2002 1,024 783 241
Total 4, 622 3, 575 1,047
Source: GAO analysis of HUD data.
Section 202 The Section 202 program carries significant balances of
unexpended
Unexpended Balances appropriations from year to year. Unexpended balances
include the
cumulative amount of budget authority that has not been spent (outlayed)
and may consist of either obligated or unobligated funds. Some of the
unexpended balances are expected to be carried over annually for various
programmatic reasons, including the time required for project sponsors to
prepare their application for program funds and finalize plans as well as
the time required for HUD*s field offices to review and process them.
However, some unexpended funds can also result from problems in the
timeliness of
project processing. Between fiscal years 1998 and 2002, the program*s
unexpended balance increased from about $4.8 billion to $5.2 billion. In
nominal dollars, this balance has increased by an average annual rate of
about 2 percent between fiscal years 1998 and 2002. In constant 1998
dollars, unexpended balances for Section 202 actually decreased by an
average rate of less than 1 percent annually. Table 5 shows the annual
balances of unexpended appropriations for the Section 202 program since
fiscal year 1998.
Table 5: Annual Balances of Unexpended Appropriations for Section 202 in
Fiscal Years 1998- 2002
Nominal dollars in millions
Fiscal year 1998 1999 2000 2001 2002
Section 202 Supportive Housing for the Elderly $4,839 $4, 998 $5,048
$5,138 $5, 219 Capital advance 1,774 1,789 1,949 2,041 2, 164 PRAC (rental
assistance) 3, 065 3,209 3,099 3,097 3, 055 Housing for Special
Populations 6, 343 6,547 6,701 6,899 7, 074 Source: GAO analysis of HUD
data.
As table 5 shows, unexpended PRAC funds account for a large share of the
total unexpended balances for the Section 202 program as well as for the
overall Housing for Special Populations account. Before fiscal year 1997,
HUD provided individual projects with PRAC amounts that covered rental
assistance payments generally for 20 years. Since fiscal year 1997, HUD
provided PRAC amounts that covered rental assistance payments for 5 years.
In both cases, PRAC funds are obligated, but remain unexpended, for
multiple years after project occupancy* unlike capital advance funds,
which are fully expended by project completion. With the reduction of the
PRAC term from 20 to 5 years, HUD expects PRAC funds to comprise a
declining share of the overall unexpended balance for the Section 202
program.
Data Issues Concerning the American Housing
Appendi I I I x Survey In reporting on the housing affordability problems
of elderly renter households with very low incomes, this report relies on
data from the 2001 American Housing Survey (AHS). We assessed the
reliability of the data by reviewing AHS documentation, performing
electronic testing of the data files to check for completeness of data
files, and replicating published tables. 1 We determined that the data are
reliable enough for the purposes of this report.
AHS is a probability sample of about 55,700 housing units interviewed
between August and November 2001. 2 Because this sample is based on random
selections, the specific sample selected is only one of a large
number of samples that might have been drawn. Since each sample could have
provided different estimates, we express our confidence in the precision
of this sample*s results as 95 percent confidence intervals (for example,
+7 percentage points). This is the interval that would contain the actual
population value for 95 percent of the samples that could have been drawn.
As a result, we are 95 percent confident that each of the confidence
intervals in this report will include the true values in the study
population. In the following section, we provide 95 percent confidence
intervals for the
estimates used in this report. We calculated these confidence intervals by
adding and subtracting the sampling error for each estimate to or from the
estimate itself. 3
Estimates from the survey are also subject to certain nonsampling errors,
such as incomplete data and wrong answers. According to the survey
documentation, errors due to incomplete data and wrong answers can be
greater than sampling errors for some survey questions. 4 Of the survey
questions we rely upon for our analysis (age, tenure, income, housing
costs, rent subsidies, and location), the survey question on income was
subject to
1 U. S. Census Bureau, Current Housing Reports * Series H150/ 01, American
Housing Survey for the United States: 2001. This report can be found at
http:// ww. huduser. org/ datasets/ ahs. html.
2 For a description of the sample design, refer to Appendix B of U. S.
Census Bureau, Current Housing Reports * Series H150/ 01, American Housing
Survey for the United States: 2001.
3 The formulas and methodology for computing these sampling errors are
provided in Appendix D of U. S. Census Bureau, Current Housing Reports *
Series H150/ 01, American Housing Survey for the United States: 2001.
4 A more complete discussion of these sources of error (including response
inconsistencies for various questions) can be found in Appendix D of the
Census* Current Housing Reports
for 2001.
a high level of inconsistency in survey responses. Also relevant to this
report, AHS is known to underreport income when compared to the
Current Population Survey and other independent sources. However, our
analysis concentrates on elderly renters with very low income, for which
this should be less of an issue. According to a Census study based on
relatively older data (from the early 1980s), much of the underreporting
of
income in the survey seems to derive from interest and dividend income as
well as wages and salary. 5 Consequently, the underreporting of income may
be less of a problem among very low income elderly households who do not
tend to rely on these sources of income. Generally, HUD*s own internal
analysis suggests that very low income renters in AHS tend to report their
income more accurately than other groups. For example, in an unpublished
analysis, HUD found that the income reported by very low income renters in
the 1989 AHS was about 2 percent greater than the income reported in the
1990 Decennial Census. Nonetheless, current information on the extent of
underreporting, especially among elderly renter households with very low
incomes, is not available.
The survey also collects data on the type of government housing assistance
the household receives. For example, it asks if the household lives in a
unit owned by a public housing authority or receives vouchers. However,
households surveyed may misreport their specific programs. As a result,
the survey does not provide sufficient and reliable detail on the specific
housing assistance program that is serving the household. According to the
survey documentation, units requiring income verification are usually
subsidized.
Table 6 shows the distribution of units that are occupied by homeowners
and renters in 2001. A great majority of elderly households were
homeowners. About 21 million ( 460,000) of 26 million ( 498,000) elderly
households owned their homes. Elderly renter households consisted of about
5 million ( 242,000) households.
5 U. S. Census Bureau, Current Housing Reports * Series H121/ 95- 01,
American Housing Survey: A Quality Profile, July 1996.
Table 6: Housing Units Occupied by Homeowner and Renter Elderly Households
in 2001
Units in thousands
95 percent confidence interval Sampling Estimate error From To
Elderly Owner occupied 21,324 460 20,864 21,784 Renter occupied 5,028 242
4,787 5,270
Cash rent 4,528 230 4,299 4,758 No cash rent 500 78 422 578
Total 26,353 498 25,855 26,850
Nonelderly Owner occupied 50,941 591 50,350 51,532 Renter occupied 28,968
514 28,454 29,483 Cash rent 27,520 505 27,015 28,026 No cash rent 1,448
132 1,316 1,580
Total 79,909 555 79,354 80,463
All Owner occupied 72,265 579 71,686 72,844 Renter occupied 33,996 541
33,455 34,537 Cash rent 32,049 532 31,517 32,580 No cash rent 1,948 152
1,795 2,100
Total 106,261 345 105,917 106,606
Source: GAO analysis of the American Housing Survey, 2001.
Table 7 provides details on the estimated number of households who owned
or rented their homes by income category (very low income and low income)
in 2001. About 3.7 million ( 208,000) elderly renter households have very
low incomes. About 4.3 million ( 223,000) elderly renter households have
low incomes. These figures include households that do not pay cash rent.
Based on the data from tables 6 and 7, over four- fifths (85
+- 2 percent) of elderly renter households have low incomes and
approximately three- quarters (73 +- 3 percent) have very low incomes.
Table 7: Income Categories for Elderly Homeowner and Renter Households in
2001 Units in thousands
95 percent confidence interval Sampling Very low income Estimate error
From To
Owner occupied 9,394 324 9,070 9,718 Renter occupied 3,668 208 3,460 3,875
Cash rent 3,287 197 3,090 3,484 No cash rent 381 68 313 449
Total 13,061 375 12,686 13,437
Low Income Owner occupied 13,351 379 12,972 13,729 Renter occupied 4,262
223 4,038 4,485 Cash rent 3,806 211 3,595 4,017 No cash rent 456 74 381
530
Total 17,612 426 17,186 18,038
Source: GAO analysis of the American Housing Survey, 2001.
Table 8 shows the number of units occupied by elderly renter households
with very low incomes by subsidy status and rent burden. About 1.7 million
( 141,000) elderly renter households with very low incomes have moderate
or severe rent burdens. The majority of these actually have severe rent
burdens. About 1.3 million ( 125,000) renter households with
very low incomes receive some form of government assistance. Households
that do not pay cash rent appear in the tables above in this appendix for
informational purposes. However, since they do not pay cash rents, we
exclude these households from our estimates of rent burdens in
this report.
Table 8: Elderly Renter Households with Very Low Incomes by Subsidy Status
and Rent Burden in 2001
Units in thousands
95 percent confidence interval Sampling Renter households Estimate error
From To
Subsidized 1, 307 125 1,182 1, 432 Unassisted 1,980 154 1, 826 2, 133 Zero
income 125 39 86 163 No rent burden 201 49 152 250 Rent burden 1, 654 141
1,513 1, 795
Moderate rent burden 509 78 430 587 Severe rent burden 1, 145 117 1,028 1,
263
Total 3, 287 197 3,090 3, 484
Source: GAO analysis of the American Housing Survey, 2001.
Table 9 looks at unassisted elderly renter households with rent burdens.
Of the 1.7 million ( 141,000) households with rent burdens, about 60
percent are located either in the northeast or the south regions. The
northeast and south contained about 542,000 ( 81, 000) and 477,000 (
76,000),
respectively, of the nation*s rent burdened elderly renter households with
very low incomes. Table 9: Moderate or Severe Rent Burden of Unassisted
Very Low Income Elderly Renter Households by Region in 2001
Units in thousands
95 percent confidence interval Sampling Renter households Estimate error
From To
Northeast 542 81 461 623 Midwest 284 59 226 343 South 477 76 401 553 West
350 65 285 415
Total 1, 654 141 1,513 1, 795
Source: GAO analysis of the American Housing Survey, 2001.
The following four tables show the number and proportion of units occupied
by elderly renter households with very low incomes by subsidy status and
rent burden in metropolitan areas (tables 10 and 11) and nonmetropolitan
areas (tables 12 and 13). About 1.4 million ( 131,000) elderly renter
households with very low incomes in metropolitan areas and 234,000 (
53,000) in nonmetropolitan areas have moderate or severe rent burden
(tables 10 and 12). The proportion of households with rent burdens was
generally higher in metropolitan areas than in nonmetropolitan areas
(tables 11 and 13). In addition, households in nonmetropolitan areas were
less likely than those in metropolitan areas to have severe rent burdens.
Table 10: Number of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Metropolitan Areas in 2001
Units in thousands
95 percent confidence interval Sampling Renter households Estimate error
From To
Subsidized 1, 048 112 936 1, 160 Unassisted 1,696 142 1, 553 1, 838 Zero
income 109 36 72 145 No rent burden 167 45 122 212 Rent burden 1, 420 131
1,290 1, 551
Moderate rent burden 395 69 326 464 Severe rent burden 1, 025 111 914 1,
137
Total 2, 744 180 2,564 2, 924
Source: GAO analysis of the American Housing Survey, 2001
Table 11: Proportion of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Metropolitan Areas in 2001 95 percent
confidence interval Sampling Renter households Estimate error From To
Subsidized 38% 3% 35% 41% Unassisted 62% 3% 59% 65% Zero income 4% 1% 3%
5% No rent burden 6% 2% 4% 8% Rent burden 52% 3% 48% 55%
Moderate rent burden 14% 2% 12% 17% Severe rent burden 37% 3% 34% 41%
Source: GAO analysis of the American Housing Survey, 2001
Table 12: Number of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001
Units in thousands
95 percent confidence interval Sampling Renter households Estimate error
From To
Subsidized 259 56 203 315 Unassisted 284 59 225 343 Zero income 16 14 2 30
No rent burden 34 20 14 55 Rent burden 234 53 181 287
Moderate rent burden 114 37 77 151 Severe rent burden 120 38 82 158
Total 543 81 462 624
Source: GAO analysis of the American Housing Survey, 2001.
Table 13: Proportion of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001 95 percent
confidence interval Sampling Renter households Estimate error From To
Subsidized 48% 7% 40% 55% Unassisted 52% 7% 45% 60% Zero income 3% 3% 0%
5% No rent burden 6% 4% 3% 10% Rent burden 43% 7% 36% 50%
Moderate rent burden 21% 6% 15% 27% Severe rent burden 22% 6% 16% 28%
Source: GAO analysis of the American Housing Survey, 2001
Excluded from these estimates are the housing affordability needs of very
low income homeowners. Although homeowners can experience housing
affordability problems, homeowners and renters face different challenges
in affording their homes. Unlike renters, homeowners have equity in their
homes* about 68 percent ( 1 percent) of elderly homeowners own their homes
free and clear. In addition, elderly homeowners face certain challenges in
maintaining their housing, such as paying for property maintenance and
accessibility modification. 6 As a result, rental programs, such as
Section 202, do not directly address the problems homeowners experience.
6 In the absence of additional income, an elderly homeowner can, among
other things, downsize to a more affordable home, seek property tax
relief, or access the home*s equity through a home equity conversion
mortgage (* reverse mortgage*).
Appendi V I x Federal Housing Programs and the Elderly The federal
government has multiple housing programs that subsidize the development of
rental properties. Many of these programs also subsidize the development
of properties that are intended to serve primarily elderly households.
Unlike Section 202, most federal housing programs do not target a single
type of household. Rather, they serve many different types of households,
such as families with children, people with disabilities, and the elderly,
and they produce units with rents that are affordable to households at
different income levels.
Housing Production In addition to Section 202, the federal government has
multiple active
Programs That housing production programs that continue to expand the
number of
assisted households by subsidizing the development of new rental housing.
Develop Elderly
These federal programs, described below, can also subsidize individual
Housing
rental properties that are intended primarily to serve elderly households.
Active Housing Production
Low- Income Housing Tax Credits and Tax- Exempt Multifamily
Programs
Housing Bonds provide federal tax incentives for private investment and
are often used in conjunction with other federal and state subsidies in
the production of new and rehabilitated rental housing.
HOME Investment Partnerships provides formula- based grants to states
and localities to build, acquire, or rehabilitate affordable rental
housing or provide tenant- based rental assistance. 1 Section 515/ 521
Rural Rental Assistance provides below- market loans
and rental assistance to support the development of rental housing in
rural areas.
Multifamily mortgage insurance programs provide mortgage insurance for
the development of rental housing without federallyfunded interest rate
subsidies or project- based rental assistance. 2
1 HOME also provides homeownership assistance. 2 Although properties with
FHA- insured multifamily mortgages today are often termed unassisted
because they do not receive project- based rental assistance, projects may
receive grants, tax concessions, subsidies, and other subsidies from
federal, state, and local governments.
The Housing Choice Voucher program (housing vouchers) is another important
source of assistance for elderly households. The program supplements
tenants* rental payments in privately owned, moderately priced apartments
chosen by the tenants. Currently, about 260,000 of the
approximately 1.5 million voucher households are elderly. However, unlike
the Section 202 or other programs discussed, housing vouchers is not a
production program and does not directly subsidize the development of new
or rehabilitated housing.
In addition to the active housing production programs, the federal
government also has programs that no longer subsidize the development of
rental properties but, in some cases, continue to provide operating
subsidies, rental assistance payments, or other subsidies for rental
properties that were developed under these programs in the past. Over the
years, these inactive housing production programs, described in the next
section, subsidized many rental properties that were intended primarily to
serve elderly households.
Inactive Housing Public Housing financed the development and operation
of properties
Production Programs managed and owned by local housing authorities. 3
Section 236 and Section 221( d)( 3) Below Market Interest Rate
provided mortgage insurance for the development of rental housing with
federally funded interest rate subsidies. Section 8 project- based
rental assistance programs provided projectbased rental assistance to
properties that were financed with
Department of Housing and Urban Development (HUD) mortgage insurance, tax
exempt bonds, and below- market interest rate loans. 4
3 Since 1994, public housing has not received new appropriations to fund
incremental units. HUD funds the replacement of existing public housing
units through the HOPE VI program. This program, however, does not
increase the supply of affordable housing.
4 These programs included Section 8 New Construction/ Substantial
Rehabilitation, Section 8 Loan Management Set Aside, Section 8 Property
Disposition, and Section 8 Moderate Rehabilitation. Some of these programs
overlapped with other mortgage subsidy programs.
Target Households Unlike Section 202, most active federal housing programs
do not target a single type of household. Rather, they serve many
different types of
households, such as families with children, persons with disabilities, and
the elderly. Furthermore, most federal housing programs target households
at different income levels, not just households with very low incomes (50
percent or less of area media income) as does Section 202. Table 14
provides information on targeted household types and rent levels
of the active housing production and insurance programs.
Table 14: Active Federal Rental Housing Production and Insurance Programs
by Household Type Served and Program Rent Levels
Household type Rental housing production program served Program rent
levels affordable to households with:
Section 202 Supportive Housing Elderly 50% or less of area median income
(AMI) for all units Low- Income Housing Tax Credits Multiple household 50%
of AMI for 20% of units or
types 60% of AMI for 40% of units Tax- Exempt Multifamily Housing Bonds
Multiple household 50% of AMI for 20% of units or
types 60% of AMI for 40% of units HOME Investment Partnerships Multiple
household 65% of AMI for all units and
types 50% of AMI for 20% of units Section 811 Supportive Housing Persons
with 50% or less of AMI for all units
disabilities Section 515 Rural Rental Housing with Section 521 Primarily
families and
80% of AMI or less for all 515 units with rental rental assistance the
elderly assistance FHA multifamily mortgage insurance a Multiple household
No income requirements/ market rate rents
types Source: GAO. a These mortgage insurance programs are Section 221(
d)( 4), Section 221( d)( 3), and Rental Housing for the Elderly (Section
231). In recent years, few mortgages have been insured with Section 231
because borrowers who intend to develop elderly rental properties rely on
Section 221( d)( 4) or Section 221( d)( 3).
Low- Income Housing Tax Credits (tax credits), Tax- Exempt Multifamily
Housing Bonds (tax- exempt bonds), and HOME set aside some of their units
for very low- income households and can provide housing for the elderly
(table 14). Congress has granted considerable latitude to state and local
agencies that administer these programs in deciding who will be
served with federal housing resources. 5 In addition, mortgage insurance
programs for multifamily rental properties under HUD*s Federal Housing
Administration (FHA) currently do not have any specific age or income
requirements for tenants. However, since rents for newly developed
FHAinsured properties are often set at market levels, these programs may
not be able to reach very low- income households without the use of other
subsidies.
Annual Housing Although Section 202*s annual production levels are small
when compared
Production Levels to the total production levels of other housing
programs, such as tax
credits* the largest of all current production programs* Section 202,
nonetheless, is a relatively important source of subsidized rental housing
units for the elderly. Table 15 presents the volume of new production by
rental housing production program. The volume of housing production
illustrates individual program activity but, due to limitations in the
data, it is not possible to accurately estimate what percentage of elderly
units produced through federal housing programs is from Section 202
because units produced through these programs can overlap with each other.
For example, HOME funding can be used in conjunction with programs such as
tax credits, tax- exempt bonds, or HUD mortgage insurance programs to
finance new production. As a result, adding units together for any of the
programs in table 15 will likely result in double counting.
5 For example, every year the Internal Revenue Service requires that the
state agencies responsible for awarding tax credits under the tax credit
program submit updated plans that outline how they will distribute their
allocations of tax credits. See HUD*s 2002 report
Analysis of State- Qualified Allocation Plans for the Low- Income Housing
Tax Credit Program.
Table 15: Approximate Volume of New Production of Housing Units by Active
Federal Rental Housing Programs
Approximate number of new or rehabilitated per annum Production program
Elderly units Total units
Section 202 Supportive Housing 5, 700 5, 700 Percent of total 100%
Low- Income Housing Tax Credits 13, 200 86, 000 Percent of total 15%
Tax- Exempt Multifamily Housing Bonds 5, 600 33, 300 Percent of total 17%
HOME Investment Partnerships 4,000 17, 000 Percent of total 24%
Section 515 Rural Rental Housing 800 1, 800 Percent of total 44%
Section 811 Supportive Housing NA 1, 300 Percent of total NA
FHA multifamily mortgage insurance 900 26, 400 Percent of total 3% Source:
GAO. Notes: For Section 202, Section 811, and the FHA multifamily mortgage
insurance programs, we estimated the average number of total and elderly
units endorsed annually from 1998 to 2001 based
on HUD program data. We reported the number of elderly units for tax
credits based on the 2002 report from the Commission on Affordable Housing
and Health Facility Needs for Seniors in the 21 st Century and for tax-
exempt bonds based on the National Council of State Housing Agencies*
State HFA Factbook: 2001 NCSHA Annual Survey Results. In addition, for tax
credits, we estimated the
average number of units placed in service annually from 1998 to 2000 based
on HUD*s Low- Income Housing Tax Credit Database. Finally, we relied on
estimates from program officials for HOME and Section 515.
Due to differing sources of data and, in some cases, lack of official
data, these estimates are rough approximations of actual production
activity and are intended to be illustrative. Many of these programs
overlap with each other. As a result, adding units together for any of the
programs will likely result in double counting.
Appendi V x Section 202 Program Data This appendix provides additional
information on the extent to which Section 202 projects meet the
Department of Housing and Urban Development*s (HUD*s) 18- month processing
time guideline. In particular, we present data on projects* status in
meeting the guideline, HUD field offices* rate of success in meeting the
guideline, and the factors cited by HUD in its approvals of processing
time extensions. Table 16 profiles the projects funded in fiscal years
1998 through 2000 according to the projects* status in gaining HUD*s
approval to start construction.
Table 16: Distribution of Section 202 Projects, Capital Advance Funds, and
PRAC Funds, by Fiscal Year and Construction Approval Status
Exceeded 18- month guideline Approved for
Funding Fiscal
Met 18- month construction after
Pending approval award
year guideline 18 months for construction
cancelled
1998 Number of projects 47 108 11 0 Percent of projects 28% 65% 7% Capital
advance funds $113 million $337 million $43 million PRAC funds (rental
assistance) $23 million $68 million $9 million
Total funds $136 million $406 million $52 million Percent of total funds
23% 68% 9% 1999 Number of projects 44 84 34 3
Percent of projects 27% 51% 21% 2% Capital advance funds $108 million $284
million $127 million $15 million PRAC funds $22 million $57 million $28
million $3 million
Total funds $130 million $341 million $155 million $18 million
Percent of total funds 20% 53% 24% 3% 2000 Number of projects 41 40 82 0
Percent of projects 25% 25% 50% Capital advance funds $109 million $124
million $283 million PRAC funds $21 million $27 million $58 million
Total funds $131 million $150 million $341 million
Percent of total funds 21% 24% 55% Total Number of projects 132 232 127 3
Percent of projects 27% 47% 26% 1% Capital advance funds $330 million $746
million $453 million $15 million PRAC funds $66 million $152 million $94
million $3 million
(Continued From Previous Page)
Exceeded 18- month guideline Approved for
Funding Fiscal
Met 18- month construction after
Pending approval award
year guideline 18 months for construction
cancelled Total funds $396 million $897 million $547 million $18 million
Percent of total funds 21% 48% 29% 1% Source: GAO analysis of HUD
Development Application Processing (DAP) System, December 2002. Note:
Percentages do not always add to 100 because of rounding. Total funds do
not always equal the
sum of capital advance and project rental assistance contract (PRAC) funds
because of rounding.
Table 17 compares the status of projects located in metropolitan and
nonmetropolitan areas in gaining approval to start construction within
either 18 or 24 months. In both cases, metropolitan projects were about
twice as likely as projects in nonmetropolitan areas to take more than
either 18 or 24 months to be approved. That is, the odds of a metropolitan
project taking more than 18 or 24 months to be approved for construction
were about twice the odds of a nonmetropolitan project taking more than
18 or 24 months, respectively.
Table 17: Status of Metropolitan and Nonmetropolitan Projects in Gaining
Construction Start Approval, Projects Funded in Fiscal Years 1998 to 2000
Construction start approval status
Nonmetropolitan Metropolitan projects projects All projects Number Percent
Number Percent Number Percent
Approved within 18 months 78 22% 54 39% 132 27% Not approved within 18
months 278 78% 84 61% 362 73%
Approved within 24 months 180 51% 92 67% 272 55% Not approved within 24
months 176 49% 46 33% 222 45% Source: GAO analysis of HUD DAP system,
December 2002.
Tables 18, 19, and 20 present the rate of project approvals within either
18 or 24 months for all field offices that have responsibility for
processing Section 202 projects. Table 18 shows the results for all
projects, table 19 shows the results only for projects located in
metropolitan areas, and table 20 shows the results for projects located in
nonmetropolitan areas. The rate of project approvals for each field office
is the percentage of projects,
funded between fiscal years 1998 and 2000, that HUD approved for
construction within the 18- month processing time guideline or within the
24- month period after the funding award* that is, 18 months plus the 6-
month discretionary extension.
Table 18: Field Office Performance in Approving Projects to Start
Construction, All Projects Funded in Fiscal Years 1998 to 2000 Project
approval rate (%) Field office Within 18 months Within 24 months Number of
projects
Atlanta 11 67 9 Baltimore 18 36 11 Birmingham 80 80 5 Boston 0 15 20
Buffalo 29 64 14 Caribbean 0 0 2 Charleston 0 0 3 Chicago 21 57 14
Cleveland 8 58 12 Columbia 78 89 9 Columbus 50 56 16 Denver 33 58 12 Des
Moines 29 71 7 Detroit 50 70 10 Fort Worth 43 71 14 Greensboro 93 93 14
Hartford 0 10 10 Houston 14 71 7 Indianapolis 67 83 6 Jackson 25 75 4
Jacksonville 13 50 16 Kansas City 29 71 7 Knoxville 50 100 6 Little Rock
83 100 18 Los Angeles 0 30 20 Louisville 67 92 12 Manchester 9 64 11
Milwaukee 6 39 18
(Continued From Previous Page)
Project approval rate (%) Field office Within 18 months Within 24 months
Number of projects
Minneapolis 45 91 11 Nashville 40 80 10 New Orleans 27 45 11 New York 0 36
22 Newark 0 22 9 Oklahoma City 67 67 3 Omaha 50 100 6 Philadelphia 18 41
17 Phoenix 0 22 9 Pittsburgh 11 33 9 Portland 27 64 11 Providence 40 40 5
Richmond 8 17 12 San Antonio 20 60 5 San Francisco 7 38 29 Seattle 22 44 9
St Louis 22 89 9
Total (all offices) 27 55 494
Source: GAO analysis of HUD DAP system, December 2002.
Table 19: Field Office Performance in Approving Metropolitan Projects to
Start Construction, All Metropolitan Projects Funded in Fiscal Years 1998
to 2000 Project approval rate (%)
Number of metropolitan Field office Within 18 months Within 24 months
projects
Atlanta 0 67 6 Baltimore 22 44 9 Birmingham 67 67 3 Boston 0 19 16 Buffalo
18 55 11 Caribbean 0 0 2 Charleston 0 0 1 Chicago 25 50 12 Cleveland 10 60
10 Columbia 100 100 4 Columbus 54 62 13 Denver 14 29 7 Des Moines 40 80 5
Detroit 56 67 9 Fort Worth 46 69 13 Greensboro 86 86 7 Hartford 0 10 10
Houston 14 71 7 Indianapolis 60 80 5 Jackson - - 0 Jacksonville 13 50 16
Kansas City 33 67 6 Knoxville 33 100 3 Little Rock 75 100 4 Los Angeles 0
30 20 Louisville 80 100 5 Manchester 25 50 4 Milwaukee 0 27 11 Minneapolis
33 83 6 Nashville 40 80 5 New Orleans 25 75 4 New York 0 36 22
(Continued From Previous Page)
Project approval rate (%) Number of metropolitan Field office Within 18
months Within 24 months
projects
Newark 0 22 9 Oklahoma City 67 67 3 Omaha 50 100 4 Philadelphia 21 43 14
Phoenix 0 40 5 Pittsburgh 14 43 7 Portland 17 33 6 Providence 40 40 5
Richmond 13 25 8 San Antonio 25 75 4 San Francisco 0 43 21 Seattle 13 38 8
St Louis 17 83 6
Total (all offices) 22 51 356
Source: GAO analysis of HUD DAP system, December 2002.
Table 20: Field Office Performance in Approving Nonmetropolitan Projects
to Start Construction, All Nonmetropolitan Projects Funded in Fiscal Years
1998 to 2000
Project approval rate (%) Number of nonmetropolitan Field office Within 18
months Within 24 months
projects
Atlanta 33 67 3 Baltimore 0 0 2 Birmingham 100 100 2 Boston 0 0 4 Buffalo
67 100 3 Caribbean - - 0 Charleston 0 0 2 Chicago 0 100 2 Cleveland 0 50 2
Columbia 60 80 5 Columbus 33 33 3 Denver 60 100 5 Des Moines 0 50 2
Detroit 0 100 1 Fort Worth 0 100 1 Greensboro 100 100 7 Hartford - - 0
Houston - - 0 Indianapolis 100 100 1 Jackson 25 75 4 Jacksonville - - 0
Kansas City 0 100 1 Knoxville 67 100 3 Little Rock 86 100 14 Los Angeles -
- 0 Louisville 57 86 7 Manchester 0 71 7 Milwaukee 14 57 7 Minneapolis 60
100 5 Nashville 40 80 5 New Orleans 29 29 7 New York - - 0
(Continued From Previous Page)
Project approval rate (%) Number of nonmetropolitan Field office Within 18
months Within 24 months
projects
Newark - - 0 Oklahoma City - - 0 Omaha 50 100 2 Philadelphia 0 33 3
Phoenix 0 0 4 Pittsburgh 0 0 2 Portland 40 100 5 Providence - - 0 Richmond
0 0 4 San Antonio 0 0 1 San Francisco 25 25 8 Seattle 100 100 1 St Louis
33 100 3
Total (all offices) 39 67 138
Source: GAO analysis of HUD DAP system, December 2002.
Table 21 shows the average number of months that projects took to complete
various stages of the development process between Congress*s appropriation
of funds for the Section 202 program and completion of construction. For
projects funded between fiscal years 1998 and 2000 that had been approved
to start construction at the time of our analysis, the
average time taken from appropriation to approval to start construction
was 36 months. Projects that had also completed construction took another
11 months, on average, from beginning to end of construction. From
appropriation to end of construction, the average time taken was 47 months
or almost 4 years.
Table 21: Average Duration of Stages of Section 202 Project Development,
Projects Funded Fiscal Years 1998 to 2000 That Were Approved to Start
Construction
Average months
Fiscal year Stage of development 1998 1999 2000 1998- 2000
Appropriation to notice of funding availability 6 4 4 5 Notice of funding
availability to funding award 7 10 10 9 Funding award to firm commitment
21 19 15 19 Firm commitment to approval to start construction 3 2 2 3
Approval to start construction to construction completion a 12 11 9 11
Total time from appropriation to approval to start construction 37 35 31
36
Total time from appropriation to construction completion 49 46 40 47
Number of projects b 155 128 81 364 Source: GAO analysis of HUD DAP
system, December 2002. a The average time for construction is based on a
total of 193 projects that completed construction: 110
from 1998, 69 from 1999, and 114 from 2000. b The number of projects
includes only projects that were approved to start construction. An
additional
11 projects from 1998, 37 projects from 1999, and 82 projects from 2000
were not approved for construction at the time of our analysis.
Table 22 summarizes the factors that HUD cited in extending the processing
time for projects beyond 24 months after the funding award. This table
draws on extension waivers approved between January 1998 and
June 2002 for projects funded between fiscal years 1998 and 2000, showing
the number and percentage of extended projects affected by each factor.
Table 22: Factors Cited by HUD in Approved Time Extensions for Section 202
Projects Funded in Fiscal Years 1998 to 2000
Number of extended
Percent of projects
extended projects Factor
affected affected
Financing and cost issues 29 35% Seeking additional funding 17 20%
Construction issues a 11 13% Other financial issues 5 6% State and local
government issues 27 32%
Historic preservation 1 1% Local review, approval, or permits 17 20%
Zoning issues 11 13% Other state and local issues 3 4% Design/ architect
issues 15 18% Site change 14 17% Environmental issues 8 10% Site control 8
10% Community concerns/ local opposition 8 10% Other site issues 7 8%
Legal challenges 6 7% General delay in project processing b 19 23% Source:
GAO analysis of HUD data. Note: GAO analyzed HUD- approved project
processing time extensions. 84 projects received a total of 103
extensions. Percentages do not total 100 because many projects received
extensions for multiple reasons. a Construction issues include increased
construction costs and difficulty finding a qualified contractor or
obtaining a bid within the capital advance amount. b General delays in
project processing include cases where HUD cited the need for time for
sponsors to
submit or modify required paperwork and for HUD to review paperwork,
without stating a more specific reason.
Survey of HUD Field Office Representatives Appendi x VI
Introduction
advances. facilitate project processing. survey.
Name: Title: through the present. United States General Accounting Office
Section 202 Supportive Housing for the Elderly:
Development Process Survey
The United States General Accounting Office is contacting HUD officials
responsible for the administration of the Section 202 Supportive Housing
for the Elderly program. The Senate Special Committee
on Aging asked GAO to explore the issues involved in the processing of
projects that have been awarded capital We are interested in obtaining
your valuable insights into the processing of Section 202 projects from
fund reservation to initial closing . We are especially interested in
learning more about the implementation of HUD Notice H 96 - 102, which was
designed to BACKGROUND INFORMATION Name of Office/ Location:
Telephone number: E- mail address :
FUND RESERVATION AND PROJECT MONITORING
1.
b. From fiscal year 1998 through the present, how frequently has your
office monitored the progress of the project Sponsor/ Owners between fund
reservation and initial closing ? For each category below, please indicate
the frequency that best describes your contact. a. For all Section 202
projects? b. For Section 202 Projects needing special
1.
e. f. PROJECT PLANNING CONFERENCES
5. HUD Notice H 96- 102 stresses the importance of conducting a
comprehensive project planning conference and includes a suggested agenda
to be used at the conference. The agenda includes items such as project
development, legal considerations, project design/ contractor/
construction issues, and project development schedule.
We are interested in obtaining the following information on project
planning conferences held at your office for fund reservations from fiscal
year 1998 through the present . ( Please check one box for each row) (
Unless otherwise noted, N= 44)
Project Planning Conference Activities Never a. How frequently have
planning conferences been held
within 30 to 45 days of the sponsor s acceptance of fund b. How frequently
have all relevant agenda items identified
in section 3- 1 of HUD Notice H 96- 102 been covered c. How frequently
have Sponsor/ Owners, their consultant ( if used) , design architect, and
attorney all participated
d. How frequently have all HUD technical experts ( design architect, cost
analyst, attorneys, etc. ) , responsible for reviewing project paperwork
participated in each project planning conference? Were there instances
when specific HUD technical experts who were responsible for project
paperwork did
not participate in project planning conferences?
6. Based on your experience with all projects receiving fund reservations
in your office since fiscal year 1998 :
Part A: For each factor related to Sponsors or Owners , select a single
box that most commonly describes the factor s impact on the overall
processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects in your office by selecting a single
box that most commonly describes the frequency of the factor s impact on
the overall processing time. ( For example, the factor Seldom if ever
prevents timely processing, Sometimes prevents timely processing, , etc. )
Sponsor / Owner Factors That May Negatively Influence Timely Processing of
Section 202 Projects
( N= 44) A. Typical Impact of Factor on Processing
B. Frequency Of Factor Preventing Timely Processing
Sponsor/ Owner Factors:
Time ( check one box for each factor) ( check one box for each factor)
Always or No Minor Moderate Significant Seldom if Sometimes Often Very
often almost Impact Impact Impact Impact ever always ( 1)
( 2) ( 3)
( 4) ( 1)
( 2) ( 3)
( 4) ( 5) a. Doesn t attend pre- application
workshop ( 2.3% did not 11.4% 20.5% 22.7% 43.2% 50.0% 34.1% 2.3% 2.3% 6.8%
respond in part A and 4.6% in part B)
b. Lacks experience in Section 202 program/ multi- family project
0.0% 4.6% 31.8% 63.6% 4.6% 38.6% 27.3% 15.9% 13.6% development c. Does not
effectively manage
project development process 0.0% 4.6% 22.7% 72.7% 0.0% 40.9% 22.7% 18.2%
18.2% d. Lacks effective consultant 0.0% 11.4% 0.0% 88.6% 6.8% 40.9% 13.6%
13.6% 25.0% e. Has difficulty designing project within fund reservation
amount 0.0% 9.1% 27.3% 63.6% 4.6% 25.0% 13.6% 18.2% 38.6% f. Lacks
sufficient funds for pre- construction costs required before receipt of
capital
9.1% 43.2% 15.9% 31.8% 40.9% 27.3% 11.4% 13.6% 6.8% advance ( e. g. ,
environmental reviews, site control, etc. ) g. Doesn t fulfill
requirements in a
timely fashion ( e. g. , set up
2.3% 13.6% 27.3% 56.8% 13.6% 27.3% 25.0% 22.7% 11.4% Owner corporation,
submit complete required forms, etc. ) h. Other ( Please specify) ( 84. 1%
did
0.0% 0.0% 0.0% 15.9% 0.0% 2.3% 4.6% 4.6% 4.6% not respond in parts A/ B)
Section 202 Supportive Housing for the Elderly: Development Process Survey
4
7. Based on your experience with all projects receiving fund reservations
in your office since fiscal year 1998 :
Part A: For each factor related to HUD staff, funding, or policies ,
select a single box that most commonly describes the factor s impact on
the overall processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects in your office by selecting a single
box that most commonly describes the frequency of the factor s impact on
the overall processing time. ( For example, the factor Seldom if ever
prevents timely processing, , Sometimes prevents timely processing, etc. )
HUD Factors That May Negatively Influence Timely Processing of Section 202
Projects ( N= 44) A. Typical Impact of Factor on Processing
B. Frequency Of Factor Preventing Timely Processing
HUD Factors: Time ( check one box for each factor) ( check one box for
each factor) Always or No Minor Moderate Significant Seldom if Sometimes
Often Very often almost Impact Impact Impact Impact ever always ( 1) ( 2)
( 3) ( 4)
( 1) ( 2)
( 3) ( 4)
( 5) a. Staff lack Section 202 experience 18.2% 29.6% 27.3% 25.0% 52.3%
40.9% 2.3% 2.3% 2.3% b. Staff lack Section 202 training 11.4% 34.1% 29.6%
25.0% 38.6% 50.0% 4.6% 4.6% 2.3% c. Section 202 workload ( e. g. ,
simultaneously reviewing new applications and paperwork for
6.8% 29.6% 45.5% 18.2% 15.9% 59.1% 18.2% 4.6% 2.3% funded projects) d. FHA
loan processing can be, at
certain times, higher priority than 13.6% 18.2% 29.6% 38.6% 25.0% 34.1%
22.7% 13.6% 4.6% Section 202 project processing e. Some staff unwilling to
fully implement HUD Notice H 96- 102 59.1% 15.9% 11.4% 13.6% 79.6% % 18.2%
2.3% 0.0% 0.0% f. Insufficient project coordination ( including turnover
in project coordinator position) ( 2. 3% did
36.4% 25.0% 29.6% 6.8% 63.6% 27.3% 4.6% 2.3% 0.0% not respond in parts A/
B)
g. Capital advance insufficient to fund projects ( 2. 3% did not 6.8% 4.6%
27.3% 61.4% 11.4% 22.7% 9.1% 29.6% 25.0% respond in part B) h. Award
letters not mailed during fiscal year of appropriation 20.5% 25.0% 29.6%
25.0% 31.8% 25.0% 2.3% 13.6% 27.3% i. Availability of HUD amendment funds
( after other funding sources exhausted) ( 2. 3% did not respond
9.1% 25.0% 29.6% 34.1% 25.0% 20.5% 15.9% 20.5% 15.9% in parts A/ B)
j. Time spent by HUD HQ considering waiver requests 6.8% 20.5% 27.3% 45.5%
15.9% 25.0% 20.5% 13.6% 25.0% ( extensions, amendment funds) k. Other (
Please specify) ( 90.9% did not respond in parts A/ B) 0.0% 0.0% 2.3% 6.8%
0.0% 0.0% 2.3% 2.3% 4.6% Section 202 Supportive Housing for the Elderly:
Development Process Survey 5
8. Based on your experience with all projects receiving fund reservations
in your office since fiscal year 1998 :
Part A: For each factor related to State, Local, and/ or Other
requirements , select a single box that most commonly describes the factor
s impact on the overall processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects in your office by selecting a single
box that most commonly describes the frequency of the factor s impact on
the overall processing time. ( For example, the factor Seldom if ever
prevents timely processing, Sometimes prevents timely processing, , etc. )
Factors Related to State, Local, or Other Requirements That May Negatively
Influence Timely Processing of Section 202 Projects ( N= 44) A. Typical
Impact of Factor on Processing
B. Frequency Of Factor Preventing Timely Processing
Factors Related to State, Local, or Time Other Requirements:
( check one box for each factor) ( check one box for each factor) Always
or No Minor Moderate Significant Seldom if Sometimes Often Very often
almost Impact Impact Impact Impact ever always ( 1) ( 2)
( 3) ( 4)
( 1) ( 2)
( 3) ( 4)
( 5) a. Project is new construction ( 2.3%
did not respond in part B) 36.4% 34.1% 13.6% 15.9% 50.0% 22.7% 13.6% 2.3%
9.1% b. Project involves rehabilitation ( 4. 6% did not respond in parts
25.0% 22.7% 27.3% 20.5% 45.5% 31.8% 6.8% 6.8% 4.6% A/ B) c. Project site
zoning approval ( 2.3% did not respond in part A) 6.8% 22.7% 27.3% 40.9%
15.9% 43.2% 20.5% 13.6% 6.8% d. Local permits ( i. e. , obtaining and/ or
cost of permits) 9.1% 29.6% 29.6% 31.8% 25.0% 38.6% 15.9% 11.4% 9.1% e.
State and local historic
preservation approval 13.6% 45.5% 31.8% 9.1% 45.5% 43.2% 9.1% 2.3% 0.0% f.
Site contamination mitigation ( 2. 3% did not respond in part A) 13.6%
31.8% 25.0% 27.3% 52.3% 27.3% 13.6% 2.3% 4.6% g. Securing secondary
financing ( e. g. , time needed to secure additional funding and obtain
approval of 11.4% 11.4% 38.6% 38.6% 18.2% 25.0% 25.0% 25.0% 6.8% financing
documents) h. Legal challenges 11.4% 36.4% 27.3% 25.0% 22.7% 63.6% 9.1%
4.6% 0.0% i. General local opposition to project
15.9% 31.8% 27.3% 25.0% 40.9% 50.0% 4.6% 2.3% 2.3% j. Other ( Please
specify) ( 86.4% did not respond in parts A/ B) 0.0% 0.0% 4.6% 9.1% 0.0%
4.6% 6.8% 0.0% 2.3% Section 202 Supportive Housing for the Elderly:
Development Process Survey 6
a) b) c) 9. What are the three most important factors ( from those listed
in the tables above) that can negatively impact timely processing of
Section 202 projects?
HUMAN CAPITAL RELATED QUESTIONS
10. a. Did any staff members from your office attend HUD s Section 202/
811 field office staff training titled The Process Imperative: Moving
Quickly from Fund Reservation to Initial Closing held this past summer in
St. . Louis, Missouri or Washington, D. C. ? ( N= 44)
1.
a) b) c)
f. e. How was the content of the training shared with staff members in
your office who did not attend the training ? ( Unless otherwise noted, N=
34)
Method of Instruction
Formal training
a. Training session held ( at least 1 full day) Informal training
b. Meeting or information session held ( less than 1 full day)
c. Trained staff answer project processing questions and provide guidance
to other staff on an hoc basis d. Trained staff provided a written summary
of
training highlights e. Other ( please explain) CONCLUSIONS
Check one box for each
Section 202 projects from fund reservation to initial closing:
row
1.
Survey of Section 202 Sponsors and
Appendi VI x I
Consultants United States General Accounting Office Section 202 Supportive
Housing for the Elderly: Introduction
The United States General Accounting Office is contacting sponsors and
consultants who have significant experience with housing development under
the Section 202 Supportive Housing for the Elderly program. The Senate
Special Committee on Aging asked GAO to explore the issues involved in the
processing of projects that have been awarded capital advances.
We are interested in obtaining your valuable insights into the processing
of Section 202 projects from fund reservation to initial closing. As you
complete the survey, please consider your experience since 1998 with the
Section 202 program only.
Instructions Please complete this survey by December 13, 2002 and fax it
to (202) 512- 2502.
If you have any questions about this survey or have problems submitting
your response, please contact Melissa A. Roye by phone at (202) 512- 6426
or by email at royem@ gao. gov.
BACKGROUND INFORMATION 1. In case we would like to clarify any of your
responses, please provide your sponsor or
consultant name, respondent name and title, location, telephone number,
and e- mail address of the individual primarily responsible for gathering
the information requested in this survey.
Name of Sponsor or Consultant: Respondent name: Title: Location: Telephone
number: E- mail address:
1
2. Based on your experience with all Section 202 projects (not Section
811) receiving fund reservations since 1998, please list the states in
which you have sponsored or consulted on at least one project per year OR
a total of at least three projects since 1998.
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
3. Approximately how many Section 202 projects have you sponsored or
consulted on in total since 1998 _Mean= 12. 3_ (N= 21), since 1992 _Mean=
25.6_ (N= 21)?
FACTORS IMPACTING TIMELY PROCESSING We are interested in identifying
factors that may contribute to the untimely processing of only Section 202
projects from fund reservation to initial closing. We understand that
there are three basic factors that can add to project processing time.
These factors may include (1) the actions or characteristics of Project
Sponsors/ Owners; (2) HUD staff, funding, and policies; and (3) State,
local, and/ or other requirements. Your responses to the following
questions (4, 5, 6, 7) will provide valuable insight into the significance
of these factors.
2
4. Based on your experience with all projects you have sponsored or
consulted on that have received fund reservations since 1998 :
Part A: For each factor related to Sponsors or Owners , select a single
box that most commonly describes the factor s impact on the overall
processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects by selecting a single box that most
commonly describes the frequency of the factor s impact on the overall
processing time. ( For example, the factor Seldom if ever prevents timely
processing, Sometimes prevents timely processing, etc. )
Sponsor / Owner Factors That May Negatively Influence Timely Processing of
Section 202 Projects ( N= 21) A. Typical Impact of Factor on Processing B.
Frequency Of Factor Preventing Timely Processing
Sponsor/ Owner Factors:
Time
( check one box for each factor) ( check one box for each factor) Always
or No Minor Moderate
Significant Seldom if Sometimes
Often Very often
almost Impact
Impact Impact
Impact ever
always
( 1) ( 2)
( 3) ( 4)
( 1) ( 2)
( 3) ( 4)
( 5) a. Doesn t attend pre- application workshop ( 9.5% did not respond
for part B) 42. 9% 38. 1% 9. 5% 9. 5% 76. 2% 14. 3% 0. 0% 0. 0% 0. 0% b.
Lacks experience in Section 202 program/
multi- family project development ( 9.5% did 28. 6% 14. 3% 9. 5% 47. 6%
28. 6% 23. 8% 0. 0% 14. 3% 23. 8% not respond for part B) c. Does not
effectively manage project
development process ( 9.5% did not respond 28. 6% 4. 8% 14. 3% 52. 4% 23.
8% 28. 6% 4. 8% 9. 5% 23. 8% for part B)
d. Lacks effective consultant ( 4.8% did not respond for part A and 19.1%
for part B) 23. 8% 4. 8% 4. 8% 61. 9% 23. 8% 14. 3% 4. 8% 0. 0% 38. 1% e.
Has difficulty designing project within fund
reservation amount ( 9.5% did not respond 4. 8% 4. 8% 33. 3% 57. 1% 4. 8%
23. 8% 4. 8% 28. 6% 28. 6% for part B) f. Lacks sufficient funds for pre-
construction costs required before receipt of capital advance ( e. g. ,
environmental reviews, site
14. 3% 23. 8% 23. 8% 38. 1% 33. 3% 19. 1% 19. 1% 9. 5% 9. 5% control, etc.
) ( 9.5% did not respond for part B)
g. Doesn t fulfill requirements in a timely fashion ( e. g. , set up Owner
corporation, submit complete required forms, etc. )
23. 8% 28. 6% 19. 1% 28. 6% 23. 8% 33. 3% 9. 5% 4. 8% 14. 3% ( 14.3% did
not respond to part B)
h. Other ( Please specify) ( 71. 4% did not respond to parts A/ B) 0. 0%
0. 0% 4. 8% 23. 8% 0. 0% 0. 0% 9. 5% 9. 5% 9. 5% 3
5. Based on your experience with all projects you have sponsored or
consulted on that have received fund reservations since 1998 :
Part A: For each factor related to HUD staff, funding, or policies ,
select a single box that most commonly describes the factor s impact on
the overall processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects by selecting a single box that most
commonly describes the frequency of the factor s impact on the overall
processing time. ( For example, the factor Seldom if ever prevents timely
processing, Sometimes prevents timely processing, etc. )
HUD Factors That May Negatively Influence Timely Processing of Section 202
Projects ( N= 21) A. Typical Impact of Factor on Processing B. Frequency
Of Factor Preventing Timely Processing
HUD Factors:
Time
( check one box for each factor) ( check one box for each factor) Always
or No Minor Moderate
Significant Seldom if Sometimes
Often Very often
almost Impact
Impact Impact
Impact ever
always
( 1) ( 2)
( 3) ( 4)
( 1) ( 2)
( 3) ( 4)
( 5) a. Staff lack Section 202 experience 4. 8% 4. 8% 47. 6% 42. 9% 19. 1%
42. 9% 14. 3% 9. 5% 14. 3% b. Staff lack Section 202 training 4. 8% 4. 8%
38. 1% 52. 4% 14. 3% % 47. 6% 9. 5% 19. 1% 9. 5% c. Section 202 workload (
e. g. , simultaneously
reviewing new applications and paperwork for funded projects) ( 14.3% did
not
4. 8% 14. 3% 33. 3% 47. 6% 4. 8% 19. 1% 33. 3% 19. 1% 9. 5% respond for
part B)
d. FHA loan processing can be, at certain times, higher priority than
Section 202 project processing ( 14.3% did not respond 0. 0% 9. 5% 14. 3%
61. 9% 0. 0% 23. 8% 23. 8% 19. 1% 19. 1% for parts A/ B)
e. Some staff unwilling to fully implement HUD Notice H 96- 102 ( 4.8% did
not
4. 8% 14. 3% 38. 1% 38. 1% 14. 3% 38. 1% 23. 8% 4. 8% 19. 1% respond for
part A) f. Insufficient project coordination ( including turnover in
project coordinator position) 4. 8% 14. 3% 42. 9% 38. 1% 23. 8% 28. 6% 19.
1% 4. 8% 23. 8% g. Capital advance insufficient to fund projects 0. 0% 0.
0% 33. 3% 66. 7% 0. 0% 9. 5% 28. 6% 33. 3% 28. 6% h. Award letters not
mailed during fiscal year of appropriation 14. 3% 52. 4% 9. 5% 23. 8% 33.
3% 47. 6% 4. 8% 0. 0% 14. 3% i. Availability of HUD amendment funds (
after other funding sources exhausted)
( 4.8% did not respond for part A and 14. 3% 0. 0% 19. 1% 61. 9% 14. 3%
14. 3% 14. 3% 14. 3% 23. 8% 19.1% for part B)
j. Time spent by HUD HQ considering waiver requests ( extensions,
amendment funds) 4. 8% 4. 8% 38. 1% 52. 4% 4. 8% 52. 4% 14. 3% 23. 8% 4.
8% k. Other ( Please specify) ( 71. 4% did not
respond for parts A/ B) 0. 0% 4. 8% 0. 0% 23. 8% 0. 0% 4. 8% 0. 0% 9. 5%
14. 3% 4
6. Based on your experience with all projects you have sponsored or
consulted on that have received fund reservations since 1998 :
Part A: For each factor related to State, Local, and/ or Other
requirements , select a single box that most commonly describes the factor
s impact on the overall processing time.
Part B: Indicate the frequency of each factor s influence on the timely
processing of Section 202 projects by selecting a single box that most
commonly describes the frequency of the factor s impact on the overall
processing time. ( For example, the factor Seldom if ever prevents timely
processing, Sometimes prevents timely processing, etc. )
Factors Related to State, Local, or Other Requirements That May Negatively
Influence Timely Processing of Section 202 Projects ( N= 21) A. Typical
Impact of Factor on Processing Time
B. Frequency Of Factor Preventing Timely Processing
Factors Related to State, Local, or ( check one box for each factor) Other
Requirements:
( check one box for each factor) Always or No Minor Moderate
Significant Seldom if Sometimes
Often Very often
almost Impact
Impact Impact
Impact ever
always
( 1) ( 2)
( 3) ( 4)
( 1) ( 2)
( 3) ( 4)
( 5) a. Project is new construction 33. 3% 38. 1% 4. 8% 23. 8% 42. 9% 33.
3% 4. 8% 9. 5% 9. 5% b. Project involves rehabilitation
( 14.3% did not respond in part A 38. 1% 14. 3% 33. 3% 0. 0% 33. 3% 28. 6%
14. 3% 0. 0% 4. 8% and 19. 1% in part B) c. Project site zoning approval (
9. 5% did not respond in part B) 19. 1% 9. 5% 19. 1% 52. 4% 14. 3% 23. 8%
14. 3% 19. 1% 19. 1% d. Local permits ( i. e. , obtaining
and/ or cost of permits) 0. 0% 14. 3% 47. 6% 38. 1% 0. 0% 38. 1% 28. 6%
23. 8% 9. 5% e. State and local historic preservation approval 23. 8% 42.
9% 14. 3% 19. 1% 52. 4% 28. 6% 4. 8% 0. 0% 14. 3% f. Site contamination
mitigation
( 4.8% did not respond in part A 33. 3% 14. 3% 4. 8% 42. 9% 42. 9% 23. 8%
9. 5% 4. 8% 4. 8% and 14. 3% in part B) g. Securing secondary financing (
e. g. , time needed to secure additional
funding and obtain approval of financing documents) ( 4.8% did
19. 1% 4. 8% 23. 8% 47. 6% 9. 5% 28. 6% 9. 5% 14. 3% 28. 6% not respond in
part A and 9. 5% in part B)
h. Legal challenges ( 4.8% did not respond in part A and 14.3% in
23. 8% 14. 3% 14. 3% 42. 9% 42. 9% 23. 8% 0. 0% 9. 5% 9. 5% part B) i.
General local opposition to project ( 9.5% did not respond in part B) 14.
3% 23. 8% 9. 5% 52. 4% 14. 3% 42. 9% 14. 3% 9. 5% 9. 5% j. Other ( Please
specify) ( 81. 0% did not respond in parts A/ B) 0. 0% 0. 0% 9. 5% 9. 5%
0. 0% 0. 0% 0. 0% 9. 5% 9. 5% 5
7. What are the three most important factors ( from those listed in the
tables above) that can negatively impact timely processing of Section 202
projects?
a) b) c)
8. Please identify up to three policy changes within HUD s control that
you believe would aid the timely processing of Section 202 projects from
fund reservation to initial closing: a)
b) c)
Thank you very much for your time.
6
Comments from the Department of Housing
Appendi VI x I I and Urban Development
(250083)
a
GAO United States General Accounting Office
HUD*s Section 202 program provides a valuable housing resource for very
low income elderly households. Although they represent a small share of
all elderly households, very low income elderly renters have acute housing
affordability problems because of their limited income and the need for
supportive services. The Section 202 program, which offers about 260,000
rental units nationwide and ensures that residents receive rental
assistance and access to services that promote independent living, is the
only federal program devoted exclusively to providing this type of
housing. However, even with the program*s exclusive focus, Section 202 has
reached only about an estimated 8 percent of very low income elderly
households.
About three- quarters of Section 202 projects in GAO*s analysis did not
meet HUD*s time guideline for gaining approval to start construction.
These delays held up the delivery of housing assistance to needy elderly
households by nearly a year compared with projects that met HUD*s
guideline. Several factors contributed to these delays, in particular
capital advances that were not sufficient to cover development costs.
Project sponsors reported that insufficient capital advances often forced
them to spend time seeking additional funds from HUD and other sources.
Although HUD*s policy is to provide sufficient funding to cover the cost
of constructing a modestly designed project, HUD has acknowledged that its
capital advances for the Section 202 program sometimes fall short. Other
factors affecting the timeliness of the approval process included
inadequate training and guidance for field staff responsible for the
approval process, inexperienced project sponsors, and local zoning and
permit requirements.
Housing Cost Burdens of Very Low Income Elderly Renter Households in 2001
According to the Department of Housing and Urban Development
(HUD), the most widespread and urgent housing problem facing elderly
households is affordability. About 3.3 million elderly renter households
in the United States have very low incomes (50 percent or less of area
median income).
The Section 202 Supportive Housing for the Elderly Program provides
capital advances (grants) to nonprofit organizations to
develop affordable rental housing exclusively for these households. GAO
was asked to determine the role of the Section 202 program in addressing
the need for affordable elderly housing and the factors
affecting the timeliness of approving and constructing new projects.
GAO is making recommendations to reduce the time required for projects to
receive approval from HUD to start construction. Specifically, GAO is
recommending that HUD assess the effectiveness of the methods it uses to
calculate
the size of the Section 202 capital advances and make any appropriate
changes to them. GAO
is also making other recommendations to improve HUD*s administration and
oversight of the 202 program*s performance. GAO provided a draft of this
report
to HUD for comment. HUD agreed with the report*s conclusions and
recommendations.
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 512. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact David G. Wood at (202) 512- 8678 or WoodD@ gao. gov.
Highlights of GAO- 03- 512, a report to
Special Committee on Aging, U. S. Senate
May 2003
ELDERLY HOUSING
Project Funding and Other Factors Delay Assistance to Needy Households
Page i GAO- 03- 512 Section 202 Elderly Housing
Contents
Contents
Page ii GAO- 03- 512 Section 202 Elderly Housing
Contents
Page iii GAO- 03- 512 Section 202 Elderly Housing
Contents
Page iv GAO- 03- 512 Section 202 Elderly Housing
Page 1 GAO- 03- 512 Section 202 Elderly Housing United States General
Accounting Office
Washington, D. C. 20548 Page 1 GAO- 03- 512 Section 202 Elderly Housing
A
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Appendix I
Appendix I Scope and Methodology
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Appendix II
Appendix II Budget Information for the Section 202 Program
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Appendix II Budget Information for the Section 202 Program
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Appendix III
Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix III Data Issues Concerning the American Housing Survey
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Appendix IV
Appendix IV Federal Housing Programs and the Elderly
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Appendix IV Federal Housing Programs and the Elderly
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Appendix IV Federal Housing Programs and the Elderly
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Appendix IV Federal Housing Programs and the Elderly
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Appendix V
Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix V Section 202 Program Data
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Appendix VI
Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VI Survey of HUD Field Office Representatives
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Appendix VII
Appendix VII Survey of Section 202 Sponsors and Consultants
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Appendix VII Survey of Section 202 Sponsors and Consultants
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Appendix VII Survey of Section 202 Sponsors and Consultants
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Appendix VII Survey of Section 202 Sponsors and Consultants
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Appendix VII Survey of Section 202 Sponsors and Consultants
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Appendix VIII
Appendix VIII Comments from the Department of Housing and Urban
Development
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Appendix VIII Comments from the Department of Housing and Urban
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