Public Housing: HUD's Oversight of HOPE VI Sites Needs to Be More
Consistent (30-MAY-03, GAO-03-555).				 
                                                                 
Congress established the HOPE VI program to revitalize severely  
distressed public housing. In fiscal years 1993 to 2001, the	 
Department of Housing and Urban Development (HUD) awarded	 
approximately $4.5 billion in HOPE VI revitalization grants. The 
Ranking Minority Member, Subcommittee on Housing and		 
Transportation, Senate Committee on Banking, Housing, and Urban\ 
Affairs, asked GAO to examine HUD's process for assessing grant  
applications, the status of work at sites for which grants have  
been awarded, and HUD's oversight of HOPE VI grants.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-555 					        
    ACCNO:   A07023						        
  TITLE:     Public Housing: HUD's Oversight of HOPE VI Sites Needs to
Be More Consistent						 
     DATE:   05/30/2003 
  SUBJECT:   Public housing					 
	     Federal aid for housing				 
	     Grant administration				 
	     Grant monitoring					 
	     HUD HOPE VI Program				 

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GAO-03-555

                                       A

May 30, 2003 Let er t The Honorable Jack Reed

Ranking Minority Member Subcommittee on Housing

and Transportation Committee on Banking, Housing,

and Urban Affairs United States Senate

Dear Senator Reed: For decades, some of the nation*s public housing sites
have exemplified urban decay. In 1992, the National Commission on Severely
Distressed Public Housing reported that approximately 86,000, or 6
percent, of the nation*s public housing units were severely distressed*
characterized by physical deterioration and uninhabitable living
conditions, high levels of poverty, inadequate and fragmented services,
institutional abandonment, and location in neighborhoods often as blighted
as the sites themselves. In

an effort to address these long- standing problems in a new way, Congress,
in October 1992, established the Urban Revitalization Demonstration
Program, commonly known as HOPE VI, which is administered by the
Department of Housing and Urban Development (HUD). The program provides
grants to public housing authorities to rehabilitate or rebuild severely
distressed public housing and improve the lives of public housing
residents through supportive services, such as child care and job
training. In fiscal years 1993 to 2001, HUD awarded approximately $4.5
billion in HOPE VI revitalization grants to 98 public housing authorities
(grantees) for 165 sites. 1

While each HOPE VI project is unique, all projects generally involve (1)
the preparation of a comprehensive revitalization plan; (2) relocation of
the original residents; (3) demolition of the distressed public housing
units; (4) construction of new public housing units, often intermingled
with other types of housing, or rehabilitation of existing public housing
units; (5) *reoccupancy,* or the movement of some original residents to
completed

1 HUD did not award the 28 fiscal year 2002 revitalization grants until
March 2003; therefore, they are not covered in this report. HUD also has
awarded about $15 million in HOPE VI planning grants and approximately
$293 million in HOPE VI demolition grants, but they are not the focus of
this report.

units; and (6) occupancy, or the filling of all of the completed housing
units. To select housing authorities for participation in HOPE VI, HUD
publishes an annual notice of funding availability (NOFA) setting forth
the program*s current requirements and available funds. Housing
authorities then prepare applications from which HUD selects those that
best satisfy the NOFA requirements and signs grant agreements that serve
as contracts with the housing authorities. Grant agreements specify the
activities and

documentation, such as revitalization plans, that grantees must complete
as well as key deadlines that they must meet. Grantees that HUD determines
are in default of grant agreement terms are subject to various sanctions,
including having their remaining HOPE VI funds rescinded.

You requested that we comprehensively review the HOPE VI program. Because
of the scope of the request, we agreed with your office to provide the
information in a series of reports. The first report, issued in November
2002, discussed the financing of HOPE VI sites. 2 This second report
focuses on HUD*s management of the HOPE VI program. Specifically, as
agreed with your office, this report examines (1) HUD*s process for
assessing HOPE VI revitalization grant applications and selecting
grantees, (2) the status of work at sites for which grants have been
awarded and compliance with grant agreement deadlines, (3) HUD*s oversight
of HOPE

VI grants, and (4) the amount of program funds that HUD has budgeted for
technical assistance and the types of technical assistance it has
provided.

To address these objectives, we first obtained and analyzed information
from HUD*s HOPE VI reporting system on the 165 revitalization grants
awarded through fiscal year 2001, including production data and key
milestones. We assessed the reliability of these data by reviewing
information about the system and performing electronic testing to detect
obvious errors in completeness and reasonableness. We determined that the
data were sufficiently reliable for the purposes of this report. Second,
we visited the 18 housing authorities that were awarded revitalization

grants in fiscal year 1996. We selected 1996 because it was the first year
that grants were subject to a standard construction deadline, and the
deadline had passed for the majority of the grants by the time we began
our site visits. In addition, we interviewed the HUD headquarters
officials responsible for administering the program.

2 U. S. General Accounting Office, Public Housing: HOPE VI Leveraging Has
Increased, but HUD Has Not Met Annual Reporting Requirement, GAO- 03- 91
(Washington, D. C.: Nov. 15, 2002).

We performed our work from November 2001 to April 2003 in accordance with
generally accepted government auditing standards. Appendix I provides
additional details on our scope and methodology.

Results in Brief To assess HOPE VI revitalization grant applications, HUD
has consistently used four core factors* that is, the demonstrated need
for revitalization

assistance, the capacity of applicants to use grants effectively, the
quality of proposed revitalization plans, and the potential for applicants
to use grants to leverage funds from other sources. However, the agency
has imposed more stringent requirements over the years to facilitate and
improve its

decision- making process. For example, to demonstrate need, HUD has
required applicants since fiscal year 1993 to provide basic statistics,
such as crime and vacancy rates; but, in fiscal year 1999, it began
requiring applicants to also submit an independent engineer*s
certification that public housing units targeted for revitalization are
*severely distressed.* Further, in fiscal year 2002, HUD imposed an
additional eligibility criterion

to eliminate applicants that had made little progress with revitalization
grants received in prior years. Previously, such applicants were not
excluded, and some were awarded multiple grants. Although the core
assessment factors have been consistent over the years, the HUD Inspector
General* in annual reviews of the grant award process* found that the
agency has not consistently followed the HOPE VI grant selection
procedures that it establishes each year; for example, the Inspector
General reported that the staff making selection decisions did not always
document their justifications for scoring and rating individual
applications. HUD has taken steps to improve the process in response to
the Inspector General*s findings.

As of December 31, 2002, construction was complete at 15 of the 165 HOPE
VI sites, and the majority of grantees had not met deadlines established
in their grant agreements with HUD. Relocation was complete at 101 sites,
demolition was complete at 87 sites, and at least some units were built at
99 of the 165 sites. Grantees had completed 27 percent of the total
planned

units and spent approximately $2.1 of the $4.5 billion in HOPE VI
revitalization funds awarded. However, the majority of grantees had missed
at least one of the deadlines in their grant agreements. For example,
grantees did not submit the revitalization plan to HUD within the time
frame specified in the grant agreement for 75 percent of the grants
awarded through fiscal year 1999 (for grants awarded after 1999, the
deadline had not yet passed at the time of our study). Similarly, grantees
did not complete construction within the deadline on 39 of the 42 grants
for which

the standard time allowed for construction (54 months) had expired at the
time of our study. Several factors affect the status of work at HOPE VI
sites, including the development approach used, changes to revitalization
plans,

and relationships with residents. For example, sites funded with a mix of
public and private financing tend to take longer because housing
authorities must hire additional staff or outside consultants proficient
in private- sector real estate construction, financing, and lending
practices in order to put together financing and retain developers.

HUD*s oversight of HOPE VI grants has been inconsistent due to staffing
limitations, confusion about the role of field offices, and a lack of
formal enforcement policies. Both grant managers who report directly to
HUD headquarters and staff in HUD field offices are responsible for
overseeing HOPE VI grants. The workload assigned to HUD grant managers,
who have primary responsibility for HOPE VI grants, has been increasing
since HUD

last hired a large group of grant managers in 1998, and HUD has reported
that one reason for project delays has been the limited number of grant
managers. Staff in HUD*s field offices are required to monitor grants by
conducting annual reviews. However, by the end of 2002, HUD had not
conducted any annual reviews for 8 out of the 20 grants awarded in fiscal
year 1996. According to field office managers, the reviews were not

performed either because of a lack of staff or because the offices did not
understand their role in HOPE VI oversight. In a 1998 report, the HUD
Inspector General noted that HUD had not been performing even the minimal
monitoring required for the HOPE VI program, in part due to understaffing
in both headquarters and the field offices. HOPE VI oversight also is
hampered by a lack of enforcement policies. While HUD*s grant agreements
describe conditions that the agency may consider a default, HUD lacks
specific policies on when it will declare a grantee to be in default or
apply sanctions. Although HUD has issued nine default notices to

grantees that have not demonstrated significant progress, it has not done
so for other grantees showing a similar lack of progress.

Since the HOPE VI program began in fiscal year 1993, about $63 million in
HOPE VI funding has been budgeted for technical assistance, and HUD has
obligated the majority of its technical assistance funding for services
provided directly to grantees. Of the $51 million that HUD estimates it
has obligated to date, 55 percent has been obligated for services provided
directly to grantees. This included, in fiscal years 1996 to 2000,
providing

each new grantee with an expediter* a private- sector expert in finance,
real estate development, and community revitalization* to assist with the
implementation of its HOPE VI grant. HUD obligated the remaining funds

for services that help it to manage the program. For example, it obligated
21 percent of the funding to develop and implement the HOPE VI reporting
system. In recent years, HUD has eliminated some services previously
provided to grantees. In fiscal year 2001, for example, HUD stopped
providing expediters because, according to program officials, the practice

had become too expensive. Currently, only at- risk grantees* grantees that
are experiencing problems with their grants or that do not have adequate
capacity to manage their grants* are considered for technical assistance.

This report contains recommendations designed to improve HUD*s management
of the HOPE VI program. HUD agreed with each of our recommendations.

Background Under the Housing Act of 1937, as amended, Congress created the
federal public housing program to help communities provide housing for
lowincome families. Congress annually appropriates funds for the program,
and HUD allocates these funds to the approximately 3,400 public housing

authorities nationwide. Housing authorities are typically created under
state law, and a locally appointed board of commissioners approves their
decisions. HUD and the housing authorities have an annual contributions
contract* a written contract under which HUD agrees to make payments

to the housing authority and the housing authority agrees to administer
the housing program in accordance with HUD regulations and requirements.
In addition to competitively awarded HOPE VI grants, HUD provides housing
authorities with several types of assistance, including operating
subsidies to cover the difference between rent payments and operating
expenses and capital funds to improve the physical condition of properties
and upgrade the management and operation of existing public housing sites.

HOPE VI is one of the few active federal housing production programs. By
providing funds for a combination of capital improvements and community
and supportive services, HOPE VI seeks to (1) improve the living
environment for public housing residents of severely distressed public
housing through the demolition, rehabilitation, reconfiguration, or
replacement of obsolete public housing; (2) revitalize sites on which such

public housing is located and contribute to the improvement of the
surrounding neighborhood; (3) provide housing that will avoid or decrease
the concentration of very low- income families; and (4) build sustainable

communities. 3 With the 165 grants awarded through fiscal year 2001,
grantees planned, as of December 31, 2002, to demolish 78,265 public
housing units and construct or rehabilitate 85,327 units, including 44,757
public housing units.

HUD*s requirements for HOPE VI revitalization grants are laid out in each
fiscal year*s NOFA and grant agreement. 4 NOFAs announce the availability
of funds and contain application requirements, threshold requirements,
rating factors, and the application selection process. 5 Grant agreements,
which change each fiscal year, are executed between each grantee and HUD
and specify the activities, key deadlines, and documentation that grantees
must meet or complete. For example, the fiscal year 2001 grant agreement
specified that the grantee must complete construction within 54 months of
the date on which the grant agreement was executed.

From fiscal years 1993 to 2001, HUD received 609 revitalization grant
applications. 6 HUD uses the same basic procedures each year to screen,
review, and rank grant applications. When grant applications are received,
they are screened to determine whether they meet the eligibility and
threshold requirements in the NOFA. Next, reviewers rate the grant

3 Until fiscal year 1999, the HOPE VI program operated from year to year
as a demonstration program in accordance with authorization provided each
year in appropriations acts. The Quality Housing and Work Responsibility
Act of 1998 authorized HOPE VI through the end of fiscal year 2002. As
defined in the act, severely distressed public housing (1) requires major
redesign, reconstruction, or redevelopment or partial or total demolition;
(2) is a significant contributing factor to the physical decline of and
disinvestments by public and private entities; (3) is occupied
predominantly by families that are very low- income, whose

members are unemployed, and that are dependent on various forms of public
assistance or has high rates of vandalism and criminal activity; and (4)
cannot be revitalized through assistance under other programs. 4 HUD had
planned to develop regulations for the HOPE VI program but, as of May
2002, had withdrawn its plans to do so. 5 A threshold requirement is a
requirement that an applicant must meet to be eligible for a HOPE VI
revitalization grant. For example, the fiscal year 2002 NOFA states that
an applicant is eligible only if it provides a certification either that
it has procured a developer for the first phase or that it will act as its
own developer. A rating factor is a category that is used to evaluate
specific aspects of the application, such as the need for funding. For
each factor, HUD can award anywhere from zero to the maximum amount of
points.

6 Some of the 609 applications were submitted for the same public housing
site. For example, of the 66 fiscal year 2001 applicants, 43 had submitted
previous applications for the same public housing site. Of the 43 repeat
applicants, 25 had applied twice, 11 had applied three times, 3 had
applied four times, and 4 had applied five times.

applications on the basis of the rating factors described in the NOFA and
rank them in score order. Generally, a group of applications representing
twice the amount of funds available is sent to a final review panel, which
may include the Deputy Assistant Secretary for Public Housing Investments,
the Assistant Secretary for Public and Indian Housing, and other senior
HUD staff. The final review panel assigns a final score and recommends for
selection the most highly rated competitive applications, subject to the
amount of available funding. For a list of the 165 grants awarded through
fiscal year 2001, see appendix II.

Public housing authorities with revitalization grants can use a variety of
other public and private funds to develop their HOPE VI sites. Public
funding can come from federal, state, and local sources. For example,
housing authorities can use funds raised through federal low- income
housing tax credits. Under this program, states are authorized to allocate
federal tax credits as an incentive to the private sector to develop
rental housing for low- income households. 7 Private sources can include
mortgage financing and financial or in- kind contributions from nonprofit
organizations. Developing public housing with a combination of public and
private financing sources is known as mixed- finance development.

HUD*s Office of Public Housing Investments, housed within the Office of
Public and Indian Housing, manages the HOPE VI program. Grant managers
within the Office of Public Housing Investments are primarily responsible
for overseeing HOPE VI grants. They approve changes to the revitalization
plan and coordinate the review of the community and supportive services
plan that each grantee submits. 8 In addition, grant managers track the
status of grants by analyzing data on the following key activities:
relocation of original residents, demolition of distressed units,

7 After the state allocates tax credits to developers, the developers
typically offer the credits to private investors. The private investors
use the tax credits to offset taxes otherwise owed on their tax returns.
The money that private investors pay for the credits is paid into the
projects as equity financing.

8 The revitalization plan includes, among other things, the grantee*s HOPE
VI application, budgets, a community and supportive services plan, a
relocation plan, and any supplemental submissions that HUD requests
following its review of the HOPE VI application or as a result of a visit
to the site. The community and supportive services plan contains a
description of the supportive services that will be provided to residents,
proposed steps and schedules for establishing arrangements with service
providers, plans for actively involving residents in planning and
implementing supportive services, and a system for monitoring and tracking
the performance of the supportive services programs as well as resident
progress.

new construction or rehabilitation, reoccupancy by some original
residents, and occupancy of completed units. Public and Indian Housing
staff located in HUD field offices also play a role in overseeing HOPE VI
grants, including coordinating and reviewing construction inspections.

HUD Uses Core According to our analysis, HUD has generally used a core of
four rating

Factors to Assess factors as the basis for assessing HOPE VI
revitalization grant applications.

Although HUD*s fundamental factors have remained the same, the
Applications but Has

requirements that housing authorities must fulfill under each factor have
Not Consistently

become more stringent from year to year. Additionally, until the most
Followed Its Selection

recent NOFA, HUD had not eliminated applicants on the basis of poor
performance on previously awarded grants. HUD*s Inspector General also

Procedures has reported that HUD has not consistently followed its
selection

procedures that are established for each annual assessment. Although HUD
Generally

HUD has generally evaluated applications for HOPE VI revitalization grants
Uses the Same Core Factors

on the basis of four core rating factors. Although other factors have been
to Assess Applications, added and removed over time and the names of the
factors have varied Applicants Must Now Meet

somewhat throughout the years, four key concepts* need, capacity, quality,
and leveraging* have been used consistently to assess More Stringent

applications. 9 As defined in the most recent NOFA, need should indicate
Requirements

the severity of distress at the targeted public housing site. Information
provided under capacity is used to assess the experience of the
applicant*s team in planning, implementing, and managing comparable
physical development, financing, leveraging, and partnership activities.
10 HUD

determines quality by evaluating the overall quality of the plan, the
likelihood of success, project readiness, and design. Finally, information
provided under leveraging is used to assess the extent to which funds will
be leveraged for physical development and community and supportive
services, what other revitalization activities have been carried out in
the targeted area in anticipation of the HOPE VI grant, and if there are
physical

9 For example, the need factor has also been called *Extent of Need for
Revitalization* and *Need for Funding.* The capacity factor was also
called *Capability* and *Capability and Readiness.* Since 1996, HUD has
evaluated the quality of the revitalization plan using terms such as
*Program Quality, Feasibility, and Sustainability* and *Soundness of
Approach.*

10 The applicant*s *team* can include housing authority staff, developer
partners, program managers, property managers, subcontractors,
consultants, attorneys, financial consultants, and other entities proposed
to carry out program activities.

development activities under way that will enhance the new HOPE VI site.
For more information on the most recent NOFA, see appendix III.

Although the core factors have remained the same, the information that
housing authorities must submit and the requirements that they must
fulfill under each factor have generally increased over time (see fig. 1).
For example, although housing authorities have been required to provide
basic statistics, such as crime and vacancy rates, to document severe
distress or need since fiscal year 1993, housing authorities also were
required,

beginning in fiscal year 1999, to submit a certification from an
independent engineer that the public housing targeted for revitalization
met HUD criteria for severe distress. Since fiscal year 1993, applicants
also were required to provide information on their own capacity to
implement their plans. But, beginning in fiscal year 1997, housing
authorities also were required to document the ability of their proposed
partners to develop, construct, and manage the proposed activities. To
receive the maximum amount of points for the quality rating factor in
fiscal year 1996, applicants

were required to submit several pieces of information, including budgets,
a certification that the proposed activities could not be completed
without HOPE VI funding, and a description of how the housing authority
planned to maintain the proposed programs and policies over the long term.
By fiscal year 2002, housing authorities additionally had to submit
documentation that the revitalization plan would result in outside
investment in the surrounding community and evidence that, if funded, work
could commence immediately. To indicate that they could leverage funds,
housing authorities were encouraged to submit evidence of outreach and
support for the project in fiscal year 1995. However, by fiscal year 2000,
applicants had to show that they would obtain at least $4 in leveraged
funds for every HOPE VI dollar requested for development in order to
receive the maximum amount of points under leveraging.

Figure 1: Changes to the HOPE VI Program Over Time Legislation October
1992:

September 1994: April 1996:

FY 1993 appropriations act creates FY 1995 appropriations act

FY 1996 appropriations act HOPE VI Urban Revitalization

requires funding for housing expands program eligibility to all

Demonstration Program authorities that received planning housing
authorities with

. Targets 40 most populous cities grants in prior years distressed housing
and adds

and troubled housing authorities . Removed 500 units per city limit
demolition to the funding criteria

. Limits funding to 500 units in each city . Requires using at least 80

percent of funds for capital costs

October 1993: September 1996:

FY 1994 appropriations act requires FY 1997 appropriations act

funding to be provided to qualified prohibits granting competitive

housing authorities that applied advantage in awards to settle

in FY 1993 but were not funded litigation or pay judgments

1992 1993 1994 1995 1996 1997 February 1995:

HUD issues special funding request letter to the 40 most

July 1996: April 1997:

populous cities and troubled HUD publishes 1996

HUD publishes 1997 housing authorities HOPE VI NOFA HOPE VI NOFA .
Requires applicants to complete

. Requires applicants to demolish

. Removes demolition a worksheet documenting

at least one obsolete building; requirement severe distress strongly
encourages them to

. Requires documentation of

. Evaluates applicants on the establish a self- sufficiency

the developer's experience extent to which any previous program for
residents and

. Eliminates the

January 1993:

HOPE VI grants have mixed- income sites categorization of

HUD publishes 1993 HOPE VI NOFA progressed . Sets funding on the basis of
applicants by size . Requires applicants to submit

. Requires description of size, with a maximum award

. Caps funding at $35 evidence of their capacity, including

support from potential of $40 million million per application their Public
Housing Management

leveraging partners . Requires one public meeting

. Establishes $5,000 limit Assessment Program scores . Caps funding at $50

with residents and community per unit for community

. Caps funding at $50 million per city million per application

members and supportive services

HUD

Source: GAO.

Legislation October 1997:

October 1998: October 1999:

November 2001:

FY 1998 FY 1999 appropriations act

FY 2000 appropriations act FY 2002 appropriations act

appropriations act authorizes $625 million for

specifies that $1.2 million should authorizes $574 million for the

creates new $26 the HOPE VI program

be contracted to the Urban HOPE VI program

million set aside for Institute to conduct an

senior sites The Quality Housing and Work

independent study on the Responsibility Act of 1998

long- term effects of the HOPE VI authorizes the HOPE VI program

program on former residents through September 30, 2002 . Provides a
definition of severely

distressed public housing

October 2000:

FY 2001 appropriations act authorizes $575 million for the HOPE VI program

1998 1999 2000 2001 2002 February 1999: March 1998:

HUD publishes 1999 HOPE VI NOFA HUD publishes 1998

. Requires grantees to provide matching HOPE VI NOFA funds (at least 5
percent of the

. Requires revitalization grant amount) description of

. Disqualifies troubled housing authorities resident

unless HUD determines this designation is involvement not due to reasons
that affect its capacity

July 2002: . Eliminates the

to carry out the proposed activities HUD publishes requirement to

. Requires applicants to conduct at least 2002 HOPE VI NOFA submit Public

one training session for residents and

February 2000: February 2001:

. Emphasizes grant Housing

at least three public meetings with HUD publishes

HUD publishes timeliness and

Management residents and community members 2000 HOPE VI NOFA 2001 HOPE VI
NOFA capacity of applicants Assessment

. Limits the amount of the grant that can

. Fully implements the Quality

. Gives priority to Section 202

. Sets 28 threshold Program scores be spent on community and supportive

Housing and Work and other large sites a

requirements that

. Establishes $5,000 services to 15 percent Responsibility Act of 1998 .
Evaluates applicants on the

applicants must meet limit per household

. Requires applicants to submit a

. Evaluates applicants on the ratio of HOPE VI funds to

to be eligible for community and certification by an engineer that units

ratio of HOPE VI funds to community and supportive

. Places a $20 million supportive services

are severely distressed committed leveraged funds

service funds leveraged cap on award amounts

HUD

Note: This figure is based on GAO analysis of HUD*s legislative
appropriations and NOFAs.

a Section 202 sites are distressed public housing sites with more than 300
units that HUD has determined to be subject to conversion to rental
assistance under Section 202 of the Omnibus Consolidated Rescissions and
Appropriations Act of 1996.

According to HOPE VI officials, HUD has increased the types and quantity
of information required each year in an effort to obtain information that
makes it easier to rate and rank applications and allows the agency to
make improved selection decisions. In addition, the agency has made some
changes in an effort to make the application process easier for housing
authorities. Finally, HOPE VI officials noted that the program*s annual
appropriation legislation can change the requirements each year and that
the NOFAs must be revised to reflect these changes.

Although the changes have given HUD better information upon which to base
selection decisions, some of the housing authority and public housing
industry group officials that we interviewed expressed concerns about the
changes in the application requirements that housing authorities must
meet. According to these officials, such changes make it difficult for
housing authorities to anticipate what HUD intends to emphasize and to
make detailed revitalization plans until each NOFA is published. The
officials also noted that it is challenging for previously denied
applicants to determine how to revise their applications. Housing
authorities and interest groups report that it generally costs $75,000 to
$250, 000 to prepare a HOPE VI grant application. The fiscal year 2002
NOFA was of particular

concern to some of the housing authority officials and industry group
representatives that we interviewed. According to these officials, the
NOFA required housing authorities to conduct impractical up- front
planning and to obtain commitments at an unrealistically early date. For
example, an applicant had to certify that it had procured a developer for
the first phase of construction by the application due date. Officials we
interviewed stated that this requirement would be costly to the applicant,
who at that point would have no guarantee of funding.

Until Fiscal Year 2002, HUD Although HUD*s annual selection process had
considered the performance

Did Not Declare Applicants of applicants who had received HOPE VI grants
in prior years, it was not

Ineligible because of Past until the fiscal year 2002 NOFA that past
program performance became a

Performance mandatory threshold requirement for an applicant to be
eligible for a HOPE

VI revitalization grant. Incorporating past performance* specifically, the
demonstrated ability to efficiently manage projects* can help direct HOPE
VI funds to where they can most effectively produce results.

Starting in fiscal year 1995, an applicant*s score for capacity was
partially based on the extent to which any previously awarded HOPE VI
grants had progressed. In fiscal years 1993, 1996, and 1997, applicants
were also required, under the capacity factor, to submit Public Housing
Management Assessment Program scores, which were a measure of a housing
authority*s performance in all major areas of management operations. HUD
stopped requiring this information in fiscal year 1998, after the Public
Housing Management Assessment Program was discontinued. 11 The fiscal

year 2002 NOFA was the first that stated that an applicant with one or
more existing HOPE VI revitalization grants would be disqualified if one
or more of those grants failed to meet certain performance requirements as
required in the applicable HOPE VI revitalization grant agreement.

During the years that past performance was a rating factor* rather than a
threshold eligibility requirement* multiple HOPE VI revitalization grants
were awarded to housing authorities that had made little progress in
constructing new units under previous grants. For example, the Chicago
Housing Authority was awarded grants in fiscal years 1998, 2000, and 2001,

although construction, as of December 31, 2002, was 21 percent complete at
the Cabrini- Green site (fiscal year 1994 grant); 26 percent complete at
the Robert Taylor B site (fiscal year 1996 grant); 27 percent complete at
the ABLA Brooks Extension site (fiscal year 1996 grant); and 0 percent

complete at the Henry Horner site (fiscal year 1996 grant). Similarly, the
Detroit Housing Commission has received three grants and constructed 25
percent of the units planned.

11 In 1997, HUD instituted a new system* the Public Housing Assessment
System* to measure overall housing authority performance. Because this
system is still undergoing changes, applicants have not been asked to
submit their scores as part of their application.

In a June 2002 report to Congress, HUD acknowledged that it has done
little to rectify the problems among low performers and has often awarded
poorly performing housing authorities multiple grants despite low or no

unit production, inadequate oversight, and capacity issues. 12 HUD also
acknowledged that awarding multiple grants to poor performers further
strains the institutional and staff capacity of these public housing
authorities, intensifying existing problems. Finally, HUD noted that it
had initially awarded grants to large housing authorities for large- scale
developments, without fully recognizing that most of the grantees included
at- risk and troubled public housing authorities. 13 Some of these large
housing authorities were awarded multiple revitalization grants, and the
burden of managing the grants resulted in slow planning, redevelopment,
and construction.

According to HUD, it elevated the importance of past performance in the
fiscal year 2002 NOFA because it wanted to emphasize accountability and
readiness. It determined that applicants that already had one or more HOPE
VI revitalization grants should demonstrate the capability to manage them
before HUD awarded them more funds. It also concluded that poor performers
should not be rewarded with additional funding when other housing
authorities possibly could implement the grants better.

HUD Has Not Consistently In annual reviews of the HOPE VI grant selection
process, HUD*s Inspector

Followed Its Grant General has found that the agency has not consistently
followed its grant

Selection Procedures selection procedures for each year. For example, in
an audit of the fiscal

year 1996 grant award process, the Inspector General found that HUD
revised its screening procedures to allow applicants to comply with only
one of the two eligibility criteria in the NOFA. 14 Under the revised
screening procedures, HUD awarded $269 million to applicants that should
have been ineligible for funding because they did not demonstrate
compliance with the two criteria as specified in the NOFA. Similarly, when

12 U. S. Department of Housing and Urban Development, HOPE VI: Best
Practices and Lessons Learned 1992- 2002 (Washington, D. C.: June 14,
2002). 13 Under the Public Housing Management Assessment Program, housing
authorities that received an overall score of less than 60 percent were
designated as troubled (overall). An at- risk housing authority is one
that is close to being designated as troubled.

14 U. S. Department of Housing and Urban Development, Office of Inspector
General, Audit of the Fiscal Year 1996 HOPE VI Grant Award Process, 98-
FO- 101- 0001 (Washington, D. C.: Oct. 20, 1997).

HUD encountered a defect in a fiscal year 1996 application, often the
reviewers resolved the defect in a manner that improved the applicant*s
application but did not always comply with the NOFA procedures for
resolving application defects. The Inspector General concluded that, as a
result, some applications that should have been ineligible for funding
were inappropriately funded.

Similarly, the Inspector General also has found that in both fiscal years
1998 and 1999 HUD did not fully or consistently implement key application
review procedures. 15 Specifically, the final review panel, and to a
lesser degree the initial reviewers, did not always document their
justifications for scoring and rating individual applications. For
example, in its fiscal year 1998 audit, the Inspector General reviewed 24
applications and identified 6

on which the final review panel changed preliminary scores without
providing adequate documentation or justification to support all the
changes. The scoring changes resulted in 5 of the applicants obtaining
funding and 1 losing funding. In its fiscal year 1999 audit, the Inspector
General reviewed 25 applications and found that HUD*s final review panel
had changed scores for 6 applications without providing adequate

documentation or justification. The scoring changes resulted in 5 of the
applicants obtaining funding.

In response to these and other Inspector General criticisms of the HOPE VI
grant selection process, HOPE VI officials told us that they follow their
review procedures to the best of their ability, given the time constraints
of the annual competition. Although the Inspector General generally has
about 4 months to review the previous year*s applications, HOPE VI
officials noted that they have shorter time frames* generally, 6 weeks.
HUD officials also stated that they have made efforts to address the
Inspector General*s concerns, including efforts to better screen

applications. In its report on the fiscal year 1999 HOPE VI competition,
the Inspector General determined that HUD had addressed issues in its
fiscal year 1998 review, relating to the need to ensure that (1) each
rejected applicant would be provided specific written notification as to
why the application was not successful and (2) all evaluations were based
on the facts presented in the applications.

15 The results of the Inspector General*s reviews of the fiscal years 1998
and 1999 award processes were captured in management letters related to
annual financial statement audits.

Status of Work Varies The status of work at HOPE VI sites varies, with
construction completed at

Greatly, and Most 15 of the 165 sites that received revitalization grants
through fiscal year

2001. Overall, at least some units have been constructed at 99 of the 165
Grantees Have Not Met

sites, and 47 percent of all HOPE VI funds have been expended. In general,
Grant Agreement

more recently awarded grants are progressing more quickly than earlier
Deadlines

grants. Nevertheless, the majority of grantees missed at least one of the
deadlines in their grant agreements. For example, grantees did not submit
the revitalization plan to HUD on time for 75 percent of the grants
awarded through fiscal year 1999. Many factors affect the status of work
at HOPE VI sites, including the development approach, housing authority
management, and relationships with residents and the surrounding
community.

Status of Work Varies Our analysis of data from HUD*s HOPE VI reporting
system shows that

Widely at HOPE VI Sites work status varies at HOPE VI sites. As of
December 31, 2002, relocation

was complete at 101 of the 165 sites, demolition at 87 sites, and
construction at 15 sites. 16 Reoccupancy* the return of some original
residents to revitalized units* was complete at 37 sites, while occupancy
was complete at 14 of the 165 sites. Grantees had demolished 57,772 units
of severely distressed public housing and constructed or rehabilitated
23,109 units. Figure 2 shows the percentage of planned revitalization
activities completed by each fiscal year*s grantees.

16 The following 15 sites are complete: Bernal/ Plaza, San Francisco,
California (fiscal year 1993 grant); Earle Village, Charlotte, North
Carolina (fiscal year 1993 grant); Outhwaite Homes/ King Kennedy,
Cleveland, Ohio (fiscal year 1993 grant); Allen Parkway Village, Houston,
Texas (fiscal year 1993 grant); Hillside Terrace, Milwaukee, Wisconsin
(fiscal year 1993 grant); Quigg Newton Homes, Denver, Colorado (fiscal
year 1994 grant); Lafayette Courts, Baltimore, Maryland (fiscal year 1994
grant); McGuire Gardens, Camden, New Jersey (fiscal year 1994 grant);
Hayes Valley, San Francisco, California (fiscal year 1995 grant);
Lexington Terrace, Baltimore, Maryland (fiscal year 1995 grant); Valley
Green/ Sky Tower, Washington, D. C. (fiscal year 1997 grant); Enterprise
Drive, Helena, Montana (fiscal year 1997 grant); Vine Hill Homes,
Nashville, Tennessee (fiscal year 1997 grant); Caroline Street Apartments,
New Bedford, Connecticut (fiscal year 1998 grant); and Heritage House II,
Kansas City, Missouri (fiscal year 1998 grant).

Figure 2: Percentage of Planned Revitalization Activities That Grantees
Completed, by Fiscal Year Awarded Percentage 100

80 60 40 20

0 1993

1994 1995 1996 1997 1998 1999 2000 2001 Fiscal year

Relocation Demolition Construction Reoccupancy Occupancy Source: GAO.

Note: This figure is based on GAO analysis of data from HUD*s HOPE VI
reporting system (as of Dec. 31, 2002).

Although construction was complete at only 15 sites as of December 31,
2002, construction was nearing completion at additional sites. As shown in
figure 3, at least some units had been constructed at 99 of the 165 sites.

Where construction was still ongoing, it was 50 percent or more complete
at 40 sites and 75 percent or more complete at 25 sites. No units had been
completed at 66 sites. Overall, 27 percent of the total planned units were
complete as of December 31, 2002.

Figure 3: Percentage of Construction Completed at 165 HOPE VI Sites Number
of sites 80

70

66

60 50 40 30

25 25

20

19 15 15

10 0

0 >0 to

25 to 50 to

75 to 100 <25 <50 <75 <100 Percentage range of construction completed

Source: GAO. Note: This figure is based on GAO analysis of data from HUD*s
HOPE VI reporting system (as of Dec. 31, 2002).

In general, grantees with more recently awarded grants are completing
activities more quickly than those with the earlier grants. The fiscal
year 1993 grantees took an average of 31 months after execution of grant

agreements to start construction. The fiscal year 1994 grantees took an
average of 41 months. 17 However, the 14 grantees awarded grants in fiscal
year 1999 that have started construction did so an average of 16 months
after grant agreement execution. Furthermore, the 9 fiscal year 2000
grantees that have started construction did so, on average, 10 months
after grant agreement execution. 18 According to HUD, there are several
possible reasons for this improvement, which include that the later
grantees may have more capacity than the earlier grantees, the
applications submitted in

later years were more fully developed to satisfy NOFA criteria, and HUD
has placed greater emphasis on reporting and accountability.

Overall, grantees have expended about $2.1 of the $4.5 billion (47
percent) in HOPE VI revitalization funds awarded. 19 As expected, a
greater percentage of the funds budgeted for planning and demolition has
been expended than of the funds budgeted for construction and community
and

supportive services (see fig. 4). For example, 67 percent of all HOPE VI
funds budgeted for demolition have been expended, while 42 percent of all
HOPE VI funds budgeted for construction have been expended.

17 One fiscal year 1994 grant was not included in the calculation because
the grantee plans to use the grant funds to acquire, rather than
construct, homeownership units. 18 As of December 31, 2002, 7 of the
fiscal year 1999 grantees and 9 of the fiscal year 2000 grantees had not
started construction. Until these grantees start construction, we cannot
be sure that the fiscal years 1999 and 2000 grantees, as a whole, have
moved faster than earlier grantees.

19 The percentage of HOPE VI dollars expended can be impacted by the fact
that, in some cases, other money is spent first, reserving the HOPE VI
dollars to be expended later in the project.

Figure 4: Status of HOPE VI Funds Budgeted and Expended for Revitalization
Activities Dollars in millions 3, 000

2, 500 2, 000 1, 500

42%

1, 000 500

64% 49%

0

67% 43%

Planning/ Professionalservices

Demolition Construction

Relocation/ Reoccupancy Community/ Supportive

services Fund uses

HOPE VI funds budgeted HOPE VI funds expended Source: GAO.

Note: This figure is based on GAO analysis of data from HUD*s HOPE VI
reporting system (as of Dec. 31, 2002).

Majority of Grant The majority of grantees missed at least one of the
deadlines established in Agreement Deadlines Have

their grant agreements. 20 Grantees must meet three major deadlines Not
Been Met according to their grant agreements: the submission of a
revitalization plan to HUD, the submission of a community and supportive
services plan to

HUD, and completion of construction. Overall, for 75 percent of the grants
20 All grants are not subject to the same time frames because the
deadlines in each year*s grant agreements tend to be different.

awarded through fiscal year 1999, the grantees did not submit the
revitalization plan to HUD on time. 21 For 70 percent of the grants
subject to a standard deadline for the submission of a community and
supportive services plan, the grantees did not meet the deadline. 22
Additionally, grantees completed construction within the deadline on only
3 of the 42

grants for which the time allowed for construction* 54 months from grant
execution for grants awarded since fiscal year 1996* had expired. For 9 of
the 39 grants that missed their construction deadline, the grantees had
not constructed any units as of December 31, 2002.

HUD data show that the time it has taken grantees to submit key documents
has shortened over the life of the program. For example, as shown in table
1, grantees have been taking less time to submit revitalization plans to
HUD. On average, the fiscal year 1994 grantees took about 790 days after
the execution of their grant agreements to submit a revitalization plan.
By fiscal year 2000, the grantees took an average of 185 days after the
execution of their grant agreements to submit a revitalization plan.
Similarly, although there is no specific grant agreement deadline

related to submitting mixed- finance proposals* documents that HUD must
approve before mixed- finance construction can begin* the recent grantees
have done so in less time than did earlier grantees. The average number of
days between grant execution and submission of a mixed- finance proposal
fell from 2, 255 days for the fiscal year 1994 grantees to 508 days for
the fiscal year 2000 grantees.

21 We omitted from our analysis 5 fiscal year 1995 grants that were
awarded during a second round of funding because each grantee signed a
grant agreement with HUD that contained unique deadlines specific to that
grant. The revitalization plan deadlines for the fiscal years 2000 and
2001 grants have not yet passed.

22 We could not assess compliance for grants awarded in fiscal years 1995-
99 using the data in HUD*s HOPE VI reporting system because the grant
agreements stated that the activity should be completed in accordance with
the schedule in each grantee*s revitalization plan, rather than in
accordance with a standard deadline.

Table 1: Average Number of Days to Complete Key Program Activities Average
number of days from

Average number of days from Fiscal year grant execution to revitalization

grant execution to submission awarded

plan submission of mixed- finance proposal

1993 137 2, 047 1994 790 2, 255 1995 287 1, 276 1996 400 1, 421 1997 290
983 1998 317 1, 005 1999 259 912 2000 185 508 2001 93 296 Source: HUD.
Note: Not all of the grantees have submitted a revitalization plan. For
example, 1 of the fiscal year 2000 grantees and 4 of the fiscal year 2001
grantees have not submitted a revitalization plan. Until these grantees
have submitted a plan, we cannot determine the average number of days for
the fiscal year 1999 and 2000 grantees, as a whole.

HUD has taken steps to encourage adherence to deadlines. For instance, the
agency notified grantees in March 2002 that, as part of HUD*s increased
focus on readiness, 10 dates could no longer be revised in the HOPE VI
reporting system as of June 30, 2002. The dates included planned
completion of the revitalization plan, planned completion of a
mixedfinance proposal, planned start of construction, and planned
completion of construction. Prior to this decision, grantees had been
allowed to adjust their planned dates when delays occurred, making it
difficult for HUD to determine the extent of delays. In its fiscal year
2002 NOFA, HUD also

stressed project readiness. For example, the NOFA required applicants to
provide a certification stating either that they had procured a developer
for the first phase of development by the application due date or that
they would act as their own developer. Similarly, applicants that proposed
offsite replacement housing were required to submit evidence of control of
the proposed off- site locations.

Many Factors Affect Work Our visits to the sites that were awarded
revitalization grants in 1996 show

Status that many factors* including the development approach, housing
authority

management, and relationships with residents and the community* can affect
the status of work at a site. In its June 2002 report to Congress, HUD

stated that a mixed- finance development approach might cause delays
because housing authorities often lack staff with expertise in development
and complex financing approaches. They must hire additional staff or
outside consultants proficient in private- sector real estate
construction,

financing, and lending practices to put together financing and retain
developers. For example, the redevelopment of Dalton Village in Charlotte,
North Carolina, was delayed about 1 year due to the denial of its initial
application for low- income housing tax credits. In addition, the Housing
Authority of New Orleans decided to use tax increment financing to raise
additional funds for its St. Thomas site. 23 It took more than 2 years for
the housing authority to get all of the approvals necessary. In contrast,
the Chester Housing Authority was able to complete construction at Lamokin
Village within 5 years of grant execution because it used only public
housing funds, which did not require them to acquire additional expertise.

Other aspects of the development approach, such as the type and location
of planned revitalization efforts, also can affect status. For example,
rehabilitation of existing buildings tends to take less time than
construction of new ones. As of December 31, 2002, over half of the HOPE
VI units scheduled for rehabilitation had been completed, while less than
a quarter of the new planned units had been constructed. The Cuyahoga
Metropolitan Housing Authority*s fiscal year 1996 grant involves both
rehabilitation of existing units and construction of new units. As of
April 2003, rehabilitation of 56 units was under way, whereas the
construction of new units was not scheduled to begin until October 2004.
Also, on- site construction tends to occur faster than off- site
construction. As of December 31, 2002, 29 percent of on- site construction
was complete, while

19 percent of off- site construction was complete. Grantees planning for
offsite construction sometimes have to purchase the property or properties
on which the units will be built. For example, the Housing Authority of
the

City of Pittsburgh plans to acquire numerous parcels of land in the
community surrounding the Bedford Additions site and construct new offsite
units prior to beginning construction on- site. Because acquiring the
sites is taking longer than anticipated, the housing authority has yet to
relocate residents and demolish the original site. For more examples of
how development approaches can affect work status, see appendix IV.

23 Tax increment financing allows a municipality to provide financial
incentives to stimulate private investment in a designated area, known as
a tax increment financing district.

The extent to which revitalization plans were changed during the course of
redevelopment also affects work status. The Housing Authority of the City
of Atlanta*s original application for a fiscal year 1996 HOPE VI grant
outlined a plan for 100 percent public housing at the Perry Homes site.
Two years after the grant award, HUD conducted a site visit and determined
that the site should include a wide range of units, including market- rate
units. Due to these changes, a revitalization plan was not approved until
October 2002. The Cuyahoga Metropolitan Housing Authority changed the
plans for its Riverview site due to environmental problems. In contrast,
the Housing Authority of Louisville, another fiscal year 1996 grantee, has
not had to make any significant modifications to its revitalization plan
for Cotter and Lang Homes, and over 60 percent of the 1,213 planned units
were complete as of December 31, 2002.

Several grantees we visited stated that the performance of housing
authority management staff affected the status of their revitalization
plans. For example, residents in Jacksonville and housing authority staff
in Spartanburg stated that their fiscal year 1996 grants had progressed
significantly, in part, because the executive director communicated well
with residents, the housing authority board, and local community leaders.
In contrast, the Cuyahoga Metropolitan Housing Authority was

experiencing internal problems at the time its fiscal year 1996 grant was
awarded. Its executive director was ultimately convicted for theft of
public funds, mail fraud, and lying about a loan. A new executive director
was hired in late 1998, and the housing authority was finally able to
focus on the fiscal year 1996 HOPE VI grant in 1999, according to housing
authority officials. In Detroit, the revitalization plans for Herman
Gardens changed multiple times because there were several changes in
executive leadership and each executive director had a different plan for
the site. Because the Detroit Housing Commission had not submitted a
formal revitalization plan for Herman Gardens, HUD notified the commission
in March 2000 and March 2002 that it was in default of its grant
agreement.

The extent of support from residents and the local community also can
affect the timing of progress at HOPE VI sites. For example, the Tucson
Community Services Department, which serves as the city*s public housing
authority, worked closely with its residents and the local community
during the planning process for its fiscal year 1996 grant. Tucson did not
submit its revitalization plan until a majority of the residents had
approved it. In contrast, resident or community opposition delayed
progress at several of

the sites we visited. For instance, the Chicago Housing Authority*s plans
for Henry Horner Homes were delayed 4 years by legal actions related to a

resident lawsuit. Residents at San Francisco*s North Beach site did not
want to relocate from the site during the redevelopment, which caused the
redevelopment to take longer than it would have otherwise. Because the
Housing Authority of New Orleans*s St. Thomas site is located in a
historic district, local preservationists opposed the construction of a
retail store at the site. In July 2002, a nonprofit organization filed a
lawsuit against the housing authority for failing to comply with
environmental and historic preservation laws. The case was dismissed in
April 2003. See appendix IV

for more information on each of the 20 sites we visited. HUD*s approval
process can also affect the status of work at HOPE VI sites. Officials
responsible for managing 12 of the 20 grants awarded in fiscal year 1996
told us that HUD*s approval process for key documents, such as the
revitalization plan and mixed- finance proposals, was too slow. However,
according to a HUD report, the agency*s approval process has been

improving. For instance, HUD*s data show the average number of days from
the submission of a mixed- finance proposal to approval was 185 days for
the fiscal year 1996 grantees. For the fiscal year 1999 grantees, the
average number of days between submission and approval of a mixedfinance
proposal was 126 days.

HUD*s Oversight of HUD grant managers located at HUD headquarters and in
the field are

HOPE VI Grants Has primarily responsible for overseeing HOPE VI grants,
but staff in HUD*s

field offices also assist grant managers in monitoring grants. In
particular, Been Inconsistent field office staff are to perform annual on-
site monitoring reviews. However, by the end of 2002, HUD had not
conducted any annual reviews

for 8 out of the 20 grants awarded in fiscal year 1996. According to HUD,
staffing limitations have constrained its ability to oversee grants.
Additionally, despite grantees* inability to meet key deadlines, HUD has
not developed a formal enforcement policy, which is an important part of
oversight.

While Grant Managers Both HUD headquarters and field office staff are
responsible for overseeing

Oversee Grants, Field Office HOPE VI revitalization grants. HUD has 30
grant managers that report

Staff Share HOPE VI directly to the Office of Public Housing Investments*
17 located at HUD

Oversight Responsibilities headquarters and 13 located in field offices.
Grant managers are primarily responsible for overseeing HOPE VI grants and
perform a number of

duties, including tracking the overall status of the grant, reviewing and
approving mixed- finance proposals, reviewing and approving all proposed

changes to program schedules, and reviewing and approving procurement
documents. According to HOPE VI officials, the main tool that grant
managers use to oversee grants is the HOPE VI reporting system, which
since 1998 has provided information on the status of each grant. (Grantee
reporting existed before 1998, but not in the form of the quarterly
reporting system currently used.) Grantees enter data into the Web- based
system at the end of each quarter. 24 According to the grant managers, the
reports from the system enable them to track grant activity and deadline
compliance.

Office of Public and Indian Housing staff in HUD*s field offices also play
a role in overseeing HOPE VI grants, but their responsibilities vary.
Three field offices that contain grant managers* located in New York, New
York; Miami, Florida; and Cleveland, Ohio* have signature authority,
meaning

that the office*s local Director of Public Housing can approve documents
without approval from headquarters. Other field offices contain grant
managers but do not have signature authority. However, most field offices
do not have a grant manager, but rather have a HOPE VI coordinator, whose
responsibilities include assisting grantees with preparing demolition

applications, reviewing environmental assessments, and coordinating and
reviewing inspections of HOPE VI construction sites performed by the U. S.
Army Corps of Engineers. The field offices also are responsible for
performing an annual on- site monitoring visit to each HOPE VI grant.
Following this visit, the field office is to prepare a report for both the
housing authority staff and the grant manager detailing grantee systems
and controls in place and compliance with HOPE VI program requirements.
The site visit reports also provide an assessment of the overall status of

grant activities. Staffing Limitations and

According to various reports and HUD field staff, the limited number of
Confusion about the Role of

grant managers, a shortage of field office staff, and confusion about the
Field Offices Constrain

role of field offices have diminished the agency*s ability to oversee HOPE
HUD*s Ability to Oversee

VI grants. As shown in figure 5, grant manager workload has been Grants

increasing since HUD last hired a large group of grant managers in 1998,
24 Data include current and projected production data (e. g., the number
of households relocated and the number of units demolished, constructed,
and occupied); financial information (e. g., HOPE VI funds budgeted and
expended); and key milestones (e. g., the grant award date, the dates the
revitalization and community and supportive services plans were submitted
and approved by HUD, and dates related to each phase of construction).

but the workload remains below the previous level. As of fiscal year 2001,
each grant manager was responsible for an average of about 6 grants
totaling about $157 million in HOPE VI funding. In its June 2002 report to
Congress, HUD stated that one factor contributing to delays at HOPE VI
sites was limited HUD grant managers. Similarly, some of the grantees we
visited stated that they believe grant manager workload contributed to the

slow approval process previously discussed in this report.

Figure 5: Grant Manager Workload, by Fiscal Year Grants per grant manager
15

12 9 6 3 0

1993 1994 1995 1996 1997 1998 1999 2000 2001 Fiscal year

Source: GAO. Note: This figure is based on GAO analysis of data provided
by HUD.

HUD reports that HOPE VI oversight also has been affected by a shortage of
field office staff and confusion about the role of field offices. Our site
visits showed that HUD field staff are not systematically performing the
required annual reviews. Of the 20 revitalization grants awarded in fiscal
year 1996, 8 had never had an annual review performed as of the end of
2002, and no grant had had an annual review performed each year since the
grant award. Overall, only one in five of the required annual reviews were

performed. However, the annual reviews that were performed did contain
important findings. For example, several of the annual reviews performed
for the fiscal year 1996 grantees noted that housing authorities were not

following procurement policies and lacked proper documentation of resident
relocations.

From our interviews with field office managers, we determined that there
are two reasons why annual reviews were not performed. First, many of the
field office managers we interviewed stated that they simply did not have
enough staff to get more involved in overseeing HOPE VI grants. For
example, one field office manager told us that, because of staffing
constraints, his office did not perform any HOPE VI oversight. Second,
some field offices did not seem to understand their role in HOPE VI
oversight. For instance, one office thought that the annual reviews were
primarily the responsibility of the grant managers. Others stated that
they had not performed the reviews because construction had not yet
started at the sites in their jurisdiction or because they did not think
they had the authority to monitor grants.

The HUD Inspector General and the agency itself have reported that
staffing shortages, particularly in the field, have resulted in a lack of
program oversight. In a 1998 review of the HOPE VI program, the Inspector
General stated that HUD had not been performing even the minimal
monitoring requirements for the HOPE VI program in part due to
understaffing in both headquarters and the field offices. 25 As noted in
that report, lack of monitoring led to grant implementation problems
remaining unresolved. In addition, HUD*s most significant workforce
planning activity to date* its Resource Estimation Allocation Process
(REAP)* cited staffing shortages related to the HOPE VI program. Under
REAP, HUD systematically estimated the number of employees needed to do
its work, on the basis of current workload and operations. The final
resource estimation report, which was issued in April 2001, noted that the
Office of Public and Indian Housing needed to add approximately 38 full-
time employees in the field to conduct tasks such as monitoring and
providing assistance to HOPE VI grantees. 26 The report also concluded
that the Office of Public Housing Investments should more clearly
articulate its own role and the role of field offices in the oversight of
HOPE VI grants.

25 U. S. Department of Housing and Urban Development, Office of Inspector
General, Nationwide Audit of HOPE VI Urban Revitalization Program, 99- FW-
101- 0001 (Washington, D. C.: Dec. 17, 1998). 26 Arthur Andersen LLP, HUD
Workforce Measurement Final Report * Phase I (Washington, D. C.: Apr. 17,
2001).

HUD Lacks Clear Although the majority of grantees have missed key
deadlines, HUD has not

Enforcement Policies and developed and provided to grantees an official
HOPE VI enforcement

Has Not Always Enforced policy, according to program officials. Instead,
the agency determines if

Grant Agreement Deadlines action should be taken against a grantee on a
case- by- case basis. A clear

enforcement policy could provide grantees with more certainty regarding
the consequences of not meeting grant agreement deadlines. In a December
1999 memorandum, HUD*s Office of General Counsel noted that no statutory
or program provisions required grantees to expend HOPE VI funds within a
set period of time. Therefore, it concluded that HUD may grant extensions
to time frames established in the grant agreements, thus avoiding the need
to declare grantees that have missed deadlines to be in default of their
grant agreements. 27 In the absence of a formal enforcement policy, HUD
has outlined in general

terms its default policy in grant agreements. In each grant agreement, HUD
describes several occurrences that might constitute a default by the
grantee under the grant agreement, including a grantee*s failure to comply
with the conditions and terms of its grant agreement. HUD provides written
notice of all defaults and gives the grantee 30 days to remedy the default
or to submit evidence to HUD that it is not in default. If the default
cannot be remedied within 30 days, grantees have an additional 60 days to
rectify the default situation. At that time, if the condition( s) noted in
HUD*s initial

letter to the grantee has not been resolved, HUD may require the grantee
to revise its program schedule, management plan, or program budget. HUD
also may restrict the grantee*s authority to draw down grant funds or
require reimbursement by the grantee. HUD also reserves the right to
appoint a receiver to carry out HOPE VI activities, reduce the amount of
the grant award, or terminate the grant.

According to HOPE VI officials, all grantees would have been considered in
default of their grant agreements at some point in their grant process if
HUD had not been flexible regarding time frames. For example, virtually
all of the fiscal year 1996 grantees were allowed an extension to the date
construction was to be completed, and some were allowed multiple

27 Prior to fiscal year 2002, HOPE VI appropriations were available until
expended. Starting in fiscal year 2002, HOPE VI appropriations must be
obligated within 2 fiscal years. Specifically, the fiscal year 2002 HOPE
VI appropriations must be obligated by September 30, 2003, while the
fiscal year 2003 HOPE VI appropriations must be obligated by September 30,
2004. For fiscal years 2002 and 2003, appropriations must be expended
within 5 years after the period of availability of obligation.

extensions. The Chicago Housing Authority*s Henry Horner grant and the
Housing Authority of the City of Atlanta*s Perry Homes grant received
extensions for the execution of a general contractor*s agreement and for
the date construction was to be completed. In 2000, the Housing Authority
of the City of Pittsburgh*s grant for Bedford Additions received an
extension until early 2003 to complete construction; in 2002, the
authority

received an additional extension to complete construction by July 2007.
Although HUD has not developed a formal enforcement policy, it has issued
default notices to grantees. It has generally issued these notices when
there is no evidence of a formal and comprehensive approach to the
grantee*s revitalization effort. As of March 2003, HUD had declared nine
grants to be in default and issued warning notices regarding three other
grants.

According to program officials, HUD expects to increase the use of the
default tool because a default letter tends to garner enough attention
with the local media and political leaders to prompt action. However, HUD
has never rescinded any HOPE VI funds, even when it has issued default
letters.

Because HUD does not have a formal enforcement policy, its issuance of
default notices can be viewed as arbitrary. For example, in July 2000, HUD
declared the Housing Authority of Baltimore City*s fiscal year 1996 grant
for Hollander Ridge to be in default of its grant agreement on the basis
of *failure to comply with the HOPE VI requirements or any other Federal,
State or local laws, regulations or requirements applicable in
implementing the Revitalization Plan.* The default letter also noted that,
because the housing authority*s revitalization plan was no longer
consistent with the requirements of a consent decree, the grant was deemed
to be in default. In March 2000 and March 2002, HUD declared the Detroit
Housing Commission*s fiscal year 1996 grant for Herman Gardens to be in
default because the housing authority had not submitted a revitalization
plan as required in its grant agreement. However, HUD has not issued
default letters to other grantees who have not met grant agreement
deadlines for completing construction. For example, even though no units
have been completed at St. Thomas in New Orleans or Bedford Additions in
Pittsburgh and, according to grant agreement deadlines, construction was

to be completed by early 2002, neither fiscal year 1996 grant has been
declared in default.

HUD Has Obligated the HUD estimates that it has obligated about $51
million of the $63 million in

Majority of Funds HOPE VI funds that have been set aside for technical
assistance, with the majority of this obligation funding services provided
directly to grantees

Budgeted for Technical and program reporting. As shown in figure 6, the
funding budgeted for

Assistance for Support technical assistance has fluctuated. Over the first
4 years of the program,

to Grantees and HOPE funding ranged between $2.5 and $3.2 million,
annually. In fiscal year 1998,

funding increased to $10 million and consistently remained at or above
that VI Program Reporting

level until fiscal year 2002, when it decreased to $6.2 million.

Figure 6: Technical Assistance Funding, by Fiscal Year Dollars in millions
20

15 10

5 0

1994 1995 1996 1997 1998 1999 2000 2001 2002 Fiscal year

Source: GAO. Note: This figure is based on GAO analysis of data provided
by HUD.

As shown in figure 7, HUD has obligated the majority of its technical
assistance funding for services provided directly to grantees and program
reporting. Of the $51 million that HUD estimates it has obligated to date,
55 percent has been obligated for technical assistance provided to
grantees. For example, HUD assigns each grant an outside technical
assistance provider to help the grantee develop its community and
supportive services

plan. In fiscal years 1996 to 2000, HUD assigned each new grant an
expediter to assist the grantee with its HOPE VI plans. These expediters

were private- sector experts in finance, real estate development, and
community revitalization. Another major category of technical assistance
has been program reporting. According to HOPE VI officials, HUD spends

about $2.5 million annually on the HOPE VI reporting system. A contractor
maintains the reporting system and staffs a help desk to respond to
questions from grantees. The remaining technical assistance funding has
been obligated for headquarters management assistance, such as
consultants; site inspections performed by the U. S. Army Corps of
Engineers; and staff training and travel.

Figure 7: Total Obligations for Technical Assistance, by Funding Category

Staff training and travel

4%

Site inspections

7% 13%

Headquarters management assistance

55% 21%

HOPE VI program reporting Technical assistance to grantees Source: GAO.

Note: This figure is based on GAO analysis of estimates provided by HUD.

In recent years, HUD has eliminated some services previously provided to
grantees. For example, in fiscal year 2001, HUD stopped providing
expediters because, according to program officials, the practice had
become too expensive. Currently, only at- risk grantees* grantees that are
experiencing problems with their grants or do not have adequate capacity
to manage their grants* are considered for technical assistance. According
to HUD officials, HUD has decreased the amount of technical assistance it

provides because the agency believes that grantees should be responsible
for retaining and funding their own technical assistance. Figure 8 shows

the percentage of technical assistance funds provided directly to grantees
over the life of the program.

Figure 8: Obligations for Technical Assistance, by Fiscal Year Obligations
in millions 25

20

59%

15

59%

10

50% 41%

5

29% 41%

50% 71%

67%

0

33%

Through 1999 2000 2001 2002 1998 Fiscal year

Technical assistance to grantees All other technical assistance Source:
GAO.

Note: This figure is based on GAO analysis of estimates provided by HUD.

Conclusions HOPE VI is one of the few active federal housing production
programs and is supposed to deliver almost 45,000 units of rehabilitated
or new public

housing. During these tight budgetary times, when Congress faces difficult
choices in deciding how to provide affordable housing, it is increasingly
important that federal housing programs produce results. After 10 years of
the HOPE VI program, construction has been completed at 15 of 165 sites.

However, work is proceeding more quickly at sites financed by more
recently awarded grants. The HOPE VI program has incorporated measures to
increase efficiency* in part attributable to HUD*s requesting more
information from grant applicants and a renewed emphasis on meeting
deadlines. In addition, the emphasis on performance measures, such as

HUD*s incorporation of past performance as an eligibility requirement in
the fiscal year 2002 NOFA, should help direct HOPE VI funds to where they
can most effectively produce results. However, the HOPE VI program could
be improved further. By emphasizing the need for regular grant oversight
and review and improving and clarifying the lines of communication between
headquarters and the field offices, HUD can eliminate existing confusion
about staff roles, build a

consistent record of site reviews and oversight, and improve
communications with grantees to facilitate progress on grants. Since the
HOPE VI grant process involves both HUD and public housing authorities,
HUD can further improve the efficiency of the grant program and help
achieve its goal of revitalizing public housing by holding grantees
accountable for performance, particularly in the areas of meeting
deadlines and producing deliverables. The HOPE VI program, as it is
currently set up, does not have a clear and consistent system for
determining if grantees are

not in compliance with grant requirements, nor does it offer clear
incentives for grantees to change behavior or correct undesirable
conditions.

Recommendations for To improve its selection and oversight of HOPE VI
grants, we recommend

Executive Action that the Secretary of Housing and Urban Development

 continue to include past performance as an eligibility requirement in
each year*s notice of funding availability;

 clarify the role of HUD field offices in HOPE VI oversight and ensure
that the offices conduct required annual reviews of HOPE VI grants; and

 develop a formal, written enforcement policy to hold public housing
authorities accountable for the status of their grants.

Agency Comments We provided a draft of this report to HUD for its review
and comment. In a letter from the Assistant Secretary for Public and
Indian Housing (see

app. V), HUD stated that it found the report to be fair and accurate in
its assessment of the management of the program. HUD also agreed with our
three recommendations. Specifically, it stated that it would take action
to incorporate past performance as an eligibility criterion in the fiscal
year 2003 HOPE VI Revitalization NOFA. Regarding the recommendation to
develop a formal enforcement policy, HUD stated that it regards the

development of management tools such as the locked checkpoint system
described in this report to be a key step in the establishment of a
formalized enforcement policy and will endeavor to institute other
responsive measures. Additionally, HUD provided clarifications on several
technical points, which have been included in this report as appropriate.

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 10 days
after the date of this report. At that time, we will send copies of this
report to the Chairman, Subcommittee on Housing and Transportation, Senate
Committee on Banking, Housing, and Urban Affairs; the Chairman and Ranking
Minority Member, Senate Committee on Banking, Housing, and Urban Affairs;
the Chairman and Ranking Minority Member, Subcommittee on Housing and
Community Opportunity, House Committee on Financial Services; and the
Chairman and Ranking Minority Member, House Committee on Financial
Services. We will also send copies to the Secretary of Housing and Urban
Development and the Director of the Office of Management and Budget. We
will make copies available to others upon request. This report will also
be available at no charge on GAO*s Web site at http:// www. gao. gov.

Please call me at (202) 512- 8678 if you or your staff have any questions
about this report. Key contributors to this report are listed in appendix
VI.

Sincerely yours, David G. Wood Director, Financial Markets and

Community Investment

Appendi Appendi xes I x Objectives, Scope, and Methodology Our objectives
were to examine (1) the Department of Housing and Urban Development*s
(HUD) process for assessing HOPE VI revitalization grant applications and
for selecting grantees, (2) the status of work at sites for which grants
have been awarded and compliance with grant agreement deadlines, (3) HUD*s
oversight of HOPE VI grants, and (4) the amount of program funds that HUD
has budgeted for technical assistance and the types of technical
assistance it has provided.

To accomplish these objectives, we analyzed the data contained in HUD*s
HOPE VI reporting system on the 165 sites that received revitalization
grants in fiscal years 1993 through 2001 and visited 20 sites in 18
cities. We selected these 20 sites because they received HOPE VI
revitalization grants

in fiscal year 1996, which was the first year that grants were subject to
a standard construction deadline. Using the 1996 grants also allowed us to
assess whether grantees had met their deadlines, which had passed for the
majority of the grantees by the time we began our site visits. In
addition, we interviewed the HUD headquarters officials responsible for
administering the HOPE VI program.

To determine the criteria that HUD uses to assess HOPE VI revitalization
grant applications, we analyzed each year*s notice of funding availability
(NOFA). Specifically, we examined the rating factors used each year to
determine if there were any similarities between the different NOFAs. We
also analyzed the information that housing authorities were required to

submit for selected rating factors and identified changes in these
requirements over time. To determine how HUD has followed its grant
selection procedures, we obtained and reviewed HUD Office of Inspector
General reports on the HOPE VI grant selection process for fiscal years
1996 and 1998 to 2001. 1 Finally, we interviewed public housing industry
groups* the Council of Large Public Housing Authorities, the Public
Housing Authorities Directors Association, and the National Association of
Housing and Redevelopment Officials* regarding the grant selection
process.

To determine the status of work at sites for which grants have been
awarded, we obtained and analyzed information from HUD*s HOPE VI reporting
system. Specifically, we obtained data as of December 31, 2002, for the
165 revitalization grants awarded through fiscal year 2001. We used

1 The HUD Inspector General did not publish a review of the fiscal year
1997 HOPE VI selection process.

these data to determine the status of relocation, demolition,
construction, reoccupancy, and occupancy and the amount of expended HOPE
VI funds. For each of the 1996 grants, we interviewed housing authority
and HUD officials to determine the status of each grant and the factors
affecting that status. To determine the extent to which grantees have met
grant agreement deadlines, we obtained and analyzed each year*s grant
agreement. We then used milestone data from HUD*s HOPE VI reporting system
to determine the extent to which grantees had met the deadlines in their
grant agreements. To assess the reliability of the data in HUD*s HOPE VI
reporting system, we interviewed the officials that manage the system;
reviewed information about the system, including the user guide, data
dictionary, and steps taken to ensure the quality of these data; and
performed electronic testing to detect obvious errors in completeness and
reasonableness. We determined that these data were sufficiently reliable
for the purposes of this report.

To identify how HUD oversees HOPE VI grants, we obtained and analyzed
HUD*s HOPE VI monitoring guidance and interviewed program officials. We
obtained and analyzed information on the number of grants and grant
managers at the end of each fiscal year to determine grant manager
workload. During each of our site visits, we interviewed housing authority

staff regarding HUD*s oversight of their grants. We also obtained and
analyzed copies of the annual reviews performed for the 1996 grants and
interviewed HUD field office staff regarding their role in HOPE VI

oversight. Finally, we reviewed HUD Inspector General reports on the HOPE
VI program and HUD*s final report on its Resource Estimation and
Allocation Process. To determine how much HUD has budgeted for technical
assistance, we

reviewed information provided by HUD on the total amount budgeted each
fiscal year for technical assistance. To determine the types of technical
assistance HUD has provided, we obtained and analyzed data on the major
types of technical assistance provided with each fiscal year*s budget. The
data HUD provided were estimates of the amounts it had obligated for
technical assistance over the life of the program. We also interviewed
program officials regarding the types of technical assistance provided and
1996 grantees regarding the types of technical assistance they received
from HUD.

We performed our work from November 2001 through April 2003 in accordance
with generally accepted government auditing standards.

Appendi I I x HOPE VI Revitalization Grants In fiscal years 1993 to 2001,
HUD awarded 165 revitalization grants to 98 public housing authorities
(see table 2). Nearly half of all of the HOPE VI revitalization grant
funds awarded have been granted to 20 housing authorities. Within this
group of housing authorities, 8 have received 4 or more revitalization
grants: the Housing Authority of the City of Atlanta, the Housing
Authority of Baltimore City, the Chicago Housing Authority, the Housing
Authority of the City of Oakland, the District of Columbia Housing
Authority, the Philadelphia Housing Authority, the Seattle Housing
Authority, and the City and County of San Francisco Housing Authority. The
Chicago Housing Authority has been awarded 8 HOPE VI revitalization

grants, more than any other housing authority. The Housing Authority of
Baltimore City follows with 6 revitalization grants. 1

Table 2: 165 Revitalization Grants Awarded, Fiscal Years 1993- 2001 Public
housing authority Site Fiscal year awarded Amount awarded

Albany Housing Authority Edwin Corning Homes 1998 $28,852, 200

Albany, New York Alexandria Redevelopment and Samuel Madden Homes 1998
6,716, 250 Housing Authority Alexandria, Virginia

Allegheny County Housing Authority McKees Rocks Terrace 1997 15,847, 160

Pittsburgh, Pennsylvania Homestead Apartments 1998E a 2,549, 392 Housing
Authority of the City of Atlanta

Techwood/ Clark Howell/ Centennial Place 1993 42,562, 635 Atlanta, Georgia
Perry Homes 1996 20,000, 000

Carver Homes 1998 34,669, 400 Joel Chandler Harris Homes 1999 35,000, 000
Capitol Homes 2001 35,000, 000 Atlantic City Housing Authority and Shore
Park

1999 35,000, 000 Urban Redevelopment Agency

Shore Terrace Atlantic City, New Jersey Housing Authority of Baltimore
City

Lafayette Courts 1994 49,663, 600 Baltimore, Maryland Lexington Terrace
1995( 2) b 22,702, 000

Hollander Ridge 1996 20,000, 000

1 Although the Housing Authority of Baltimore City was awarded 6 grants, 1
grant was subsequently split into 2 grants, for a total of 7 grants.

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

Murphy Homes 1997 31,325, 395

Julian Gardens Flag House Courts 1998 21,500, 000 Broadway Homes 1999
21,362, 223 Housing Authority of the City of Biloxi

Bayview Homes 2000 35,000, 000

Biloxi, Mississippi Bayou Auguste Housing Authority of the Birmingham
Metropolitan Gardens 1999 34,957, 850 District Birmingham, Alabama

Boston Housing Authority Mission Main 1993 49,992, 350

Boston, Massachusetts Orchard Park 1995( 2) b 30,000, 000 Maverick Gardens
2001 35,000, 000 Housing Authority of the City of GD Rogers and Addition
1999 21,483, 332 Bradenton Bradenton, Florida

Housing Authority of the City of Cohansey View 2001 10,945, 944 Bridgeton
Bridgeton, New Jersey

Buffalo Housing Authority Lakeview Homes

1997 28,015, 038 Buffalo, New York Lower West Side Cambridge Housing
Authority

John F. Kennedy Apartments 1998E a 5,000, 000 Cambridge, Massachusetts
Camden Housing Authority

McGuire Gardens 1994 42,177, 229 Camden, New Jersey Westfield Acres 2000
35,000, 000

Housing Authority of the City of Earle Village 1993 41,740, 155 Charlotte
Charlotte, North Carolina

Dalton Village 1996 24,501, 684 Fairview 1998 34,724, 570 Chattanooga
Housing Authority

McCallie Homes 2000 35,000, 000 Chattanooga, Tennessee Housing Authority
of Chester City

Lamokin Village 1996 14,949, 544 Chester, Pennsylvania McCafferey Village
1998 9,751, 178

Chester County Housing Authority Oak Street 1997 16,434, 200

West Chester, Pennsylvania Chicago Housing Authority Cabrini- Green 1994
50,000, 000 Chicago, Illinois ABLA Brooks Extension 1996 24,483, 250

Henry Horner 1996 18,435, 300

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

Robert Taylor 1996 25,000, 000 ABLA 1998 35,000, 000 Madden/ Wells/ Darrow
2000 35,000, 000 Robert Taylor 2001 35,000, 000 Rockwell Gardens 2001
35,000, 000 Cincinnati Housing Authority

Lincoln Court 1998 31,093, 590 Cincinnati, Ohio Laurel Homes 1999 35,000,
000

Housing Authority of the City of Saxon Homes 1999 25,843, 793 Columbia,
South Carolina Columbia, South Carolina

Columbus Metropolitan Housing Windsor Terrace (Rosewind) 1994 42,053, 408

Authority Columbus, Ohio

Cuyahoga Metropolitan Housing Outhwaite Homes

1993 50,000, 000 Authority

King Kennedy Estate South Cleveland, Ohio Carver Park 1995( 2) b 21,000,
000 Riverview 1996 29,733, 334 Dallas Housing Authority

Lakewest 1994 26,600, 000 Dallas, Texas Roseland 1998 34,907, 186

Danville Redevelopment and Housing Liberty View 2000 20,647, 784

Authority Danville, Virginia

Dayton Metropolitan Housing Authority Edgewood Court

1999 18,311, 270 Dayton, Ohio Metro Gardens

Metro Annex Decatur Housing Authority

Longview Place 1999 34,863, 615 Decatur, Illinois Housing Authority of the
City and

Quigg Newton Homes 1994 26,489, 288 County of Denver Denver, Colorado

Curtis Park 1998 25,753, 220 Arapahoe Courts Detroit Housing Commission

Jeffries Homes 1994 39,807, 342 Detroit, Michigan Parkside Homes 1995( 1)
b 47,620, 227

Herman Gardens 1996 24,224, 160 District of Columbia Housing Authority

Ellen Wilson Homes 1993 25,075, 956 Washington, D. C. Valley Green,
Skytower 1997 20,300, 000

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

Frederick Douglass Homes 1999 29,972, 431

Stanton Dwellings East Capitol Dwellings 2000 30,867, 337 Capitol View
Plaza Arthur Capper

2001 34,937, 590 Carrollsburg Housing Authority of the City of Durham

Few Gardens 2000 35,000, 000 Durham, North Carolina Housing Authority of
the City of El Paso

Kennedy Brothers 1995( 1) b 36,224, 644 El Paso, Texas Housing Authority
of the City of Pioneer Homes

1997 28,903, 755 Elizabeth

Migliore Manor Elizabeth, New Jersey Housing Authority of the City of Gary

Duneland Village 1999 19,847, 454 Gary, Indiana Greensboro, North Carolina
Housing Morningside Homes 1998 22,987, 722

Authority Greensboro, North Carolina

Housing Authority of the City of Woodland Homes 1999 21,075, 322

Greenville, South Carolina Pearce Homes Greenville, South Carolina

Housing Authority of the City of Westview Homes 2001 27,357, 875
Hagerstown Hagerstown, Maryland

Helena Housing Authority Enterprise Drive 1997 939, 700

Helena, Montana Housing Authority of the City of High Springfield
Townhouses 1999 20,180, 647 Point, North Carolina High Point, North
Carolina

Holyoke Housing Authority Jackson Parkway 1996 15,000, 000

Holyoke, Massachusetts Houston Housing Authority Allen Parkway Village
1993 36,602, 761 Houston, Texas 1997 21,286, 470

Indianapolis Housing Authority Concord Village

1995( 1) b 29,999, 010 Indianapolis, Indiana Eagle Creek Jacksonville
Housing Authority

Durkeeville 1996 21,552, 000 Jacksonville, Florida Housing Authority of
the City of Jersey Curries Woods 1997 31,624, 658

City Jersey City, New Jersey

Lafayette Gardens 2001 34,140, 000 Housing Authority of Kansas City

Guinotte Manor 1993 47,579, 800 Kansas City, Missouri

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

Theron B. Watkins Homes 1996 13,000, 000 Heritage House 1997 6,570, 500

1998E a 3,429, 500 King County Housing Authority

Park Lake Homes 2001 35,000, 000 Tukwila, Washington Knoxville's Community
Development

College Homes 1997 22,064, 125 Corporation Knoxville, Tennessee

Housing Authority of the City of Washington Ridge 1999 21,842, 801
Lakeland, Florida Lakeland, Florida

Lexington- Fayette Urban County Charlotte Court 1998 19,331, 116

Housing Authority Lexington, Kentucky

Housing Authority of the City of Los Pico Gardens 1993 50,000, 000

Angeles Los Angeles, California

Aliso Village 1998 23,045, 297 Housing Authority of Louisville

Cotter and Lang Homes 1996 20,000, 000 Louisville, Kentucky Macon Housing
Authority

Oglethorpe Homes 2001 19,282, 336 Macon, Georgia Memphis Housing Authority

LeMoyne Gardens 1995( 1) b 47,281, 182 Memphis, Tennessee Hurt Village
2000 35,000, 000

Mercer County Housing Authority Steel City Terrace Extension 2000 9,012,
288

Sharon, Pennsylvania Miami- Dade Housing Agency Ward Towers 1998E a 4,697,
750 Miami, Florida Scott Homes

1999 35,000, 000 Carver Homes Housing Authority of the City of Hillside
Terrace 1993 45,689, 446

Milwaukee Milwaukee, Wisconsin Parklawn 1998 35,000, 000

Lapham Park 2000 11,300, 000 Mobile Housing Board

Central Plaza Towers 1998E a 4,741, 800 Mobile, Alabama Metropolitan
Development and Housing Vine Hill Homes 1997 13,563, 876

Agency - Nashville Nashville, Tennessee

Preston Taylor Homes 1999 35,000, 000

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

New Bedford Housing Authority Caroline Street Apartments 1998E a 4,146,
780

New Bedford, Massachusetts Housing Authority of the City of New New
Brunswick Homes 1998 7,491, 656 Brunswick New Brunswick, New Jersey

Housing Authority of the City of New Elm Haven Terrace 1993 45,331, 593
Haven New Haven, Connecticut

Housing Authority of New Orleans Desire 1994 44,255, 908

New Orleans, Louisiana St. Thomas 1996 25,000, 000 New York City Housing
Authority

Arverne Homes 1995( 1) b 47,700, 952

New York, New York Edgemere Homes 1996 20,000, 000 Prospect Plaza 1998
21,405, 213 Housing Authority of the City of Newark

Archbishop Walsh Homes 1994 49,996, 000 Newark, New Jersey Stella Wright
Homes 1999 35,000, 000

Newport, Kentucky Housing Authority Peter G. Noll

2000 28,415, 290 Newport, Kentucky Booker T. Washington

McDermott- McLane Norfolk Redevelopment and Housing Roberts Village

2000 35,000, 000 Authority

Bowling Green Norfolk, Virginia North Charleston Housing Authority

North Park Village 2001 30,347, 921 North Charleston, South Carolina
Housing Authority of the City of Oakland

Lockwood Gardens 1994 26,510, 020

Oakland, California Lower Fruitvale Chestnut Court 1998 12,705, 010
Westwood Gardens 1999 10,053, 254 Coliseum Gardens 2000 34,486, 116
Housing Authority of the City of Orlando

Colonial Park 1997 6,800, 000 Orlando, Florida Housing Authority of the
City of Christopher Columbus 1997 21,662, 344

Paterson Paterson, New Jersey

Peoria Housing Authority Colonel John Warner Homes 1997 16,190, 907

Peoria, Illinois Philadelphia Housing Authority Richard Allen Homes 1993
50,000, 000 Philadelphia, Pennsylvania Schuylkill Falls 1997 26,400, 951

Martin Luther King Plaza 1998 25,229, 950 Mill Creek 2001 34,825, 000

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

City of Phoenix Housing Department Matthew Henson Homes 2001 35,000, 000

Phoenix, Arizona Pittsburgh Housing Authority Allequippa Terrace 1993
31,564, 190 Pittsburgh, Pennsylvania Manchester 1995( 2) b 7,500, 000

Bedford Additions 1996 26,592, 764 Housing Authority of Portland

Columbia Villa, 2001 35,000, 000

Portland, Oregon Columbia Villa Additions Portsmouth Redevelopment and Ida
Barbour 1997 24,810, 883 Housing Authority Portsmouth, Virginia

Puerto Rico Housing Administration Cristantemos y Manuel A. Perez 1994
50,000, 000

San Juan, Puerto Rico Housing Authority of the City of Raleigh Halifax
Court 1999 29,368, 114 Raleigh, North Carolina Housing Authority of the
City of Easter Hill 2000 35,000, 000

Richmond, California Richmond, California

Richmond Redevelopment and Housing Blackwell 1997 26,964, 118

Authority Richmond, Virginia

City of Roanoke Redevelopment and Lincoln Terrace 1998 15,124, 712

Housing Authority Roanoke, Virginia

St. Louis Housing Authority Darst- Webbe 1995( 1) b 46,771, 000

St. Louis, Missouri Blumeyer Homes 2001 35,000, 000 Housing Authority of
the City of St.

Jordan Park 1997 27,000, 000 Petersburg St. Petersburg, Florida

San Antonio Housing Authority Springview 1994 48,810, 294

San Antonio, Texas Mirasol 1995( 1) b 48,285, 500 City and County of San
Francisco Bernal

1993 49,992, 377 Housing Authority

Plaza East San Francisco, California Hayes Valley North and South 1995( 2)
b 22,055, 000 North Beach 1996 20,000, 000 Valencia Gardens 1997 23,230,
641 Housing Authority of Savannah

Garden Homes 2000 16,328, 649 Savannah, Georgia Seattle Housing Authority

Holly Park 1995( 1) b 48,116, 503 Seattle, Washington

(Continued From Previous Page)

Public housing authority Site Fiscal year awarded Amount awarded

Roxbury 1998 17,020, 880 Rainier Vista Garden 1999 35,000, 000 High Point
Garden 2000 35,000, 000 Housing Authority of the City of Tobe Hartwell

1996 14,620, 369 Spartanburg

Tobe Hartwell Extension Spartanburg, South Carolina Springfield Housing
Authority

John Hay Homes 1994 19,775, 000 Springfield, Illinois Housing Authority of
the City of Southfield Village 1997 26,446, 063

Stamford Stamford, Connecticut

Housing Authority of the City of Tacoma Salishan 2000 35,000, 000

Tacoma, Washington Housing Authority of the City of Tampa Ponce de Leon

1997 32,500, 000 Tampa, Florida College Hill Riverview Terrace

2001 19,937, 572 Tom Dyer Tucson Public Housing Authority

Connie Chambers 1996 14,600, 000 Tucson, Arizona Robert F. Kennedy Homes
2000 12,748, 000

Housing Authority of the City of Tulsa Osage Hills 1998 28,640, 000

Tulsa, Oklahoma Housing Authority of the City of Grandview Manor 1999
17,124, 895 Wheeling, West Virginia

Lincoln Homes Wheeling, West Virginia Wilmington, Delaware Housing

Eastlake 1998 16,820, 350 Authority Wilmington, Delaware

Housing Authority of the City of Robert S. Jervay Place 1996 11,620, 655
Wilmington, North Carolina Wilmington, North Carolina

Housing Authority of the City of Kimberly Park Terrace 1997 27,740, 850
Winston- Salem Winston- Salem, North Carolina Source: HUD.

a 1998E indicates a special grant for elderly projects. b There were two
funding rounds in fiscal year 1995.

Fiscal Year 2002 Application Screening and

Appendi I I I x Scoring Process The fiscal year 2002 NOFA for the HOPE VI
program explained the process that HUD would use to screen and score
applications. It stated that HUD would first screen applications to
determine if they met threshold requirements* requirements that must be
met in order for a HOPE VI revitalization grant application to be
considered for funding. The NOFA

also stated that if the application failed to meet any one of these
thresholds, HUD would not rate or rank the application. 1 The NOFA
contained 28 threshold requirements, for which applicants had to attest or
document compliance, including certification signed by an engineer or
architect that the targeted public housing project meets the definition of
severe physical distress and certification either that the applicant had
procured a developer for the first phase by the application deadline or
that it would act as its own developer. Additionally, an applicant that
had one or more existing HOPE VI revitalization grants would be
disqualified if one or more of those grants failed to meet the performance
requirements described in the NOFA; applications that included a proposal
to develop market- rate housing had to include a preliminary market
assessment letter. 2

If an application met all of the threshold requirements, HUD would rate it
using the rating factors outlined in the NOFA. As shown in table 3, the
2002 NOFA listed nine rating factors, some of which comprised various

subfactors. An application could receive a maximum of 114 points. 1 Some
of the threshold items were *curable,* meaning that HUD would give the
applicant an opportunity to correct a technical deficiency. Examples of
curable technical deficiencies included the failure of an applicant to
include a required certification or sign a document. If HUD identified a
technical deficiency, the applicant would be notified by fax and be
required to submit information to cure the deficiency to HUD within 14
calendar days from the date of HUD notification.

2 A market assessment letter should (1) provide an assessment of the
demand and associated pricing structure for the proposed residential units
and any community facilities, economic development, and retail structures
and (2) be based on the market and economic conditions of the project
area.

Table 3: Fiscal Year 2002 Rating Factors Maximum possible points Factor
Subfactor per subfactor Maximum points available

Capacity 21

Capacity of developer 6 Development capacity of

6 applicant Capacity of prior grantees a -10

Community and supportive 3 services program capacity Property management
capacity 4

Public housing authority plan b 2

Need 26

Severe physical distress 10 Impact of the severely distressed 5 site on
the surrounding neighborhood

Obligation of capital funds c 8 Need for affordable housing in 3 the
community Leveraging 17

Development leveraging 7 Community and supportive 5 services leveraging
Variety of community and

1 supportive services resources Anticipatory resources d 2

Collateral resources e 2

Resident and community involvement 3 Community and supportive services 6
Relocation 5 Fair Housing and Equal Opportunity 7

Accessibility f 2 Adaptability g 1 Visitability h 1 Fair housing 3

Mixed- income communities 6

On- site unit mix 3 Off- site housing 1

(Continued From Previous Page)

Maximum possible points Factor Subfactor per subfactor Maximum points
available

Homeownership housing 2

Overall quality of plan 23

Overall quality of the application 5 Likelihood of success 5 Project
readiness 7 Design 3 Evaluation i 3

Maximum points that could be awarded 114

Source: GAO analysis of the fiscal year 2002 NOFA. a Although points could
not be earned under this subfactor, points would be deducted if certain

activities, such as submission of the community and supportive services
plan, had not been carried out within the initial time frames established.
Points also would be deducted on the basis of the percentage of the grant
funds obligated. For example, if a housing authority received a HOPE VI
revitalization grant in fiscal year 1996 or prior and had obligated less
than 60 percent of its grant funds, 5 points would be deducted. b Two
points would be awarded if the revitalization plan described in the
application had been

incorporated into the applicant*s public housing authority plan, and if
the public housing authority*s plan had been approved by its local HUD
field office. c HUD would evaluate the extent to which the applicant could
undertake the proposed revitalization

activities without a HOPE VI grant. Large amounts of available capital
funds may indicate that the revitalization could be carried out without a
HOPE VI grant. d In many cases, public housing authorities, cities, or
other entities may have carried out revitalization

activities in previous years in anticipation of the applicant*s receipt of
a HOPE VI revitalization grant. These expenditures, if documented, may be
counted as leveraged anticipatory resources. e Collateral investment
includes physical redevelopment activities under way or projected to be

completed before October 2007 that would enhance the new HOPE VI
community, but would occur whether or not the public housing project was
revitalized. This includes economic or other kinds of development
activities that would have occurred with or without the anticipation of
HOPE VI funds.

f Points are awarded if the applicant describes a plan to provide housing
and services for persons with disabilities, such as accessibility in
homeownership units or accessibility modifications. g Adaptability means
that certain elements of a dwelling unit, such as kitchen counters, sinks,
and grab

bars, can be added to, raised, lowered, or otherwise altered to
accommodate the needs of persons with or without disabilities. h
Visitability standards allow a person with mobility impairments access
into the home but do not

require that all features be made accessible. i Applicants are encouraged
to work with their local university( ies), other institutions of learning,

foundations, or others to evaluate the performance and impact of their
HOPE VI revitalization plan over the life of the grant. The proposed
methodology must measure success against goals set at the outset of the
revitalization activities. Evaluators must establish baselines and provide
ongoing interim reports that will allow the applicant to make changes as
necessary as the project proceeds.

Appendi V I x Site Visit Summaries Between January and October 2002, we
visited the 18 housing authorities that were awarded HOPE VI
revitalization grants in fiscal year 1996. For each of the 20 sites that
were awarded grants that year, we describe below background information on
the conditions at the original site for which the grant was awarded, the
housing authority*s revitalization and community and supportive services
(CSS) plans for the site, the status of those plans as of March 2003, and
the factors that affected the status. We also include a

time line and photographs for each site. Because the site summaries
incorporate a number of program- specific and technical terms, we have
included a glossary at the end of this report.

ABLA Homes* Brooks As figure 9 shows, the Chicago Housing Authority was
awarded a $24.5 million HOPE VI revitalization grant for the Brooks
Extension portion of

Extension, Chicago, ABLA Homes in October 1996. 1 Relocation and
demolition have been

Illinois completed at the ABLA Brooks Extension site, but the new
construction has not yet begun. The Chicago Housing Authority*s scattered
site program,

which includes the development of any nonelderly public housing, has been
under judicial receivership since 1987. The housing authority is in the
midst of implementing a 10- year transformation plan, which is a $1.5
billion blueprint for rebuilding or rehabilitating 25,000 units of public
housing* enough for every leaseholder as of October 1999* and transforming
isolated public housing sites into mixed- income communities. The housing

authority was awarded another HOPE VI revitalization grant for ABLA in
fiscal year 1998 and also has received revitalization grants for the
following sites: Cabrini- Green (fiscal year 1994), Henry Horner (fiscal
year 1996), Robert Taylor (fiscal years 1996 and 2001), Madden/ Wells/
Darrow (fiscal

year 2000), and Rockwell Gardens (fiscal year 2001). 1 ABLA Homes consists
of five contiguous sites: Jane Addams Homes, Grace Abbott Homes, Robert
Brooks Homes, Brooks Extension, and Loomis Courts.

Figure 9: Time Line for ABLA Homes

Demolition of Brooks Extension. Vacant Brooks Extension site.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 July:

November: January:

March: July:

Initial grant Second

CSS plan approved by HUD Projected start Projected completion

agreement revitalization

December:

of new construction of new construction

executed grant awarded

Revitalization plan

October:

approved by HUD Initial

August:

revitalization Demolition completed

grant awarded

July:

Revitalization and CSS plans submitted

January:

Relocation completed

November:

Completion of Brooks Homes rehabilitation

October:

Second grant agreement executed

Sources: GAO (except the left photo, which is printed with the permission
of the Chicago Housing Authority). Note: This time line is based on GAO
analysis of data provided by the Chicago Housing Authority.

Background The five sites that comprise ABLA Homes had more than 3,500
original units. Three of the five ABLA sites were included in the
authority*s fiscal

year 1996 revitalization plans. Brooks Extension, the focus of the fiscal
year 1996 revitalization grant, was completed in 1961 and consisted of
three, 16- story buildings containing 453 units. Robert Brooks Homes was

completed in 1943 and contained 834 units. Loomis Courts* a projectbased
Section 8 development* was completed in 1953 and contained 126 units.

The density at ABLA was 37.33 units per acre, as compared with Chicago*s
average density of 28 units per acre. The buildings at ABLA suffered from
significant structural deficiencies as a result of age, weathering, and
the lack of proper maintenance. A central heating plant, located at the
Jane Addams site, provides the heat for the complex. This system is
inadequate,

and regulating the amount of heat for each unit has been a problem. The
Chicago Housing Authority was awarded a fiscal year 1995 HOPE VI planning
grant totaling $400,000 for ABLA and two other sites.

Revitalization and In addition to the $24.5 million HOPE VI revitalization
grant, the Chicago

Community and Supportive Housing Authority was awarded four HOPE VI
demolition grants totaling

Services Plans $2.5 million for Brooks Extension and Robert Brooks Homes.
The total

budget for the renovation of Brooks Extension, Robert Brooks Homes, and
Loomis Courts is $186 million and includes other public housing funds,
equity from low- income housing tax credits, and tax increment financing.
The revitalization plans call for the rehabilitation of 330 public housing
units at Robert Brooks Homes; the construction of 777 new units at Brooks
Extension (336 public housing units, 90 tax credit units, and 351
homeownership units); and the rehabilitation of 126 subsidized units at
Loomis Courts. A 57,000- square- foot community center to be funded by the
city is also part of the plans.

Of the $24.5 million revitalization grant, the housing authority plans to
set aside $3.6 million for community and supportive services. The
community and supportive services plan for ABLA, which was approved in
January 2002, focuses on employment, education, health, community
building, and pilot programs. In addition to special programs funded by
the HOPE VI grant, the housing authority plans to implement its service
connector system at ABLA. The service connector system will help residents
access services through a system of outreach, assessment, referral, and
follow- up.

Current Status The rehabilitation at Robert Brooks Homes has been
completed. The reconstruction of 132 units was completed in 1998, and the
reconstruction

of the remaining 198 units was completed in 2000. Brooks Extension has
been demolished (see fig. 9). The housing authority selected a developer

for the entire ABLA development area in December 2002. Construction on the
new units at Brooks Extension is expected to start in March 2004.

The housing authority has hired a nonprofit organization to serve as
ABLA*s service connector, and the program has been in operation since
August 2001. A consultant has also been hired to implement the community
and supportive services plan, including facilitating task forces on
employment, education, and health.

Factors Contributing to The ABLA revitalization has been affected by the
need for the revitalization

Current Status plans to comply with the Gautreaux consent decree. In 1966,
African

American residents of Chicago public housing filed suit against the
Chicago Housing Authority for creating a segregated public housing system.
In response, the court issued a judgment that prohibits the housing
authority from constructing any new public housing in a neighborhood in
which more than 30 percent of the occupants are minorities (limited areas)
unless

it develops an equal number of units in neighborhoods where less than 30
percent are minorities (general areas). In 1987, the court appointed a
receiver for the housing authority*s scattered site program, including the
development of nonelderly public housing. In the case of ABLA, the
receiver and the housing authority had to show the court that, while ABLA
was currently in a limited area, the area was going to be revitalized by

HOPE VI. In June 1998, the court approved the housing authority*s request
to designate ABLA a revitalizing area, thus allowing the development of
new nonelderly public housing at the site without requiring an equal
number of units to be built in a general area.

According to a housing authority official, site planning was progressing
at the Brooks Extension site until the housing authority applied, in 1997,
for a HOPE VI revitalization grant for the Grace Abbott Homes portion of
ABLA. HUD rejected the application, stating that the housing authority
needed to develop plans for the entire ABLA site and establish better
relationships with the city and the receiver. In 1998, the housing
authority submitted a

new application that covered all of ABLA and showed that it had worked
closely with the city and receiver. While the housing authority was
preparing this application, work at Brooks Extension stopped. HUD
ultimately awarded the housing authority a fiscal year 1998 grant for the
portions of ABLA not covered by the fiscal year 1996 grant.

Management changes at the housing authority have also affected
implementation of the grant, according to a housing authority official.
After placing the housing authority under administrative receivership for
approximately 4 years, HUD returned control of the housing authority to
Chicago in May 1999. During the reorganization that occurred after the
city resumed control, decisions were delayed. For example, the housing
authority*s negotiations with the program manager selected for ABLA were
delayed, in part, because the agency had just regained control of its
operations and was developing an overall plan for transformation.

According to a housing authority official, the receiver raised some legal
issues that slowed progress at the ABLA site. HOPE VI revitalization
grants are typically awarded to housing authorities. However, under the
Gautreaux case, the receiver believed that the two ABLA grants should be
split so that the funds for *hard* construction costs were awarded to the
receiver, while the funds for social services were awarded to the housing
authority. It took almost 2 years to settle this issue. In October 2000,
the

grants were split between the receiver and the housing authority. The only
funds that the housing authority controls are funds for demolition,
relocation, and community and supportive services.

The housing authority had to issue two requests for proposals before
selecting a developer. The first request for proposals to develop Brooks
Extension was issued in November 2001, and the authority received three
responses. The housing authority did not think that the respondents had
sufficient capacity; therefore, it decided to issue another request for
proposals to develop the entire ABLA site. The second request for
proposals was issued in June 2002, and a developer was selected in
December 2002.

Arverne/ Edgemere The New York City Housing Authority is using $67.7
million in HOPE VI Houses, Queens, New

revitalization grant funds to renovate Arverne and Edgemere Houses. Some
of these revitalization funds were originally awarded to another site,
Beach York 41 st Street Houses, and transferred to Edgemere in December
1996 (see fig. 10). All three sites are in Far Rockaway, a peninsula on
the southern edge of Queens, south of Jamaica Bay and Kennedy Airport. The
housing authority expects to complete the rehabilitation of Arverne and
Edgemere by the end of 2004. In addition to the Arverne/ Edgemere grant,
the authority is overseeing another HOPE VI revitalization grant awarded
in fiscal year 1998 for Prospect Plaza.

Figure 10: Time Line for Arverne/ Edgemere Houses

Arverne and Edgemere Houses. HOPE VI Technology Lab at Ocean Bay
Apartments (formerly Arverne and Edgemere Houses).

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 January:

June: November:

January: December:

Revitalization grant Grant

Revitalization Start of

Projected awarded to

agreement plan

rehabilitation completion of

Beach 41st Street executed

conditionally all rehabilitation

February:

approved by HUD

July:

Revised

May:

Projected revitalization

CSS plan completion

plan submitted approved

of relocation

December:

by HUD

June:

CSS plan Projected completion

submitted of interior rehabilitation

June:

First revitalization plan submitted

December:

Revitalization grant funds transferred from Beach 41st Street to Edgemere

October:

Revitalization grant awarded to Arverne

Source: GAO. Note: This time line is based on GAO analysis of data
provided by the New York City Housing Authority.

Background The New York City Housing Authority received a $400,000
planning grant for the Arverne and Edgemere sites in fiscal year 1995. In
1996, the

authority was awarded a revitalization grant for Arverne, and HUD
transferred the revitalization grant originally awarded to Beach 41 st
Street

Houses to Edgemere. The funding was transferred from Beach 41 st Street
after an impasse over the residents* role in the planning process could
not be overcome. The Arverne site, with 418 units, was completed in 1951;
the Edgemere site, with 1, 395 units, was completed in 1961 (see fig. 10).
Although soundly constructed, they were in need of significant

modernization and improvement. The area surrounding Arverne/ Edgemere
lacks essential retail services and adequate recreation and community
space. In addition, the high density and current configuration of the
buildings have contributed to vandalism and other criminal activity.
Joblessness and low educational achievement among residents further weaken
the community. Though situated in an attractive locale, between Jamaica
Bay and the Atlantic Ocean, the community is extremely isolated with
limited transportation links to other parts of New York City.

Revitalization and The total projected budget for the renovation of
Arverne and Edgemere is

Community and Supportive $233 million, which includes other public housing
funds, city funds, and

Services Plans private funds. The revitalization plans for Arverne/
Edgemere, renamed

Ocean Bay Apartments, call for the modernization of 1, 803 apartments,
including lobby and facade improvements and site improvements such as
upgrading infrastructure and landscaping. The plans also include the
construction of a recreational facility, the expansion of the existing
community center and day- care center, and the off- site construction of a
health and education center and two retail centers.

Of the $67.7 million in revitalization grant funds, the housing authority
has budgeted $6.8 million for community and supportive services. The
community and supportive services plan, which was approved in May 1999,
focuses on case management, training, and self- sufficiency programs.

Current Status Because the majority of residents chose to remain on- site
during the renovation, only 211 residents were temporarily relocated, with
the

majority of households relocating to vacant units within the development.
The renovation is being done in phases. For example, all of the asbestos
was removed and electrical work completed before the kitchens and
bathrooms were renovated. As of March 2003, 79 percent of the interior
modernization work at Arverne and 85 percent of the interior modernization
work at Edgemere was complete. The housing authority estimates that all of
the apartment modernization work will be completed

by June 2003. Under the revised revitalization plan, the community center
will now be combined with the new recreational facility to reduce the
overall costs of the plan. This work is under design and is expected to
bid fall 2003. Also, the day- care center will be upgraded and expanded to
create a state of the art facility with expanded capacity. The day- care
center expansion design documents are completed.

Community and supportive services are being offered to residents and other
community residents. In November 1999, the housing authority opened a
Family Resource Center where it administers various training and self-
sufficiency programs for the residents. Already operating are the computer
lab (see fig. 10), after- school program, and job training classes. A
popular project has been the computer incentive program that provides a
personal computer system to residents who either work 96 hours
volunteering on HOPE VI recruiting and other HOPE VI activities or who
participate in a HOPE VI training program. The authority also has
contracted with Goodwill Industries to provide case management,
counseling, and job preparation, placement, and retention services. To
sustain community and supportive services after the expiration of the

HOPE VI grant, the authority has created the Ocean Bay Community
Development Corporation. Factors Contributing to

Resident opposition to demolition was one of the issues that led to the
Current Status

impasse at Beach 41 st Street Houses. After HUD transferred the HOPE VI
funds from Beach 41 st Street to Edgemere in December 1996, the housing
authority again included demolition in the plans for Edgemere*s
redevelopment. The housing authority determined that the best way to

meet the demolition requirement would be to remove some top floors from
each of three, nine- story buildings, thereby eliminating about 100 units.
Subsequently, the housing authority withdrew this plan and proposed to
convert dwelling units on the first floor to space for commercial and
community services. This approach would also have removed about 100 units.
The issue became moot when Congress, in the fiscal year 1998
appropriations act for the departments of Veterans Affairs and Housing and

Urban Development and independent agencies, gave the New York City Housing
Authority the option of not following any HOPE VI demolition requirements,
and the housing authority abandoned the plans for demolishing the 100
units.

It took almost 18 months to get the revitalization plan for Arverne/
Edgemere Houses approved. The housing authority first submitted

a revitalization plan to HUD in June 1997. After HUD returned the plan
with comments for the housing authority to address, the housing authority
submitted a revised plan in February 1998. The housing authority then went

back and forth with HUD on changes to the plan. According to housing
authority officials, the primary point of contention was the types of
economic development activities upon which HOPE VI funds could be spent.
HUD finally approved the housing authority*s revised plan in November
1999.

The effects of September 11, 2001, have also posed challenges for the
redevelopment of Arverne and Edgemere. Some of the housing authority*s
HOPE VI records were destroyed and had to be recreated. Additionally,
housing authority officials estimated that costs for one portion of the
project had escalated from $22 million to $30 million over the life of the
project* due, in part, to the labor force and materials moving downtown
after September 11. Overall, the housing authority estimated that the
Arverne/ Edgemere project was delayed 6 months because of the September 11
attack.

Bedford Additions, The Housing Authority of the City of Pittsburgh was
awarded a $26.6

Pittsburgh, million HOPE VI revitalization grant for Bedford Additions in
October 1996,

as shown in figure 11. Off- site construction began in September 2002, and
Pennsylvania

relocation and demolition have not yet occurred. The authority was
previously awarded HOPE VI revitalization grants for Allequippa Terrace
(fiscal year 1993) and Manchester (fiscal year 1995).

Figure 11: Time Line for Bedford Additions

Bedford Additions before revitalization. Off- site construction under way.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 December:
September:

December: July:

CSS plan Start of new

Relocation to Projected

approved off- site

be completed completion

by HUD construction

of all new

March:

construction Revitalization plan

May:

approved by HUD Demolition

October:

to be completed Revitalization plan submitted

July:

Grant agreement executed; CSS plan submitted

October:

Revitalization grant awarded

Sources: GAO (except the photos, which are printed with the permission of
the Housing Authority of the City of Pittsburgh). Note: This time line is
based on GAO analysis of data provided by the Housing Authority of the
City of Pittsburgh.

Background Bedford Additions, part of the larger Bedford Dwellings, was
constructed in 1954 and contains 460 units, the majority of which are in
three- story, walk- up buildings (see fig. 11). It is located in the Hill
District, a

neighborhood offering access to many job centers. Many of the buildings at

Bedford Additions had leaky roofs, cracks in the walls, and outdated
mechanical systems that had not been well- maintained. Also, 72 percent of
the families in its census tract were earning incomes below the poverty
level. The housing authority was awarded a $395,700 HOPE VI planning grant
for Bedford Dwellings and three other sites in fiscal year 1995.

Revitalization and The total estimated budget for the revitalization is
about $102 million and

Community and Supportive includes other public housing funds and equity
from low- income housing

Services Plans tax credits. The revitalization plans call for

 construction of a two- story, 12,000- square- foot community center; 
construction of 75 off- site homeownership units and 365 off- site rental

units (phases one and two); and  construction of 45 on- site
homeownership units and 175 on- site rental

units (phase three). Of the 660 total units planned, 220 will be
replacement public housing units. In addition, up to 40 of the
homeownership units will be made affordable for public housing residents.
The off- site units will be constructed first, and then the existing on-
site units will be demolished and new units will replace them.

Of the HOPE VI funds, the housing authority has budgeted about $5.1
million for community and supportive services. A new community center will
house the supportive services program, including the case management
function, computer learning lab, day care, a family support program,
after- school teen program, resident council offices, and housing
authority management offices.

Current Status The community center has been completed, and many of the
planned services are operational, including the computer lab. As of March
2003, the

housing authority had acquired 235 of the approximately 650 separate
parcels of land required for the off- site component of the project.
Construction on the first 147 off- site rental units started in September
2002 (see fig. 11), and construction on the first 35 off- site
homeownership units

is scheduled to begin in June 2003.

Factors Contributing to The decision to construct the off- site units
first and on many different

Current Status parcels of land has been the major impediment to progress.
According to

housing authority officials, the residents were fearful of being
displaced; therefore, they wanted the housing authority to build the new
off- site structures first so that they could be relocated to the new off-
site units. The housing authority has been going through the lengthy
process of acquiring parcels in the surrounding community either by
negotiating the purchase of properties or through eminent domain. It also
had to relocate 111 private households after acquiring their properties.

Financing the redevelopment also has been a challenge. For example, it was
difficult to obtain low- income housing tax credits because the state
housing finance agency has established strict guidelines. It wants any
units developed as part of a mixed- income project to be contiguous.
Because the housing authority could not acquire certain properties, there
is a break between two sections of off- site parcels. After convincing the
state housing

finance agency that it would need two tax credit allocations, one for each
section of the off- site parcels, and that it should not finance one
without the other, the housing authority was awarded tax credits for the
first phase of off- site development. Although this process did not delay
the revitalization plans, it did make financing the first phase of
development more complicated, according to a housing authority official.

Connie Chambers, The City of Tucson Community Services Department, which
serves as

Tucson, Arizona Tucson*s public housing authority, was awarded a $14.6
million HOPE VI

revitalization grant for Connie Chambers in late 1996, as shown in figure
12. The grant was closed out in January 2003. The department was also
awarded a fiscal year 2000 revitalization grant for Robert F. Kennedy
Homes.

Figure 12: Time Line for Connie Chambers

Connie Chambers prior to demolition. Santa Rosa Neighborhood Center (top),
scattered off- site unit (bottom right), and Posadas Sentinel (formerly
Connie Chambers) duplex (bottom left).

1996 1997 1998 1999 2000 2001 2002 2003 October:

May: March:

December: January:

Revitalization CSS plan

Start of new Relocation

Closeout grant awarded

approved on- site

completed of grant

by HUD construction November:

December: April:

Demolition Completion of

Revitalization completed

new on- site plan approved

construction by HUD

November:

Revitalization plan submitted; CSS plan submitted

August:

Grant agreement executed

Sources: GAO (except the top left photo, which is printed with the
permission of the City of Tucson Community Services Department). Note:
This time line is based on GAO analysis of data provided by the City of
Tucson Community Services Department.

Background Connie Chambers, built in 1967, consisted of 200 units (see
fig. 12). The surrounding Santa Rosa neighborhood is historic and home to
a lower

income population. According to housing authority officials, the primary
problem with Connie Chambers was that it was isolated from other
communities after construction of a new convention center and police and
fire department headquarters. Two out of three households on the public
housing waiting list turned it down because of a history of high crime and
poor physical conditions. The housing authority was awarded a $370,000
planning grant for Connie Chambers in fiscal year 1995. It used the
planning grant to conduct maintenance studies and physical needs
assessments and to hold meetings with residents.

Revitalization and The total projected budget for the project is $72
million and includes other

Community and Supportive public housing funds, equity from low- income
housing tax credits, city

Services Plans funds, and bond funds. The revitalization plan for Connie
Chambers, renamed Posadas Sentinel, calls for

 rehabilitation of 10 units at another site;  construction of 120 on-
site units (60 public housing units and 60 tax

credit units);  acquisition of 130 scattered public housing units; 
construction of 60 homeownership units;  construction of a child
development center, learning center, and health

center and expansion of the existing recreation center;  construction of
a grocery store; and  an elderly building to be built by a nonprofit
organization. Of the $14.6 million revitalization grant, the housing
authority has budgeted $1.2 million for community and supportive services.
The community and supportive services plan, approved in May 1998, calls
for a neighborhood services center to serve as a resource center for
residents of the

neighborhood and the provision of services such as language classes, an
expanded child- care program, and job training.

Current Status The 10 units at the other site have been renovated, all 120
of the on- site units have been completed, and all 130 scattered sites
have been acquired

(see fig. 12). As of March 2003, 54 of the homeownership units had been
completed. The child development center and learning center, located in
the Santa Rosa Neighborhood Center, were completed in April 2002.
Construction on the recreation and health centers is under way. The
housing authority was able to close out the grant in January 2003 because
the remaining homeownership units and the recreation and health centers
were not financed with HOPE VI funds.

A Head Start program has been operating in the child development center
since January 2002. Another day- care service, operated by a local
nonprofit organization, opened in the center in November 2001. It
primarily serves working families. The learning center has been
operational since April 2002 and contains a computer library. The learning
center offers basic computer classes in either Spanish or English.

Factors Contributing to Because the City of Tucson Community Services
Department acts as both Current Status

the city*s public housing authority and community development agency, it
was able to draw on other resources for the Connie Chambers
revitalization. Funding for the project includes city funds for
infrastructure, general city funds, and bonds. In addition, the state
housing finance agency agreed to set aside 10 percent of its annual tax
credit allotment for HOPE VI sites.

The housing authority has involved the residents and the neighborhoods
surrounding the Connie Chambers site in the revitalization process. Both
residents and the surrounding neighborhoods were involved in developing
the revitalization plan. After the revitalization plan was developed,

residents were asked to vote on the plan. Of the 181 Connie Chambers
households, 107 participated in the vote. Of the 107 that voted, 84 voted
in favor of the plan. Only after the residents expressed their support for
the

plan did the mayor and city council vote to submit the plan to HUD. When
the housing authority determined that some residents did not want to
relocate outside the neighborhood, even temporarily, it decided to
demolish Connie Chambers in phases, starting at each end of the site.
While the first phases were under construction, those who did not want to
leave the neighborhood were allowed to live in the remaining units. Once
construction was complete, they were moved into the new units, and the
rest of the original units were demolished.

Cotter and Lang The Housing Authority of Louisville was awarded a $20
million HOPE VI

Homes, Louisville, revitalization grant for Cotter and Lang Homes in late
1996 (see fig. 13), and about 65 percent of the planned units were
complete as of March 31, 2003.

Kentucky

Figure 13: Time Line for Cotter and Lang Homes Cotter and Lang Homes prior
to demolition. Park DuValle (formerly Cotter and Lang Homes) rental units
(bottom left), homeownership unit (bottom right), and senior building (top
right).

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 October:

June: April:

Demolition completed Projected

Projected completion

August:

completion of homeownership

CSS plan approved by HUD

November:

of rental units units

June:

Revised CSS plan New construction started on second phase a

approved by HUD

May: May:

Revitalization plan approved by HUD Revised CSS

February:

plan submitted Revitalization and CSS plans submitted

December:

Grant agreement executed

September:

Relocation completed

October:

Revitalization grant awarded Sources: GAO (except the two left photos,
which are printed with the permission of the Housing Authority of
Louisville).

Note: This time line is based on GAO analysis of data provided by the
Housing Authority of Louisville. a The first phase of rental units was
begun prior to receipt of the HOPE VI revitalization grant.

Background Cotter Homes, completed in 1953, consisted of 620 units. Lang
Homes, built in 1959, contained 496 units (see fig. 13). These two
contiguous public housing sites, located in Louisville*s Park DuValle
neighborhood, were the largest public housing sites in Louisville.
Together, they covered almost 80 acres. Almost 80 percent of the residents
in the Park DuValle neighborhood lived in poverty. The neighborhood also
had the highest violent crime rate per square mile in Louisville. The
local newspaper referred to one corner on the Cotter and Lang site as the
*meanest* corner in Louisville. Furthermore, the area surrounding the two
sites contained vacant or underused industrial buildings, unused school
land, vacant failed subsidized housing, and other available housing
development sites.

Revitalization and The total projected budget for the project is $200
million and includes other

Community and Supportive public housing funds, other HUD funds, and equity
from low- income

Services Plans housing tax credits. The revitalization plans for Cotter
and Lang Homes,

renamed Park DuValle, call for 1,213 new units to be completed in five
phases.

 Phase one: development of 100 rental units.  Phase two: development of
213 rental units and 150 homeownership units.

 Phase three: development of 108 rental units (including some elderly
units) and 300 homeownership units.

 Phase four: development of 192 rental units.  Phase five: acquisition
of 150 off- site rental units. Of the 763 total rental units, 500 will be
public housing units, 160 will be tax credit units, and 103 will be
market- rate units. The 450 homeownership units will be targeted to
households with a variety of incomes. A town center will include space for
various types of commercial enterprises. The HOPE VI funds will be used to
develop the 150 off- site units and to provide homeownership assistance.

Of the $20 million in HOPE VI revitalization grant funds, the housing
authority has set aside $3 million for community and supportive services.
The focus of its initial community and supportive services plan, approved

in August 1998, was lifelong learning programs and services, such as child
care, youth programs, and computer training. The developer would provide
services to residents of the Park DuValle revitalization area, and the
housing authority would provide case management services to former Cotter
and Lang residents that were not residing at the Park DuValle site.

Current Status Work on the first phase of 100 rental units was begun
before the housing authority received its HOPE VI revitalization grant,
and construction was

completed in 1998. The 321 rental units envisioned for phases two and
three also have been completed, and construction on the fourth phase of
192 rental units is under way (see fig. 13). Of the 150 planned off- site
units, 112 had been acquired as of March 31, 2003. As part of the phase
three rental units, a 59- unit senior building was constructed. As of
March 31, 2003, the first 150 homeownership units had been sold, and 147
had been completed. Twenty- eight homeowners received soft second
mortgages funded by the HOPE VI program. 2 The remaining phase of 300
homeownership units is under way. Because it estimates that it can sell
only 4 units a month in the Louisville housing market, the housing
authority does not expect all 300 units to be completed and sold until
April 2008.

The housing authority hired Jefferson County Human Services to provide
intensive case management services to former Cotter and Lang residents.
The emphasis was on preparing former residents to return to Park DuValle.
The developer focused primarily on community building in the new Park

DuValle neighborhood. For instance, it served as liaison to the Park
DuValle Neighborhood Advisory Council* an organization comprised of former
residents of Cotter and Lang, Park DuValle public housing residents, and
residents of the surrounding neighborhood. However, the housing authority
determined that additional efforts were necessary to ensure that all
former Cotter and Lang residents, whether or not they were residents of
the new community, had access to services aimed toward increasing
selfsufficiency. Therefore, it developed a revised community and
supportive services plan, which it submitted to HUD in May 2002. HUD
approved the plan in November 2002.

2 The soft second mortgages are recorded liens for 10 years. The amount of
the soft second mortgage is forgiven at 20 percent per year beginning with
year 6. After 10 years, the equity in the home belongs to the owner. The
soft second mortgages are not transferable if the

home is sold prior to year 10.

Factors Contributing to According to housing authority officials, support
from the city, other local

Current Status entities, and the local HUD field office has been integral
to the success of

the Park DuValle project. Both the mayor at the time the grant was awarded
and the subsequent mayor were very supportive of the project. The city has
provided funds and other resources (e. g., the services of the city*s
chief architect). The local school board spent $15 million on a new school
in the Park DuValle neighborhood, and the health department spent $5
million on a new health center. Staff from the local HUD field office have
also been part of the project team. During planning and much of
implementation, a management team comprised of representatives from the
housing authority, the city, the local HUD field office, and the developer
met weekly to discuss the project. Now that much of the construction has
been completed, the team meets about once a month.

The leadership of the housing authority*s executive director was another
factor cited as contributing to the success of Park DuValle. Housing
authority officials noted that, because the executive director formerly
worked in the mayor*s office, he has been able to strengthen the city*s
support for the project. In addition, according to local HUD officials,
the

executive director*s relationship with residents was very good. During his
tenure as executive director, a public housing resident was named the
chairman of the housing authority*s Board of Commissioners.

Another factor contributing to Louisville*s success is that the housing
authority has not had to make any significant modifications to its
revitalization plan. The total number of planned units (1,213) has not
changed. The few changes that have been made are minor. For example, the
housing authority originally planned for the homeownership units to be
constructed in three phases but later decided to consolidate the last two
phases for a total of two phases. Also, instead of the 125 homeownership
units originally planned in phase two, the housing authority was able to
sell 150 units.

The housing authority has been able to obtain multiple sources of funding
for the project. In addition to the $20 million in HOPE VI funds, the
master budget includes $56.2 million in other public housing funds and
$20.5 million in other HUD funds. The other sources of funding include
$37.2 million in equity from low- income housing tax credits and $56.3
million in debt financing. The state housing finance agency set aside 6
years of tax

credits for the Park DuValle project.

Dalton Village, The Charlotte Housing Authority was awarded a $24.5
million HOPE VI Charlotte, North

revitalization grant for Dalton Village in October 1996 (see fig. 14). As
of March 2003, 194 of 432 total planned units were complete. In addition
to the Carolina

Dalton Village grant, the authority is overseeing two other revitalization
grants awarded in fiscal years 1993 and 1998.

Figure 14: Time Line for Dalton Village

Dalton Village prior to demolition. Arbor Glen (formerly Dalton Village)
rental units.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 October:

January: March:

June:

Revitalization Revitalization

Start of new construction Projected completion

grant awarded plan submitted;

September:

of all new construction rehabilitation

Revised revitalization plan approved by HUD completed;

first developer

May:

signed on Revised revitalization plan submitted

December: March:

CSS plan submitted CSS plan approved by HUD

September: December:

Grant Second developer signed on

agreement

October:

executed Demolition completed

March:

Relocation completed Sources: GAO (except the photos, which are printed
with the permission of the Charlotte Housing Authority).

Note: This time line is based on GAO analysis of data provided by the
Charlotte Housing Authority.

Background Dalton Village was built in 1970 and consisted of 300 units in
brick townhouse structures with sloped roofs and clapboard facades, as
shown

in figure 14. The development was located off Clanton Road, an off- shoot
from West Boulevard, which was once a major route to Charlotte*s Douglas
International Airport. In addition to the presence of lead- based paint
and asbestos materials, the structures at Dalton Village suffered from
severe deficiencies due to the age of the buildings. The site conditions
were very poor with severe erosion taking place over a large portion of
the site, and the lack of adequate drainage devices compounded the site
problems. Dalton Village was isolated from the adjoining communities by
virtue of noncontinuous street access and a steep hill that physically
separated it from the neighboring community.

Revitalization and The total projected budget for the revitalization
project is $44 million,

Community and Supportive which includes equity from low- income housing
tax credits. The

Services Plans revitalization plan for Dalton Village, renamed Arbor Glen,
calls for

 rehabilitation of 50 existing public housing units and the Family
Investment Center;

 on- site construction of 144 family and elderly rental units, including
60 public housing units;

 on- site and off- site construction of 175 rental townhouses, including
70 public housing units;

 construction of 48 on- site homeownership units, including 20 for public
housing residents;

 construction of 15 off- site homeownership units designated for public
housing residents; and

 construction of an outreach center for recreational and educational
programs.

The housing authority has budgeted $4.1 million of the HOPE VI
revitalization grant for community and supportive services. The community
and supportive services plan, approved in March 2000, calls for services
to be provided at the new outreach center, which would house multipurpose

classrooms and a full- size multipurpose gymnasium. The focus would be on
services and programs that promote self- sufficiency.

Current Status The 50 existing units and the Family Investment Center have
been renovated, and the 144 family and elderly rental units are complete
and fully occupied (see fig. 14). The housing authority estimates that

construction of the on- site rental townhouses will begin in June 2003 and
be completed by June 2004. The housing authority has submitted two tax
credit applications* one for an additional 23 on- site units and one for
74 units at an off- site location. In January 2003, the housing authority
completed its acquisition of nearby county land needed for the 48 on- site
homeownership units, and groundbreaking is scheduled for summer 2003. The
$1.5 million outreach center was completed and opened to the public

in March 2002. It is an 11, 000- square- foot community and recreational
center consisting of a gymnasium, four classrooms, and a computer lab. The
center is open not only to Arbor Glen residents but also to the entire
Arbor Glen community and nearby neighborhoods. It houses recreational and
other educational programs. All of the Arbor Glen public housing residents
are required to participate in the family self- sufficiency program.

A case manager works with participants to develop an individual service
plan and to help the residents meet their self- sufficiency goals, such as
those related to education and employment. Factors Contributing to

The redevelopment of Arbor Glen was delayed initially because the Current
Status

Charlotte Housing Authority changed development partners. According to
housing authority officials, the first developer, signed on in 1998, did
not have much development expertise, kept changing financial projections,
and did not listen to the community or the state housing finance agency.
As a result, the initial developer*s application for low- income housing
tax credits was denied. In December 1999, the housing authority signed a
new development partner for the site. This developer was part of the
initial development team; therefore, the housing authority did not have to
issue another request for proposals.

Since the new developer was retained, the project has moved forward. The
housing authority and the new developer worked to develop a new site plan
and development scheme that would be more competitive for tax credits. In
late 2000, the project was awarded tax credits for the first phase of new

construction. The first phase of 144 units was completed and leased 6
months ahead of schedule.

Durkeeville, The Jacksonville Housing Authority was awarded a $21.5
million HOPE VI Jacksonville, Florida

revitalization grant for Durkeeville in October 1996 (see fig. 15). Of the
303 planned units, 228 have been completed.

Figure 15: Time Line for Durkeeville

Durkeeville prior to demolition. The Oaks at Durkeeville (formerly
Durkeeville).

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 December:

February: December:

December:

Demolition CSS plan

On- site Projected

completed approved

construction completion of

October:

by HUD completed

off- site units Relocation

December:

completed CSS plan

September:

submitted Revitalization plan

April:

approved by HUD Start of

August:

new on- site Revitalization

construction plan submitted

July:

Grant agreement executed

October:

Revitalization grant awarded

Sources: GAO (except the left photo, which is printed with the permission
of the Jacksonville Housing Authority). Note: This time line is based on
GAO analysis of data provided by the Jacksonville Housing Authority.

Background The 280 units in the Durkeeville public housing complex were
poorly designed, lacked sufficient ventilation, and had extensive plumbing
and drainage deficiencies. For example, the roofs were constructed without
an

overhang, which exacerbated the deterioration of the outside walls (see
fig. 15). Furthermore, the site consisted of mostly small, one- bedroom
units that no longer met the residents* needs for space. Built in 1936,
the overall design of the Durkeeville site had become outmoded. Parking
was nonexistent, the density of the housing units was twice that of the
surrounding community, and a porous design with alleyways instead of
roadways provided an environment conducive to criminal activity.

By 1990, the Durkeeville site and its surrounding neighborhood had become
Jacksonville*s most dangerous community* the violent crime rate for
Durkeeville was 12 times higher than for Jacksonville. The neighborhood
surrounding Durkeeville was once a desirable middle- class neighborhood.
However, low incomes in the neighborhood contributed to low property
values, low rents, and little economic activity; over 40 percent of
neighborhood households were below the poverty level, according to the
1990 census. The Jacksonville Housing Authority was awarded a fiscal year
1995 HOPE VI planning grant totaling $400,000 for Durkeeville.

Revitalization and The total projected budget for the revitalization is
about $37 million, which

Community and Supportive includes other public housing funds left over
from the redevelopment of

Services Plans another Jacksonville Housing Authority property. Several
key features of

the revitalization plan for Durkeeville, renamed The Oaks at Durkeeville,
include

 construction of 200 new rental public housing units (of which 40 will be
for seniors and the disabled) and 28 homeownership units on the
Durkeeville site;

 construction of 75 off- site public housing units;  renovation and
expansion of the community center;  renovation of two existing buildings
for historic preservation; and  retail space containing several
businesses and a health clinic.

The housing authority plans to set aside $3.1 million of the
revitalization grant for community and supportive services. The community
and supportive services plan, approved in February 1999, calls for the

renovated community center to become a focal point for the entire
community and to include a computer lab; community meeting rooms; social
service agencies; adult education classes; and recreational facilities,

among other programs. Current Status The Jacksonville Housing Authority
has completed the on- site

construction, which includes the 200 rental units (see fig. 15), 28
homeownership units, the renovation of the community center, and
rehabilitation of two historic buildings that include a day- care center
and resident management offices. Several businesses* including a grocery
store, pizza restaurant, Chinese restaurant, and health clinic* have moved
into the retail strip adjacent to the site. All of the housing units are
occupied. The community center houses the family self- sufficiency program
and adult literacy classes, sponsors numerous recreational

activities for children, and hosts community meetings. The day- care
facility and a museum showcasing Durkeeville*s history are operating on-
site.

The housing authority does not plan to start the development of the 75
offsite rental units until October 2003. Currently, the housing authority
is planning to use a portion of their HOPE VI funds to purchase 75 to 100
apartments and convert them to public housing. 3

Factors Contributing to According to officials at the housing authority,
on- site construction at

Current Status Durkeeville was completed in a timely manner for several
reasons. First,

the housing authority was able to develop a sound, comprehensive
revitalization plan because HUD awarded it a planning grant in fiscal year
1995. The grant provided the authority with the necessary resources to
hire several consultants and invest in extensive outreach to public
housing and community residents. Second, the on- site public housing units
were funded entirely with public housing funds. The housing authority used
only its HOPE VI grant and surplus public housing funds from another
rehabilitation project to fund Durkeeville*s redevelopment. The simpler

3 This will satisfy, in part, a federal court consent decree that
stipulates that the Jacksonville Housing Authority must create 225 new
public housing units by 2006 in designated areas of Duval County where
public housing had not previously been built.

financial structure of the redevelopment shortened the project*s time
frames by over 1 year, according to one housing authority official.

According to the executive director, in addition to these unique features
of the Durkeeville site, the housing authority enjoys the backing of a
committed board of directors, which includes prominent Jacksonville real
estate developers, attorneys, and former corporate managers. Also
represented on the board are the police department, public housing
residents, and local businesses. This broad base of support, in
conjunction with the executive director*s extensive networking with
various

government entities, provided the housing authority with key partnerships
that helped expedite work on the site.

Finally, according to housing authority officials, the decision to place
the HOPE VI- related offices in the community center increased the public
housing residents* sense of belonging to a community. The increased

number of interactions between public housing and local residents has
improved the overall relations between the two groups. This has had an
overall positive impact on the entire community.

Plans for the off- site portion of the revitalization have not proceeded
as smoothly. First, the initial site that the housing authority chose
could not get approval by the Environmental Protection Agency. The site
was once used for garbage incineration and contains polluted ash in its
soil. The

housing authority then proposed to purchase a neglected privately owned
apartment complex (HUD was going to foreclose the property) and convert
all 78 units to public housing, but a local citizens group opposed the
plan and took legal action to enforce a court decree from 2000, which
states that

only 25 percent of any apartment complex the authority buys in an area
with a low percentage of minorities can be used for public housing.
Ultimately, HUD did not conduct foreclosure proceedings, and the housing
authority is currently researching other sites.

Heman E. Perry The Housing Authority of the City of Atlanta was awarded a
$20 million

Homes, Atlanta, HOPE VI revitalization grant for Heman E. Perry Homes
(Perry Homes) in

late 1996 (see fig. 16), but the revitalization effort did not move
forward for Georgia

some time, primarily because of changes to the revitalization plans.
Construction on the first phase of units began in November 2002. The
housing authority also has received revitalization grants for the
following sites: Techwood/ Clark Howell Homes (fiscal year 1993), Carver
Homes (fiscal year 1998), Harris Homes (fiscal year 1999), and Capitol
Homes (fiscal year 2001). Centennial Place, the name given to the
revitalized Techwood/ Clark Howell Homes, was largely completed in 2000
and was the first mixed- use, mixed- income community (with public housing
as a component) in the nation.

Figure 16: Time Line for Heman E. Perry Homes

Perry Homes prior to demolition. Cleared Perry Homes site.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 July:

September: August:

February: December:

Grant Initial

Relocation Demolition of

Projected completion agreement

revitalization completed

community center completed of homeownership

executed plan submitted

July: November:

units

October:

CSS plan Start of new construction December:

Revitalization approved by October:

Projected grant

HUD HUD approval of supplement

completion awarded

June:

to revised revitalization plan of rental units

CSS plan

February:

submitted Supplement to revised

December:

revitalization plan submitted Revised

August:

revitalization Demolition of dwelling units completed

plan submitted Sources: GAO (except the photos, which are printed with the
permission of the Housing Authority of the City of Atlanta).

Note: This time line is based on GAO analysis of data provided by the
Housing Authority of the City of Atlanta.

Background Perry Homes and Perry Homes Annex, constructed in 1955,
consisted of 944 and 128 units, respectively, and were located on
approximately 153 acres of land (see fig. 16). When the housing authority
applied for the revitalization grant, the brick exterior walls had
deteriorated, resulting in water damage to walls, floors, and personal
belongings. The sanitary sewer system leaked, and the storm drainage
system did not function properly.

From 1992* 95, an average of 254 Perry Homes residents were victims of
crime each year. In addition, more than 60 percent of the residents of
Perry Homes and the surrounding neighborhood were living below the poverty
line. The Housing Authority of the City of Atlanta received a $400, 000
HOPE VI planning grant for Perry Homes and one other site in fiscal year

1995. Revitalization and

In addition to the $20 million revitalization grant, the housing authority
also Community and Supportive

was awarded $5.1 million in fiscal year 1998 HOPE VI demolition funds.
Services Plans

The total projected budget for the revitalization of the site is $143
million and includes other public housing funds and equity from low-
income housing tax credits. The revitalization plan for Perry Homes,
renamed West

Highlands at Heman E. Perry Boulevard, calls for 800 new housing units to
be constructed in five phases. The construction phases are as follows:

 Phase one: 124 rental units (50 public housing units, 12 tax credit
units, and 62 market- rate units).

 Phase two: 152 family rental units (61 public housing units, 19 tax
credit units, and 72 market- rate units) and 130 elderly rental units (100
projectbased Section 8 units and 30 market- rate units).

 Phase three: 152 rental units (61 public housing units, 14 tax credit
units, and 77 market- rate units).  Phase four: 142 rental units (56
public housing units, 11 tax credit units,

and 75 market- rate units).  Phase five: 100 homeownership units (40
units for public housing

eligible families and 60 market- rate units). 4 In addition to housing,
the plan calls for a town center, an 18- hole public golf course, and over
90 acres of green space in the form of parklands, nature trails, and
recreational fields.

4 Although the revitalization plans call for 100 homeownership units, an
additional 150 market- rate homeownership units may be built on- site, and
up to 300 additional homeownership units may be built off- site.

Of the $20 million revitalization grant, the housing authority has
budgeted $2.6 million for community and supportive services. It plans to
deliver community and supportive services to Perry Homes residents using
two basic approaches. First, it provides authoritywide programs that are
available to all public housing residents, including residents of HOPE VI
sites. These authoritywide programs include the Human Service Management
Program* which provides case management services* and the Work Force
Enterprise Program* which equips participants with the

skills necessary to manage the transition from unemployment to the
workforce. Second, the housing authority plans to ensure that Perry Homes
residents have access to neighborhood- based programs. Some of these
programs will be offered at a new school, public library, and YMCA.

Current Status All of the Perry Homes residents have been relocated, and
demolition has been completed (see fig. 16). Construction on the first
phase of 124 rental units began in November 2002. Construction of the
rental and homeownership units is scheduled to be completed by December
2006 and

December 2008, respectively. HUD approved the community and supportive
services plan for Perry Homes in July 2000, and Perry Homes residents have
been participating in authoritywide programs. The developer has hired a
human services provider to supply case management services specifically
for former Perry Homes residents. Services to be provided include case
management tracking and referral services. Construction has not yet begun
on the town center, which will include the school, public library, and
YMCA. The town center also will include a park, retail, and office space.

Factors Contributing to After the Housing Authority of the City of Atlanta
submitted its original

Current Status revitalization plan for Perry Homes to HUD in September
1998, HUD

officials visited the site to discuss issues and concerns that they had
about the plan. The plan called for the development of 415 new public
housing units on the existing site; the housing authority planned to use
only HOPE VI funds and other HUD funds. In a June 2, 1999, letter to the
housing

authority summarizing its concerns about the plan, HUD questioned whether
rebuilding the site entirely with public housing units, without funding to
provide meaningful supportive services and without significant

partnerships, could result in a sustainable development and provide the
maximum benefits to residents.

In response to HUD*s concerns, the housing authority came up with a new
concept for the Perry Homes site and started developing a new master plan.
In December 1999, the housing authority submitted a revised revitalization
plan to HUD, which called for a mixed- use, mixed- income community
consisting of 750 residential units (40 percent of which would be public
housing units), a recreation center, a public library, and a village
center. After a developer was selected, the revitalization plan was
further refined, and a supplement to the revised revitalization plan was
submitted in February 2002. HUD approved the supplement in October 2002,
and construction began shortly thereafter.

Henry Horner Homes, As figure 17 shows, the Chicago Housing Authority was
awarded an $18.4

Chicago, Illinois million HOPE VI revitalization grant for Henry Horner
Homes in late 1996.

However, the planned revitalization of the site has been delayed by a
lawsuit filed by residents and subsequent legal decisions. The Chicago
Housing Authority*s scattered site program, which includes the development
of any nonelderly public housing, has been under judicial receivership
since 1987. The housing authority is in the midst of implementing a 10-
year transformation plan, which is a $1.5 billion blueprint for rebuilding
or rehabilitating 25,000 units of public housing* enough for every
leaseholder as of October 1999* and transforming isolated public housing
sites into mixed- income communities. The housing

authority has also received revitalization grants for the following sites:
Cabrini- Green (fiscal year 1994), ABLA (fiscal years 1996 and 1998),
Robert Taylor (fiscal years 1996 and 2001), Madden/ Wells/ Darrow (fiscal
year 2000), and Rockwell Gardens (fiscal year 2001).

Figure 17: Time Line for Henry Horner Homes

Henry Horner high- rise awaiting demolition.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
2006 May:

August: February:

January: December:

Lawsuit filed Grant

Second Start of new

Projected by residents

agreement court order

construction completion

executed

December: May:

of new

August:

First Revitalization plan

construction Revitalization

court order conditionally

December:

grant awarded approved by HUD Projected

September: December:

completion Amended consent

Revitalization of relocation

decree signed plan submitted

and demolition Source: GAO.

Note: This time line is based on GAO analysis of data provided by the
Chicago Housing Authority.

Background Henry Horner Homes, completed in 1957, and Henry Horner
Extension, completed in 1961, consisted of a combination of high- rise and
mid- rise

buildings containing 1,659 units (see fig. 17). Henry Horner Homes is
adjacent to the United Center, the arena where the Chicago Bulls play, and
is located about 1.5 miles from Chicago*s central business district. At
the time that the housing authority applied for the grant, the units
targeted for revitalization had broken windows and doors, sewage backups,
insect and

rodent infestation, and missing window child guards. The violent crime
rates were three to eight times higher than those for Chicago as a whole,
and the vacancy rate in the targeted area was about 50 percent. The
Chicago Housing Authority was awarded a $400,000 HOPE VI planning

grant for Henry Horner and two other sites in fiscal year 1995.
Revitalization and

In addition to the $18.4 million revitalization grant, the housing
authority Community and Supportive

was awarded a $2.3 million HOPE VI demolition grant for Henry Horner in
Services Plans

fiscal year 2000. The total projected budget for the project is $78
million and includes other public housing funds, equity from low- income
housing tax credits, and state and city funds. The revitalization plan
calls for the construction of 764 new units on- site* 271 public housing
units, 132 affordable units (80 tax credit rental units and 52
homeownership units), and 361 market- rate units (114 rental units and 247
homeownership units). These units will be constructed in three phases. The
housing authority has set aside almost $30,000 of the HOPE VI
revitalization grant funds for community and supportive services. Although
this amount is small, the housing authority plans to submit a community
and supportive services plan for Henry Horner.

Current Status Over 600 of the planned 1,197 units have been demolished.
According to the housing authority, the revitalization plans were
developed in such a way as to minimize the temporary relocation of current
residents. After the first of

three phases of construction is completed, most of the remaining 176
households will be relocated to the new units. Construction on the first
phase of units began in January 2003. The first units are expected to be
ready for occupancy by the end of 2003. The authority and the Horner
Resident Committee are currently negotiating the relocation notices that

will go out to the residents. The remaining buildings will be demolished
on a schedule negotiated with the Horner Resident Committee.

Factors Contributing to The redevelopment of Henry Horner was delayed for
4 years by legal

Current Status actions. In 1991, the Henry Horner Mothers Guild filed a
suit against the

Chicago Housing Authority and HUD alleging, among other things, that Henry
Horner had been *de facto* demolished without obtaining HUD or local
government approval or providing replacement housing. The case was settled
in September 1995 when an amended consent decree was signed. After the
housing authority was awarded a HOPE VI revitalization

grant for Henry Horner in 1996, the Henry Horner plaintiffs raised
concerns about the revitalization plans, including the number of
replacement public housing units, which delayed the project and ultimately
resulted in two subsequent court orders, issued in December 1999 and
February 2000. As a result of these legal decisions, the Chicago Housing
Authority is required to

designate 220 units or 35 percent of the total units, whichever is
greater, as very low- income units. Also, any decisions regarding the
revitalization of Henry Horner are subject to the approval of the
plaintiffs* counsel and the Horner Resident Committee.

Because any remaining work at Henry Horner is subject to approval by the
Horner plaintiffs* counsel and the Horner Resident Committee,
decisionmaking has been slow. According to housing authority officials, it
took the Henry Horner Working Group* which includes the Horner Resident
Committee and the Horner plaintiffs* counsel* about 2 years to develop the
revitalization plan and issue a request for qualifications for a
developer. It

took another 4 months after the request for qualifications was issued to
select a developer.

Herman Gardens, The Detroit Housing Commission was awarded a $24.2 million
HOPE VI

Detroit, Michigan revitalization grant for Herman Gardens in October 1996
(see fig. 18).

Construction has not yet begun, and HUD notified the housing commission,
for the second time, in March 2002 that it was in default of its grant
agreement. The housing commission previously had been awarded
revitalization grants for Jeffries Homes (fiscal year 1994) and Parkside
Homes (fiscal year 1995).

Figure 18: Time Line for Herman Gardens

Herman Gardens prior to demolition. Vacant Herman Gardens site.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 October:

June: April:

August: December:

January: September:

Revitalization Relocation

Demolition CSS plan

Supplement to Projected

Projected completion grant

completed completed

approved revitalization

start of new of new construction

awarded

October: March:

by HUD plan submitted

construction Grant

First

June: August:

agreement default notice

CSS plan Revitalization

executed submitted

plan submitted

March:

Second default notice

Sources: GAO (except the left photo, which is printed with the permission
of the Detroit Housing Commission). Note: This time line is based on GAO
analysis of data provided by the Detroit Housing Commission.

Background Herman Gardens, built in 1943, originally consisted of 2,144
units on 160 acres (see fig. 18). Problems at the site included structural
decay, deterioration of underground utility systems, rodents, and
hazardous

materials contamination. The Detroit Housing Commission received a
$400,000 HOPE VI planning grant for Herman Gardens and two other sites in
fiscal year 1995.

Revitalization and In addition to the $24.2 million revitalization grant,
the Detroit Housing

Community and Supportive Commission was awarded, in fiscal years 1998 and
1999, $3.8 million in

Services Plans HOPE VI demolition funds for Herman Gardens. The total
projected budget

for the revitalization of the site is $232 million and includes other
public housing funds, equity from low- income housing tax credits, and
city funds. The revitalization plan calls for 804 units* 470 rental units
(including 258 public housing units) and 334 homeownership units. Other
elements of the plan include construction of a regional athletic facility
on the site and construction of 250,000 square feet of institutional space
for a new community college.

Of the $24.2 million revitalization grant, the housing commission has
budgeted $3.5 million for community and supportive services. The community
and supportive services plan, which was approved in August 2001, focuses
on case management; employment and training; youth and

senior services and activities; and partnerships to address job readiness,
placement, and retention.

Current Status Relocation and demolition have been completed (see fig.
18). As of March 2002, the Detroit Housing Commission had not submitted a
revitalization plan for Herman Gardens. Therefore, HUD notified the
housing commission on March 15, 2002, that it was in default of its grant
agreement and needed to submit a default resolution plan to avoid losing
its grant. As part of the default resolution plan, HUD required the
commission to meet a number of requirements, including submitting a
revitalization plan and

obtaining firm financial commitments from the city. The Detroit Housing
Commission submitted its revitalization plan for Herman Gardens to HUD in
August 2002 and submitted a supplement to the plan in December 2002. In
September 2002, the city council passed a resolution committing $22
million to the Herman Gardens project. As of April 2003, HUD had not
lifted the default status or approved the revitalization plan. According
to a

housing commission official, the revitalization plan states that
construction is scheduled to begin in January 2004. However, the housing
commission has already formed a number of partnerships to provide
community and supportive services to Herman Gardens residents. These
services include training in retail sales, computers, manufacturing, and
child care. Additionally, 18 different unions have formed a partnership
that offers a preapprenticeship program.

Factors Contributing to Due to management changes, the Detroit Housing
Commission developed

Current Status several different plans for Herman Gardens. The first plan
was developed

prior to the grant award and called for 672 units of public housing.
Before that plan was formally submitted to HUD, the executive director
responsible for the plan left the housing commission and was replaced by
an interim executive director. By February 1999, the interim executive

director had developed a second plan, which proposed a combination of
public and market- rate housing as well as a golf course. After a new
executive director was hired, the housing commission proposed a third
development concept. Although never submitted as a formal revitalization
plan, the concept called for a mixed- use, mixed- income development on
the site.

Problems at one of Detroit*s other HOPE VI projects also contributed to
delays at Herman Gardens. According to a housing commission official, HUD
visited all three of its grant sites shortly after the commission
developed the second plan for Herman Gardens in February 1999. During the
visit, HUD recommended that the commission cease work at Herman Gardens
and Jeffries Homes until problems at Parkside Homes were

addressed. The Parkside Homes project was over budget and behind schedule.
Additionally, once work resumed at Herman Gardens and Jeffries Homes, the
Jeffries Homes project seemed to be more of a priority for HUD, according
to a commission official.

According to commission and local HUD officials, being part of city
government has also affected the pace of progress on the project. Until
recently, all of the commission*s contracts had to be approved by the city
council. Currently, only contracts related to the disposition of land upon
which public housing is situated are subject to city council approval. The
commission also has to go through the city to hire staff. According to a
commission official, the commission is in the process of seeking the
authority to hire its own staff.

Because it never formally submitted a revitalization plan for Herman
Gardens, HUD notified the Detroit Housing Commission in March 2000 that it
was in violation of its grant agreement. In December 2000, HUD issued a
letter to the housing commission requiring it to develop a default
resolution plan. The two parties agreed that the housing commission would
submit

biweekly progress reports on Herman Gardens. When HUD found these biweekly
reports to be inadequate, it notified the housing commission again in
March 2002 that it was in default of its grant agreement. In the letter,
HUD stated that it had been 52 months since the grant was awarded and no
substantial progress had occurred.

Hollander Ridge, The Housing Authority of Baltimore City received a $20
million HOPE VI

Baltimore, Maryland revitalization grant in October 1996 for Hollander
Ridge (see fig. 19).

Project activity was brought to a standstill by a series of legal actions,
and the funds were ultimately transferred to another public housing site
in the city of Baltimore. The housing authority will be selling the
Hollander Ridge property to the city upon HUD approval. Additionally, the
housing authority has completed construction at two HOPE VI sites*
Lafayette Courts (fiscal year 1994) and Lexington Terrace (fiscal year
1995)* and is administering four additional HOPE VI grants as follows:
Homeownership Demonstration (fiscal year 1994), Murphy Homes and Julian
Gardens (fiscal year 1997), Flag House Courts (fiscal year 1998), and
Broadway Homes (fiscal year 1999).

Figure 19: Time Line for Hollander Ridge

Hollander Ridge prior to demolition. Vacant Hollander Ridge site.

1996 1997 1998 1999 2000 2001 August:

January: September:

July: November:

Grant agreement executed U. S. District Revitalization

Fourth Circuit Federal legislation

January:

Court grants plan submitted

Federal Appeals enacted allowing

American Civil Liberties Union housing

Court overturns Hollander Ridge

writes HUD concerning its legal authority's

District Court's funds to be

objections to revitalization plans motion to amend

decision; used for

partial consent HUD declares

Claremont

October:

decree allowing Hollander Ridge

Homes Revitalization grant awarded

construction of grant in default February:

June:

senior village at

April:

Housing authority Partial consent decree

Hollander Ridge Relocation

proposes reuse of approved by U. S. District Court

completed; Hollander Ridge funds;

demolition demolition completed

started Sources: GAO (except the left photo, which is printed with the
permission of the Housing Authority of Baltimore City).

Note: This time line is based on GAO analysis of data provided by the
Housing Authority of Baltimore City.

Background Hollander Ridge was built in 1976 and was located on 60 acres
at the eastern edge of Baltimore City. Hollander Ridge was once the public
housing of choice, but over time became one of the most distressed
communities in the housing authority*s portfolio. The property had over 1,
000 units of family and elderly public housing. By the late 1990s, only
half of the units were occupied, and the crime rate soared above the rates
of Baltimore*s other public housing sites. Additionally, Hollander Ridge

suffered from significant deferred maintenance, extensive site problems,

and the deterioration of infrastructure and major building systems (see
fig. 19). Because of its isolation, the site*s residents had little access
to public transportation and lacked nearby shopping and employment
opportunities. The Housing Authority of Baltimore City received a $700,
000 HOPE VI planning grant for Hollander Ridge and one other site in
fiscal year 1995.

Current Status Federal legislation was passed in November 2001 that
enabled the housing authority to transfer its HOPE VI funds for Hollander
Ridge to Claremont Homes. The revitalization plans for Claremont Homes,
which are in the preliminary stages, call for the demolition of all
existing low- rise buildings and the construction of a new mixed- income
development. The housing authority plans to reserve 73 units at the
Claremont Homes site for former Hollander Ridge residents. However,
according to the housing authority, the legislation enacted in November
2001 that allowed the housing

authority to transfer the Hollander Ridge funds to the site must be
amended before any of the plans to revitalize Claremont Homes can be
implemented. The legislation currently only allows for the rehabilitation
of Claremont Homes. As a result of third- party master planning, the
housing authority determined that rehabilitation is not financially
feasible; therefore, housing authority officials intend to ask Maryland*s
congressional delegation to propose an amendment to the federal
legislation that would allow demolition and new construction to occur at
the site. Concurrence will be sought from the American Civil Liberties
Union (ACLU)* the representative of the residents. The authority has
submitted a disposition application to HUD for approval to sell the
Hollander Ridge site to the city of Baltimore. Factors Contributing to

Legal actions and community opposition halted progress at Hollander
Current Status

Ridge and ultimately led to the transfer of the HOPE VI funds to Claremont
Homes. In 1995, six public housing families, represented by the ACLU,
filed suit against the Housing Authority of Baltimore City and HUD
alleging that they had engaged in racial and economic segregation through
site selection and development of public housing in Baltimore City since
1937. On June 25, 1996, the parties entered into a partial consent decree,
which was approved by a United States District Court Judge. Among other
things, this decree provides that the housing authority *will not seek
public housing funds from HUD for public housing construction or
acquisition with rehabilitation in Impacted Areas.* The Hollander Ridge
site is located in an impacted area, with a high concentration of low-
income housing and a high percentage of minority populations.

The housing authority*s original plan was to modernize Hollander Ridge by
reducing its density through demolition and reconfiguration of existing
units and upgrading the housing units and amenities. This plan was
consistent with the terms of the partial consent decree, and HUD had
awarded the HOPE VI grant on the basis of this plan. However, the adjacent

community resisted plans to place any type of public housing back on the
site. Community residents had long complained about the site*s high crime
rate and its effect on nearby property values. In response to the local
opposition, the housing authority decided to abandon plans to rebuild
family public housing at Hollander Ridge.

The housing authority and the community agreed to a subsequent plan to
demolish all of the existing public housing units and replace them with
facilities for seniors. The plan called for a senior village, which would
provide affordable housing as well as community- based health and wellness
programs for low- to moderate- income seniors. All 1,000 units would be
demolished, and 450 senior units would be built on- site, 225 of which
would be designated as public housing. The housing authority also agreed
to build a $1.2 million fence around the entire Hollander Ridge site.

Because the plans for a senior village would violate sections of the
partial consent decree and residents would be displaced, the ACLU
maintained strict opposition to the senior village concept. Nevertheless,
the housing authority sought a modification to the decree that would allow
the

development of public housing on the Hollander Ridge site. In January
1999, the U. S. District Court approved this request. On July 8, 2000,
Hollander Ridge was imploded. Just a few days later, the Fourth Circuit
Court of Appeals, responding to an ACLU appeal, reversed the District
Court*s order. On July 31, 2000, HUD declared the grant to be in default.
Federal legislation enacted in November 2001 allowed the housing authority
to transfer the funds to its Claremont Homes site. As shown in figure 19,
Hollander Ridge remains a vacant lot.

Jackson Parkway, The Holyoke Housing Authority received a $15 million HOPE
VI Holyoke, revitalization grant in October 1996 for Jackson Parkway (see
fig. 20). Fiftyone

of the 272 planned units have been completed. Massachusetts

Figure 20: Time Line for Jackson Parkway

Jackson Parkway prior to demolition. New rental units.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 October:

March: January:

October: December:

April:

Revitalization CSS plan

Relocation Start of new

Projected Projected

grant approved by

completed construction

completion completion of

awarded HUD;

February:

of demolition new construction revitalization

Revitalization plan plan submitted

approved by HUD

February:

CSS plan submitted

August:

Grant agreement executed

Sources: GAO (except the left photo, which is printed with the permission
of the Holyoke Housing Authority). Note: This time line is based on GAO
analysis of data provided by the Holyoke Housing Authority.

Background Jackson Parkway was built in 1943 and contained 219 units on a
12.5- acre site in the Churchill section of Holyoke (see fig. 20).
According to housing

authority officials, the apartments and their residents were isolated from

the economic and social fabric of the surrounding community. In addition,
the units were run- down and unappealing. The immediate neighborhood
adjacent to Jackson Parkway was marked by abandoned, obsolete, and vacant
buildings and was affected by drug dealing and vandalism. The Churchill
neighborhood formerly was a residential center for mill workers and other
laborers. However, by the 1990 census, the neighborhood*s residents had a
50 percent school drop- out rate and only 37 percent participated in the
workforce. Because Jackson Parkway contained almost 25 percent of all
residential units in the Churchill neighborhood, its revitalization was
seen as pivotal to the success of future improvements in the area.

Revitalization and The revitalization of Jackson Parkway is estimated to
cost around $47

Community and Supportive million* which includes other public housing and
HUD funds, other

Services Plans federal funds, and equity from low- income housing tax
credits* and will occur in three phases. The first phase will consist of
the demolition of 219

units and a 42- unit elderly complex and the construction of 50 public
housing units, 60 homeownership units, a park, a community center, and a
maintenance facility. The second phase will consist of the rehabilitation
of two, five- story walkups, which will result in 39 public housing units,
and

the construction of 11 new public housing units. In the third phase, 112
units will be rehabilitated or constructed in the surrounding
neighborhood. The new community will be called Churchill and Oakhill
Homes.

Of the $15 million revitalization grant, $700,000 has been set aside for
community and supportive services. The focus of the community and
supportive services plan, approved in March 1998, is to implement a
comprehensive on- site service delivery system to coordinate existing
health and human services with innovative educational and employment
opportunities. The Holyoke Housing Authority plans to partner with

numerous schools, universities, churches, career development
organizations, libraries, and the Chamber of Commerce to implement its
self- sufficiency programs.

Current Status Of the 272 total units to be rehabilitated or constructed,
51 have been completed. The 50 new public housing units planned for phase
one were

built and fully occupied in summer 2002 (see fig. 20). Additionally, all
planned phase one demolition has been completed. The community buildings
are in the design phase, and work on the community park has begun and is
expected to be completed by summer 2003. One model

homeownership unit has been completed. Also, 270 applications to purchase
the 60 homeownership units have been received. Selective demolition has
begun for phase two* the rehabilitation of two,

five- story walkups. Additionally, land has been cleared and footings and
foundation walls have been set. These units are to be completed in the
fall of 2003. The housing authority is working with the Catholic Diocese
of Springfield and Habitat for Humanity to build new homeownership units
on one complete city block. This will be the third and final phase of the
revitalization.

By the spring of 2000, a resident services department was established and
operating to address the needs of former Jackson Parkway residents. Each
Jackson Parkway resident was assessed by one of three case managers, who
help residents to find employment, acquire GEDs, take English as a Second
Language courses, and receive homeownership counseling. Factors
Contributing to

Several factors contributed to delays early in the revitalization process.
Current Status Because Jackson Parkway was the authority*s first
experience with the HOPE VI program, its staff had to overcome an initial
learning curve. For example, the staff had to learn about real estate
development and lowincome housing tax credits and about how to work with
developers. Also, HUD*s Inspector General charged the housing authority
with procurement violations related to the selection of its first
developer. According to HUD officials, they placed procurement review
restrictions on the authority because of the lack of sufficient in- house
procurement expertise. These restrictions delayed the authority*s ability
to obtain an infrastructure

contractor and a developer for the site. One housing authority official
estimated that the procurement charges delayed the progress of the grant
by 1 year. Additionally, approval of key documents took longer than
expected. For example, approval of the revitalization plan took 23 months
and approval of the mixed- finance proposal for the first phase took 6
months. The housing authority has had seven different HUD HOPE VI grant
managers since 1996, and staff believe that this frequent rotation caused
temporary

disconnects that resulted in delays.

Lamokin Village, The Chester Housing Authority was awarded a $14.9 million
HOPE VI

Chester, Pennsylvania revitalization grant in October 1996 for Lamokin
Village (see fig. 21).

Construction is complete, and all 150 units are occupied. Since 1994, the
housing authority has been under judicial receivership resulting from a
resident lawsuit concerning distressed housing conditions. The housing
authority also was awarded a fiscal year 1998 HOPE VI revitalization grant
for Wellington Ridge.

Figure 21: Time Line for Lamokin Village

Lamokin Village prior to demolition. Chatham Estates (formerly Lamokin
Village).

1996 1997 1998 1999 2000 2001 2002 October:

December: September:

July: September:

June:

Revitalization CSS plan

Relocation Start of new

Demolition Rental

grant awarded approved

completed construction

completed units

by HUD completed

November: July:

June:

CSS plan Revitalization

Senior submitted

plan approved building

September:

by HUD completed

Revitalization plan submitted

July:

Grant agreement executed

Sources: GAO (except the left photo, which is printed with the permission
of the Chester Housing Authority). Note: This time line is based on GAO
analysis of data provided by the Chester Housing Authority.

Background Lamokin Village was built in the early 1940s and consisted of
38, two- and three- story buildings, totaling 350 units. The site suffered
from substantial

deterioration; major system problems, such as piping leaks and water table
problems; and poor site conditions (see fig. 21). The site also had
significant design problems due to its dense, maze- like building
configuration with no interior streets. According to the Chester Housing
Authority, Chester has been a distressed community for decades. About 56
percent of the population of Chester receives some form of government
assistance, and HUD has ranked Chester as the most depressed city of its
size in the United States. The housing authority was awarded a fiscal year
1995 HOPE VI planning grant for Lamokin Village and one other site as a
part of the overall recovery plan for the city.

Revitalization and The total amount budgeted for the redevelopment of
Lamokin Village is $27

Community and Supportive million, which includes other public housing
funds and equity from lowincome

Services Plans housing tax credits. The revitalization plan for Lamokin
Village,

renamed Chatham Estates, calls for three phases: (1) 22 new residential
buildings with a mix of 110 one- story and duplex row homes, (2) a 40-
unit senior building, and (3) 30 off- site homeownership units. All
existing units

in Lamokin Village were to be demolished. Of the $14.9 million
revitalization grant, the housing authority budgeted about $1.2 million
for community and supportive services. The community and supportive
services plan, approved in December 1997, proposes a

comprehensive welfare- to- work strategy designed to cultivate the
economic self- sufficiency of Lamokin Village residents. Specific plans
include the establishment of a *one- stop shop* for social services, a
community center and educational facility to be built on- site, and a
comprehensive evaluative component that will examine the impact of HOPE VI
on the Chester community.

Current Status The 150 units, including the 40- unit senior building,
planned for phases one and two are 100 percent complete and occupied (see
fig. 21). Thirty- eight former residents returned to the family rental
units, and 21 former residents moved to the senior building. The third
phase of the plan is being transferred to the housing authority*s fiscal
year 1998 HOPE VI revitalization grant.

The authority did establish an interagency *one- stop shop* in 1998 that
is used as the coordinating point for all programs and partners servicing
the authority*s residents. The shop is located in the Chester Crozier
Hospital, along with various other social service agencies. For example,
the Chester Education Foundation provides an employment program at the
hospital.

The authority has also included a family self- sufficiency component,
which is optional for residents and provides services such as case
management, computer hardware and software training, van transportation,
homeownership training, and entrepreneurial training. The supportive
services funding was expended before construction of the community and
educational center could begin; the authority is currently trying to raise
additional funding for this center. Finally, Widener University*s School
of Social Work has been evaluating impacts and outcomes of HOPE VI
initiatives in Chester since 1997.

Factors Contributing to In 1994, the Chester Housing Authority was placed
on HUD*s troubled

Current Status status list after receiving an extremely low evaluation
score. During this

same period, a federal judge appointed a federal court receiver for the
housing authority in an effort to transform the authority. The
receivership is scheduled to end in June 2003. According to officials at
the local HUD field office, the receiver has brought about many positive
changes for the housing authority and its residents, including the two
HOPE VI revitalization grants. In 2002, the authority received a high
evaluation score, placing it in HUD*s high- performer category. The
receiver ensured that the authority had the proper staffing and knowledge
to administer its HOPE VI grants. Additionally, the authority brought the
president of the resident council on staff, helping to rebuild the
relationship between the authority and its residents. The receiver also
created a separate police force to increase the safety and security of the
authority*s public housing sites, the lack of which had been a major
complaint of former residents. Finally, during the receivership, all of
Chester*s public housing family units

have either been demolished or rehabilitated. Relying primarily on public
housing funds simplified the development process. Tax credit equity was
only used to finance the construction of the 40- unit senior building. The
remainder of the redevelopment was financed by HOPE VI and other public
housing funds. In addition, the housing authority elected to act as its
own developer of the family units. Finally, all units were constructed on-
site, thus the housing authority did not have to purchase additional
property.

North Beach, San The San Francisco Housing Authority was awarded a $20
million HOPE VI

Francisco, California revitalization grant for North Beach in October
1996. Construction at the

site did not begin until November 2002 (see fig. 22). The housing
authority has also completed three sites with two HOPE VI revitalization
grants* Bernal/ Plaza (fiscal year 1993) and Hayes Valley (fiscal year
1995)* and construction at its Valencia Gardens site (fiscal year 1997) is
scheduled to begin later this year.

Figure 22: Time Line for North Beach

North Beach prior to demolition. Vacant North Beach site.

1996 1997 1998 1999 2000 2001 2002 2003 2004 October:

February: June:

March: May:

January: December:

Revitalization Grant

Revitalization CSS plan

CSS plan Demolition

Projected grant awarded

agreement plan

submitted approved

completed completion

executed approved

by HUD November:

of new by HUD

Start of new construction

December:

construction Revitalization

October:

plan submitted Relocation

completed Source: GAO.

Note: This time line is based on GAO analysis of data provided by the San
Francisco Housing Authority.

Background Located adjacent to Fisherman*s Wharf and surrounding the
historic cable car turnaround, North Beach is situated in the heart of San
Francisco*s

tourist attractions. The site is surrounded by a busy, densely built,
vibrant neighborhood that is well- served by public transportation,
schools, shopping, and services. However, North Beach itself has been a
pocket of

poverty, with residents earning, on average, only 17 percent of area
median income. The site was built in 1952 and consisted of 13 concrete
buildings with 229 walk- up units, which filled two city blocks (see fig.
22). It was poorly designed with large amounts of indefensible space that
became havens for criminal activity. Due to repeated earthquake stress,
the buildings were weakening and had substandard major systems, including
sewer and plumbing. A $400,000 HOPE VI planning grant awarded in fiscal
year 1995 for North Beach funded a study of the site. The study determined
that due to the dilapidated condition of the site and the high crime rate
in the area, complete neighborhood revitalization would be essential to
any redevelopment plan.

Revitalization and In addition to the $20 million revitalization grant,
the San Francisco

Community and Supportive Housing Authority was subsequently awarded a $3.2
million HOPE VI

Services Plans demolition grant for the North Beach site in fiscal year
2001. The total projected budget is $106 million* up from the $69 million
estimated in

1996* and includes other public housing funds, other HUD funds, other
federal funds, and equity from low- income housing tax credits. The
revitalization plans call for 341 units. The 341 units will be divided as
follows:

 229 public housing units, which will be a one- for- one replacement for
the units that were demolished on both the east and west blocks and

 112 rental apartments for families with incomes below 50 percent of the
city median income. Also included in the plans are a parking garage for
323 cars and commercial and retail space surrounding the cable car
turnaround area. Approximately $1.5 million of the revitalization grant
was set aside for community and supportive services. This service
component was created to provide residents with opportunities to achieve
self- sufficiency through education, employment, and entrepreneurship. The
community and supportive services plan, approved in May 2001, calls for a
commitment to

lifelong education that includes the development of basic intellectual
skills, specific training for particular types of employment, and a focus
on life skills such as parenting.

Current Status Relocation, abatement, and demolition of both the east and
west blocks has been completed (see fig. 22). California awarded the
authority $55 million in tax credits in the spring of 2002 for the North
Beach site, the largest award in California history. With this additional
funding, the housing authority was able to begin construction at the site
in November 2002.

About half of all residents currently participate in community and
supportive services. Participants create an individual plan with a case
manager, who then directs the resident to the various services offered,
such as employment assistance, computer, and English as a Second Language
classes. Additionally, 30 residents from North Beach are enrolled in the
housing authority*s family self- sufficiency program. Program
participation enables each household to receive up to $1,200 for training
in various trades.

Factors Contributing to According to housing authority officials, the
primary factor contributing to

Current Status delays at North Beach was resident resistance. To address
resident

concerns regarding relocation, a former executive director initially
promised residents that the redevelopment would occur in two phases, which
meant that they would not have to be relocated off- site. However, the
housing authority later determined that this option would be too

expensive, and that the residents would have to be relocated off- site so
that redevelopment could occur all at once. The residents were not happy
with this decision and were very reluctant to move out of their
apartments.

Funding shortfalls have also contributed to delays at the North Beach
site. San Francisco*s original HOPE VI application requested $30 million
to complete the revitalization of North Beach. Because HUD only awarded
them $20 million, making up the difference has been difficult. The
authority had to add 112 units to the plan in order to convince the city
to provide $10 million in funding assistance. According to housing
authority officials, now that the project has been awarded $55 million in
tax credits, the pace of the redevelopment should accelerate.
Administering over $118 million in HOPE VI funds for five sites

simultaneously has been challenging for the authority*s staff. The housing

authority has a history of management and financial problems that have
affected its redevelopment efforts. HUD took over the housing authority in
1996 after the Mayor of San Francisco requested HUD*s assistance. The
authority had managerial problems, high crime at its public housing
developments, and problems with the physical condition of its housing

stock. After implementing new policies and procedures and reorganizing the
housing authority, HUD returned it to local control in 1997. Several years
after the housing authority was returned to local control, it developed
financial difficulties and again sought HUD*s assistance. HUD continues to
monitor and provide assistance to the housing authority.

Another factor that delayed the North Beach redevelopment was
environmental problems on- site. Half of the units contained lead paint
and asbestos, and the site*s soil had some arsenic, mercury, zinc, and
lead contamination (due to the site*s early industrial history). As a
result, the city required additional environmental reviews before it gave
its approval to begin construction.

Riverview and The Cuyahoga Metropolitan Housing Authority was awarded a
$29. 7

Lakeview Terraces, million HOPE VI revitalization grant for Riverview and
Lakeview Terraces

in October 1996 (see fig. 23). Although the housing authority has
completed Cleveland, Ohio

relocation and demolition, the rehabilitation of units at Lakeview has
been slow, and little progress has been made with the construction of new
units at Riverview. The housing authority has been awarded two other HOPE
VI revitalization grants: a $50 million grant in fiscal year 1993 for
Outhwaite Homes/ King Kennedy, which is complete, and a $21 million grant
in fiscal

year 1995 for the Carver Park site. Figure 23: Time Line for Riverview and
Lakeview

Riverview and Lakeview prior to renovation. Vacant Riverview site;
renovation under way at the Lakeview site.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 October:

January: July:

November: October:

June:

Revitalization Revitalization

CSS plan Start of

Projected start Projected

grant plan

approved by HUD renovation

of new on- site completion

awarded submitted

May:

at Lakeview construction

of new off- site

October:

Demolition at at Riverview

construction Grant

Riverview completed June:

agreement

April:

Projected executed

CSS plan submitted completion

June:

of new on- site Revised revitalization plan

construction conditionally approved by HUD

at Riverview

March: October:

Relocation at Projected

Riverview completed completion

of renovation

January:

at Lakeview Revised revitalization plan submitted

Sources: GAO (except the left photo, which is printed with the permission
of the Cuyahoga Metropolitan Housing Authority). Note: This time line is
based on GAO analysis of data provided by the Cuyahoga Metropolitan
Housing Authority.

Background Riverview, completed in 1963, consisted of 143 family units and
501 elderly units (see fig. 23). 5 Lakeview, completed in 1932, contained
570 family units and 214 elderly units. Riverview and Lakeview are
neighboring public housing sites, which collectively housed 715 elderly
units and 713 family units. Riverview is on unstable ground, which
includes numerous sinkholes. Both developments are located in the Ohio
City neighborhood, home to the West Side Market, which has been in
operation since the 1880s and attracts around 1 million visitors each
year. Due to its age, the Lakeview units had many problems, including high
lead levels, lack of parking, and obsolete underground plumbing and storm
lines. In addition, the majority of the Lakeview units were one- and two-
bedroom units, while the local demand is for three- bedroom and larger
units.

Revitalization and The total projected budget for the Riverview/ Lakeview
revitalization is

Community and Supportive about $112 million, which includes other public
housing funds, other

Services Plans federal funds, equity from the sale of low- income housing
tax credits, bank financing, and other local funds. The current
revitalization plan calls for 95

new public housing units, 240 rehabilitated public housing units, and 345
new market- rate and moderate- income units. For Riverview, there are
plans to construct 45 public housing units on- site and 50 off- site, to
acquire 54 off- site public housing units, and to construct 228 market-
rate and 117 affordable (tax credit) units. At the Lakeview site, there
are plans to renovate 186 public housing units and a community center.
There are also plans for site improvements, including the demolition of
garage

compounds. Of the $29.7 million in HOPE VI funds, the housing authority
plans to set aside $5.8 million for community and supportive services. The
goals of its community and supportive services plan, approved in July
2000, are to track and provide services to Lakeview residents and
relocated families from Riverview, make all interested residents meet the
qualifications for moving into the newly renovated units, and help
Lakeview and Riverview residents make the transition from welfare to work.

5 The elderly units were modernized in March 1996 and are not included in
the HOPE VI revitalization plans.

Current Status The renovation of the first 56 units at the Lakeview site
is under way, and six units have been completed (see fig. 23). The
demolition of the garage

compounds and rehabilitation work are moving along as scheduled, according
to the housing authority. The relocation of 98 households and demolition
of 135 units is complete at the Riverview site (see fig. 23). The housing
authority has also acquired 54 single- family homes in scattered sites,
which are fully occupied, but the construction of new units is not
scheduled to begin until October 2004. In June 2002, the housing authority
received an award for its plan for the Riverview site from the Congress
for New Urbanism. The housing authority is in the process of executing a
development agreement. Case management activities are in progress for 343
Riverview and

Lakeview residents. These residents participate in a range of activities,
including entrepreneurial and employment training and educational
programs. The housing authority is also in the process of implementing a
new system for ensuring that residents can receive the job- training
services that they need by using vouchers to purchase services.

Factors Contributing to The housing authority was experiencing internal
problems when the grant

Current Status was awarded in 1996. The prior administration was not
following

appropriate procurement procedures, according to HUD officials, and the
former executive director was ultimately convicted for theft of public
funds, mail fraud, and lying about a loan. A new executive director was
hired in late 1998, and the housing authority was finally able to focus on
the HOPE VI grant in 1999.

The project has also experienced delays due to cost constraints,
consideration of community and resident input, and problems with the site.
First, the housing authority requested $40 million to implement its
revitalization plan, but it was awarded $29.7 million. As a result, it
took time for the housing authority to obtain other funding. Next, the
housing

authority did not originally plan to put public housing back on the
Riverview site because the land was sloping and unstable. Due to community
and resident opposition to this plan, the housing authority

agreed to put public housing units back on- site. Subsequent analysis by
an engineering firm revealed that certain areas were stable enough for new
construction. Similarly, while the housing authority originally planned to
modernize 12 of the buildings at Lakeview, it later revised these plans to
include modernization of an additional 66 row- house units.

Robert S. Jervay Place, The Wilmington Housing Authority was awarded an
$11.6 million HOPE VI

Wilmington, North revitalization grant for Robert S. Jervay Place (Jervay
Place) in October

1996 (see fig. 24). Relocation and demolition at Jervay Place are
complete, Carolina but construction has been slow to start.

Figure 24: Time Line for Robert S. Jervay Place

Jervay Place prior to demolition. New homeownership units.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 August:

February: November:

March: August:

Grant CSS plan

Demolition Start of new

Projected completion agreement

approved completed

construction of new construction

executed by HUD

October: April:

October:

Revitalization First

Relocation plan approved

developer completed

by HUD selected

May: April:

October:

CSS plan Second

Revitalization submitted

developer grant awarded

selected

December:

Revitalization plan submitted

Sources: GAO (except the left photo, which is printed with the permission
of the Wilmington Housing Authority). Note: This time line is based on GAO
analysis of data provided by the Wilmington Housing Authority.

Background Jervay Place, constructed in 1951, was made up of 30, two-
story, brick buildings that housed 250 units on 14 acres of land (see fig.
24). The

building configuration yielded limited defensible space for each dwelling
unit and rendered the site vulnerable to criminal activity. The site
needed renovation, lead- based paint removal, asbestos abatement, and

modifications for the handicapped. In addition, the resident population
consisted of young, welfare- dependent, single- parent families.

Revitalization and The total projected budget for the Jervay Place
revitalization is $33 million,

Community and Supportive which includes equity from low- income housing
tax credits, other grants, Services Plans

and private debt. The revitalization plans called for 190 new units to be
developed at Jervay Place and surrounding sites in four phases, excluding
a phase dedicated to the implementation of community and supportive
services. The construction phases are as follows:

 construction of 14 for- sale or lease- purchase units on the original
site;  construction of 60 units and a community center on the original
site and

40 off- site units;  construction of 44 for- sale or lease- purchase
units on the original site;

and  construction of 32 scattered site for- sale or lease- purchase
units. Of the 190 new units, 71 would be public housing units, 29 would be
financed with a combination of low- income housing tax credits and
project- based Section 8, 28 would be lease- purchase units, and 62 would
be other subsidized homeownership units. A 7, 000- square- foot,
commercialretail

space will also be constructed on- site, but the housing authority has not
determined in which phase this will be done.

Of the $11.6 million in HOPE VI funds, the Wilmington Housing Authority
planned to set aside $1.5 million for community and supportive services.
The focus of its service efforts would be transportation, job training and
placement, education, health care, and child care. The housing authority
also planned to establish partnerships with local schools and businesses.

Current Status Relocation, demolition, and 4 of the 14 phase one
homeownership units have been completed, and construction of the next 5
units is under way

(see fig. 24). For phase two, construction began in November 2002, and tax
credits have been approved. For phase three, the housing authority is
working on its homeownership plan. The final phase of construction has not
begun. The housing authority estimates that all of the units will be
complete in August 2005.

HUD approved the housing authority*s community and supportive services
plan in February 1999. The housing authority administers services through
its family self- sufficiency program, through which case managers are
assigned to work with individual households and match them with
appropriate services. Case managers have worked with participants to
assist them with their self- sufficiency goals, including working with
residents to prequalify them to purchase the homes constructed in phase
one. Residents who wish to return to Jervay Place must be enrolled in this
program. As of January 2003, 62 of the 132 original residents were
enrolled. Factors Contributing to

The procurement of the initial development partner was legally challenged
Current Status

by one of the other bidders. According to HUD, a considerable amount of
time was spent resolving this issue, and HUD*s Office of General Counsel
ultimately determined the challenge was unfounded. However, the housing
authority and the initial developer did not work well together, and the
developer was released in July 1999. A new developer was hired in April
2001, and HUD assigned an expediter* a private- sector expert in finance,
real estate development, or community revitalization* to help move the
project. Both the housing authority and the second developer had to work
through resistance from the community and residents, who did not
understand the plans because they were not involved in the planning by the
previous developer and who were frustrated by the lack of progress at
Jervay Place, according to housing authority officials. As a result of
these issues, the housing authority did not submit its revitalization plan
until

December 2000. HUD approved the plan in October 2001. According to housing
authority officials, revitalization also has been adversely affected by
the city*s and HUD*s slow approval processes. For example, while the city
informed the housing authority in August 2001 that its site plan had been
approved, it was informed in December 2001 that the site plan should not
have been approved because the setbacks, the space between the building
area and the property line, were incorrect. As a result,

the site plans had to be changed and resubmitted to obtain the city*s
approval. Similarly, housing authority officials stated that HUD*s slow
approval process has contributed to delays. For example, it took HUD 5
months to conditionally approve the revitalization plan. In addition,
housing authority officials stated that they had to take out a line of
credit to begin construction because HUD was taking too long to make the
grant

funds available. According to HUD, approval could not be completed until
the housing authority fulfilled several conditions, including submission
of a mixed- finance proposal, a revised implementation schedule, proposed
unit designs, and a revised HOPE VI budget. In addition, the HUD grant
manager assigned to the housing authority was responsible for closing six
mixed- finance deals as well as reviewing new HOPE VI grant applications
during this time frame.

Robert Taylor Homes The Chicago Housing Authority was awarded a $25
million HOPE VI B, Chicago, Illinois

revitalization grant in October 1996 for Robert Taylor Homes B (see fig.
25). Relocation and demolition are complete, and approximately one-
quarter of the planned units have been constructed. The housing
authority*s scattered site program, which includes the development of any
nonelderly public housing, has been under judicial receivership since
1987. The authority is in the midst of implementing a 10- year
transformation plan, a $1.5 billion

blueprint for rebuilding or rehabilitating 25,000 units of public housing*
enough for every leaseholder as of October 1999* and transforming isolated
public housing sites into mixed- income communities. The

authority was awarded a revitalization grant for Robert Taylor A in fiscal
year 2001 and has also received grants for the following sites:
CabriniGreen (fiscal year 1994), ABLA (fiscal years 1996 and 1998), Henry
Horner (fiscal year 1996), Madden/ Wells/ Darrow (fiscal year 2000), and
Rockwell Gardens (fiscal year 2001).

Figure 25: Time Line for Robert Taylor Homes B

Robert Taylor Homes prior to demolition. The Langston.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 August:

October: December:

December:

Grant Demolition completed Revitalization plan approved by HUD

Projected completion agreement

March:

of new construction executed

Start of new construction

October: January:

Revitalization Relocation completed

grant awarded

June:

CSS plan submitted; CSS plan approved by HUD

January:

Revitalization plan submitted

Source: GAO. Note: This time line is based on GAO analysis of data
provided by the Chicago Housing Authority.

Background The Robert Taylor Homes consisted of over 4,300 units in 28
detached, 16- story buildings along Chicago*s State Street corridor, a 4-
mile stretch of five

different public housing sites (see fig. 25). It was the nation*s largest,
most densely populated public housing enclave. The Robert Taylor Homes
were divided into two subsites called Robert Taylor A and B. The fiscal
year 1996 HOPE VI revitalization grant is for Robert Taylor B, which was
constructed

between 1959 and 1963, and consisted of 2,400 units spread over 16
highrise buildings. The surrounding neighborhood included many boarded- up

buildings, vacant lots, and a few small businesses. However, the site also
is near bus and train services and a technical vocational school.
Revitalization and

In addition to the revitalization grant for Robert Taylor B, the Chicago
Community and Supportive

Housing Authority was subsequently awarded a $6.3 million HOPE VI Services
Plans

demolition grant in fiscal year 2000 and a $13 million HOPE VI demolition
grant in fiscal year 2001. The total projected budget for the Robert
Taylor B revitalization is $113 million, which includes other public
housing funds, other federal funds, conventional debt, and equity from the
sale of lowincome housing tax credits. The revitalization plans call for
the demolition of 762 units and the construction of 251 public housing
units in scattered off- site locations throughout the surrounding
neighborhoods.

Of the $25 million revitalization grant, approximately $1.5 million has
been budgeted for community and supportive services. The community and
supportive services plan was submitted and approved in June 1998. The plan
states that the housing authority will provide case managers to monitor
families* progress in meeting goals established in self- sufficiency

plans. The plan also allowed for the housing authority to use a Boys and
Girls Club to deliver self- sufficiency activities until a community
center was constructed in 1998. The services provided would include a
combination of employment; education; and family services, such as child
care and health care.

Current Status As shown in figure 25, a 116- unit site, referred to as The
Langston, has been constructed and is at capacity. Twenty- nine of these
units are public housing units and are occupied by former residents of
Robert Taylor A and

B. The remaining units are a mixture of tax credit and market- rate units.
Construction of a second site, referred to as The Quincy, is also
complete. The Quincy has 107 units, including 27 public housing units,
which are fully

occupied. The remaining units are also a mixture of market- rate and tax
credit units. In February 2003, HUD approved the combination of the 1996
grant for Robert Taylor B with the 2001 grant for Robert Taylor A for
planning and implementation purposes as well as the extension of certain
grant agreement deadlines affecting the 1996 grant. As a result, while the
housing authority is still obligated to complete 195 more public housing

units under the 1996 grant, these units will be developed as a part of a
new three- phase Robert Taylor Master Plan. Construction on the first
phase of this plan is scheduled to begin in late 2003.

The housing authority is currently in the process of revising its
community and supportive services plan to incorporate its service
connector program, in which case managers work individually with residents
to provide either necessary services or refer them to the appropriate
providers. The housing authority is in the process of locating the
original residents, finding out whether they are using any supportive
services through the housing choice program, and determining what services
they need. According to the housing authority, the primary service
provided to the original residents has been relocation assistance. In
addition, the Charles Hayes Family Investment Center opened in September
1998 adjacent to the original site, offering a one- stop source for
computer training, job placement, medical, and other supportive services.

Factors Contributing to The revitalization of Robert Taylor B has been
slowed by tension early in

Current Status the relationship between the Chicago Housing Authority and
its receiver and by the need for the plans to comply with the Gautreaux
consent

decree. In 1966, African American residents of the Chicago public housing
community filed suit against the housing authority for creating a
segregated public housing system. In response, the court issued a judgment
that prohibits the housing authority from constructing any new family
public housing in a neighborhood in which more than 30 percent of the
occupants are minorities (limited areas) unless it develops an equal
number of units in neighborhoods where less than 30 percent are minorities
(general areas). In 1987, the court appointed a receiver for Chicago*s
scattered- site

program, which includes the development of nonelderly public housing.
According to a housing authority official, the first delay at Robert
Taylor B occurred because the housing authority did not develop its
revitalization plan with the input of the receiver. The housing authority
submitted the plan to HUD in January 1998, and 9 months later HUD informed
the housing authority that it could not act on the plans without the
concurrence of the receiver. It took over 1 year for the housing authority
and the receiver to revise the plans together and to address HUD*s
specific concerns. HUD approved the plan in December 1999, but it only
partially approved the HOPE VI budget because the housing authority and
the receiver had not come to agreement on the receiver fee. The
determination of how grant funds should be dispersed between the housing
authority and the receiver was not finalized until May 2000.

The housing authority also has experienced difficulty obtaining off- site
locations for the balance of the public housing units that need to be

constructed. To address this difficulty, the housing authority has
proposed combining the revitalization efforts of Robert Taylor B with the
revitalization funded under the fiscal year 2001 Robert Taylor A grant.
The housing authority is working on obtaining a revitalizing order for the
Robert Taylor community, which would waive the Gautreaux restrictions.
Revitalizing orders allow the construction of new family public housing
units in limited areas without requiring an equal number of units to be
built in a general area. The revitalizing circumstances must support a
reasonable forecast of economic integration, with the longer term
possibility of racial

integration. The housing authority hopes that it can use the work already
completed with the Robert Taylor B grant to show that the area is being
revitalized.

Finally, receipt of the fiscal year 2001 HOPE VI grant for Robert Taylor A
has slowed progress at Robert Taylor B. After receiving this grant, the
housing authority took time to develop a master plan to coordinate the

development of both Robert Taylor A and B. The master plan allows the
housing authority to combine the grants for planning purposes, although
they remain administratively separate. In addition, the Robert Taylor site
has not consistently been a top priority for the housing authority.
According to a housing authority official, other sites that are further
along

have been selected to get the majority of the housing authority*s time,
energy, and resources.

St. Thomas, New The Housing Authority of New Orleans was awarded a $25
million HOPE VI Orleans, Louisiana

revitalization grant for St. Thomas in 1996. Although relocation and
demolition have been completed, no new units have been constructed (see
fig. 26). The housing authority is currently under administrative

receivership. The housing authority was also awarded a HOPE VI
revitalization grant for the Desire site in fiscal year 1994.

Figure 26: Time Line for St. Thomas

Original St. Thomas buildings. Cleared St. Thomas site.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 September:

October: October:

December: June:

December:

Revitalization Grant

Second Demolition completed Projected

Projected completion grant awarded

agreement developer

July:

start of new of new construction

executed selected

CSS plan construction

September:

approved First

by HUD developer

June:

selected Relocation

completed

May:

CSS plan submitted

September:

Revitalization plan approved by HUD

August:

Revitalization plan submitted

Source: GAO. Note: This time line is based on GAO analysis of data
provided by the Housing Authority of New Orleans.

Background St. Thomas, completed in 1941, consisted of 1,510 public
housing units on almost 50 acres (see fig. 26). The site was located in a
mixed- use

neighborhood close to the central business district and the Garden
District. The neighborhood in which St. Thomas is located was recently
designated

as a historic district. St. Thomas had a vacancy rate of 50 percent when
the Housing Authority of New Orleans applied for the HOPE VI grant. The
original site had a density of approximately 30 units per acre and
contained

long spaces between buildings, which were conducive to criminal and
violent behavior. Moreover, underground utilities were either obsolete or
deteriorated. Stormwater flooding and sanitary line overflows were common.
The odor of sewage was pervasive throughout the site. Revitalization and

In addition to the revitalization grant, the Housing Authority of New
Community and Supportive

Orleans was awarded a HOPE VI demolition grant in the amount of $3.5
Services Plans

million to demolish 701 units at St. Thomas. With funds from the city,
state, tax- exempt bonds, and other sources, the total projected budget
for the revitalization of St. Thomas is $293 million. The revitalization
plans call for

 a total of 1,238 units, including construction of 182 on- site public
housing units, 107 on- site public housing eligible rental units, 15 on-
site affordable homeownership units, 100 off- site public housing eligible
rental units, and 50 off- site affordable homeownership units;

 construction of a 200,000- square- foot retail center on 17 acres
adjacent to the site; and

 historic preservation and renovation of five of the original St. Thomas
buildings.

Of the $25 million revitalization grant, the housing authority plans to
spend $4 million on community and supportive services. The housing
authority will attempt to contact all of the original St. Thomas
households and conduct assessments of their needs. On the basis of these
assessments, a detailed case management plan will be drafted. The St.
Thomas community and supportive services plan, which HUD approved in July
2001, documents goals and objectives for achieving self- sufficiency for
the

residents of St. Thomas in the following areas: employment and income
generation, education, training, homeownership training and assistance,
health, strengthening families, and services to build community
leadership.

Current Status The St. Thomas site has been cleared, but construction has
not yet started (see fig. 26). The relocation of 739 families was
completed in June 2001, and demolition of 1,365 units was completed in
December 2001. As of April 2003, infrastructure work at the St. Thomas
site was 60 percent complete.

The transfer of property from the housing authority to the retail
developer for the construction of the retail center is scheduled to occur
by June 2003. This property transfer is contingent upon the housing
authority*s submission of documents to HUD for the closing of the first
phase of construction on residential units, an escrow deposit from the
developer to guarantee the construction of residential housing, and the
environmental clearance for the retail site. State economic development
bonds were approved in December 2002, which enabled negotiations regarding
the retail center to progress. The historic preservation of five of the
original St. Thomas buildings also has begun.

The housing authority has hired Kingsley House, a social service provider
located near the St. Thomas site, to perform assessments and provide case
management plans in accordance with the community and supportive services
plan. The Kingsley House, established in 1896, administers a variety of
programs from Head Start to adult day care. Assessments have been
conducted on 451 of the 739 families that were affected by the
redevelopment plans.

Factors Contributing to According to housing authority officials, progress
has been delayed due to

Current Status funding shortfalls. Although the housing authority
requested $40 million,

HUD awarded $25 million, which was not enough to revitalize the St. Thomas
site. Similarly, the city could provide $6 million of the $20 million
needed for infrastructure at the site. As a result, the developer had to
take time to identify other funding sources. Moreover, it took
approximately 2

years from the time that the developer told HUD its intentions to employ
tax- increment financing (TIF) until the New Orleans City Council approved
it. Approval of the TIF was delayed due to public pressure against the TIF
concept and the project itself. Moreover, the state bond commission did
not approve the issuance of bonds until December 2002, after nearly 6
months of delays due in part to the need to complete environmental review
processes. Also, although the housing authority selected a developer in
September

1997, the HUD Office of Inspector General identified problems with the
selection process. 6 Specifically, the Inspector General found that the

6 U. S. Department of Housing and Urban Development, Developer Selection;
St. Thomas HOPE VI Grant; New Orleans, Louisiana, 98- FW- 201- 1813 (Fort
Worth, Texas: July 24, 1998).

housing authority allowed the majority of the selection panel members to
be nonhousing authority individuals. The Inspector General also found that
the interaction of the initial developer with certain members of the
selection panel and St. Thomas residents constituted both a perceived and
actual conflict of interest. As a result, the housing authority selected a
new developer in October 1999. Once selected, the new developer
reconfigured the revitalization plan.

Delays continue because the St. Thomas site is located in a historic
district. Preservationists opposed demolition of existing buildings and
the construction of the retail center because of its size, design,
financing, impact upon traffic, and negative effect upon local businesses.
The housing authority consulted with environmental and preservationist
groups and executed a Memorandum of Agreement in September 2000 that
stipulated the preservation of five of the original St. Thomas buildings
and a warehouse as well as other measures aimed at minimizing adverse
environmental impact in and around St. Thomas. Consultation began in 2001
for an amended Memorandum of Agreement to consider the retail

component proposed for the site. In July 2002, a nonprofit organization
filed a lawsuit against the housing authority and HUD (1) stating that
they were not in compliance with environmental and historic preservation
laws and (2) seeking HUD to

withhold all HOPE VI funds from the housing authority. Since the filing of
the lawsuit, HUD has completed a supplemental environmental assessment and
has published a finding of no significant impact. Moreover, the housing
authority, HUD, and other parties have executed an amended

Memorandum of Agreement. The case was reopened in March 2003, but it was
dismissed by a judge in April 2003. Finally, the Housing Authority of New
Orleans has had a long history of management problems, and its public
housing has long been in very poor

condition. In 1996, HUD entered into a *cooperative endeavor agreement*
with New Orleans to correct problems at the housing authority. Under this
agreement, HUD dissolved the housing authority*s board of commissioners
and chose a HUD representative as Executive Monitor to oversee the
authority*s progress in implementing improvements. In 2002, after the
housing authority had made little progress, HUD took control of its
management and operations. According to HUD officials involved in the
receivership, they are working on reallocating staff resources,
reorganizing the housing authority*s structure, and cutting back on
unnecessary expenditures.

Theron B. Watkins The Housing Authority of Kansas City, Missouri, received
a $13 million

Homes, Kansas City, HOPE VI revitalization grant for Theron B. Watkins in
November 1996 (see fig. 27). This grant has funded the revitalization of
the Watkins site and will

Missouri fund additional revitalization plans at another site and off-
site units. The

authority has had numerous problems related to management and maintenance
of its properties, and it was placed under judicial receivership in 1994.
The authority also was awarded three other HOPE VI revitalization grants*
a fiscal year 1993 revitalization grant for Guinotte Manor, a fiscal year
1997 revitalization grant for Heritage House, and a smaller revitalization
grant for Heritage House awarded in fiscal year 1998 that is complete.

Figure 27: Time Line for Theron B. Watkins Homes

Theron B. Watkins Homes after revitalization.

'96 1997 1998 1999 2000 2001 2002 2003 2004 2005 June:

August: December:

October:

Revitalization plan CSS plan

CSS plan Projected completion

approved by HUD submitted

approved of off- site construction

December:

by HUD Relocation

June:

completed; Demolition

revitalization completed

plan submitted

April: August:

Completion Grant agreement

of on- site executed

rehabilitation

November:

Revitalization grant awarded

Source: GAO. Note: This time line is based on GAO analysis of data
provided by the Housing Authority of Kansas City, Missouri.

Background For many years, the Theron B. Watkins site served as the symbol
for urban decline in Kansas City. With its deteriorated structures, large
open entryways, and outdated and neglected electrical systems, the site
suffered

from many of the same problems identified in housing of similar design
throughout the country. The site was built in 1953 and contained 288 units
in 22, three- story buildings. In the late 1980s, living conditions at the
site began to deteriorate at a rapid pace with drug dealing and related
crime rampant; units in disrepair and neglect; and the housing authority
unable to

address problems due to its mismanagement problems. These conditions
created an unsafe living environment that prompted residents to vacate the
site in large numbers. Upon the arrival of the receiver in 1994, problems
at the site included a 43 percent vacancy rate; enormous backlogs of
uncompleted maintenance work; high rates of criminal activity; and

hundreds of families living in dangerous, substandard conditions.
Revitalization and

According to the revitalization plan, the Housing Authority of Kansas
City, Community and Supportive

Missouri, would use their $13 million HOPE VI revitalization grant to fund
Services Plans

portions of several redevelopment projects. The majority of the grant
would fund the rehabilitation of 75 units at the Theron B. Watkins site.
(Other public housing funds would be used to complete the rehabilitation
of the remaining units.) Additionally, some of the HOPE VI funds would be

used to rehabilitate 74 townhomes at the housing authority*s Wayne Miner
site. Finally, the funding would be used to demolish 24 units at Theron B.
Watkins. These units would be replaced in two off- site communities. Of
the $13 million revitalization grant, $1.4 million was budgeted for
community and supportive services. The funds would be used to provide case
management, community policing, and programs and activities. An additional
$314,000 would be used to renovate the housing authority*s

family development center. Current Status Of the 173 total planned units,
149 have been completed. The rehabilitation

of 75 units at the Theron B. Watkins site is complete (see fig. 27), as is
the renovation of the family development center. The rehabilitation of the
74 townhomes at the Wayne Miner site was completed in March 2003. The
replacement of the 24 demolished units in two, off- site, mixed- income
developments remains in the planning stage. However, due to recent tax
credit awards, construction on 13 of the 24 replacement units is scheduled
to begin in June 2003.

Community and supportive services for residents of Theron B. Watkins
include bilingual case management for the large immigrant population,
community policing, transportation, public health programs, and youth
development activities. The housing authority recently conducted a needs
assessment of its residents, which demonstrated the residents* preference
for case management. Services for children are offered at an on- site

community center, including Head Start, Parents as Teachers, Boy/ Girl
Scouts, and the Police Athletic League.

Factors Contributing to The housing authority had already begun the
revitalization of Theron B.

Current Status Watkins with other public housing funds when the fiscal
year 1996 HOPE VI

revitalization grant was awarded. Additionally, the receivership improved
the management of the housing authority, which ensured that the authority
had the staffing and expertise to implement its HOPE VI grants.

Although the on- site renovation was completed by April 2000, the other
two parts of the redevelopment effort have faced challenges. The housing
authority*s initial HOPE VI application included the Wayne Miner site as a
mixed- income development, but after an evaluation of financial
feasibility

and market demand, the housing authority decided that mixed- income
development would not be sustainable at the site. Thus, the housing
authority had to redo its plans for the site to include only public
housing. The plans to replace the 24 demolished Theron B. Watkins units at
two, offsite, mixed- income developments were delayed when the housing
authority*s fiscal years 2001 and 2002 applications for low- income
housing tax credits were denied. However, in early 2003, one of the two
mixedincome developments was awarded tax credits, and construction is
expected to begin in June 2003. The housing authority plans to reapply for
tax credits for the other development in the fall of 2003.

Tobe Hartwell Courts The Spartanburg Housing Authority was awarded a $14.6
million HOPE VI

and Tobe Hartwell revitalization grant for Tobe Hartwell Courts and Tobe
Hartwell Extension

in October 1996 and has completed all of the planned public housing and
Extension, homeownership units, a community center, and nearly half of the
planned

Spartanburg, South tax credit units (see fig. 28).

Carolina

Figure 28: Time Line for Tobe Hartwell Courts and Tobe Hartwell Extension

Tobe Hartwell Courts prior to demolition. Tobias Booker Hartwell Campus of
Learners (formerly Tobe Hartwell Courts and Tobe Hartwell Extension):
rental units, computer room, and gymnasium.

1996 1997 1998 1999 2000 2001 2002 2003 2004 October:

May: April:

February: July:

November:

Revitalization Revitalization

Start of new Completion of

Completion of Projected

grant awarded plan approved

construction replacement

homeownership units completion

by HUD;

March:

public housing of tax credit

CSS plan Demolition

units units

approved completed

by HUD

March:

Relocation completed

January:

Revitalization plan submitted; CSS plan submitted

August:

Grant agreement executed

Sources: GAO (except the left photo, which is printed with the permission
of the Spartanburg Housing Authority). Note: This time line is based on
GAO analysis of data provided by the Spartanburg Housing Authority.

Background Tobe Hartwell Courts and Tobe Hartwell Extension* constructed
in 1941 and 1952, respectively* contained 266 units in concrete and
masonry

buildings (see fig. 28). High density, narrow streets, limited
rehabilitation options, and general disrepair characterized the
development. In 1996, incidents of crime were 19 percent higher at this
development than crime in Spartanburg public housing in general, and
nearly 40 percent of the residents did not have a high- school diploma.
The housing authority was awarded a $400,000 HOPE VI planning grant for
Tobe Hartwell Courts and Extension in May 1995.

Revitalization and The total projected budget for the project is $30
million, which includes tax

Community and Supportive credit equity and private funds. The
revitalization plans for Tobe Hartwell

Services Plans Courts and Tobe Hartwell Extension, renamed the Tobias
Booker Hartwell

Campus of Learners, call for 268 new units to be developed in the
following four phases:

 Phase one: 118 public housing replacement units and a community center
on the original site.

 Phase two: 50 single- family homes on two off- site locations.  Phase
three: 50- unit, off- site apartment complex (40 low- income housing tax
credit units and 10 public housing units).

 Phase four: another 50 low- income housing tax credit off- site units.
Of the $14.6 million in HOPE VI funds, approximately $803,000 was set
aside for community and supportive services. The community and supportive
services plan, approved in May 1998, stated that case managers

would administer the program and monitor residents* progress. The
community center would be the hub of the supportive services component and
would include a day- care facility, a computer center, a clinic, meeting

rooms, staff offices, and a combined gymnasium and multipurpose community
room. Current Status The 118 replacement public housing units were
completed in February

2001 and are now fully occupied (see fig. 28). All 50 homes are complete,
36 have been sold, and contracts are in place for 7. Of the 50 tax credit
units planned for phase three, all have been constructed and accepted.
Site

infrastructure work is complete for phase four, and the housing authority
is awaiting the 2003 low- income housing tax credit cycle to apply for
building funds for this phase.

A needs assessment of the residents was updated in January 2000, and
provision of supportive services began in December 2000. The community
center is complete, and the day- care and health- care components are
fully operational. Classes are also under way in the computer lab, and
case managers are on- site.

Factors Contributing to Spartanburg Housing Authority officials believe
that they have been Current Status

successful for several reasons. First, receipt of a planning grant enabled
the housing authority to thoroughly plan the revitalization. As a result
of this early planning, the housing authority made few changes to their
plans after the revitalization grant was awarded. Also, housing authority
officials emphasized that they involved their residents early and often,
enabling them to avoid the delays and difficulties that many other housing
authorities have experienced. Moreover, housing authority officials

emphasized that their previous executive director provided strong
leadership and was the driving force behind the planning and
implementation of their revitalization grant.

The financing of this grant was relatively simple compared with the
financing that other housing authorities must arrange to construct
mixedincome developments. For example, the housing authority put all
public housing units back on- site. In addition, in South Carolina, the
state housing finance agency sets aside low- income housing tax credits
for HOPE VI sites. This made it easier for the housing authority to obtain
tax credits for its off- site components.

Comments from the Department of Housing

Appendi x V and Urban Development

Appendi VI x GAO Contacts and Staff Acknowledgments GAO Contacts David
Wood, (202) 512- 8678 Paul Schmidt, (312) 220- 7681 Staff

In addition to those named above, Catherine Hurley, Kevin Jackson,
Acknowledgments

Barbara Johnson, Alison Martin, John McGrail, Sara Moessbauer, Marc
Molino, Lisa Moore, Barbara Roesmann, Paige Smith, Ginger Tierney, and
Carrie Watkins made key contributions to this report.

Glossary Case management An experienced case manager assesses the needs
and circumstances of

each family holistically and makes referrals to an appropriate range of
service providers on the basis of priorities that these individual
assessments suggest. Also see community and supportive services.

Community and supportive Services such as child care, transportation, job
training, job placement and

services retention services, youth programs, addictions counseling, and
parenting

classes. Community and supportive

Contains a description of the types of community and supportive services
services plan

that will be provided to residents, the proposed steps and schedules for
establishing arrangements with service providers, the plans for actively
involving residents in supportive services planning and implementation,
and a system for monitoring and tracking the performance of the supportive
services programs as well as resident progress. Also see

community and supportive services.

Consent decree A judicial decree that sanctions a voluntary agreement
between parties in dispute.

Defensible space program A program that restructures the physical layout
of communities to allow residents to control the areas around their homes
and reduce crime. For

example, common entryways and grounds are replaced with private entrances
and yards.

Elderly rental unit A unit designated for an individual or for a family
whose head, spouse, or sole member is a person 62 years of age or older.
An elderly family may include elderly persons with disabilities and other
family members who are

not elderly and who may or may not have disabilities. Family rental unit A
unit of affordable rental housing developed for use by two or more

persons in a development.

Family self- sufficiency A HUD program that encourages communities to
develop local strategies to

program help assisted families obtain employment that will lead to
economic

independence and self- sufficiency. Public housing agencies work with
welfare agencies, schools, businesses, and other local partners to develop
a comprehensive program that gives participating family members the skills
and experience to enable them to obtain employment that pays a living
wage. When a family volunteers to participate in the program, the housing
authority and the head of the family execute a contract of participation
that specifies the rights and responsibilities of both parties. The 5-
year contract specifies goals and services for each family. The housing
authority establishes an interest- bearing escrow account for each
participating

family. The housing authority credits the escrow account, based on
increases in earned income of the family, during the term of the contract.
If the family completes the contract and no member of the family is
receiving welfare, the amount of the account is paid to the head of the
family.

HOPE VI demolition grant Awarded to housing authorities from 1996 to the
present, these grants fund the demolition of severely distressed public
housing, the relocation of

residents affected by the demolition, and the implementation of supportive
services for permanently relocated residents. HOPE VI planning grant
Awarded to housing authorities from 1993 to 1995, these grants were used
to fund studies for the area to be revitalized, to develop a plan of

revitalization, for economic development, and for technical support. HOPE
VI revitalization grant Revitalization grants* which have been awarded
since the program*s

inception* fund, among other things, the capital costs of major
rehabilitation, new construction, and other physical improvements;
demolition of severely distressed housing; and community and supportive
services programs for residents, including those relocated as a result of
revitalization efforts.

Low- income housing tax Low- income housing tax credits provide tax
incentives for private

credit program investment in the development and rehabilitation of housing
for lowincome

households. Under this program, states are authorized to allocate federal
tax credits as an incentive to the private sector to develop rental

housing for low- income households. After the state allocates tax credits
to developers, the developers typically offer the credits to private
investors. The private investors use the tax credits to offset taxes
otherwise owed on their tax returns. The money that private investors pay
for the credits is paid into the projects as equity financing.

Market- rate unit Housing unit with no income eligibility restrictions for
renters or homeowners.

Mixed- finance development A method of public housing development that
involves a combination of public and private financing sources and may
include the ownership of public housing units by a housing authority, or
an entity other than the housing authority in which the authority may or
may not have an ownership interest.

Mixed- finance proposal A proposal that must be approved by HUD prior to
the development of units financed with a combination of public and private
funds. The

proposal consists of 12 sections of narrative and attachments and includes
basic descriptive information, such as the number and types of units
planned, the development schedule, and the sources and uses of funding.

Mixed- income development A development that combines public housing
families with other residents of various income levels in order to
decrease the economic and social

isolation of the public housing families. Project- based Section 8

A HUD rent subsidy program that attaches the subsidy to a unit instead of
a Program

person. Under this program, landlords are responsible for ensuring that
these units are leased only to qualified tenants and that the units meet
HUD standards.

Revitalization plan Consists of a series of documents and submissions that
govern the revitalization of a public housing development. The
revitalization plan

includes, among other things, the grantee*s HOPE VI application, budgets,
a community and supportive services plan, a relocation plan, and any

supplemental submissions that HUD requests following its review of the
HOPE VI application and as a result of a site visit to the development.

Tax credit unit Units financed with low- income housing tax credit equity.
Also see lowincome housing tax credit program.

Tax increment financing Allows a municipality to provide financial
incentives to stimulate private

(TIF) investment in a designated area (a TIF district) where blight has
made it

difficult to attract new development. TIF can be used to support new
development or the rehabilitation of existing buildings in industrial,
commercial, residential, or mixed- use development proposals. Funding for

TIF- eligible activities is derived from the increase in incremental tax
revenues generated by new construction or rehabilitation projects within
the boundaries of the TIF district. States determine what activities are
eligible uses of TIF funds; these activities may include land acquisition,
site preparation, building rehabilitation, public improvements, and
interest subsidy. (250107)

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C. 20548

Report to the Ranking Minority Member, Subcommittee on Housing and
Transportation, Committee on Banking, Housing, and Urban Affairs, U. S.
Senate

May 2003 PUBLIC HOUSING HUD*s Oversight of HOPE VI Sites Needs to Be More
Consistent

GAO- 03- 555

Letter 1 Results in Brief 3 Background 5 HUD Uses Core Factors to Assess
Applications but Has Not

Consistently Followed Its Selection Procedures 8 Status of Work Varies
Greatly, and Most Grantees Have Not Met

Grant Agreement Deadlines 16 HUD*s Oversight of HOPE VI Grants Has Been
Inconsistent 25 HUD Has Obligated the Majority of Funds Budgeted for
Technical

Assistance for Support to Grantees and HOPE VI Program Reporting 31
Conclusions 33 Recommendations for Executive Action 34 Agency Comments 35

Appendixes

Appendix I: Objectives, Scope, and Methodology 36

Appendix II: HOPE VI Revitalization Grants 38

Appendix III: Fiscal Year 2002 Application Screening and Scoring Process
46

Appendix IV: Site Visit Summaries 49 ABLA Homes* Brooks Extension,
Chicago, Illinois 50 Arverne/ Edgemere Houses, Queens, New York 55 Bedford
Additions, Pittsburgh, Pennsylvania 60 Connie Chambers, Tucson, Arizona 64
Cotter and Lang Homes, Louisville, Kentucky 68 Dalton Village, Charlotte,
North Carolina 72 Durkeeville, Jacksonville, Florida 76 Heman E. Perry
Homes, Atlanta, Georgia 80 Henry Horner Homes, Chicago, Illinois 85 Herman
Gardens, Detroit, Michigan 89 Hollander Ridge, Baltimore, Maryland 93
Jackson Parkway, Holyoke, Massachusetts 97 Lamokin Village, Chester,
Pennsylvania 100 North Beach, San Francisco, California 103 Riverview and
Lakeview Terraces, Cleveland, Ohio 107 Robert S. Jervay Place, Wilmington,
North Carolina 110 Robert Taylor Homes B, Chicago, Illinois 114 St.
Thomas, New Orleans, Louisiana 119

Theron B. Watkins Homes, Kansas City, Missouri 124 Tobe Hartwell Courts
and Tobe Hartwell Extension, Spartanburg,

South Carolina 128

Appendix V: Comments from the Department of Housing and Urban Development
131

Appendix VI: GAO Contacts and Staff Acknowledgments 133 GAO Contacts 133
Staff Acknowledgments 133

Glossary 134 Tables Table 1: Average Number of Days to Complete Key
Program Activities 22

Table 2: 165 Revitalization Grants Awarded, Fiscal Years 1993- 2001 38
Table 3: Fiscal Year 2002 Rating Factors 47

Figures Figure 1: Changes to the HOPE VI Program Over Time 10 Figure 2:
Percentage of Planned Revitalization Activities That Grantees Completed,
by Fiscal Year Awarded 17

Figure 3: Percentage of Construction Completed at 165 HOPE VI Sites 18
Figure 4: Status of HOPE VI Funds Budgeted and Expended for

Revitalization Activities 20 Figure 5: Grant Manager Workload, by Fiscal
Year 27 Figure 6: Technical Assistance Funding, by Fiscal Year 31 Figure
7: Total Obligations for Technical Assistance, by Funding

Category 32 Figure 8: Obligations for Technical Assistance, by Fiscal Year
33 Figure 9: Time Line for ABLA Homes 51 Figure 10: Time Line for Arverne/
Edgemere Houses 56 Figure 11: Time Line for Bedford Additions 61 Figure
12: Time Line for Connie Chambers 65 Figure 13: Time Line for Cotter and
Lang Homes 68 Figure 14: Time Line for Dalton Village 72 Figure 15: Time
Line for Durkeeville 76 Figure 16: Time Line for Heman E. Perry Homes 81
Figure 17: Time Line for Henry Horner Homes 86 Figure 18: Time Line for
Herman Gardens 89 Figure 19: Time Line for Hollander Ridge 94

Figure 20: Time Line for Jackson Parkway 97 Figure 21: Time Line for
Lamokin Village 100 Figure 22: Time Line for North Beach 103 Figure 23:
Time Line for Riverview and Lakeview 107 Figure 24: Time Line for Robert
S. Jervay Place 110 Figure 25: Time Line for Robert Taylor Homes B 115
Figure 26: Time Line for St. Thomas 120 Figure 27: Time Line for Theron B.
Watkins Homes 125 Figure 28: Time Line for Tobe Hartwell Courts and Tobe
Hartwell Extension 128

Abbreviations

ACLU American Civil Liberties Union CSS community and supportive services
HUD Department of Housing and Urban Development NOFA notice of funding
availability REAP Resource Estimation Allocation Process TIF tax increment
financing HOPE VI Urban Revitalization Demonstration Program

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a

GAO United States General Accounting Office

HUD has generally used the same core rating factors to assess HOPE VI
grant applications* need, capacity, quality, and leveraging. However, HUD
has, over time, increased the requirements that housing authorities must
meet for each of these factors in order to make better selection
decisions. Although authorities* historical program performance had been
considered under various rating factors, it was not until fiscal year 2002
that past performance became a threshold requirement that an applicant
must meet to be eligible for a grant.

The status of work at HOPE VI sites varies greatly, with construction
complete at 15 of the 165 sites. As of December 31, 2002, grantees had
completed 27 percent of the total planned units and spent approximately
$2.1 of the $4.5 billion in HOPE VI revitalization funds awarded. However,
the majority of grantees have not met their grant agreement deadlines. For
example, the time allowed for construction has expired for 42 grants, yet
grantees completed construction within the deadline on only 3 grants.
Several factors affect the status of work at HOPE VI sites, including the
development approach used and changes made to revitalization plans.

HUD*s oversight of HOPE VI grants has been inconsistent, due partly to
staffing limitations and confusion about the role of field offices. Both
headquarters and field office staff are responsible for overseeing HOPE VI
grants. However, HUD field offices have not systematically performed
required annual reviews. Additionally, despite grantees* inability to meet
key deadlines, HUD has no formal enforcement policies. Instead, the agency
determines if action should be taken against a grantee on a case- by- case
basis. Although HUD has declared 9 grants to be in default and issued
warnings regarding 3 grants, it has not done so for other grants in a
similar situation. Percentage of Construction Completed at 165 HOPE VI
Sites

Note: This figure is based on GAO analysis of data from HUD*s HOPE VI
reporting system as of December 31, 2002.

Congress established the HOPE VI program to revitalize severely distressed
public housing. In fiscal years 1993 to 2001, the Department of Housing
and Urban Development (HUD) awarded approximately $4.5 billion in HOPE VI
revitalization grants. The Ranking Minority Member, Subcommittee on
Housing and Transportation, Senate Committee on Banking, Housing, and
Urban Affairs, asked GAO to examine

HUD*s process for assessing grant applications, the status of work at
sites for which grants have been awarded, and HUD*s oversight of HOPE VI
grants.

To improve its selection and oversight of HOPE VI grants, GAO recommends
that HUD (1) continue to include past performance as an eligibility
requirement in each year*s notice

of funding availability; (2) clarify the role of HUD field offices in HOPE
VI oversight and ensure that the offices conduct required annual reviews
of HOPE VI grants; and (3) develop a formal, written enforcement policy to
hold public

housing authorities accountable for the status of their grants.

HUD found this report to be fair and accurate, and it agreed with the
three GAO recommendations.

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 555. To view the full report,
including the scope and methodology, click on the link above. For more
information, contact David G. Wood at (202) 512- 8678. Highlights of GAO-
03- 555, a report to the

Ranking Minority Member, Subcommittee on Housing and Transportation,
Committee on Banking, Housing, and Urban Affairs, U. S. Senate

May 2003

PUBLIC HOUSING

HUD's Oversight of HOPE VI Sites Needs to Be More Consistent

Page i GAO- 03- 555 HUD's Management of the HOPE VI Program

Contents

Contents

Page ii GAO- 03- 555 HUD's Management of the HOPE VI Program

Contents

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General Accounting Office

Washington, D. C. 20548 Page 1 GAO- 03- 555 HUD's Management of the HOPE
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Appendix I

Appendix I Objectives, Scope, and Methodology

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Appendix II

Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix II HOPE VI Revitalization Grants

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Appendix III

Appendix III Fiscal Year 2002 Application Screening and Scoring Process

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Appendix III Fiscal Year 2002 Application Screening and Scoring Process

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Appendix IV

Appendix IV Site Visit Summaries

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Appendix IV Site Visit Summaries

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Appendix V

Appendix V Comments from the Department of Housing and Urban Development

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Appendix VI

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