Public Housing: Information on the Roles of HUD, Public Housing  
Agencies, Capital Markets, and Service Organizations (15-FEB-06, 
GAO-06-419T).							 
                                                                 
Under the Public Housing Program, the Department of Housing and  
Urban Development (HUD) and local public housing agencies (PHA)  
provide housing for low-income residents at rents they can	 
afford. Today, over 3,000 PHAs administer approximately 1.2	 
million public housing units throughout the nation. First	 
authorized in 1937, the program has undergone changes over the	 
decades. The Quality Housing and Work Responsibility Act of 1998 
increased managerial flexibility but also established new	 
requirements for housing agencies. Some observers have questioned
the program's ability to provide quality, affordable housing to  
the nation's neediest families. This testimony, which is based	 
upon a number of reports that GAO has issued related to public	 
housing since 2002, discusses the roles of (1) HUD (2) public	 
housing agencies, (3) capital markets, and (4) community services
organizations in the public housing system.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-419T					        
    ACCNO:   A47018						        
  TITLE:     Public Housing: Information on the Roles of HUD, Public  
Housing Agencies, Capital Markets, and Service Organizations	 
     DATE:   02/15/2006 
  SUBJECT:   Housing programs					 
	     Locally administered programs			 
	     Low income housing 				 
	     Program evaluation 				 
	     Program management 				 
	     Public assistance programs 			 
	     Public housing					 
	     Rental housing					 
	     HUD HOPE VI Program				 
	     HUD Public Housing Program 			 

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GAO-06-419T

     

     * Related Products

Testimony

Before the Subcommittee on Federalism and the Census, Committee on
Government Reform, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:00 p.m. EST

Wednesday, February 15, 2006

PUBLIC HOUSING

Information on the Roles of HUD, Public Housing Agencies, Capital Markets,
and Service Organizations

Statement of David G. Wood, Director Financial Markets and Community
Investments

GAO-06-419T

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today as the Committee considers
the nation's public housing. The Public Housing Program was established in
1937 to provide decent and safe rental housing for low-income families.
Congress annually appropriates funds for the program, and the Department
of Housing and Urban Development (HUD) allocates them to local public
housing agencies (PHA). Today, over 3,000 PHAs administer approximately
1.2 million public housing units throughout the nation under HUD's
oversight.

My statement is based on a number of reports that we have issued related
to public housing, primarily since 2002. The topics of these reports have
included (1) how HUD assesses PHAs' performance and the steps it takes to
remedy poor performance; (2) the agencies' experiences with reforms
instituted by the Quality Housing and Work Responsibility Act (QHWRA) of
1998; (3) various aspects of the HOPE VI program for revitalizing severely
distressed public housing; and (4) most recently, the condition of public
housing for the elderly and disabled. As you requested, my statement
discusses the roles of (1) HUD (2) public housing agencies, (3) capital
markets, and (4) community services organizations in the public housing
system. In preparing this information, we excerpted and summarized
information from reports issued between 2002 and 2005. A list of these
reports appears at the end of this statement.

In brief:

           o  Traditionally, HUD's role has been to provide PHAs with
           funding, guidance, and oversight. HUD provides both capital and
           operating funding. In addition, HUD has provided selected agencies
           with grants under the HOPE VI program to demolish and revitalize
           severely distressed public housing and provide community and
           supportive services. HUD provides guidance to PHAs to supplement
           its regulations and explicitly convey required program policies
           and procedures. Based on our past work, we have made
           recommendations to HUD to improve the clarity and timeliness of
           its guidance to PHAs, and to improve its oversight of the program.
           o  PHAs are responsible for managing public housing in accordance
           with HUD regulations and requirements. They are also required to
           develop and submit plans detailing the agency's goals and
           strategies for reaching these goals. Further, PHAs that receive
           HOPE VI grants are required to provide residents with supportive
           services. Our work has identified challenges that the agencies
           face in carrying out their responsibilities, including difficulty
           with HUD's data systems and lack of resources for hiring and
           training staff.
           o  While we have not reviewed the extent to which capital markets
           can play a role in the public housing system, our examination of
           the HOPE VI program and other work has identified examples of
           leveraging federal funds with funds from a variety of other public
           and private sources. HUD encourages PHAs to use their HOPE VI
           grants to leverage funding from other sources to increase the
           number of affordable housing units developed at project sites. The
           examples we have found include private funding for both capital
           projects and the provision of supportive services.
           o  PHAs may utilize community service organizations to assist
           public housing residents. Work we have done on federal housing
           programs that benefit the elderly, as well as recent work focused
           on public housing for the elderly and residents with disabilities,
           identified examples of supportive services being offered or
           provided to public housing residents. Such services may be
           provided through HUD grants as well as through partnerships
           between PHAs and community-based nonprofit organizations.

           Under the U. S. Housing Act of 1937, as amended, Congress created
           the federal public housing program to provide decent and safe
           rental housing for eligible low-income families, the elderly, and
           persons with disabilities. HUD administers the program with PHAs,
           typically local agencies created under state law that manage
           housing for low-income residents at rents they can afford.
           Agencies that participate in the program contract with HUD to
           provide housing to eligible low-income households and, in return,
           receive financial assistance from HUD. Public housing comes in all
           sizes and types, from scattered single-family houses to high-rise
           apartments.

           In 1992, Congress established the HOPE VI program, which is
           administered by HUD. The program provides grants to PHAs to
           rehabilitate or rebuild severely distressed public housing and
           improve the lives of public housing residents through supportive
           services. In 2003, Congress expanded the statutory definition of
           "severely distressed public housing" for the purpose of HOPE VI to
           include indicators of social distress, such as a lack of
           supportive services and economic opportunities. Between fiscal
           years 1993 and 2005, Congress appropriated $6.8 billion for the
           HOPE VI program.

           In addition to managing public housing, some PHAs administer other
           HUD programs that provide housing assistance for low-income
           households. Under the Housing Choice Voucher Program, about 2,500
           participating PHAs enter into contracts with HUD and receive funds
           to provide rent subsidies to the owners of private housing on
           behalf of assisted low-income households. In addition, PHAs assist
           in administering HUD's project-based rental assistance programs,
           through which HUD pays subsidies to private owners of multifamily
           housing that help make this housing affordable for lower income
           households.

           Traditionally, HUD has provided funding to local PHAs to manage
           the public housing system, as well as for the revitalization of
           severely distressed public housing. HUD's role has also included
           providing PHAs with guidance and overseeing their performance,
           including providing technical assistance.

           HUD provides funding to housing agencies through two formula grant
           programs: the Operating Fund and the Capital Fund. The Operating
           Fund provides annual subsidies to housing agencies to make up the
           difference between the amount they collect in rent and the cost of
           operating the units. The Capital Fund provides grants to PHAs for
           the major repair and modernization of the units. In addition, HUD
           has provided selected agencies with grants under the HOPE VI
           program to help housing agencies replace and revitalize severely
           distressed public housing with physical and community and
           supportive service improvements. As shown in table 1, this HUD
           funding has totaled about $31.5 billion over the past 5 fiscal
           years.

           Table 1: Appropriations for the Public Housing Program for Fiscal
           Years 2002-2006

           Source: GAO.

           aBudget totals include the 1.0 percent across the board rescission
           to nondefense discretionary resources provided in FY 2006 regular
           appropriations acts per P.L. No: 109-148.

           In exchange for capital and operating funding, PHAs enter into
           annual contributions contracts. According to this written
           contract, HUD agrees to make payments to the PHA and the PHA
           agrees to administer the housing program in accordance with HUD
           regulations and requirements. HUD provides guidance to PHAs to
           supplement its regulations, and explicitly convey required program
           policies and procedures.

           Some of our past work has shown a need for HUD to improve the
           clarity and/or timeliness of its guidance to housing authorities.
           For example:

           o  For our 2002 review of HUD's and housing agencies' experiences
           in preparing annual plans required by the Quality Housing and Work
           Responsibility Act of 1998 (QHWRA), we surveyed HUD field offices
           and interviewed eight PHAs to gain insight into their
           experiences.1 Respondents reported that HUD-provided guidance on
           the planning process was less than adequate. One respondent
           reported that headquarters guidance was delayed in getting to
           field locations, while another reported that changing rules made
           it difficult to know what the PHAs should do and what the field
           locations should look for in reviewing plans. However, some PHAs
           balanced their comments with positive remarks; for example, one
           large agency told us that HUD had improved the template for fiscal
           year 2001. HUD provided a desk guide to assist housing agencies
           and field locations in fiscal year 2001, in an effort to improve
           the planning process.
           o  In surveying the directors of PHAs on their experiences with a
           number of QHWRA housing reforms, we again found late and unclear
           guidance from HUD.2 Public housing directors reported having to
           spend more administrative time in implementing reforms, partially
           due to a lack of clear guidance from HUD.
           o  In reviewing HUD's management of the HOPE VI program, we found
           that the department's guidance on the role of field offices was
           unclear, and, as a result, some field offices did not seem to
           understand their role in HOPE VI oversight.3 For example, some
           officials stated that they had not performed annual reviews of
           HOPE VI projects because they did not think they had the authority
           to monitor grants. Based upon these findings, we recommended that
           the Secretary of HUD clarify the role of HUD field offices in HOPE
           VI oversight and ensure that the offices conduct required annual
           reviews of HOPE VI grants. HUD agreed with this recommendation and
           published new guidance in March 2004 that clarified the role of
           the HUD field offices and changed the annual review requirements.

           HUD is responsible for overseeing PHAs' overall performance and
           for helping agencies improve their performance (see fig. 1). In
           1997, as a part of its 2020 Management Reform Plan, HUD instituted
           a new approach for evaluating PHAs' performance. The approach
           includes "scoring" each of several categories of performance,
           assigning each housing agency to a risk category, designating
           agencies as "troubled" if their scores are substandard and, in
           some cases, appointing receivers to actively manage the agencies.
           Also as a part of its oversight, HUD identifies housing agencies
           that need technical assistance. HUD's technical assistance
           involves activities such as training housing agency staff on how
           to use HUD systems or comply with reporting requirements.

           Figure 1: HUD's Oversight Structure for the Public Housing Program

           HUD uses the Public Housing Assessment System (PHAS) to evaluate
           public housing agencies' performance, while its Public and Indian
           Housing Information Center (PIC) risk assessment uses the PHAS
           score and information about funding and compliance issues to
           classify housing authorities as high, moderate, or low risk. PHAS
           is designed to evaluate housing agencies' overall performance in
           managing rental units, including the physical condition of units,
           soundness of agencies' financial operations, the effectiveness of
           their management operations, and the level of resident
           satisfaction with the services and living conditions. HUD designed
           the PIC system to facilitate a Web-based exchange of data between
           PHAs and local HUD offices. PIC contains a detailed inventory of
           public housing units and information about them, including the
           number of developments and units, age of the development, and the
           extent to which apartment units are accessible for persons with
           disabilities. The system also tracks tenant (household)
           information, such as age, disability status, and income.

           Our past work has identified opportunities for HUD to improve its
           oversight of housing agencies and it provision of technical
           assistance. For example:

           o  In 2002, we reported that the results of the PHAS and PIC
           systems were inconsistent.4 Specifically, in comparing information
           in the two systems, we found that 12 of the agencies that
           HUD-using PHAS scores-had determined were "troubled" were
           classified in the PIC system as "low" risk. Accordingly, we
           recommended that HUD classify all troubled housing authorities as
           high risk to better ensure that they receive sufficient
           monitoring. HUD agreed with our recommendation and incorporated it
           into its risk-assessment system.

           o  In preparing a 2002 report on HUD's human capital management,
           directors of several HUD field offices told us that they lacked
           the staff to provide the level of oversight and technical
           assistance that the housing authorities need.5 In light of this
           and other findings, we recommended that the Secretary of HUD
           develop a comprehensive strategic workforce plan. HUD subsequently
           hired a contractor to develop a Strategic Workforce Plan, which it
           completed in 2004. The plan includes analysis of current and
           future demand for staff and an analysis of the skills and
           competencies needed to accomplish tasks.

           o  In our October 2003 report, we noted that small agencies are
           more likely to require assistance with the day-to-day management
           of HUD programs and that HUD does not maintain centralized,
           detailed information on the types of assistance PHAs require or
           request from them.6 HUD reported that it was developing a system
           that would allow it to collect such information in the future.
           o  In 2005, we reported on HUD's efforts to assess PHAs'
           compliance with its policies for determining rent subsidies.7 We
           found that HUD had undertaken special reviews that, while useful,
           had suffered from a lack of clear policies and procedures and that
           the training and guidance HUD provided to PHAs on its policies for
           determining rent subsidies were not consistently adequate or
           timely. We recommended that the HUD Secretary (1) make regular
           monitoring of PHAs' compliance with HUD's policies for determining
           rent subsidies a permanent part of HUD's oversight activities and
           (2) collect complete and consistent information from these
           monitoring efforts and use it to help focus corrective actions
           where needed. HUD concurred with the recommendations but has not
           yet fully implemented them.

           HUD can take enforcement actions against PHAs that it identifies,
           through PHAS, as being "troubled." For such agencies, HUD assigns
           a recovery team and develops a plan to remedy the problems.
           Initially, HUD may offer technical assistance and training, but it
           may also sanction an authority; for example, by withholding
           funding. Ultimately, HUD may place a PHA under an administrative
           receivership, in which a receiver replaces the top management of
           the agency. Additionally, some PHAs may have receivers appointed
           by judges (these are known as judicial receivers). In February
           2003, we reported that under administrative or judicial receivers,
           nearly all of the 15 agencies under receivership showed
           improvement during their years of receivership, according to
           changes in HUD's assessed scores and/or other evidence.8 The four
           PHAs under judicial receiverships generally had continued to
           demonstrate strong performance. While PHAs under administrative
           receiverships had also made improvements, some continued to
           demonstrate a significant problem with housing units being in very
           poor physical condition.

           Finally, HUD's headquarters and field offices are responsible for
           overseeing PHAs' use of HOPE VI grants. In 2003, we reported that
           HUD's oversight of HOPE VI grants had been inconsistent due to
           staffing limitations, confusion about the role of field offices,
           and a lack of formal enforcement policies.9 Based upon these
           findings, we recommended that HUD clarify the role of its field
           offices in HOPE VI oversight; ensure that the offices conduct
           required annual reviews of HOPE VI grants; and develop a formal,
           written enforcement policy to hold PHAs accountable for the status
           of their grants. HUD agreed with these recommendations and
           clarified the role of HUD field offices, changed the annual review
           requirements, and developed an enforcement policy, which it shared
           with grantees in December 2003.

           Generally, PHAs are responsible for administering the public
           housing program in accordance with HUD regulations and
           requirements. Specifically, PHAs must provide decent, safe, and
           sanitary housing to their residents, manage their financial
           resources, meet HUD's standards for management operations, and
           address residents' satisfaction. Among other things, PHAs are
           responsible for ensuring that tenants are eligible for public
           housing and that tenant subsidies are calculated properly. PHAs
           are also required to develop both short- and long-term plans
           outlining their goals and strategies. PHAs that receive HOPE VI
           grants are subject to additional requirements associated with
           those grants; for example, the agencies must provide residents of
           HOPE VI sites with certain types of supportive services.

           During the 1990s, PHAs gained broader latitude from HUD and the
           Congress to establish their own policies in areas such as
           selecting tenants and setting rent levels. The Quality Housing and
           Work Responsibility Act of 1998 (QHWRA), which extensively amended
           the U.S. Housing Act of 1937, allowed PHAs to exercise still more
           discretion over rents and admissions.10 For example, QHWRA
           increased managerial flexibility by, among other things, making
           HUD-provided capital and operating funds more fungible, allowing
           housing authorities to sell some units to residents, and
           developing mixed-income housing units in order to bring more
           working and upwardly mobile families into public housing.

           QHWRA also established new requirements for housing agencies,
           including, for example, mandatory reporting requirements in the
           form of a 5-year plan and annual reporting plans. Five-year plans
           include long-range goals, while annual plans detail the agency's
           objectives and strategies for achieving these goals, as well as
           the agency's policies and procedures. For our May 2002 report, we
           examined PHAs' experiences in preparing the first of their
           required plans.11 We visited eight PHAs in the course of this
           work, and found that their views differed on the usefulness of the
           planning process and the level of resources required to prepare
           the plans, among other things. In June 2003, in response to
           concerns that some QHWRA reforms were placing an undue burden on
           small PHAs, HUD issued regulations allowing small PHAs to submit
           streamlined annual plans. We have not revisited this issue, and
           therefore cannot say how HUD or the PHAs view the usefulness of
           the plans today.

           QHWRA also required PHAs to implement a number of additional
           reforms that affect the Public Housing Program. For our October
           2003 report, we surveyed PHAs to find out their views on 18 key
           changes brought about by QHWRA and to see if views differed among
           large, medium, and small agencies.12 Some agencies in each size
           category viewed both the 5-year plan and the annual plan
           requirements as helpful to them in managing and operating their
           programs, although proportionately fewer small agencies had this
           view. We also found that agencies of all sizes reported spending
           more time on HUD-subsidized programs after QHWRA than before the
           reforms were enacted, in part because of increased reporting
           requirements, difficulties in submitting data to HUD, and lack of
           resources for hiring and training.

           PHAs that receive HOPE VI grants to revitalize public housing must
           obtain HUD's approval for their revitalization plans and must
           report project status information to HUD. The agencies are also
           required to offer community and supportive services-such as child
           care, transportation, job training, job placement and retention
           services, and parenting classes-to all original residents of
           public housing affected by HOPE VI projects, regardless of their
           intention to return to the revitalized site. In our November 2002
           report on HOPE VI financing, we found that PHAs that had been
           awarded grants in fiscal years 1993 to 2001 had budgeted a total
           of about $714 million for community and supportive services.13 Of
           this amount, about 59 percent were HOPE VI funds while 41 percent
           was leveraged from other resources. In our November 2003 report on
           HOPE VI impacts, we reported that limited HUD data on 165 HOPE VI
           grantees awarded through fiscal year 2001, and additional
           information, indicated that supportive services had achieved or
           contributed to positive outcomes.14

           While we have not reviewed the extent to which capital markets can
           be used with the public housing system, our reviews of the HOPE VI
           program have shown that some PHAs use HOPE VI revitalization
           grants to leverage additional funds from a variety of other public
           and private sources.

           HUD encourages PHAs to use their HOPE VI grants to leverage
           funding from other sources to increase the number of affordable
           housing units developed at HOPE VI sites. Public funding can come
           from other federal, state, or local sources. Private sources can
           include mortgage financing and financial or in-kind contributions
           from nonprofit organizations. In our November 2002 report on HOPE
           VI project financing, we found that financial leveraging of
           projects had shown a general increase over time, and that PHAs
           expected to leverage-for every dollar received in HOPE VI
           revitalization grants awarded through fiscal year 2001-an
           additional $1.85 in funds from other sources.15 Our report also
           noted that HUD had not reported annual leveraging and cost
           information about the HOPE VI program to the Congress, as it had
           been required to do since 1998. Consequently, we recommended that
           HUD provide annual reports on the program, including information
           on the amounts and sources of funding used at HOPE VI sites, to
           Congress. In response to this recommendation, in December 2002,
           HUD began issuing annual reports that include funding information.

           We also found in the November 2002 report that housing agencies
           with HOPE VI revitalization grants expected to leverage $295
           million in additional funds for community and supportive services.
           In our most recent report concerning public housing (December
           2005), we found that PHAs have used HOPE VI revitalization grants
           to leverage additional funds from a variety of sources, including
           private loans.16 In particular, we noted an example of a
           renovation and the colocation of supportive services that were
           made possible through coordination of efforts and use of mixed
           financing-the Allegheny County Housing Authority's revitalization
           of the Homestead Apartments outside of Pittsburgh, Pennsylvania.
           The housing agency built space on-site for two nonprofit
           elder-care service providers in addition to remodeling the
           buildings. Approximately 67 percent of the funding for the
           Homestead renovation was based on 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. While this represents a way for
           private capital to be used in conjunction with public housing
           projects, we noted in our November 2002 report that such funding
           does entail a federal cost (in the form of taxes foregone).17

           PHAs may utilize community service organizations to provide
           supportive services to public housing residents. Our recent work
           has focused on the services that PHAs can provide to elderly and
           non-elderly persons with disabilities.

           In a February 2005 report on housing programs that offer
           assistance for the elderly, we identified programs that public
           housing agencies can use to assist elderly public housing
           residents.18 For example, through the Resident Opportunities and
           Self Sufficiency (ROSS) grant program, HUD awards grants to PHAs
           for the purpose of linking residents with supportive services.
           Also, HUD's Service Coordinator Program provides funding for PHA
           managers of public housing designated for the elderly or persons
           with disabilities to hire coordinators to assist residents in
           obtaining supportive services from community agencies; and its
           Congregate Housing Services Program provides grants for the
           delivery of meals and nonmedical supportive services to residents
           of public and multifamily housing who are elderly or have
           disabilities.

           For our December 2005 report on public housing for the elderly and
           persons with disabilities, we surveyed the directors of 46 PHAs
           that manage public housing developments that we identified as both
           severely distressed and primarily occupied by the elderly and
           persons with disabilities.19 This work identified examples of
           partnerships between PHAs and local organizations such as
           community-based nonprofits and churches to provide supportive
           services for the elderly and non-elderly persons with
           disabilities. In some cases, the local agencies paid for the
           services, while in others the housing agencies used federal
           grants. For example:

           o  A building manager for one development that we visited said the
           development partnered with a nearby church, which provided a van
           to take residents shopping once a week. Local churches also
           provided food assistance to elderly residents and residents with
           disabilities who were not able to leave their apartments.
           o  At another housing development, a community-based organization
           provided lunches on a daily basis to residents and assorted
           grocery items such as bread, fruit, and cereal on a weekly basis.
           o  The aforementioned Homestead Apartments-a high-rise, primarily
           elderly occupied public housing development-was revitalized to
           provide enhanced supportive services to elderly residents, in
           particular frail elderly residents. To do so, the housing agency
           partnered with several non-HUD entities to improve services for
           the elderly and colocate an assisted living type of facility at
           the development. To help the most frail elderly residents, the
           housing agency partnered with a nonprofit organization, which
           offers complete nursing services, meals, and physical therapy to
           Homestead residents who are enrolled in the program. For most
           participants, these comprehensive services permitted them to
           continue living at home.
           o  In a partnership in Seattle, Washington, the housing agency
           partnered with a community-based organization to provide an
           on-site community center for the elderly, where residents had
           access to meals, social activities, and assistance with filling
           prescriptions. Residents at this development also had access to an
           on-site health clinic.

           In summary, Mr. Chairman, over the past few years we have
           identified several ways for HUD to improve its administration of
           the public housing program. Our work has also identified
           challenges faced by the local public housing agencies that play
           such an essential program delivery role, not only those associated
           with implementing the reforms provided under QHWRA but also such
           day-to-day matters as correctly determining tenants' incomes and
           rents. We look forward to working with the Subcommittee as it
           considers the future of the public housing program.

           Mr. Chairman, this concludes my prepared statement. I would be
           happy to answer any questions at this time.

           For further information on this testimony, please contact David G.
           Wood at (202) 512-8678. Individuals making key contributions to
           this testimony included Isidro Gomez, Lisa Moore, David Pittman,
           Paul Schmidt, and Julie Trinder.

           Public Housing: Distressed Conditions in Developments for the
           Elderly and Persons with Disabilities and Strategies Used for
           Improvement. GAO-06-163 . Washington, D.C.: December 9, 2005.

           Project-Based Rental Assistance: HUD Should Streamline Its
           Processes to Ensure Timely Housing Assistance Payments. GAO-06-57
           . Washington, D.C.: November 15, 2005.

           HUD Rental Assistance: Progress and Challenges in Measuring and
           Reducing Improper Rent Subsidies. GAO-05-224 . Washington, D.C.:
           February 18, 2005.

           Elderly Housing: Federal Housing Programs That Offer Assistance
           for the Elderly. GAO-05-174 . Washington, D.C.: February 14, 2005.

           Public Housing: HOPE VI Resident Issues and Changes in
           Neighborhoods Surrounding Grant Sites. GAO-04-109 . Washington,
           D.C.: November 21, 2003.

           Public Housing: Small and Larger Agencies Have Similar Views on
           Many Recent Housing Reforms. GAO-04-19 . Washington, D.C.: October
           30, 2003.

           Public Housing: HUD's Oversight of HOPE VI Sites Needs to Be More
           Consistent. GAO-03-555 . Washington, D.C.: May 30, 2003.

           Public Housing: Information on Receiverships at Public Housing
           Authorities. GAO-03-363 . Washington, D.C.: February 14, 2003.

           Major Management Challenges and Program Risks: Department of
           Housing and Urban Development. GAO-03-103 . Washington, D.C.:
           January 1, 2003.

           Public Housing: HOPE VI Leveraging Has Increased, but HUD Has Not
           Met Annual Reporting Requirement. GAO-03-91 . Washington, D.C.:
           November 15, 2002.

           HUD Human Capital Management: Comprehensive Strategic Workforce
           Planning Needed. GAO-02-839 . Washington, D.C.: July 24, 2002.

           Public Housing: HUD and Public Housing Agencies' Experiences with
           Fiscal Year 2000 Plan Requirements. GAO-02-572 . Washington, D.C.:
           May 31, 2002.

           Public Housing: New Assessment System Holds Potential for
           Evaluating Performance. GAO-02-282 . Washington, D.C.: March 15,
           2002.

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                                   Background

          HUD Provides Funding, Guidance, and Oversight for Local PHAs

Funding and Guidance

Millions of dollars
                             Fiscal year                      
                    2002   2003   2004   2005  2006a   Total  
Operating Fund $3,495 $3,577 $3,579 $2,438 $3,564 $16,653  
Capital Fund    2,843  2,712  2,696  2,579  2,439  13,269  
Hope VI           574    570    149    143     99   1,535  
Total          $6,912 $6,859 $6,424 $5,160 $6,102 $31,457  

1GAO, Public Housing: HUD and Public Housing Agencies' Experiences with
Fiscal Year 2000 Plan Requirements, GAO-02-572 (Washington, D.C.: May 31,
2002).

2GAO, Public Housing: Small and Larger Agencies Have Similar Views on Many
Recent Housing Reforms, GAO-04-19 (Washington, D.C.: Oct. 30, 2003).

3GAO, Public Housing: HUD's Oversight of HOPE VI Sites Needs to Be More
Consistent, GAO-03-555 (Washington, D.C.: May 30, 2003).

                       Oversight and Technical Assistance

4GAO, Public Housing: New Assessment System Holds Potential for Evaluating
Performance, GAO-02-282 (Washington, D.C.: Mar. 15, 2002).

5GAO, HUD Human Capital Management: Comprehensive Strategic Workforce
Planning Needed. GAO-02-839 (Washington, D.C.: July 24, 2002).

6 GAO-04-19 .

7GAO, HUD Rental Assistance: Progress and Challenges in Measuring and
Reducing Improper Rent Subsidies. GAO-05-224 (Washington, D.C.: Feb. 18,
2005).

8GAO, Public Housing: Information on Receiverships at Public Housing
Authorities. GAO-03-363 (Washington, D.C.: Feb. 14, 2003).

    PHAs Are Responsible for Managing Public Housing in Accordance with HUD
                          Regulations and Requirements

9 GAO-03-555 .

10Some of QHWRA's provisions went into effect when QHWRA was enacted on
October 21, 1998, while other provisions took effect later.

11 GAO-02-572 .

12 GAO-04-19.

           Private Capital Has Been Involved in Some HOPE VI Projects

13GAO, Public Housing: HOPE VI Leveraging Has Increased, but HUD Has Not
Met Annual Reporting Requirement, GAO-03-91 (Washington, D.C.: Nov. 15,
2002).

14GAO, Public Housing: HOPE VI Resident Issues and Changes in
Neighborhoods Surrounding Grant Sites, GAO-04-109 , (Washington, D.C.:
Nov. 21, 2003).

15 GAO-03-91 .

Community Services Organizations May Provide Supportive Services to Public
                               Housing Residents

16GAO, Public Housing: Distressed Conditions in Developments for the
Elderly and Persons with Disabilities and Strategies Used for Improvement,
GAO-06-163 (Washington, D.C.: Dec. 9, 2005).

17 GAO-03-91 .

18GAO, Elderly Housing: Federal Housing Programs That Offer Assistance for
the Elderly, GAO-05-174 (Washington, D.C.: Feb. 14, 2005).

19 GAO-06-163 .

                          Contacts and Acknowledgments

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Highlights of GAO-06-419T , a testimony to the Subcommittee on Federalism
and the Census, Committee on Government Reform, House of Representatives

February 15, 2006

PUBLIC HOUSING

Information on the Roles of HUD, Public Housing Agencies, Capital Markets,
and Service Organizations

Under the Public Housing Program, the Department of Housing and Urban
Development (HUD) and local public housing agencies (PHA) provide housing
for low-income residents at rents they can afford. Today, over 3,000 PHAs
administer approximately 1.2 million public housing units throughout the
nation. First authorized in 1937, the program has undergone changes over
the decades. The Quality Housing and Work Responsibility Act of 1998
increased managerial flexibility but also established new requirements for
housing agencies. Some observers have questioned the program's ability to
provide quality, affordable housing to the nation's neediest families.

This testimony, which is based upon a number of reports that GAO has
issued related to public housing since 2002, discusses the roles of (1)
HUD (2) public housing agencies, (3) capital markets, and (4) community
services organizations in the public housing system.

Traditionally, HUD's role has been to provide PHAs with funding, guidance,
and oversight. HUD provides both capital and operating funding. In
addition, HUD has provided selected agencies with grants under the HOPE VI
program to demolish and revitalize severely distressed public housing and
provide community and supportive services. HUD provides guidance to PHAs
to supplement its regulations and explicitly convey required program
policies and procedures. Based on past work, GAO has made recommendations
to HUD to improve the clarity and timeliness of its guidance to PHAs and
to improve its oversight of the program.

PHAs are responsible for managing public housing in accordance with HUD
regulations and requirements. They are also required to develop and submit
plans detailing the agency's goals and strategies for reaching these
goals. Further, PHAs that receive HOPE VI grants are required to provide
residents with supportive services. GAO's work has identified challenges
that the agencies face in carrying out their responsibilities, including
difficulty with HUD's data systems and lack of resources for hiring and
training staff.

GAO has not reviewed the extent to which capital markets can play a role
in the public housing system, but its examination of the HOPE VI program
and other work has identified examples of leveraging federal funds with
funds from a variety of other public and private sources. HUD encourages
public housing agencies to use their HOPE VI grants to leverage funding
from other sources to increase the number of affordable housing units
developed at project sites. The examples GAO has found include private
funding for both capital projects and the provision of supportive
services.

PHAs may utilize community service organizations to assist public housing
residents. Work GAO has done on federal housing programs that benefit the
elderly, as well as recent work focused on public housing for the elderly
and residents with disabilities, identified examples of supportive
services being offered or provided to public housing residents. Such
services may be provided through HUD grants as well as through
partnerships between public housing agencies and community-based nonprofit
organizations.
*** End of document. ***