Public Housing: Information on the Financing, Oversight, and	 
Effects of the HOPE VI Program (20-JUN-07, GAO-07-1025T).	 
                                                                 
Since fiscal year 1992, the Department of Housing and Urban	 
Development (HUD) has awarded more than $6 billion in HOPE VI	 
program grants to public housing authorities to revitalize	 
severely distressed public housing and provide supportive	 
services to residents. HUD has encouraged housing authorities to 
use their HOPE VI grants to attract, or leverage, funding from	 
other sources, including other federal, state, local, and	 
private-sector sources. Projects funded with public and private  
funds are known as mixed-finance projects. This testimony is	 
based primarily on three reports that GAO issued between November
2002 and November 2003, focusing on (1) the financing of HOPE VI 
projects, including the amounts of funds leveraged from non-HOPE 
VI sources; (2) HUD's oversight and administration of the	 
program; and (3) the program's effects on public housing	 
residents and neighborhoods surrounding HOPE VI sites. As	 
requested, the statement summarizes the key findings from these  
reports, the recommendations GAO made to HUD for improving HOPE  
VI program management, and HUD's actions in response to the	 
recommendations.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1025T					        
    ACCNO:   A71050						        
  TITLE:     Public Housing: Information on the Financing, Oversight, 
and Effects of the HOPE VI Program				 
     DATE:   06/20/2007 
  SUBJECT:   Accountability					 
	     Community development				 
	     Federal aid for housing				 
	     Federal funds					 
	     Federal grants					 
	     Funds management					 
	     Grant administration				 
	     Grant monitoring					 
	     Housing programs					 
	     Program evaluation 				 
	     Program management 				 
	     Public housing					 
	     Reporting requirements				 
	     Executive agency oversight 			 
	     HUD HOPE VI Program				 

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GAO-07-1025T

   

     * [1]Background
     * [2]Grantees Had Projected A General Increase in Leveraged Funds
     * [3]HUD's Oversight of Projects and Enforcement of Program Requi
     * [4]About Half of Public Housing Residents Were Expected to Retu

          * [5]Most Original Residents Were Relocated to Other Public Housi
          * [6]Among 1996 Grant Sites, Resident Involvement in the HOPE VI
          * [7]1996 HOPE VI Communities Experienced Positive Changes

     * [8]Contacts and Acknowledgments

          * [9]Order by Mail or Phone

Testimony

Before the Subcommittee on Housing, Transportation, and Community
Development, Committee on Banking, Housing, and Urban Affairs, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery
Expected at 2:00 p.m. EDT
Wednesday, June 20, 2007

PUBLIC HOUSING

Information on the Financing, Oversight, and Effects of the HOPE VI
Program

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

GAO-07-1025T

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today as the Subcommittee
considers legislation to reauthorize the HOPE VI program. In 1992,
Congress established the Urban Revitalization Demonstration Program,
commonly known as HOPE VI, administered by the Department of Housing and
Urban Development (HUD). Under this program, HUD competitively awards
grants for revitalizing distressed public housing--through rehabilitation
or demolition and construction of new, mixed-income developments--and for
improving the lives of public housing residents through supportive
services such as child care and job training. By providing funds for a
combination of capital improvements and community and supportive services,
the program seeks not only to improve the living environment for public
housing residents, but also to help improve surrounding neighborhoods and
decrease the concentration of very low-income families.

Since fiscal year 1992, HUD has awarded more than $6 billion in HOPE VI
grants to public housing authorities. Grant agreements, which serve as
contracts between HUD and the grantees, specify the activities that the
housing authorities must complete and key deadlines they must meet. To
increase the number of affordable housing units developed at HOPE VI
sites, HUD has encouraged housing authorities to use their HOPE VI grants
to attract, or leverage, funding from other sources, including other
federal, state, local, and private-sector sources. Projects funded with a
combination of public and private funds are known as mixed-finance
projects. HUD also has encouraged housing authorities to leverage
additional funds for supportive services.

My testimony is based primarily on a series of three reports concerning
the program that we issued between November 2002 and November 2003.^1
These reports focused on (1) the financing of HOPE VI projects, including
the amounts of funds leveraged from non-HOPE VI sources, (2) HUD's
oversight and administration of the program, and (3) the program's effects
on public housing residents and neighborhoods surrounding HOPE VI sites.
As you requested, my statement summarizes the key findings from our work,
the recommendations we made to HUD for improving HOPE VI program
management, and HUD's actions in response to the recommendations.

^1The three reports are Public Housing: HOPE VI Leveraging Has Increased,
but HUD Has Not Met Annual Reporting Requirement, [10]GAO-03-91
(Washington, D.C.: Nov. 15, 2002); Public Housing: HUD's Oversight of HOPE
VI Sites Needs to Be More Consistent, [11]GAO-03-555 (Washington, D.C.:
May 30, 2003); and Public Housing: HOPE VI Resident Issues and Changes in
Neighborhoods Surrounding Grant Sites, [12]GAO-04-109 (Washington, D.C.:
Nov. 21, 2003).

In Brief:

           o In our November 2002 report, which examined the extent to which
           housing authorities had leveraged HOPE VI funds with other sources
           of financing, we found that for revitalization grants awarded
           since the program's inception through fiscal year 2001, housing
           authorities expected to leverage--for each HOPE VI dollar
           received--$1.85 in funds from other sources, and that the
           authorities projected generally increasing amounts of leveraged
           funds. However, HUD considered the level of leveraging to be
           somewhat higher, because it treated as "leveraged" other public
           housing funds that the housing authorities would have received
           even in the absence of their HOPE VI grants. Our analysis of
           mixed-finance projects HUD had approved through fiscal year 2001
           indicated that 79 percent of the budgeted funds came from federal
           sources. This was a higher proportion than HUD data indicated,
           because HUD did not treat funds that grantees received through
           low-income housing tax credits as federal funds--even though the
           credits represent forgone federal income and are therefore a cost
           to the federal government. Finally, our analysis also showed that
           although the majority of funds budgeted overall for supportive
           serves were HOPE VI funds, the amount of non-HOPE VI funds
           budgeted for supportive services had increased dramatically since
           the program's inception. We recommended that HUD provide the
           Congress with annual reports on the HOPE VI program, as it was
           required by statute to do, and to include in the reports the
           amounts and sources of funding used at HOPE VI sites. The first
           such report that HUD submitted to Congress was for fiscal year
           2002. Based on data reported in HUD's 2006 annual report, HOPE VI
           grantees have cumulatively leveraged, from the program's inception
           through the second quarter of fiscal year 2006, $1.28 for every
           HOPE VI grant dollar expended.
           o In our May 2003 report, which examined several issues concerning
           HUD's management of the program, we found that the department's
           oversight had been inconsistent for several reasons, including
           limited numbers of grant managers and field office staff, and
           confusion about the role of field offices; however, in response to
           our recommendations, HUD has taken steps designed to address these
           problems. We found a number of instances of limited oversight; for
           example, by the end of 2002, HUD field offices had not conducted
           any of the required annual reviews for 8 out of 20 grants awarded
           6 years earlier. According to field office managers, the reviews
           had not been performed either because they lacked staff or because
           the offices did not understand their role in HOPE VI oversight. We
           also found that the status of work at HOPE VI sites varied, with
           construction completed at less than 10 percent of the 165 sites
           that had received revitalization grants through fiscal year 2001;
           that many grantees had missed deadlines specified in their grant
           agreements; and that HUD lacked clear enforcement policies to deal
           with such grantees. We made several recommendations designed to
           improve HUD's management of the program. HUD concurred with these
           recommendations and has taken actions in response, including
           publishing guidance on the oversight responsibility of field
           offices and notifying grantees that they would be in default of
           their grant agreement should key deadlines not be met. Because we
           have not examined HUD's oversight of the program since the 2003
           report, we do not know the extent to which HUD's actions have
           corrected the problems we identified.
           o In our November 2003 report, which focused on resident issues
           and changes in the neighborhoods surrounding HOPE VI sites, we
           found that public housing residents at HOPE VI sites had been
           affected in varying ways by the program, and that the
           neighborhoods surrounding the HOPE VI sites we examined had
           generally experienced improvements in indicators such as
           education, income, and housing, although we could not determine
           the extent to which HOPE VI contributed to the changes.^2 Most of
           the almost 49,000 residents that had been relocated as of June 30,
           2003, had moved to other public housing or subsidized housing, and
           that small percentages had been evicted, moved without giving
           notice, or vacated for other reasons. At the time of our study,
           the grantees expected that about half of the original residents
           would return to the revitalized sites. The grantees had involved
           the public housing residents of HOPE VI sites in project plans to
           varying degrees. They had also provided a variety of community and
           supportive services to residents, and limited HUD data and
           information obtained during our site visits suggested that these
           had yielded at least some positive outcomes; for example, 31 of 49
           participants in a Housing Authority of Pittsburgh health worker
           training program had obtained employment. Finally, according to
           our analysis of census and other data, the neighborhoods in which
           20 HOPE VI sites (1996 grantees) are located had experienced
           improvements in a number of indicators used by researchers to
           measure neighborhood change, such as educational attainment
           levels, average household income, and percentage of people in
           poverty. However, for a number of reasons, we could not determine
           the extent to which the HOPE VI program was responsible for the
           changes.
			  
^2In examining neighborhood effects, we included only the projects that
received grants in 1996. These were the first awarded after HUD allowed
revitalization to be funded with a combination of public and private
funds, which has become the HOPE VI model; further, because program
effects can occur over time, focusing on the earlier projects may have
increased the chances of detecting any such effects.

           Background

           In 1992 the National Commission on Severely Distressed Public
           Housing (the Commission) 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 public housing
           sites themselves. In response to the Commission's report, Congress
           established the Urban Revitalization Demonstration Program, more
           commonly known as HOPE VI, at HUD. The program awards grants to
           public housing authorities (PHA). The grants can fund, among other
           things, the demolition of distressed public housing, capital costs
           of major rehabilitation, new construction, and other physical
           improvements, and community and supportive service programs for
           residents, including those relocated as a result of revitalization
           efforts. Beginning in 1996 with the adoption of the Mixed-Finance
           Rule, PHAs were allowed to use public housing funds designated for
           capital improvements, including HOPE VI funds, to leverage other
           public and private investment to develop public housing units.
           Public funding can come from federal, state, and local sources.
           For example, HUD itself provides capital funding to housing
           agencies to help cover the costs of major repair and modernization
           of units. Private sources can include mortgage financing and
           financial or in-kind contributions from nonprofit organizations.

           HUD's requirements for HOPE VI revitalization grants are laid out
           in each fiscal year's notice of funding availability (NOFA) and
           grant agreement. NOFAs announce the availability of funds and
           contain application requirements, threshold requirements, rating
           factors, and the application selection process. 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. NOFAs and grant
           agreements also contain guidance on resident involvement in the
           HOPE VI process. HUD encourages grantees to communicate, consult,
           and collaborate with affected residents and the broader community,
           but allows grantees the final decision-making authority. Grant
           applications are screened to determine whether they meet the
           eligibility and threshold requirements in the NOFA. A 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) recommends the most highly
           rated applications for selection, subject to the amount available
           for funding.

           HUD's Office of Public Housing Investments, housed in 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.^3 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, 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. Beginning in fiscal year 1999, HUD began
           to encourage HOPE VI revitalization grant applicants to form
           partnerships with local universities to evaluate the impact of
           their proposed HOPE VI revitalization plans.^4

           In 2003, Congress reauthorized the HOPE VI program and required us
           to report on the extent to which public housing for the elderly
           and non-elderly persons with disabilities was severely distressed.
           We subsequently reported that available data on the physical and
           social conditions of public housing are insufficient to precisely
           determine the extent to which developments occupied primarily by
           elderly persons and non-elderly persons with disabilities are
           severely distressed.^5 Using HUD's data on public housing
           developments--buildings or groups of buildings---and their
           tenants, we identified 3,537 developments primarily occupied by
           elderly residents and non-elderly persons with disabilities. Data
           from HUD and other sources indicated that 76 (2 percent) of these
           3,537 developments were potentially severely distressed.

^3The revitalization plan includes 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.

^4 [19]GAO-04-109 .

^5Public Housing: Distressed Conditions in Developments for the Elderly
and Persons with Disabilities and Strategies Used for Improvement,
[20]GAO-06-163 (Washington, D.C.: December 9, 2005)	

           Grantees Had Projected A General Increase in Leveraged Funds,
			  Primarily From Federal Sources

           According to our analysis of HUD data for our November 2002
           report, housing authorities expected to leverage an additional
           $1.85 in funds from other sources for every dollar received in
           HOPE VI revitalization grants awarded since the program's
           inception through fiscal year 2001.^6 However, HUD considered the
           amount of leveraging to be slightly higher because it treated as
           "leveraged" both (1) HOPE VI grant funds competitively awarded for
           the demolition of public housing units and (2) other public
           housing capital funds that the housing authorities would receive
           even in the absence of the revitalization grants. Even when public
           housing funds were excluded from leveraged funds, our analysis of
           HUD data showed that projected leveraging had increased; for
           example, 1993 grantees expected to leverage an additional $0.58
           for every HOPE VI grant dollar (excluding public housing funds),
           while 2001 grantees expected to leverage an additional $2.63 from
           other sources (excluding public housing funds). But, our analysis
           of HUD data through fiscal year 2001 also indicated that 79
           percent of funds that PHAs had budgeted came from federal sources,
           when low-income housing tax credit funding was included. Finally,
           our analysis showed that although the majority of funds budgeted
           overall for supportive services were HOPE VI funds, the amount of
           non-HOPE VI funds budgeted for supportive services increased
           dramatically since the program's inception. Specifically, while 22
           percent of the total funds that fiscal year 1997 grantees budgeted
           for supportive services were leveraged funds, 59 percent of the
           total that fiscal year 2001 grantees budgeted were leveraged
           funds.

           Although HUD had been required to report leveraging and cost
           information to the Congress annually since 1998, it had not done
           so at the time of our 2002 report. As required by law, this annual
           report is to include the cost of public housing units revitalized
           under the program and the amount and type of financial assistance
           provided under and in conjunction with the program. We recommended
           that the Secretary of Housing and Urban Development provide these
           annual reports to Congress and include in these annual reports,
           among other things, information on the amounts and sources of
           funding used at HOPE VI sites, including equity raised from
           low-income housing tax credits, and the total cost of developing
           public housing units at HOPE VI sites, including the costs of
           items subject to HUD's development cost limits and those not
           subject.^7
			  
^6 [21]GAO-03-91 . To determine the extent to which grantees had leveraged
federal and nonfederal funds, we analyzed data from HUD's HOPE VI
reporting system on grants awarded. This data primarily consisted of
budgeted or projected funds.

^7Pursuant to the Quality Housing and Work Responsibility Act of 1998,
HUD's total development cost policy limits the amount of public housing
funds--including HOPE VI funds--that housing authorities may spend to
construct a public housing unit. This per-unit limit does not apply to
funds leveraged from other sources.

           In response to this recommendation, HUD issued annual reports to
           Congress for fiscal years 2002 through 2006 that include
           information on the amounts and sources of funding used at HOPE VI
           sites. In each of these reports, HUD included the amount of funds
           leveraged from low-income housing tax credits in its data on
           non-federal funds.^8 Based on data reported in the 2006 annual
           report, since the program's inception HOPE VI grantees have
           cumulatively leveraged $1.28 per HOPE VI grant dollar expended.^9
           Currently, we have work underway examining, among other things,
           how and the extent to which leveraging occurs in several federal
           programs, including the HOPE VI program.
			  
			  HUD's Oversight of Projects and Enforcement of Program
			  Requirements Had Been Inconsistent

           Our May 2003 report found that a variety of factors diminished
           HUD's ability to oversee HOPE VI grants.^10 In particular, the
           limited numbers of grant managers, a shortage of field office
           staff, and confusion about the role of field offices had
           diminished the agency's ability to oversee HOPE VI grants. Our
           site visits showed that HUD field staff was not systematically
           performing required annual reviews. For example, for
           revitalization grants awarded in 1996, some never received an
           annual review and no grant had had an annual review performed each
           year since the grant award. From our interviews with field office
           managers, we determined that there were 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.
           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.
			  
^8In 2002 HUD reported the amount of funds budgeted for grants. For the
annual reports covering fiscal years 2003 through 2006, HUD reported the
amounts of funds expended for grants.

^9U.S. Department of Housing and Urban Development, 2006 Annual Report to
Congress on HOPE VI, (Washington, D.C.: January 2007). Data based on funds
expended as of the second quarter of fiscal year 2006. Total HOPE VI grant
dollars expended include revitalization and demolition grants.

^10 [22]GAO-03-555 .

           As a result of our findings, we recommended that HUD clarify the
           role of HUD field offices in HOPE VI oversight and ensure that the
           offices conducted required annual reviews. In response to this
           recommendation, HUD published new guidance in March 2004 that
           clarified the role of HUD field offices in HOPE VI oversight and
           the annual review requirements. According to the guidance, HUD
           field office responsibilities include conducting an annual risk
           assessment, which should consider such factors as missed deadlines
           and adverse publicity and should be used to determine whether an
           on-site review should be conducted and which areas of the HOPE VI
           grant should be reviewed. The published guidance included a risk
           assessment form and sample monitoring review reports. While HUD's
           action was responsive to our recommendation, we have not examined
           the extent to which it has corrected the problems we identified in
           our 2003 report.

           Our 2003 report also noted that the status of work at HOPE VI
           sites varied, and that the majority of grantees had missed one or
           more of three major deadlines specified in 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. We made recommendations to HUD designed to ensure
           better compliance with grant agreements. More specifically:

           o Of the 165 sites that received revitalization grants through
           fiscal year 2001, 15 had completed construction at the time of our
           review.^11 Overall, at least some units had been constructed at 99
           of the 165 sites, and 47 percent of all HOPE VI funds had been
           expended. In general, we found that the more recently awarded
           grants were progressing more quickly than earlier grants. For
           example, fiscal year 1993 grantees had taken an average of 31
           months to start construction. In contrast, the fiscal year 2000
           grantees started construction an average of 10 months after their
           grant agreement was executed.^12 HUD cited several reasons that
           may explain this improvement, such as later grantees having more
           capacity than the earlier grantees, the applications submitted in
           later years being more fully developed to satisfy NOFA criteria,
           and HUD placing greater emphasis on reporting and accountability.

^11 [23]GAO-03-555 .

^12At the time of our analysis, 9 of the fiscal year 2000 grantees had not
started construction. As a result, we could not be sure that the fiscal
year 2000 grantees, as a whole, had moved faster than earlier grantees.
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.

           To further improve its selection of HOPE VI grantees, we
           recommended that HUD continue to include past performance as an
           eligibility requirement in each year's NOFA--that is, to take into
           account how housing authorities had performed under any previous
           HOPE VI grant agreements. In response to this recommendation, HUD
           stated in its fiscal year 2004 NOFA that a HOPE VI application
           would not be rated or ranked, and would be ineligible for funding,
           if the applicant had an existing HOPE VI revitalization grant and
           (1) development was delinquent due to actions or inactions that
           were not beyond the control of the grantee and (2) the grantee was
           not making substantial progress towards eliminating the
           delinquency. According to the fiscal year 2006 NOFA, the ratings
           of applicants that received HOPE VI grants between 1993 and 2003
           can be lowered for failure to achieve adequate progress.

           o For at least 70 percent of the grants awarded through fiscal
           year 1999, grantees had not submitted their revitalization plans
           or community and supportive services plans to HUD on time.^13
           Moreover, the large majority of grantees had also missed their
           construction deadlines; in the case of 9 grants, no units had been
           constructed as of the end of December 2002. HUD had taken some
           steps to encourage adherence to its deadlines; for example, HUD
           began requiring applicants to provide a certification stating that
           they had either procured a developer for the first phase of
           development, or that they would act as their own developer.

           However, HUD did not have an official enforcement policy to deal
           with grantees that missed deadlines. As a result, we recommended
           that HUD develop a formal, written enforcement policy to hold
           public housing authorities accountable for the status of their
           grants. HUD agreed with this recommendation, and in December, 2003
           notified several grantees that they were nearing deadlines and
           that failure to meet these deadlines could result in HUD placing
           the grant in default. According to the 2006 NOFA, HUD may withdraw
           funds from grantees that have not proceeded within a reasonable
           timeframe, as outlined in their program schedule.
			  
^13We 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 had not yet passed at the time of our study.

			  About Half of Public Housing Residents Were Expected to Return
			  to Revitalized Sites, while Evidence Suggested That Communities
			  Surrounding Some HOPE VI Sites Had Improved

           In our November 2003 report, we found that most residents at HOPE
           VI sites had been relocated to other public housing, or other
           subsidized housing, and that grantees expected that about half of
           the original residents would return to the revitalized sites.^14
           In our examination of sites that had received HOPE VI grants in
           1996, we found that the housing authorities had involved public
           housing residents in the planning and implementation process to
           varying degrees. Further, HUD data and information obtained during
           our site visits suggested that the supportive services provided
           public housing residents yielded at least some positive outcomes.
           Finally, according to our analysis of census and other data, the
           neighborhoods in which 1996 HOPE VI sites are located had
           generally experienced positive improvements in educational
           attainment levels, average household income, and percentage of
           people in poverty, although we were unable to determine the extent
           to which the HOPE VI program contributed to these changes.
			  
			  Most Original Residents Were Relocated to Other Public Housing,
			  and About Half Were Expected to Return to Revitalized HOPE VI Sites
			  
           According to HUD data, approximately 50 percent of the almost
           49,000 residents that had been relocated as of June 30, 2003, had
           been relocated to other public housing; about 31 percent had used
           vouchers to rent housing in the private market; approximately 6
           percent had been evicted; and about 14 percent had moved without
           giving notice or vacated for other reasons. However, because HUD
           did not require grantees to report the location of original
           residents until 2000, grantees had lost track of some original
           residents. Although grantees, overall, expected that 46 percent of
           all the residents that occupied the original sites would return to
           the revitalized sites, the percentage varied greatly from site to
           site. A variety of factors may have affected the expected return
           rates, such as the numbers and types of units to be built at the
           revitalized site and the criteria used to select the occupants of
           the new public housing units.
			  
^14 [24]GAO-04-109 .

           Among 1996 Grant Sites, Resident Involvement in the HOPE VI
			  Process Varied, While Supportive Services Yielded Some Positive
			  Outcomes

           We found that the extent to which the 1996 grantees involved
           residents in the HOPE VI process varied.^15 Although all of the
           1996 grantees held meetings to inform residents about
           revitalization plans and solicit their input, some of them took
           additional steps to involve residents in the HOPE VI process. For
           example, in Tucson, Arizona, the housing authority waited until
           the residents had voted their approval before submitting the
           revitalization plan for the Connie Chambers site to the city
           council. In other cases, litigation or the threat of litigation
           ensured resident involvement. For instance, under a settlement
           agreement, the Chicago Housing Authority's decisions regarding the
           revitalization of Henry Horner Homes were subject to the approval
           of the Horner Resident Committee.

           Overall, based on the information available at the time of our
           2003 report, grantees had provided a variety of community and
           supportive services, including case management and direct services
           such as computer and job training programs. Grantees had also used
           funds set aside for community and supportive services to construct
           facilities where services were provided by other entities.
           Information we collected during our visits to the 1996 sites, as
           well as limited HUD data on all 165 grants awarded through fiscal
           year 2001, indicated that HOPE VI community and supportive
           services had achieved or contributed to positive outcomes. For
           example, 31 of 49 participants in a Housing Authority of
           Pittsburgh health worker training program had obtained employment,
           while 114 former project residents in Louisville, Kentucky had
           enrolled in homeowner counseling and 34 had purchased a home.
			  
			  1996 HOPE VI Communities Experienced Positive Changes

           According to our analysis of census and other data, the
           neighborhoods in which 1996 HOPE VI sites are located generally
           have experienced improvements in a number of indicators used to
           measure neighborhood change, such as educational attainment
           levels, average housing values, and percentage of people in
           poverty. For example, our analysis showed that in 18 of 20 HOPE VI
           neighborhoods, the percentage of the population with a high school
           diploma increased, in 13 neighborhoods average housing values
           increased, and in 14 neighborhoods the poverty rate decreased
           between 1990 and 2000. For a number of reasons--such as relying on
           1990 and 2000 census data even though HOPE VI sites were at
           varying stages of completion--we could not determine the extent to
           which HOPE VI contributed to these changes. However, we found that
           several studies conducted by universities and private institutions
           also showed that the neighborhoods in which HOPE VI sites are
           located had experienced positive changes in income, employment,
           community investment, and crime indicators. For example, one study
           found that per capita income in eight selected HOPE VI
           neighborhoods increased an average of 71 percent, compared with
           14.5 percent for the cities in which these sites are located,
           between 1989 and 1999.
			  
^15 [25]GAO-04-109 .			  

           We also observed that the HOPE VI program also may influence
           changes in neighborhood indicators by demolishing older,
           distressed public housing alone. For example, in the 6 HOPE VI
           neighborhoods where the original public housing units were
           demolished, but no on-site units had been completed, measured
           educational attainment and income levels increased.

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

           For further information on this testimony, please contact David G.
           Wood at (202) 512-8678. Individuals making key contributions to
           this testimony included Alison Gerry, John McGrail, Lisa Moore,
           Paul Schmidt, and Mijo Vodopic.
			  
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250350

www.gao.gov/cgi-bin/getrpt? [26]GAO-07-1025T .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact David G. Wood at (202) 512-8678 or
[email protected].

Highlights of [27]GAO-07-1025T , a testimony to the Subcommittee on
Housing, Transportation, and Community Development, Committee on Banking,
Housing, and Urban Affairs, U.S. Senate

June 20, 2007

PUBLIC HOUSING

Information on Financing, Oversight, and Effects of the HOPE VI Program

Since fiscal year 1992, the Department of Housing and Urban Development
(HUD) has awarded more than $6 billion in HOPE VI program grants to public
housing authorities to revitalize severely distressed public housing and
provide supportive services to residents. HUD has encouraged housing
authorities to use their HOPE VI grants to attract, or leverage, funding
from other sources, including other federal, state, local, and
private-sector sources. Projects funded with public and private funds are
known as mixed-finance projects.

This testimony is based primarily on three reports that GAO issued between
November 2002 and November 2003, focusing on (1) the financing of HOPE VI
projects, including the amounts of funds leveraged from non-HOPE VI
sources; (2) HUD's oversight and administration of the program; and (3)
the program's effects on public housing residents and neighborhoods
surrounding HOPE VI sites. As requested, the statement summarizes the key
findings from these reports, the recommendations GAO made to HUD for
improving HOPE VI program management, and HUD's actions in response to the
recommendations.

In its November 2002 report, GAO found that housing authorities expected
to leverage--for each HOPE VI dollar received--$1.85 in funds from other
sources, and that the authorities projected generally increasing amounts
of leveraged funds. GAO also found that even with the general increase in
projected leveraging, 79 percent of the budgeted funds in mixed-finance
projects that HUD had approved through fiscal year 2001 came from federal
sources. GAO recommended that HUD provide the Congress with annual reports
on the HOPE VI program, as required by statute, and provide data on the
amounts and sources of funding used at HOPE VI sites. HUD has submitted
these reports to Congress since fiscal year 2002. According to the 2006
report, HOPE VI grantees have cumulatively leveraged, from the program's
inception through the second quarter of fiscal year 2006, $1.28 for every
HOPE VI grant dollar expended.

In its May 2003 report, GAO found that HUD's oversight of the HOPE VI
program had been inconsistent for several reasons, including a shortage of
grant managers and field office staff and confusion about the role of
field offices. A lack of enforcement policies also hampered oversight; for
example, HUD had no policy regarding when to declare a grantee in default
of the grant agreement or apply sanctions. GAO made several
recommendations designed to improve HUD's management of the program. HUD
concurred with these recommendations and has taken actions in response,
including publishing guidance outlining the oversight responsibility of
field offices and notifying grantees that they would be in default of
their grant agreement if they fail to meet key deadlines.

In its November 2003 report, GAO found that most of the almost 49,000
residents that had been relocated as of June 2003 had moved to other
public or subsidized housing; small percentages had been evicted, moved
without giving notice, or vacated for other reasons. Grantees expected
that about half of the original residents would return to the revitalized
sites. Limited HUD data and information obtained during GAO's site visits
suggested that the grantee-provided community and supportive services had
yielded some positive outcomes, such as job training and homeownership.
Finally, GAO's analysis of Census and other data showed that neighborhoods
surrounding 20 HOPE VI sites (awarded grants in 1996) experienced
improvements in several indicators used by researchers to measure
neighborhood change, such as educational attainment levels, average
household income, and percentage of people in poverty. However, for a
number of reasons, GAO could not determine the extent to which the HOPE VI
program was responsible for the changes.

References

Visible links
  10. http://www.gao.gov/cgi-bin/getrpt?GAO-03-91
  11. http://www.gao.gov/cgi-bin/getrpt?GAO-03-555
  12. http://www.gao.gov/cgi-bin/getrpt?GAO-04-109
  13. http://www.gao.gov/
  14. http://www.gao.gov/
  15. http://www.gao.gov/fraudnet/fraudnet.htm
  16. mailto:[email protected]
  17. mailto:[email protected]
  18. mailto:[email protected]
  19. http://www.gao.gov/cgi-bin/getrpt?GAO-04-109
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-06-163
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-03-91
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-03-555
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-03-555
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-04-109
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-04-109
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1025T
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1025T
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