Rental Housing: Information on Low-Income Veterans' Housing	 
Conditions and Participation in HUD's Programs (05-DEC-07,	 
GAO-08-324T).							 
                                                                 
Veterans returning from service in Iraq and Afghanistan could	 
increase demand for affordable rental housing. Households with	 
low incomes (80 percent or less of the area median income)	 
generally are eligible to receive rental assistance from the	 
Department of Housing and Urban Development's (HUD) housing	 
choice voucher, public housing, and project-based programs.	 
However, because rental assistance is not an entitlement, not all
who are eligible receive assistance. This testimony, based on a  
2007 report, discusses (1) the income status and demographic and 
housing characteristics of veteran renter households, (2) how	 
HUD's rental assistance programs treat veteran status (whether a 
person is a veteran or not) and whether they use a veteran's	 
preference, and (3) the extent to which HUD's rental assistance  
programs served veterans in fiscal year 2005. The 2007 report	 
discussed in this testimony made no recommendations.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-324T					        
    ACCNO:   A78609						        
  TITLE:     Rental Housing: Information on Low-Income Veterans'      
Housing Conditions and Participation in HUD's Programs		 
     DATE:   12/05/2007 
  SUBJECT:   Eligibility determinations 			 
	     Housing programs					 
	     Income statistics					 
	     Low income housing 				 
	     Program evaluation 				 
	     Program management 				 
	     Public housing					 
	     Rent policies					 
	     Rental housing					 
	     Veterans						 
	     Veterans benefits					 
	     Policies and procedures				 
	     Vouchers						 
	     HUD Tenant Rental Assistance			 
	     Certification System				 
                                                                 

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GAO-08-324T

   

     * [1]Background
     * [2]More Than Half of Low-Income Veteran Renter Households Had H

          * [3]More Than Half of Low-Income Veteran Renters Had Problems Af
          * [4]Small Percentage of Low-Income Veteran Renter Households Liv

     * [5]HUD Rental Assistance Programs Do Not Take Veteran Status in
     * [6]Most Contacted Housing Agencies and Owners of Project-Based
     * [7]At Least 250,000 Veteran Households Received HUD Rental Assi
     * [8]Contact and Acknowledgement
     * [9]GAO's Mission
     * [10]Obtaining Copies of GAO Reports and Testimony

          * [11]Order by Mail or Phone

     * [12]To Report Fraud, Waste, and Abuse in Federal Programs
     * [13]Congressional Relations
     * [14]Public Affairs
     * [15]PDF6-Ordering Information.pdf

          * [16]GAO's Mission
          * [17]Obtaining Copies of GAO Reports and Testimony

               * [18]Order by Mail or Phone

          * [19]To Report Fraud, Waste, and Abuse in Federal Programs
          * [20]Congressional Relations
          * [21]Public Affairs

Testimony

Before the Subcommittee on Housing and Community Opportunity, Committee on
Financial Services, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery
Expected at 10:00 a.m. EST
Wednesday, December 5, 2007

RENTAL HOUSING

Information on Low-Income Veterans' Housing Conditions and Participation
in HUD's Programs

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

GAO-08-324T

Madam Chairwoman and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss our work on the
housing conditions of veterans with low incomes and their participation in
HUD's rental assistance programs. As you know, disproportionately large
numbers of military veterans have appeared among the homeless population
in recent years, raising concerns about the incomes and housing conditions
of veterans who rent, rather than own, their homes. According to the
Department of Veterans Affairs (VA), on any given night at least 194,000
veterans were homeless in fiscal year 2005--about one-third of the adult
homeless population--and many veteran renters could be on the verge of
homelessness if they have low incomes or precarious living conditions in
overcrowded or substandard housing.1 The return of more veterans from
service in Iraq and Afghanistan--some with significant physical and
psychological challenges--could increase demand for affordable housing
with supportive services such as mental health and substance abuse
treatment.

The Department of Housing and Urban Development (HUD) is the primary
federal provider of rental housing assistance through its housing choice
voucher, public housing, and project-based programs. Vouchers assist
households in paying rent for units of their choice in the private market,
while public housing and project-based programs assist households by
subsidizing the rents of specifically designated units. These programs
generally serve low-income households--those with incomes that are 80
percent or less of their local area median incomes. However, because the
rental assistance programs are not entitlement programs--the extent of
assistance is limited by the amount of appropriated funds--not all renter
households that are eligible receive assistance. My testimony refers to
households that do not receive rental assistance as "unassisted."

My statement is based on our August 2007 report, Rental Housing:
Information on Low-Income Veterans' Housing Conditions and Participation
in HUD's Programs.2 Specifically, my statement discusses (1) the income
status and demographic and housing characteristics of veteran renter
households; (2) how HUD's rental assistance programs treat veteran status
(that is, whether a person is a veteran or not) and veteran-specific
benefits in determining eligibility and subsidy amounts; (3) the extent to
which public housing agencies and property owners--third parties who
administer rental assistance programs on HUD's behalf--establish veterans'
preferences in their administrative and tenant selection plans; and (4)
the extent to which HUD's rental assistance programs served veteran
households in fiscal year 2005.

1We use the Bureau of the Census's definition of a veteran: generally, a
person who is 18 years of age or older and has served on active duty in
the U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard in the past,
but is no longer on active duty. Persons who have served in the National
Guard or Military Reserves are classified as veterans only if they have
been called or ordered to active duty.

2 [22]GAO-07-1012 . This report was mandated by the conference report
accompanying the Fiscal Year 2006 Military Quality of Life and Veterans
Affairs Appropriations Act.

In preparing our recent report, we analyzed data from the Bureau of the
Census' (Census) 2005 American Community Survey (ACS) on the income status
and demographic and housing characteristics of veteran households. Using
income categories established by HUD for calendar year 2005, we estimated
the number of veteran households in the ACS with incomes that were low (80
percent or less of the area median income), very low (50 percent or less
of the area median income), and extremely low (30 percent or less of the
area median income).3 We also used information on veteran households in
ACS to describe certain demographic characteristics, and the cost and
quality of their housing.4 To determine how HUD's rental assistance
programs treat a household's veteran status (that is, whether the
household includes a veteran or not) in determining eligibility and
subsidy amounts, we reviewed HUD's eligibility policies and regulations on
rental assistance programs and interviewed officials from HUD and VA. To
determine whether public housing agencies and property owners
participating in HUD's programs have established a veterans' preference
for households, we interviewed officials from the 41 largest agencies that
administer the public housing program and/or the voucher program, and from
the 13 largest performance-based contract administrators that oversee
property management under project-based rental assistance programs.5
Information on preferences, however, is not statistically generalizable to
the other public housing agencies and property owners. Finally, to
determine the extent to which HUD's rental assistance programs served
veteran households in fiscal year 2005, we matched data from HUD on
program participants with data from VA on living veterans and used these
matched data to estimate the percentage of low-income veteran renter
households that received HUD assistance. For all of our research
objectives, we consulted with officials from various housing and veteran
groups. We conducted our work in Atlanta, Boston, Chicago, Los Angeles,
and Washington, D.C., from March 2006 through July 2007 in accordance with
generally accepted government auditing standards.

3Not included in the 2005 ACS survey universe are individuals who live in
group quarters--which include college dormitories, correctional
facilities, and certain types of nursing facilities and hospitals--or
homeless individuals.

4Unless otherwise noted, all reported numeric estimates derived from ACS
are subject to sampling errors of plus or minus 10 percent or less of the
value of those numeric estimates.

5We contacted or visited 41 different public housing agencies. Of these,
33 administered both the public housing and voucher programs, 7
administered the voucher program only, and 1 administered the public
housing program only. Nationwide, there are more than 4,000 public housing
agencies.

In brief, we found the following:

In 2005, an estimated 2.3 million veteran renter households, or about 53
percent of all veteran renter households nationwide, were low income
(their household incomes were 80 percent or less of their areas' median
household incomes), and more than half of these low-income households had
problems affording their rent. The number of low-income veteran renter
households varied considerably by state, from a high of 236,000 in
California (representing 10 percent of all low-income veteran renters
nationwide) to less than 6,000 in Wyoming. While the percentages of renter
households that were low-income varied by state, in no state did the
proportion fall below 41 percent. In terms of demographic characteristics,
we found the following:

           o More than one-third of low-income veteran renter households
           included a veteran who was elderly or had a disability.6

           o An estimated 1.3 million, or about 56 percent of low-income
           veteran renter households, had housing affordability
           problems--that is, their rental costs exceeded 30 percent of their
           household incomes. The extent of housing affordability problems
           varied significantly by state. For example, Nevada had the highest
           percentage of low-income veteran renters with affordability
           problems (about 70 percent), while North Dakota had the lowest
           percentage (about 37 percent).

           o Nationally, a small percentage (less than 3 percent) of
           low-income veteran renters lived in overcrowded or inadequate
           housing.

6In this testimony, we consider a veteran renter household to be elderly
if at least one veteran member was 62 years or older. A veteran renter
household with a disability contains at least one veteran member with a
disability as defined by Census.

Finally, in general, veteran renter households were less likely to be
low-income, have affordability problems, or live in overcrowded or
inadequate housing than were other (nonveteran) households.

HUD's major rental assistance programs are not required to take a
household's veteran status into account when determining eligibility and
calculating subsidy amounts, but eligible veterans can receive assistance.
HUD is not required to collect, and does not collect, any information that
identifies the veteran status of assisted households. When determining
income eligibility and subsidy amounts, HUD generally does not distinguish
between income sources that are specific to veterans, such as VA-provided
benefits, and other sources of income; rather, HUD takes into account the
type of income, such as whether it is recurring or not. Finally, although
HUD rental assistance programs generally do not target veterans, HUD
allocated about 1,800 vouchers in the early 1990s for placing formerly
homeless veterans with severe psychiatric or substance abuse disorders
into affordable rental housing, but usage of these vouchers has been
declining--as of the end of fiscal year 2006, about 1,000 vouchers
remained in use.

The majority of the 41 largest public housing agencies we contacted have
no veterans' preference for admission to their public housing or voucher
programs, and all of the 13 largest performance-based contract
administrators we contacted told us that owners of project-based
properties that they oversee generally do not have a veterans' preference.
Specifically, according to our interviews with 34 of the largest housing
agencies that administer public housing programs, 14 (about 41 percent)
offered a veterans' preference in fiscal year 2006, and 13 of the 40
largest agencies (about 33 percent) that administer the housing choice
voucher program offered a veterans' preference. Officials from all of the
13 largest contract administrators told us that owners of project-based
properties that they oversee generally do not employ a veterans'
preference when selecting tenants.

Low-income veteran households were less likely to receive HUD rental
assistance than other low-income households (that is, nonveteran
households). Specifically, of all low-income veteran households, an
estimated 11 percent received HUD rental assistance in fiscal year 2005,
whereas an estimated 19 percent of other low-income households received
assistance. Although the reasons for the difference are unclear, based on
our analyses and discussions with HUD officials, various factors could
influence the percentage of eligible veteran households that receive HUD
rental assistance--for example, different levels of need for affordable
housing among veteran and other households and public housing agencies'
and property owners' use of veterans' preference. In fiscal year 2005, at
least 250,000 low-income veteran households received rental assistance
under HUD's programs--representing about 6 percent of all households that
received such assistance. Compared with other (nonveteran) assisted
households, veteran assisted households were as likely to be elderly but
were more likely to have a disability.

Background

According to Census data, in 2005 an estimated 21.9 million households, or
20 percent of the 111.1 million households nationwide, were "veteran
households"--that is, they had at least one member who was a military
veteran. Most veteran households--about 80 percent--owned their own homes,
a significantly higher percentage than was the case for other (nonveteran)
households (about 64 percent). About 4.3 million veteran households rented
their homes. Census data also show that renter households were more likely
to be low-income than were owner-occupied households; in 2005, about 66
percent of renter households were low-income while 32 percent of
homeowners were low-income.

VA, through a variety of programs, provides federal assistance to veterans
who are homeless, and also provides homeownership assistance, but does not
provide rental assistance. One of the agency's largest programs for
homeless veterans is the Homeless Providers Grant and Per Diem program,
which provides funding to nonprofit and public agencies to help
temporarily shelter veterans. VA also administers eight other programs for
outreach and treatment of homeless veterans.7 In addition to its
homelessness programs, VA provides a variety of programs, services, and
benefits to veterans and their families.8

HUD provides rental housing assistance through three major
programs--housing choice voucher, public housing, and project-based. In
fiscal year 2005, these programs provided rental assistance to about 4.8
million households and paid about $28 billion in rental subsidies. These
three programs generally serve low-income households--that is, households
with incomes less than or equal to 80 percent of their local area median
incomes. Most of these programs have targets for households with extremely
low incomes--30 percent or less of their area median incomes. HUD-assisted
households generally pay 30 percent of their monthly income, after certain
adjustments, toward their unit's rent. 9 HUD pays the difference between
the household's contribution and the unit's rent (under the voucher and
project-based programs) and the difference between the public housing
agencies' operating costs and rental receipts for public housing.

7See GAO, Homeless Veterans Programs: Improved Communications and
Follow-up Could Further Enhance the Grant and Per Diem Program,
[23]GAO-06-859 (Washington, D.C.: Sept. 11, 2006).

8U.S.C. Title 38, Part II General Benefits, and Part III Readjustment and
Related Benefits.

More Than Half of Low-Income Veteran Renter Households Had Housing Affordability
Problems

According to our analysis of ACS data, of the 4.3 million veteran
households that rented their homes, an estimated 2.3 million, or about 53
percent were low-income in 2005. As shown in table 1, the largest share of
these 2.3 million households was concentrated in the highest low-income
category--that is, 50.1 to 80 percent of the area median income--with
somewhat smaller shares in the two lower categories. The table also shows
that other renter households (that is, households without a veteran
member) were even more likely to be low-income than veteran renter
households.

Table 1: Veteran and Other Renter Households, by Income Category, 2005

Income category (as a percentage of the area median income): All low 
income (80% or less); 
Veteran household: Number: 2,282,720; 
Veteran household: Percentage: 53%; 
Other household: Number: 22,012,930; 
Other household: Percentage: 68%. 

Income category (as a percentage of the area median income): 50.1 to 
80%; 
Veteran household: Number: 966,865; 
Veteran household: Percentage: 22; 
Other household: Number: 6,774,065; 
Other household: Percentage: 21. 

Income category (as a percentage of the area median income): 30.1 to 
50%; 
Veteran household: Number: 674,085; 
Veteran household: Percentage: 16; 
Other household: Number: 6,101,435; 
Other household: Percentage: 19. 

Income category (as a percentage of the area median income): 30% or 
less; 
Veteran household: Number: 641,770; 
Veteran household: Percentage: 15; 
Other household: Number: 9,137,430; 
Other household: Percentage: 28. 

Income category (as a percentage of the area median income): Not low 
income (greater than 80%); 
Veteran household: Number: 2,023,755; 
Veteran household: Percentage: 47; 
Other household: Number: 10,452,230; 
Other household: Percentage: 32. 

Income category (as a percentage of the area median income): Total renter households
Veteran household: Number:  4,306,475
Veteran household: Percentage: 100%
Other household: Number: 32,465,160
Other household: Percentage: 100%

Source: GAO analysis of sample survey data from 2005 ACS.

9A tenant's rent is based on a family's anticipated gross annual
income--that is, income from all sources received by the family head,
spouse, and each additional family member who is 18 years of age or older,
less applicable exclusions and deductions. There are 44 different types of
income exclusions and deductions.

The estimated numbers of low-income veteran renter households in 2005
varied greatly by state, from some 236,000 in California--the most of any
state--to less than 6,000 in each of 3 states--Delaware, Vermont, and
Wyoming. 10 The percentages of veteran renter households that were
low-income in 2005 also varied considerably by state, from about 65
percent in Michigan to about 41 percent in Virginia. Further details on
how these figures varied by state, including maps, can be found in
appendix I. In addition, a significant proportion of low-income veteran
renter households included a veteran who was elderly or had a disability.
Specifically, an estimated 816,000 (36 percent of these veteran
households) had at least one veteran who was elderly (that is, 62 years of
age or older); and 887,000 (39 percent) had at least one veteran member
with a disability.

More Than Half of Low-Income Veteran Renters Had Problems Affording Their Rents

According to our analysis of ACS data, an estimated 1.3 million low-income
veteran households, or about 56 percent of the approximate 2.3 million
such households, had rents that exceeded 30 percent of their household
income in 2005 (see table 2). These veteran renter households had what HUD
terms "moderate" or "severe" problems affording their rent.11
Specifically, about 31 percent of low-income veteran renter households had
moderate affordability problems, and about 26 percent had severe
affordability problems. The remainder either paid 30 percent or less of
their household income in rent, reported zero income, or did not pay cash
rent. In comparison, a higher proportion of other low-income renter
households had moderate or severe housing affordability problems.

10Estimates derived from the ACS, like all survey data, contain sampling
errors (that is, such estimates would be different if the survey had
selected another sample). Since each sample could have provided different
estimates, we express our confidence in the precision of this sample's
results as 90 percent confidence intervals. We express this type of error
as a margin of error, which is the difference between an estimate and its
upper or lower confidence interval, and we express the margin of error as
a percentage. The margins of errors were larger for Vermont, Delaware, and
Wyoming (exceeding plus or minus 20 percent) than those for the other
states because of the relatively small sample size used to derive the
estimates (see app. II in [24]GAO-07-1012 for margins of error for each
state and the District of Columbia).

11HUD classifies a housing affordability problem as "moderate" if housing
costs are between 30.1 percent and 50 percent of household income and
"severe" if housing costs are more than 50 percent.

Table 2: Housing Affordability for Low-Income Renter Households, 2005

Affordability category: Affordability problem; 
Veteran household: Number: 1,284,540; 
Veteran household: Percentage: 56%; 
Other household: Number: 13,855,530; 
Other household: Percentage: 63%. 

Affordability category: Affordability problem: Moderate; 
Veteran household: Number: 699,470; 
Veteran household: Percentage: 31; 
Other household: Number: 6,260,495; 
Other household: Percentage: 28. 

Affordability category: Affordability problem: Severe; 
Veteran household: Number: 585,070; 
Veteran household: Percentage: 26; 
Other household: Number: 7,595,035; 
Other household: Percentage: 35. 

Affordability category: No affordability problem; 
Veteran household: Number: 763,640; 
Veteran household: Percentage: 33; 
Other household: Number: 6,264,690; 
Other household: Percentage: 28. 

Affordability category: Zero income/no cash rent; 
Veteran household: Number: 234,535; 
Veteran household: Percentage: 10; 
Other household: Number: 1,892,710; 
Other household: Percentage: 9. 

Affordability category: Total
Veteran household: Number: 2,282,720
Veteran household: Percentage: 100%
Other household: Number: 22,012,930
Other household: Percentage: 100% 

Source: GAO analysis of sample survey data from 2005 ACS.

Note: Totals may not add due to rounding.

The extent of housing affordability problems among low-income veteran
renter households varied significantly by state in 2005 (see fig. 1). The
median percentage of low-income veteran renters with affordability
problems nationwide was 54 percent. California and Nevada had the highest
proportions of affordability problems among low-income veteran renter
households--about 68 and 70 percent, respectively. North Dakota and
Nebraska had the smallest--about 37 and 41 percent, respectively.

Figure 1: Percentage of Low-Income Veteran Renter Households with Housing
Affordability Problems, by State, 2005

Note: Three states and the District of Columbia had margins of error of
more than 10 percentage points.

Small Percentage of Low-Income Veteran Renter Households Lived in Overcrowded or
Inadequate Housing

A relatively small percentage of veteran households lived in overcrowded
or inadequate housing in 2005. Specifically, an estimated 73,000, or 3
percent, of low-income veteran renter households lived in overcrowded
housing--housing with more than one person per room--and less than 18,000,
or about 1 percent, lived in severely overcrowded housing--housing with
more than one and a half persons per room.12 In contrast, an estimated 1.5
million, or 7 percent, of other low-income renter households lived in
overcrowded housing, and about 423,000, or 2 percent, lived in severely
overcrowded housing.

Finally, ACS data indicate that a very small share of low-income veteran
renters lived in inadequate housing. ACS provides very limited information
about the quality of the housing unit; the survey classifies a unit as
inadequate if it lacks complete plumbing or kitchen facilities, or both.13
In 2005, an estimated 53,000, or 2 percent, of low-income veteran renter
households lived in inadequate housing. In comparison, an estimated
334,000, or 2 percent, of other households lived in inadequate housing.

HUD Rental Assistance Programs Do Not Take Veteran Status into Account When
Determining Eligibility or Subsidy Amounts

HUD's major rental assistance programs are not required to take a
household's veteran status into account when determining eligibility and
calculating subsidy amounts. (Consequently, HUD does not collect any
information that identifies the veteran status of assisted households.) As
with other households, veterans can benefit from HUD rental assistance
provided that they meet all of the programs' income and other eligibility
criteria. For example, assisted households must meet U.S. citizenship
requirements and, for some of the rental assistance programs, HUD's
criteria for an elderly household or a household with a disability.

When determining income eligibility and subsidy amounts, HUD generally
does not distinguish between income sources that are specific to veterans,
such as VA-provided benefits, and other types of income. HUD policies
define household income as the anticipated gross annual income of the
household, which includes income from all sources received by the family
head, spouse, and each additional family member who is 18 years of age or
older. Specifically, annual income includes, but is not limited to, wages
and salaries, periodic amounts from pensions or death benefits, and
unemployment and disability compensation.14 HUD policies identify 39
separate income sources and benefits that are excluded when determining
eligibility and subsidy amounts. These exclusions relate to income that is
nonrecurring or sporadic in nature, health care benefits, student
financial aid, and assistance from certain employment training and
economic self-sufficiency programs.15

12HUD's regulation defines housing overcrowding as a housing unit with
1.01 or more persons per room (see 24 C.F.R. 791.402) but does not provide
a definition for severe overcrowding. The measure of severe overcrowding
to which we refer in this report (1.51 or more persons per room) is
commonly used for statistical reporting purposes.

13According to ACS, a housing unit has complete plumbing if it has (1) hot
and cold piped water, (2) a flush toilet, and (3) a bathtub or shower and
complete kitchen facilities if it has (1) a sink with piped water, (2) a
stove or range, and (3) a refrigerator.

We found that, based on HUD's policies on income exclusions, most types of
income and benefits that veteran households receive from VA would be
excluded when determining eligibility for HUD's programs and subsidy
amounts. Many of the excluded benefits relate to payments that veteran
households receive under certain economic self-sufficiency programs or
nonrecurring payments such as insurance claims. Of the benefits included,
most are associated with recurring or regular sources of income, such as
disability compensation, pensions, and survivor death benefits.

Of the 39 exclusions, we found that two income exclusions specifically
applied to certain veteran households but, according to HUD, these
exclusions are rarely used. These income exclusions are (1) payments made
to Vietnam War-era veterans from the Agent Orange Settlement Fund and (2)
payments to children of Vietnam War-era veterans who suffer from spina
bifida. The two exclusions are identified in federal statutes that are
separate from those authorizing the three major rental assistance
programs.16

HUD does provide rental assistance vouchers specifically to veterans under
a small program called the Housing and Urban Development-Veterans Affairs
Supportive Housing program (HUD-VASH). Established in 1992, HUD-VASH is
jointly funded by HUD and VA and offers homeless veterans an opportunity
to obtain permanent housing, as well as ongoing case management and
supportive services. HUD allocated these special vouchers to selected
public housing agencies that had applied for funding, and VA was
responsible for identifying participants based on specific eligibility
criteria, including the veteran's need for treatment of a mental illness
or substance abuse disorder.17 Under the HUD-VASH initiative, HUD
allocated 1,753 vouchers from fiscal years 1992 through 1994. HUD funded
these vouchers for 5 years and, if a veteran left the program during this
period, the housing agency had to reissue the voucher to another eligible
veteran.18 According to VA officials, after the 5-year period ended,
housing agencies had the option of continuing to use their allocation of
vouchers for HUD-VASH, or could discontinue participation whenever a
veteran left the program (that is, the housing agency would not provide
the voucher to another eligible veteran upon turnover). VA stated that
after the 5-year period ended, many housing agencies decided not to
continue in HUD-VASH after assisted veterans left the program; instead,
housing agencies exercised the option of providing these vouchers to other
households under the housing choice voucher program.19 As a result, the
number of veterans that receive HUD-VASH vouchers has declined. Based on
information from VA, about 1,000 veterans were in the program as of the
end of fiscal year 2006, and absent any policy changes, this number is
likely to decline to 400 because housing agencies responsible for more
than 600 vouchers have decided not to continue providing these vouchers to
other veterans as existing participants leave the program.

1424 C.F.R. 5.609.

15In addition to these 39 income exclusions, program administrators must
also apply five income deductions to determine the household's adjusted
income--that is, the amount of income used to calculate the household's
rental contribution, which include standard amounts for each dependent and
for elderly family members and those with disabilities. See 24 C.F.R.
5.611.

16Pub. L. Nos. 101-201 and 104-204.

Congress statutorily authorized HUD-VASH as part of the Homeless Veterans
Comprehensive Assistance Act of 2001.20 Under the act, Congress also
authorized HUD to allocate 500 vouchers each fiscal year from 2003 through
2006--a total of 2,000 additional vouchers. In December 2006, Congress
extended this authorization through fiscal year 2011--allocating an
additional 2,500 vouchers or 500 each year. However, HUD has not
requested, and Congress has not appropriated, funds for any of the
vouchers authorized from fiscal years 2003 through 2007.21

17The veteran also must meet HUD's eligibility requirements for the
housing choice voucher program.

18HUD Notices of Funding Availability for the Section 8 Set-Aside for
Homeless Veterans with Severe Psychiatric or Substance Abuse Disorders,
Fiscal Years 1992, 1993, and 1994.

19According to the VA, veterans receiving HUD-VASH vouchers may leave the
program because, for example, they no longer need or qualify for
assistance.

20Pub. L. No. 107-95.

Most Contacted Housing Agencies and Owners of Project-Based Properties Did Not
Offer Veterans' Preference for Admission to HUD's Rental Assistance Programs

Currently, HUD's policies give public housing agencies and owners of
project-based properties the discretion to establish preferences for
certain groups when selecting households for housing assistance.
Preferences affect only the order of applicants on a waiting list for
assistance; they do not determine eligibility for housing assistance.
Before 1998, federal law required housing agencies and property owners to
offer a preference to eligible applicants to their subsidized housing
programs who (1) had been involuntarily displaced, (2) were living in
substandard housing, or (3) were paying more than half their income for
rent. Public housing agencies were required by law to allocate at least 50
percent of their public housing units and 90 percent of their housing
choice vouchers to applicants who met these criteria. Similarly,
project-based owners had to allocate 70 percent of their units to newly
admitted households that met these criteria. The Quality Housing and Work
Responsibility Act of 1998 (QHWRA) gave more flexibility to housing
agencies and project-based property owners to administer their programs,
in part by eliminating the mandated housing preferences.22 Although it
gave housing agencies and owners more flexibility, QHWRA required that
public housing agencies and owners target assistance to extremely
low-income households.23

Under QHWRA, housing agencies and owners of project-based properties may,
but are not required to, establish preferences to better direct resources
to those with the greatest housing needs in their areas. Public housing
agencies can select applicants on the basis of local preferences provided
that their process is consistent with their administrative plan.24 HUD
policy requires housing agencies to specify their preferences in their
administrative plans, and HUD reviews these preferences to ensure that
they conform to nondiscrimination and equal employment opportunity
requirements. Similarly, HUD policy allows owners of project-based
properties to establish preferences as long as the preferences are
specified in their written tenant selection plans.25 While HUD requires
housing agencies and property owners to disclose their preferences in
their administrative or tenant selection plans, HUD officials said the
department does not compile or systematically track this information
because public housing agencies and property owners are not required to
have preferences.

21Recently, the HUD fiscal year 2008 appropriations bill, H.R. 3074,
contains $75 million for the HUD-VASH program. The vouchers funded by the
appropriation are to remain available for homeless veterans upon turnover.
The House recently adopted the conference report accompanying H.R. 3074.

22The use of the federal preference requirement was temporarily suspended
by the continuing resolution enacted in January 1996 through the
appropriations act for fiscal year 1998.

23Specifically, QHWRA required that not less than 75 percent of new
program participants under the voucher program and not less than 40
percent under the public housing and project-based Section 8 programs be
extremely low income.

Most of the 41 public housing agencies we contacted used a preference
system for admission to their public housing and housing choice voucher
programs, but less than half offered a veterans' preference. As shown in
table 3, of the 34 largest housing agencies that administered the public
housing program, 29 established preferences for admission to the program
and 14 used a veterans' preference. Similarly, of the 40 housing agencies
that administered the housing choice voucher program, 34 used admission
preferences, and 13 employed a preference for veterans. According to
public housing agency officials, the most common preferences used for both
programs were for working families, individuals who were unable to work
because of age or disability, and individuals who had been involuntarily
displaced or were homeless. Of course, veterans could benefit from these
admission preferences if they met the criteria.

24A public housing agency's administrative plan is a comprehensive guide
to the agency's policies, programs, operations, and strategies for meeting
local housing needs and goals. There are two parts to the plan: (1) the
5-Year Plan, which each housing agency submits to HUD once every fifth
public housing agency's fiscal year and (2) the Annual Plan, which is
submitted to HUD every year.

25A tenant selection plan is a comprehensive guide that describes the
owners' tenant selection policies and procedures. These plans include
descriptions of the eligibility requirements and income limits for
admission.

Table 3: Number of Contacted Housing Agencies That Used a Preference
System in Their Public Housing and Housing Choice Voucher Programs

Public housing agency's use of preferences: Agencies with a preference 
system; 
Public housing: 29; 
Vouchers: 34. 

Public housing agency's use of preferences: With a veterans' 
preference; 
Public housing: 14; 
Vouchers: 13. 

Public housing agency's use of preferences: Without a veterans' 
preference; 
Public housing: 15; 
Vouchers: 21. 

Public housing agency's use of preferences: Agencies with no preference 
system; 
Public housing: 5; 
Vouchers: 6. 

Public housing agency's use of preferences: Total public housing agencies                          Public housing: 34
Vouchers: 40 

Source: GAO.

Note: Of the 41 housing agencies we contacted, 7 did not administer a
public housing program and 1 did not administer a voucher program.

Some of the public housing agencies we contacted offered veterans'
preferences because their states required them to do so. Other housing
agency officials told us they offered a veterans' preference because they
believed it was important to serve the needs of low-income veterans since
they had done so much for the well-being of others. Public housing
agencies that we contacted that did not offer a veterans' preference gave
various reasons for their decisions. Some officials told us that the
housing agency did not need a veterans' preference because veteran
applicants generally qualified under other preference categories, such as
elderly or disabled. One housing agency official we contacted said a
veterans' preference was not needed because of the relatively small number
of veterans in the community.

According to all of the performance-based contract administrators we
contacted, owners of project-based properties that they oversee generally
did not employ a veterans' preference when selecting tenants. Ten of the
13 largest contract administrators told us, based on their review of
property owners' tenant selection plans, that owners of project-based
properties generally did not employ preferences for any specific
population.26 Officials from the remaining three contract administrators
said they were aware of some property owners offering preferences to
individuals who had been involuntarily displaced, working families, or
those unable to work because of age or disability. However, all the
contract administrators we contacted either said that property owners did
not use preferences or agreed that the use of preferences, including a
veterans' preference, among owners of properties with project-based
assistance was limited. HUD officials to whom we spoke also stated, based
on their experience with tenant selection plans, that the use of
preferences at project-based properties likely was infrequent.

26According to HUD policy, a preference for households that are
involuntarily displaced by government action or natural disaster generally
applies to properties that have a HUD-insured mortgage.

At Least 250,000 Veteran Households Received HUD Rental Assistance, but Veterans
Were Less Likely to Receive Such Assistance Than Other Low-Income Households

Low-income veteran renter households were less likely to receive HUD
rental assistance than other households. As shown in table 4, of the total
2.3 million veteran renter households with low incomes, about 250,000 (or
11 percent) received HUD assistance. In comparison, of the 22 million
other renter households with low incomes, 4.1 million (about 19 percent)
received HUD assistance.27 (As noted previously, although HUD is the
largest provider of federal rental housing assistance to low-income
households, it is not the sole source of such assistance. Thus, these
percentages likely understate the actual share of all eligible veteran
renter households that receive federal rental assistance.)

27Since a significant portion of HUD-assisted households have very low-
and extremely low-incomes, we also estimated the share of veteran renter
households in these two income categories and found that about 19 percent
of them received HUD assistance (compared with about 27 percent of other
households).

Table 4: Estimated Number of Low-Income Veteran and Other Renter
Households, by HUD Assistance, 2005

HUD assisted; 
Veteran household: Number: 254; 
Veteran household: Percentage: 11%; 
Other household: Number: 4,147; 
Other household: Percentage: 19%. 

Unassisted; 
Veteran household: Number: 1,794; 
Veteran household: Percentage: 78; 
Other household: Number: 15,933; 
Other household: Percentage: 73. 

With an affordability problem; 
Veteran household: Number: 1,285; 
Veteran household: Percentage: 56; 
Other household: Number: 13,856; 
Other household: Percentage: 63. 

Without an affordability problem[A]; 
Veteran household: Number: 509; 
Veteran household: Percentage: 22; 
Other household: Number: 2,117; 
Other household: Percentage: 10. 

Other[B]; 
Veteran household: Number: 235; 
Veteran household: Percentage: 10; 
Other household: Number: 1,893; 
Other household: Percentage: 9. 

Total[C] 
Veteran household: Number: 2,283
Veteran household: Percentage: 100%
Other household: Number: 22,013
Other household: Percentage: 100% 

Sources: GAO analysis of VA's Beneficiary Identification and Records
Location Subsystem (BIRLS), HUD's Public and Indian Housing Information
Center (PIC) and Tenant Rental Assistance Certification System (TRACS),
and sample survey data from 2005 ACS.

aACS does not identify households that receive federal rental assistance.
Therefore, to determine the number of unassisted low-income households
without an affordability problem, we took the difference between the
number of HUD-assisted households derived from HUD data systems and ACS'
reported number of low-income renter households without an affordability
problem. We assumed that HUD-assisted households were included in ACS data
among those households that did not have an affordability problem.

b"Other" includes households that reported zero income or paid no cash
rent.

cHousehold counts and percentages may not add due to rounding.

The reasons why other households were nearly twice as likely as veteran
households to receive HUD assistance are unclear. However, based on our
analyses and discussions with agency officials, we identified some
potential explanations. For example:

           o As previously noted, although a significant proportion of
           low-income veteran households face affordability problems, an even
           larger proportion of other (nonveteran) households face more
           severe affordability problems. Thus, the level of veteran demand
           for rental assistance may be lower than that of nonveteran
           households.

           o Also as previously noted, HUD rental assistance programs do not
           take veteran status into account when determining eligibility, and
           most public housing agencies and property owners do not offer
           veterans' preferences. As a result, these policy decisions likely
           focus resources on other types of low-income households with
           housing needs.

           o Although low-income households generally are eligible to receive
           rental assistance from HUD's three programs, statutory
           requirements mandate that a certain percentage of new program
           participants must be extremely low income. These targeting
           requirements may lead to a higher share of HUD rental assistance
           going to nonveteran households because veteran households
           generally are less likely to fall within the extremely low-income
           category.

The estimated 250,000 veteran households that received HUD rental
assistance in 2005 constituted about 6 percent of all HUD-assisted
households. The housing choice voucher program served the largest number
of veteran households, followed by the project-based program, and public
housing (see fig. 3). However, a slightly higher proportion of veteran
households participated in the public housing program (6.9 percent) than
participated in the voucher (5.7 percent) and project-based (5.2 percent)
programs.

Figure 3: Number and Percentage of Low-Income Veteran Households Assisted
by the Voucher, Public Housing, and Project-Based Programs, Fiscal Year
2005

We found some similarities in the demographic characteristics of veterans
and other assisted households we analyzed. For example:

           o Compared with other assisted households, HUD-assisted veteran
           households were as likely to be elderly. Specifically, in fiscal
           year 2005, about 75,000, or 30 percent, of assisted veteran
           households were elderly, and about 1.3 million, or 31 percent, of
           other assisted households were elderly.

           o HUD-assisted veteran households were more likely to have a
           disability. In fiscal year 2005, HUD provided assistance to about
           88,000 veteran households with a disability, or about 34 percent
           of assisted veteran households. In comparison, 1.2 million or 28
           percent of other assisted households had a disability.

Our August 2007 report contains additional information on the demographic
and income characteristics of veteran and nonveteran households, as well
as the extent to which HUD programs take veteran status into account when
determining eligibility and subsidy amounts.

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

Contact and Acknowledgement

For further information on this testimony, please contact David G. Wood at
(202) 512-8678 or [25][email protected] . Contact points from our Office of
Congressional Relations may be found on the last page of this statement.
Individuals making key contributions to this testimony included Marianne
Anderson, Michelle Bowsky, Daniel Garcia-Diaz, John T. McGrail, Josephine
Perez, and Rose Schuville.

Appendix I: Numbers and Percentages of Low-Income Veteran Renter
Households by State

The estimated numbers of low-income veteran renter households in 2005
varied greatly by state, as shown in figure 4. The estimated median number
of low-income veteran renters in any state was about 34,000. California
had significantly more low-income veteran renter households than any other
state--more than 236,000, or about 10 percent of all such households
nationwide--followed by Texas with about 142,000, and New York with about
135,000. The states with the smallest number of low-income veteran
households were Vermont, Delaware, and Wyoming with less than 6,000 each.

Figure 4: Number of Low-Income Veteran Renter Households, by State, 2005

Note: Twenty-two states had margins of error of more than 10 percent, and
two states and the District of Columbia had margins of error that were
more than 20 percent.

As shown in figure 5, the percentages of veteran renter households that
were low-income in 2005 also varied considerably by state. Michigan had
the highest percentage--about 65 percent of its veteran renter households
were low income, while Virginia had the lowest--about 41 percent.

Figure 5: Percentage of Veteran Renter Households That Were Low-Income, by
State, 2005

250385

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To view the full product, including the scope
and methodology, click on [26]GAO-08-324T .

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

Highlights of [27]GAO-08-324T , a testimony before the Subcommittee on
Housing and Community Opportunity, Committee on Financial Services, House
of Representatives

December 2007

RENTAL HOUSING

Information on Low-Income Veterans' Housing Conditions and Participation
in HUD's Programs

Veterans returning from service in Iraq and Afghanistan could increase
demand for affordable rental housing. Households with low incomes (80
percent or less of the area median income) generally are eligible to
receive rental assistance from the Department of Housing and Urban
Development's (HUD) housing choice voucher, public housing, and
project-based programs. However, because rental assistance is not an
entitlement, not all who are eligible receive assistance.

This testimony, based on a 2007 report, discusses (1) the income status
and demographic and housing characteristics of veteran renter households,
(2) how HUD's rental assistance programs treat veteran status (whether a
person is a veteran or not) and whether they use a veteran's preference,
and (3) the extent to which HUD's rental assistance programs served
veterans in fiscal year 2005.

The 2007 report discussed in this testimony made no recommendations.

In 2005, an estimated 2.3 million veteran renter households had low
incomes. The proportion of veteran renter households that were low income
varied by state but did not fall below 41 percent. Further, an estimated
1.3 million, or about 56 percent of these low-income veteran households
nationwide, had housing affordability problems--that is, rental costs
exceeding 30 percent of household income (see map for state percentages).
Compared with other (nonveteran) renter households, however, veterans were
somewhat less likely to be low income or have housing affordability
problems.

HUD's major rental assistance programs are not required to take a
household's veteran status into account when determining eligibility and
calculating subsidy amounts, but eligible veterans can receive assistance.
The majority of the 41 largest public housing agencies that administer the
housing choice voucher or public housing programs had no veterans'
preference for admission. The 13 largest performance-based contract
administrators that oversaw most properties under project-based programs
reported that owners generally did not adopt a veterans' preference.

In fiscal year 2005, an estimated 11 percent of all eligible low-income
veteran households (at least 250,000) received assistance, compared with
19 percent of nonveteran households. Although the reasons for the
difference are unclear, factors such as differing levels of need for
affordable housing among veteran and other households could influence the
percentages.

Percentage of Low-Income Veteran Renter Households with Housing
Affordability Problems, by State, 2005

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References

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  22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1012
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-06-859
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1012
  25. mailto:[email protected]
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