Housing and Community Development Issue Area Plan--Fiscal Years 1996-98
(Letter Report, 06/01/96, GAO/IAP-96-18).
GAO presented its Housing and Community Development issue area plan for
fiscal years 1996 through 1998.
GAO plans to: (1) analyze proposals to dismantle or reorganize the
Department of Housing and Urban Development (HUD), the HUD fiscal year
(FY) 1997 budget request, the Federal Housing Agency's (FHA) mission and
operations, and HUD contracting practices and contract administration;
(2) evaluate proposed changes to FHA insurance coverage on single-family
mortgages, housing price variations and their impact on the
single-family insurance program, single-family foreclosure rates, and
the HUD program for sharing mortgage insurance risks on multifamily
loans; (3) assess the impact of proposals to restructure public and
assisted housing, HUD progress in reengineering its multifamily housing
portfolio, HUD actions to improve operations at large housing
authorities, the response of the public housing industry to recent
reform legislation, and the HUD Competitive Grant Program to modernize
and rehabilitate public housing; (4) analyze performance monitoring of a
combined grant for community development and housing, the conversion of
community development programs into a guaranteed loan program, and the
implementation of the empowerment zone program; and (5) evaluate the
Small Business Administration's (SBA) credit subsidy programs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: IAP-96-18
TITLE: Housing and Community Development Issue Area Plan--Fiscal
Years 1996-98
DATE: 06/01/96
SUBJECT: Housing programs
Community development programs
Federal agency reorganization
Cost control
Mortgage programs
Low income housing
Urban development programs
Mortgage protection insurance
Small business assistance
Minority business assistance
IDENTIFIER: Community Development Block Grant
HUD Empowerment Zones and Enterprise Communities Program
HUD Competitive Grant Program
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Cover
================================================================ COVER
Resources, Community, and Economic Development Division
June 1996
HOUSING AND COMMUNITY DEVELOPMENT
ISSUE AREA PLAN - FISCAL YEARS
1996-98
GAO/IAP-96-18
Abbreviations
=============================================================== ABBREV
FEMA - Federal Emergency Management Administration
FHA - Federal Housing Administration
GAO - General Accounting Office
GNMA - Government National Mortgage Association
HUD - Department of Housing and Urban Development
RHS - Rural Housing Service
SBA - Small Business Administration
VA - Department of Veterans Affairs
FOREWORD
============================================================ Chapter 0
As the investigative arm of the Congress and the nation's auditor,
the General Accounting Office is charged with following the federal
dollar wherever it goes. Reflecting stringent standards of
objectivity and independence, GAO's audits, evaluations, and
investigations promote a more efficient and cost-effective
government; expose fraud, waste, abuse, and mismanagement in federal
programs; help the Congress target budget reductions; assess
financial information management; and alert the Congress to
developing trends that may have significant fiscal or budgetary
consequences. In fulfilling its responsibilities, GAO performs
original research and uses hundreds of databases or creates its own
to compile and analyze information.
To ensure that GAO's resources are directed toward the most important
issues facing the Congress, each of GAO's 32 issue areas develops a
strategic plan that describes its key issues and their significance;
the objectives and focus of its work; and the planned major job
starts. Each issue area relies heavily on input from congressional
committees, agency officials, and subject-matter experts in
developing its strategic plan.
The Housing and Community Development Issue Area is responsible for
auditing federal services whose value totals over $1 trillion and
whose benefits reach virtually every community in the nation. These
services, which are scattered among several agencies, are targeted
toward ensuring that all Americans have decent, affordable housing
and healthy, vibrant communities upon which our nation's economic
growth and social stability depend.
The Department of Housing and Urban Development (HUD) has
responsibility for the bulk of these services by insuring or
guaranteeing mortgage financing for about 7 million people through
its $497 billion Federal Housing Administration (FHA) loan portfolio;
guaranteeing, through the Government National Mortgage Association
(GNMA), about $485 billion in mortgage-backed securities; providing
about $25 billion annually to subsidize rentals and to operate and
modernize residences for about 4.7 million lower-income households;
providing $5 billion annually to assist over 4,000 communities
through its Community Development Block Grant program; and overseeing
the distribution of $227 billion in unexpended budget authority.
In addition, services are provided through the Small Business
Administration's (SBA) $33 billion business loan portfolio that
supports many of the nation's 21 million small businesses; the
Federal Emergency Management Administration's (FEMA) annual disaster
assistance obligations of about $2 billion; the Department of
Veterans Affairs' (VA) $174 billion in guarantees on veterans' home
loans; and the Department of Agriculture's Rural Housing Service's
(RHS) $32 billion portfolio of direct and guaranteed home loans to
rural residents. Finally, in the secondary markets, Freddie Mac and
Fannie Mae (government-sponsored enterprises for which HUD has
oversight responsibilities) have significant national housing
missions and oversee $1.3 trillion in securities and loans.
GAO's program evaluation and performance work in the Housing and
Community Development Issue Area assists the Congress and federal
agencies by assessing proposals to restructure agencies and programs,
analyzing options to reduce costs, and evaluating the impact of those
options on the delivery of services. The principal issues concerning
housing and community development are
-- restructuring federal oversight of housing and community
development agencies to improve service delivery, eliminate
duplication, and produce long-term cost savings;
-- reducing the federal government's financial risk in its programs
to provide mortgage assistance;
-- fostering self-sufficiency among low-income people while meeting
budgetary constraints;
-- promoting the economic and social development of communities;
and
-- improving the cost-effectiveness of programs that promote small
and minority-owned business development.
In the pages that follow, we describe our key planned work on these
important issues during our 3-year planning period (fiscal years 1996
through 1998). This year's update to the plan contains some slight
changes in emphasis to reflect current congressional interest and
available resources. Also, because unanticipated events may
significantly affect even the best of plans, our planning process
allows for updating this plan to respond quickly to emerging issues.
If you have any questions or suggestions about this plan, please call
Larry Dyckman, Associate Director, or me at (202) 512-7631.
Judy A. England-Joseph
Director
Housing and Community Development Issues
CONTENTS
============================================================ Chapter 1
FOREWORD
---------------------------------------------------------- Chapter 1:1
1
TABLE I: KEY ISSUES
---------------------------------------------------------- Chapter 1:2
4
TABLE II: PLANNED MAJOR WORK
---------------------------------------------------------- Chapter 1:3
6
TABLE I: KEY ISSUES
============================================================ Chapter 2
Issue Significance Objectives Focus of work
-------------------------------------------- ------------------------------------------- -------------------------------------------- -------------------------------------------
Housing and community development agency The current focus on agency restructuring �Analyze the effects of agencies' �Reinvention proposals affecting housing
management: How can federal housing and has affected HUD, SBA, and other agencies restructuring proposals, including HUD's and community development programs,
community development agencies be involved in housing and community "reinvention blueprint." including the impact on customers and the
restructured to improve service delivery, development assistance. These agencies are potential savings
eliminate duplication, and produce long- proposing to restructure their �Assess the alternatives to restructure FHA,
term cost savings? organizations and are developing options to including making it a government-owned �Streamlining housing assistance to rural
improve the delivery of federal services corporation. residents
with significant cost savings. GAO has
designated HUD as a high-risk area because �Assess the feasibility of transforming �Residual oversight role for the federal
of long-standing deficiencies in HUD's current programs, such as assisted government if housing programs are
management, accounting, and information housing, into performance-based funds. transferred to state and local governments
systems.
�Identify and recommend spending reductions �Potential savings in HUD's budget
to decrease the federal deficit.
�HUD's initiatives to correct long-term
�Monitor HUD's actions to correct long- management deficiencies
standing departmentwide management
deficiencies.
Mortgage financing: How can the federal FHA, VA, and RHS underwrite mortgage credit �Analyze proposals to change mortgage �Financial position of FHA's mortgage
government minimize financial risks in to purchase residential and rental financing programs to reduce the federal assistance programs for single-and
mortgage assistance programs while meeting properties that are riskier than purchases government's exposure to losses. multifamily properties
affordable housing needs? made in the conventional market. These
programs support nearly $500 billion in �Analyze alternative options to provide �Reducing losses through better management
outstanding mortgage loans. In addition, mortgage financing to urban and rural of property disposition activities
HUD's GNMA guarantees timely payment to residents.
investors on $485 billion of securities �Reducing risks through changes in housing
backed by these mortgages. These four programs at FHA and RHS
agencies need to continue to limit their
losses, improve delivery of home mortgage
and rental housing assistance, and improve
oversight.
Low-income housing: How can federal low- Although real outlays for federal low- �Identify ways to better manage and maintain �Improvements in the federal oversight,
income housing programs meet budgetary income housing assistance have tripled urban and rural federally assisted public regulatory framework, and budgeting
constraints while effectively serving low- since 1977, only one-third of eligible housing and multifamily properties. practices of assisted public housing
income people and promoting self- households receive such assistance. Due to
sufficiency? budget constraints, funds for low-income �Evaluate ways to improve the cost- �Cost implications of project-and tenant-
housing assistance are likely to shrink effectiveness of housing assistance. based housing assistance
substantially. Therefore, policy makers
must find more cost-effective methods to �Evaluate options to reinvent housing �Proposed reforms to improve delivery of
house low-income people, including better assistance delivery systems and encourage housing assistance and promote self-
ways for federal housing programs to self-sufficiency. sufficiency
encourage self-sufficiency among residents
and to apply best management practices
among housing providers.
Community development: What roles do HUD and Over a dozen federal agencies provide �Identify overlap among community �Economic development in distressed urban
other federal agencies play in promoting the community development assistance. The development programs and recommend ways to areas and overlap among community
economic and social viability of communities Congress is currently debating whether to streamline them. development programs across federal
and their residents and what types of consolidate some of these programs into agencies
performance measures do these agencies use? performance-based funds or block grants to �Identify options to integrate social,
improve their effectiveness and efficiency. economic, and housing programs to maximize �Integration of social, economic, and
Consolidation should include performance delivery of services. housing programs
measures to assess program effectiveness
and safeguards against duplicate federal �Assess performance indicators used to rate �Performance indicators that will be used
programs as well as factor in the ability existing programs and recommend other to assess implementation of the empowerment
of states and localities to meet community indicators to improve oversight of these zone program
needs that the federal government formerly programs.
provided. �Impact of allocation formulas used for
�Assess the capability of states and calculating block grants to states
localities to meet community needs for
development assistance and services.
Small and minority-owned business Although several SBA programs are directed �Identify the most cost-effective ways to �Cost-effectiveness of current ways to
development: Do existing programs meet at establishing or assist small and minority-owned businesses deliver program services
clearly defined goals; what benefits have preserving small and minority-owned and recommend cost-savings measures.
been accrued; and what are the most cost- businesses, only about seven percent of all
effective ways to deliver small business lending is backed by SBA.
services to these businesses? Federal purchasing requirements annually
direct billions of dollars to support small
business development. The Congress has
raised concerns about the benefits of these
programs, and court cases have challenged
minority set-asides and mandates.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TABLE II: PLANNED MAJOR WORK
============================================================ Chapter 3
Issue Planned major job starts
------------------ --------------------------------------------------------------------
Housing and Analyze proposals to dismantle HUD, including options to transfer
community programs to other federal, state, or local agencies.
development agency Analyze HUD's fiscal year 1997 budget request.
management Evaluate issues affecting the consolidation of HUD and RHS housing
programs.
Assess FHA's mission and how well its operations provide affordable
housing.
Evaluate HUD's contracting policies and practices and contract
administration.
Assess HUD's progress in addressing high-risk issues.
Mortgage financing Evaluate the impact of proposed changes to reduce FHA's insurance
coverage on single-family mortgages.
Assess housing price variations and their impact on the current 2-
percent reserve that the single-family insurance program requires.
Analyze single-family foreclosure rates to determine patterns and
their causes.
Review HUD's program for sharing mortgage insurance risks on
multifamily loans with state and local housing finance agencies and
other qualified entities.
Low-income housing Assess the impact of proposals to restructure public and assisted
housing on the ability of lower-income families to find housing and
achieve self-sufficiency.
Assess HUD's progress in re-engineering its multifamily housing
portfolio.
Assess HUD's actions to improve operations at the worst-performing
large housing authorities and whether HUD's strategy has been
successful in Chicago, New Orleans, and San Francisco.
Analyze the response of the public housing industry to recent major
reform legislation and its consequences for increasing the number of
working families in public housing.
Evaluate HUD's Competitive Grant Program to modernize and
rehabilitate public housing.
Community Assess the options for monitoring performance of a combined block
development grant for community development and housing.
Assess the implications of converting grant and loan programs that
promote community development into a guaranteed loan program.
Determine who benefits from block grants for community
development.
Assess the implementation of the empowerment zone program.
Small and �Analyze credit subsidies provided by SBA's programs.
minority-owned
business
development
----------------------------------------------------------------------------------------
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