Public Housing: Funding and Other Constraints Limit Housing Authorities'
Ability to Comply with One-for-One Rule (Letter Report, 03/03/95,
GAO/RCED-95-78).

Pursuant to a congressional request, GAO reviewed public housing
authorities' ability to comply with the one-for-one replacement rule,
focusing on the: (1) housing authorities with the highest number of
vacant units; (2) impact of the one-for-one replacement law on housing
authorities' ability to deal with their unusable housing units; and (3)
proposed waiver of the one-for-one rule.

GAO found that: (1) 27 housing authorities account for about one-half of
the 102,000 vacancies nationwide; (2) most of the 27 authorities are
located in major cities and have more than 1,250 units; (3) the
Department of Housing and Urban Development (HUD) has classified 10 of
the 27 authorities as troubled; (4) 200 of the more than 13,000 public
housing developments have vacancy rates of 50 percent or more; (5) the
lack of federal funding for new housing or other replacement assistance
and the lack of suitable replacement sites make it difficult for housing
authorities to tear down and replace their nonviable housing units under
the one-for-one rule; (6) HUD officials believe that funding for
replacement housing is available on a multiyear basis, but housing
authorities have failed to apply for such funding; (7) the failure to
tear down nonviable housing results in excessive operating costs and
federal subsidies and abets crime and vandalism; (8) although housing
officials believe that waiving the one-for-one replacement rule would be
useful in eliminating nonviable units, they view the proposed waiver as
too restrictive and inflexible; and (9) housing officials believe that
complying with one or more criteria should be sufficient grounds for
granting a waiver, and that the lack of suitable replacement sites and
other issues should be considerations when qualifying for a waiver.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-78
     TITLE:  Public Housing: Funding and Other Constraints Limit Housing 
             Authorities' Ability to Comply with One-for-One
             Rule
      DATE:  03/03/95
   SUBJECT:  Public housing
             Housing repairs
             Repair costs
             Property disposal
             Federal aid for housing
             Replacement housing
             Waivers
             Federal regulations
             Administrative costs
             Proposed legislation
IDENTIFIER:  New Orleans (LA)
             Newark (NJ)
             Philadelphia (PA)
             Atlanta (GA)
             HUD Public Housing Management Assessment Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

March 1995

PUBLIC HOUSING - FUNDING AND OTHER
CONSTRAINTS LIMIT HOUSING
AUTHORITIES' ABILITY TO COMPLY
WITH ONE-FOR-ONE RULE

GAO/RCED-95-78

One-for-One Public Housing Replacement


Abbreviations
=============================================================== ABBREV

  GAO - General Accounting Office
  HUD - Department of Housing and Urban Development

Letter
=============================================================== LETTER


B-259664

March 3, 1995

The Honorable Christopher Shays
Chairman, Subcommittee on Human Resources
 and Intergovernmental Relations
Committee on Government Reform and Oversight
House of Representatives

The Honorable Collin C.  Peterson
House of Representatives

The overall vacancy rate in public housing is about 8 percent.  This
average, however, masks the conditions at many large housing
authorities where uninhabitable buildings cause the rate to be closer
to 22 percent.  At some authorities, whole projects are 50 to 100
percent vacant, and hundreds of deteriorated buildings stand idle. 
If housing authorities tear down or sell off any of these buildings,
by law they must replace the housing units on a one-for-one basis
with new or other viable housing or provide equivalent rental
assistance to the tenants.  However, because some authorities believe
they lack sufficient funding or appropriate sites in their
communities to replace demolished housing, they leave the
deteriorated buildings in place.  Consequently, the one-for-one law
is seen by some as the underlying cause of housing authorities'
inability to tear down their nonviable housing. 

In 1994, the House Committee on Banking, Finance and Urban Affairs
attempted to give housing authorities more flexibility to trim from
their inventories buildings that are no longer viable for providing
cost-effective and decent low-income housing.  The Committee included
in its housing reauthorization bill a provision to allow the
Secretary of Housing and Urban Development (HUD) to waive the
one-for-one replacement law (see app.  I for the full text of the
waiver).  This bill did not pass the 103rd Congress.  Because of your
concerns about the impact of the one-for-one law on nonviable public
housing and whether the proposed waiver would provide housing
authorities with the expected flexibility, you asked us to provide
information on

housing authorities with the highest number of vacant units,

the impact of the one-for-one requirement on housing authorities'
ability to deal with their nonviable housing units, and

housing officials' perceptions of the potential usefulness of the
proposed waiver. 

To develop information in these areas, we analyzed a national public
housing data base maintained by HUD.  The data base tracks vacancy
rates at the over 13,000 public housing developments in the nearly
3,400 housing authorities across the country.  We also visited 4 of
the 10 large housing authorities nationwide that are most troubled by
high vacancies (see app.  II).  These four are in New Orleans,
Louisiana; Newark, New Jersey; Philadelphia, Pennsylvania; and
Atlanta, Georgia. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

HUD's data base shows that 27 housing authorities, located
principally in the eastern United States, account for about half of
the 100,000 reported vacancies nationwide.  HUD classifies most of
these 27 as large housing authorities (having more than 1,250 units). 
Similarly, the data base shows that the highest vacancy rates occur
in only a few of the more than 13,000 public housing developments
nationwide --200 developments have vacancy rates exceeding 50
percent.  However, HUD's data do not distinguish among the vacancies
to say whether they are short-term, whether the units are under
repair, or whether the units are considered nonviable by the housing
authority. 

According to officials at the four housing authorities we visited,
constraints related to the one-for-one requirement either make it
difficult for them to tear down housing that costs more to maintain
than replace or, in some cases, prevent them from doing so.  These
constraints include insufficient federal funding for new housing or
other replacement assistance and a lack of suitable sites for
replacement housing.  Not tearing down nonviable housing leads to
excessive operating costs and federal subsidies and the crime and
vandalism associated with vacant public housing. 

Housing authority officials we interviewed believe that a waiver of
the one-for-one requirement would help them to reduce nonviable
housing, most of which is vacant.  However, they said that the waiver
proposed during the last Congress was too restrictive to be useful,
and they provided several options that would add flexibility to the
waiver.  Such flexibility would be important because of the unique
combinations of conditions and resources that exist at each housing
authority. 


   BACKGROUND
------------------------------------------------------------ Letter :2

According to a 1990 report by the National Housing Law Project
entitled Public Housing in Peril, during the 1980s public housing
authorities removed 15,000 housing units, or about 1 percent of the
total stock, from their inventories.  Even with this 1-percent
reduction of presumably the least desirable stock, the overall public
housing vacancy rate of 5.8 percent in 1984\1 has climbed to 8
percent today.  HUD's regulations in force from 1979 through 1986
required housing authorities to replace on a one-for-one basis any
units demolished or sold, subject to the availability of funding and
a local need for low-income housing.  However, the report concluded
that housing authorities sometimes directly violated or evaded this
requirement. 

To replace and strengthen these regulations and to protect public
housing from further depletion, the Congress included in the Housing
and Community Development Act of 1987 a one-for-one replacement
provision.  In addition to a requirement for replacing demolished or
sold units on a one-for-one basis, the new statute also provided that
tenants cannot be forced to vacate their existing housing before HUD
approves the housing replacement plan.  Since the Congress enacted
the new one-for-one requirement in February 1988, HUD's Inspector
General concluded that the requirement, along with site and
neighborhood standards for locating low-income housing, could be
responsible for the increase in vacancy rates over the last decade.\2

After congressional hearings in March 1994 that highlighted housing
authorities' difficulties in complying with the one-for-one
requirement, the House Committee on Banking, Finance and Urban
Affairs proposed amending section 18 of the Housing Act of 1937 to
allow the Secretary of HUD to waive the requirement if all of a
series of specific conditions existed.  For example, so long as other
requirements were met, if (1) maintaining and operating the housing
is not cost-effective, (2) replacing the housing cannot be funded,
and (3) replacing the housing is unnecessary because other affordable
housing is available in the immediate area in which the units are
located, then the waiver could be granted.  This provision, however,
along with the entire bill to reauthorize the act, was not enacted
during the 103rd Congress. 

In HUD's fiscal year 1996 budget presented to the Congress on
February 6, 1995, the Department proposes to seek authority to permit
the demolition of nonviable housing as long as the housing authority
agrees to provide replacement housing for the "sitting tenants." This
policy would be a distinct change from the current law, which
requires replacement of all demolished units whether they were
occupied or not. 


--------------------
\1 Public Housing Vacancies and the Related Impact of HUD's Proposal
to Reduce Operating Subsidies (GAO/RCED-85-93, Mar.  29, 1985). 

\2 Site and neighborhood standards are contained in HUD regulations. 
The standards require that newly constructed or rehabilitated
assisted housing must meet certain criteria for adequacy and
suitability.  In addition, when a site for this housing is chosen,
care must be taken to avoid an undue concentration of persons
receiving housing assistance in an area that already contains a high
proportion of low-income persons.  Furthermore, newly constructed
public housing can be built in an area of minority concentration only
if (1) sufficient and comparable opportunities exist for minority
families to find housing outside the area or (2) the housing is
necessary to meet overriding housing needs. 


   NATIONAL VACANCY PROFILE
------------------------------------------------------------ Letter :3

Our analysis of national vacancy data shows that a large portion of
the vacancies in the nation is concentrated in 27 housing
authorities, most of which have more than 1,250 units and are located
in major cities.  As shown in figure 1, these authorities are located
principally in the eastern United States. 

   Figure 1:  Location of 27
   Housing Authorities With Over
   50 Percent of Total Public
   Housing Vacancies

   (See figure in printed
   edition.)

Furthermore, some developments within these 27 authorities have
vacancy rates that exceed 50 percent, and some developments are 100
percent vacant.  Developments with low occupancy often contain
buildings that are entirely vacant and therefore subject to vandalism
and drug-related criminal activity. 

The nation's 3,400 public housing authorities reported to HUD
approximately 102,000 vacant units as of April 1994.  Overall, about
8 percent of the approximately 1.4 million public housing units are
vacant.  However, when the vacancies are attributed to specific
housing authorities, 27 authorities account for about 52,000
vacancies, or just over 50 percent of all vacancies.  As shown in
table 1, the five authorities with the greatest absolute number of
vacancies are located in Chicago, Philadelphia, Newark, Cleveland,
and Dallas.  Vacancy rates in these housing authorities ranged from
16 to 41 percent.  (See app.  III for a listing of the housing
authorities that account for 50 percent of all vacancies.)



                           Table 1
           
             Public Housing Vacancies as of April
                             1994

                                    No. of
                                    vacant   Total   Percent
Housing authority                    units   units    vacant
----------------------------------  ------  ------  --------
Chicago, IL\a                        6,136  39,531        16
Philadelphia, PA\a,b                 4,807  21,826        22
Newark, NJ\b                         3,812  12,977        29
Cleveland, OH                        3,377  12,074        28
Dallas, TX                           2,780   6,856        41
District of Columbia\a               2,596  11,793        22
New Orleans, LA\a,b                  2,563  13,417        19
Dade County, FL                      2,392  11,397        21
Saint Louis, MO                      2,240   6,953        32
Atlanta, GA\b                        2,093  13,571        15
------------------------------------------------------------
\a These housing authorities are among those that HUD classifies as
troubled. 

\b GAO visited these four housing authorities. 

Source:  HUD's Public Housing Occupancy Data Base. 

The housing authorities that account for most of the vacancies are
all categorized by HUD as "large" because they operate over 1,250
units.  Furthermore, HUD has designated 10 of the 27 authorities as
"troubled" because they did not earn an aggregate passing score of 60
or more in accordance with the Department's Public Housing Management
Assessment Program.  The assessment program measures housing
authorities' performance in 12 areas such as vacancy rates,
management of grant funds, and time required to prepare a unit for a
new renter.  Troubled authorities receive more intensive oversight by
HUD.  Overall, large housing authorities account for approximately 70
percent of all vacancies, and medium-sized housing authorities
(managing between 500 and 1,250 units) account for approximately 13
percent of all vacancies.  These authorities tend to be concentrated
in the eastern part of the nation.  In contrast, small housing
authorities (managing fewer than 500 units) account for 17 percent of
all vacancies and are more evenly distributed across the nation. 
(See app.  IV for the location of housing authorities by size
throughout the country.)

Housing authorities, especially large ones, may comprise many
individual housing developments.  Within the 3,400 authorities are
approximately 13,300 developments whose vacancy rates vary more
widely than rates do across authorities.  Of the 13,000 developments,
200 have vacancy rates of 50 percent or greater and account for
approximately 26 percent of all vacancies.  Thirty-two developments
reported vacancy rates of 100 percent, and many of the over 200
developments with vacancy rates from 50 to 100 percent had hundreds
of entire buildings vacant. 

To determine the magnitude of the of the problem of vacant buildings,
we contacted officials of 41 housing authorities that operate 70
developments with vacancy rates exceeding 70 percent.  These
officials told us that in 57 of their developments, 1,177 buildings
were completely vacant.  Of these 1,177 buildings, 149 were either
scheduled or awaiting HUD's approval for demolition and thus subject
to the one-for-one replacement.  The remaining buildings were
generally either being rehabilitated or were vacant because funds
were not available for rehabilitation. 


   RESOURCE AND OTHER CONSTRAINTS
   LIMIT COMPLIANCE WITH
   ONE-FOR-ONE REPLACEMENT
   REQUIREMENT
------------------------------------------------------------ Letter :4

Public housing officials at four of the authorities with the most
vacant units said that their ability to demolish their nonviable
housing and replace it on a one-for-one basis is limited by
insufficient resources and other factors.  The officials cited
factors such as a lack of funding for new housing units, scarce land
that meets the site and neighborhood standards, and resistance from
residents.  They said, however, that even if the requirement did not
exist, one-for-one replacement would be their goal.  (See app.  II
for additional details on the four authorities' experiences in
complying with the one-for-one replacement requirement.)

Housing authority officials in New Orleans and Philadelphia said that
their ability to demolish and replace deteriorated housing was
limited because of a lack of funding to develop new public housing. 
In New Orleans, housing officials told us that diminishing resources
to replace demolished public housing are forcing them to rehabilitate
older developments that should be demolished.  They said that funding
to modernize housing is more available than funding for replacement
housing and is allocated under a reasonably predictable formula. 
This predictability allows the housing authority to budget for major
modernization work in a way that it cannot do for replacement
housing.  However, the HUD Inspector General has reported that
continuing to patch up deteriorated housing without achieving
long-term viability contributes to the distressed financial condition
of the New Orleans housing authority. 

Officials at the Philadelphia Housing Authority said that the
one-for-one requirement limited their options and contributed to some
extent to their inability to demolish housing they considered
nonviable.  Officials said that at one time they had planned to
demolish the 1,300-unit Richard Allen development because it was one
of Philadelphia's most troubled.  However, they did not submit a
demolition/replacement plan to HUD because they believed that federal
funding for new housing was scarce and that the tenants were opposed
to such a plan because they did not trust the authority to replace
the units.  In addition, officials said that they did not want to
lose their recent $7 million investment in capital equipment and
infrastructure at Richard Allen. 

Officials in HUD's headquarters Division of Modernization acknowledge
that resource limitations would not allow them to accommodate all
potential applications from housing authorities.  But they also
believe that the perceived lack of funding should not play as large a
role as housing authority officials claim.  They noted that resource
limitations have been successfully dealt with by funding replacement
housing over a several-year period.  They also said that many
authorities with significant vacancies have not applied for the
funding that HUD has available to replace housing that has been
demolished or sold. 

Another constraint cited by housing authority officials is the lack
of land for replacement housing.  The constraint of limited land that
meets site and neighborhood standards is particularly relevant in
Newark where the major barrier to replacing housing in compliance
with the one-for-one law is the city's demography.  For example,
according to Newark housing authority officials, Newark has the
highest density of public housing units in the country, two-thirds of
Newark's land area is already in use by industrial or commercial
users, minorities represent 71 percent of the city's population, and
over half of the public housing population has very low
income--generally considered to be less than 30 percent of the area's
median income.  This combination of demographic factors means that
the chances are very small of finding land for replacement housing
that meets the site and neighborhood standards.  Newark officials
said that continued operation of vacant housing is a huge operating
expense. 

At the Atlanta Public Housing Authority, officials believed that
their housing replacement plans generally complied with the law, but
they said that the demolition they proposed and the anticipated
difficulty of finding sites for replacement housing made their plans
more expensive than other cities' plans.  Although Atlanta has
sufficient land areas that do not already have high concentrations of
low-income residents and would qualify for public housing, this land
often is costly to procure and is located in one area of the city. 
Moreover, the housing authority would face considerable community
opposition to low-income housing in this area. 


   HOUSING OFFICIALS SUGGESTED
   CHANGES TO THE WAIVER TO MAKE
   IT MORE USEFUL
------------------------------------------------------------ Letter :5

Officials at two of the public housing authorities we visited said
that the waiver as proposed in 1994 would provide them with little
added flexibility.  These officials, as well as HUD's Inspector
General in a recent report, suggested several changes to the proposed
waiver that could make it more useful to housing authorities as they
try to deal with their nonviable housing. 

Housing officials' suggestions generally reflected their belief that
the waiver as proposed would require a housing authority to meet too
many criteria at once.  One official noted that for the Secretary to
grant the waiver, an authority would have had to comply with each
provision in the waiver rather than with one provision or a
combination of provisions.  He believed that complying with each
provision may not always be possible and is unnecessary.  To do so,
an authority would have to demonstrate more circumstances than
necessary to justify a waiver, and some of those might not apply at
that authority.  For example, one provision would require an
authority seeking a waiver to have as a goal to increase the number
of viable public housing units it manages.  However, this official
also said that such a goal may not be realistic in a housing market
where demand for low-income housing is not growing. 

In addition, some housing officials we visited believe that the
criteria for receiving the waiver should be independent of each other
so that complying with one or more, but not all, would satisfy the
waiver.  For example, one executive director said that the
cost-effectiveness of operating and maintaining existing housing
proposed for demolition or disposition should be independent of the
availability of financial assistance to replace the housing.  He
believed that either of these circumstances should qualify an
authority to receive a waiver to the replacement requirement. 

The acting executive director of the Atlanta Housing Authority
suggested, among several comments, that the shortage of suitable
land--land meeting site and neighborhood standards--for public
housing in many cities could be additional criteria for a waiver.  He
recommended that such a shortage of land should be made a criterion
for waiver independent of whether sufficient housing replacement
funds are available to the housing authority. 

The executive director of the Newark Housing Authority suggested that
further flexibility could be given to housing authorities by
permitting them to

use other forms of federal low-income housing assistance (such as
tenant-based certificates) for all replacements, instead of limiting
the use of such assistance to 50 percent of the replacements in plans
involving the demolition or disposition of more than 200 units, and

exempt from the one-for-one requirement high-rise buildings that
should no longer be used to house families and are less than 30
percent occupied, provided that the buildings' tenants can be housed
in other projects. 

In addition, in a September 1993 report, HUD's Inspector General
concluded that statutes such as the one-for-one replacement can
hamper a housing authority's pursuit of better options for the
welfare of the tenants.  She recommended that the Secretary seek
relief from the one-for-one requirement by proposing changes to the
law that would expand the forms of assistance currently allowed by
law to meet replacement housing requirements. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Housing authority officials agree with the law's goal of replacing
housing on a one-for-one basis.  However, they point to a lack of
funding to implement the law as the chief factor frustrating their
efforts to remove and replace their most deteriorated and useless
housing.  Even when funding is available, officials in cities such as
Newark point to the site and neighborhood standards and attribute the
continuing inability to remove and replace their nonviable housing to
a lack of suitable land on which to locate replacement housing. 

Officials of housing authorities we visited believe that the
one-for-one waiver provision included in the 1994 reauthorization of
the housing legislation is too restrictive.  They and others believe
that making some changes in the wording and conditions could provide
the added flexibility needed to deal with their most deteriorated and
nonviable housing with the resources that are available to them.  For
example, being required to show either that funding is not available
for replacement housing or that maintaining the undesirable housing
is not cost-effective, rather than having to show both conditions,
would enable housing authorities to more easily qualify for a waiver. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :7

To assist housing authorities to make the best use of the resources
at their disposal, the Congress should consider giving the Secretary
of HUD the flexibility to approve alternative approaches to replacing
nonviable housing that has been demolished or sold.  In considering
reasonable alternatives, the Secretary might take into account
resource availability and circumstances unique to a specific housing
authority.  For example, instead of replacing demolished or sold
units using the combinations of replacement units and certificates
currently allowed by law, the Secretary might approve a housing
replacement plan that makes more liberal use of section 8
tenant-based certificates, if they are available. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

For each of the four housing authorities we visited, we developed a
summary of the impact that the proposed one-for-one replacement
waiver would have on the authority's nonviable housing (see app. 
II).  We provided drafts of these summaries to the respective housing
authorities and incorporated the officials' comments as appropriate. 
For the most part, housing authority officials' comments clarified
information they had already given us.  For example, Newark officials
gave us a better historical perspective on their attempts to demolish
their mostly vacant high-rise buildings.  The former acting executive
director of the Atlanta Housing Authority clarified his suggestions
for how a waiver of the replacement requirement could be reworded to
be more useful to his authority. 

We also provided a complete draft of this report to HUD for review
and comment.  Although HUD did not provide written agency comments,
we discussed the draft with officials of HUD's Office of
Construction, Rehabilitation, and Maintenance.  These officials
generally agreed with the report's contents and conclusions.  They
suggested several changes to improve clarity, which we incorporated
as appropriate.  They also asked us to note, and we have, that while
housing authorities point to the limited funding for replacement
housing, many authorities do not apply for and take advantage of the
funding that is available to them from HUD.  HUD officials also
stated that our matter for congressional consideration was
appropriate in that we suggested giving the Secretary of HUD the
flexibility to administer the one-for-one requirement on a
case-by-case basis. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To develop a profile of public housing vacancies nationwide and
relate those vacancies to the one-for-one replacement statute, we
collected and analyzed data at three levels.  First, we obtained a
HUD data base containing vacancy data on over 13,000 public housing
developments in the nearly 3,400 public housing authorities across
the country.  Second, from the national data base, we identified over
200 authorities that had developments with vacancy rates exceeding 50
percent.  Of those 200, we contacted 41 with developments having
vacancy rates in excess of 70 percent to determine the reasons for
those vacancies and the extent to which these developments had
buildings that were entirely vacant.  Finally, to determine the
impact of the one-for-one statute on housing authorities with
significant vacancies, we visited 4 of the 10 authorities with the
highest absolute number of vacancies.  These four were in New
Orleans, Newark, Philadelphia, and Atlanta.  We conducted our review
from June 1994 to February 1995 in accordance with generally accepted
government auditing standards. 


---------------------------------------------------------- Letter :9.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 5 days after the date of this letter.  At that time, we will
send copies of this report to the appropriate Senate and House
committees; the Secretary of HUD; and the Director, Office of
Management and Budget.  We will make copies available to other
interested parties on request. 

Please call me at (202) 512-7631 if you or your staff have any
questions about this report.  Major contributors to this report are
listed in appendix V. 

Judy A.  England-Joseph
Director, Housing and Community
 Development Issues




(See figure in printed edition.)Appendix I
PROPOSED WAIVER TO THE ONE-FOR-ONE
REPLACEMENT REQUIREMENT
============================================================== Letter 



(See figure in printed edition.)



(See figure in printed edition.)


IMPACT OF THE ONE-FOR-ONE
REPLACEMENT REQUIREMENT AT FOUR
LARGE HOUSING AUTHORITIES
========================================================== Appendix II

We visited housing authorities in New Orleans, Newark, Philadelphia,
and Atlanta to obtain information on the impact of the one-for-one
replacement requirement and to learn how housing authority officials
perceived the impact of the requirement on their housing inventory. 


      ONE-FOR-ONE REPLACEMENT IN
      NEW ORLEANS
------------------------------------------------------ Appendix II:0.1

New Orleans housing officials said that they must overcome several
obstacles to comply with the one-for-one replacement requirement. 
These obstacles include inadequate funding for new public housing
development, a cumbersome and lengthy process to obtain HUD's
approval to demolish nonviable housing, and the lack of local support
for such demolishment.  Nevertheless, although Department of Housing
and Urban Development (HUD) and New Orleans housing officials say
that the one-for-one requirement prevents them from demolishing
deteriorated housing, they do not consider it to be the primary cause
of their inability to demolish nonviable housing.  They said that
more immediate causes include the federal restriction against using
housing modernization funds to replace demolished housing, a lack of
funding for day-to-day maintenance, and the lack of quality
management at the housing authority. 

According to the acting executive director of the Housing Authority
of New Orleans, to stretch public dollars and expedite the
replacement of obsolete public housing, housing authority officials
need more flexibility in deciding whether to modernize aging housing
or replace it.  As a result of diminishing resources to replace
demolished public housing, housing authorities are choosing to
rehabilitate older developments that should be demolished because
funding to modernize them is more available and is allocated under a
reasonably predictable formula.  This predictability allows the
authority to budget for major modernization work in a way that it
cannot do for replacement housing. 

In New Orleans, the Desire development illustrates the points made by
HUD and other officials.  New Orleans housing officials would like to
tear down many of the Desire units without replacing them but cannot
do this legally.  Therefore, they have chosen to remodel Desire
instead of raze it and construct new buildings.  This decision,
however, has been questioned by HUD's Inspector General as well as by
housing consultants.  Over 10 years ago, the Inspector General
reported that Desire's grounds and structures were not well
maintained; tenants were not provided decent, safe, and sanitary
housing; and Desire lacked long-term viability, contributed
substantially to the distressed financial condition of the authority,
and should be taken out of service.  Likewise, a consulting
engineering firm said at that time that it seriously doubted whether
the authority could maintain Desire economically and suggested it be
demolished.  In 1990, the authority hired a consultant who inspected
400 units and concluded, once again, that Desire was nonviable. 
Nonetheless, in 1992 New Orleans requested approval to rehabilitate
Desire at a cost of about $84 million in modernization funds because
this funding is more accessible than funding for development of new
public housing.  Depending on design, this amount of new development
funding could be sufficient to raze and rebuild the entire project. 

In a 1994 audit of the Housing Authority of New Orleans, HUD's
Inspector General questioned the need for a rehabilitation of Desire
that approaches $100 million, or about $76,000 per unit.  The audit
report showed that the authority had 1,717 names on its waiting list
on February 17, 1994, compared to 2,233 vacant units and 1,678
awaiting (or undergoing) modernization--including 852 vacant units at
Desire.  The report concluded that on this basis, additional housing
capacity does not seem warranted.  Moreover, the Inspector General
noted that several factors--including Desire's 58 percent vacancy
rate, an excessive rehabilitation cost per unit, and little prospect
for social or commercial improvements in the immediate area--suggest
that rehabilitating Desire would be costly and may not meet a real
demand for low-income housing in that area.  The Inspector General
concluded that statutes such as the one-for-one replacement can
hamper a housing authority's pursuit of better options for the
welfare of its tenants. 


      ONE-FOR-ONE REPLACEMENT IN
      NEWARK
------------------------------------------------------ Appendix II:0.2

Officials in both HUD's Newark field office and the Newark Housing
Authority agree that the one-for-one replacement requirement has
caused public housing stock to remain in place that would have been
demolished, but they also agree that the occupancy rate of that stock
has remained low.  The housing authority believes that it cannot
replace demolished housing on a one-for-one basis because it can
neither obtain adequate funding nor comply with the site and
neighborhood standards. 

According to Newark public housing officials, enactment of the
one-for-one replacement requirement in 1988 caused the authority to
change its plans to demolish nearly 3,600 high-rise family units in
four mostly vacant projects.  The authority had planned to place the
residents of the projects in a mix of low-rise apartments and
townhouses.  However, the authority could not obtain enough
affordable land or funding needed to replace all the units--both
occupied and vacant.  Consequently, the authority modified its plan
to demolish 11 buildings, instead of the 21 buildings in its original
plan, leaving 10 buildings containing 1,458 units still in place. 
Most of these units are in buildings that are still completely vacant
and sealed, although the authority receives federal operating
subsidies for those units.  In 1994, the authority estimated the cost
to rehabilitate these units to meet HUD's standards could be as high
as $38,000 per unit. 

Newark officials said that the continued operation of the mostly
vacant high-rise projects slated for demolition is a huge operating
expense.  On March 22, 1994, the executive director testified before
the Congress that the current annual operating cost for the two
family high-rise projects with the highest vacancy rates--both have
vacancy rates exceeding 80 percent--is $12.4 million, or over $2,700
per occupied unit per month.  The average monthly operating cost is
$500 per unit for the rest of the authority's inventory. 

As the authority tries to replace demolished housing with new
low-income housing, the major barrier is the city's demography.  For
example, according to the executive director, Newark has the highest
density of public housing units in the country, two-thirds of
Newark's land area is used for nonhousing purposes, minorities
represent over 70 percent of the city's population, and over half of
the public housing population is at the low-income level.  For these
reasons, establishing replacement housing in Newark that complies
with the site and neighborhood standards is difficult.  Housing
authority management welcomes the legislative proposal to modify the
one-for-one replacement requirement, especially if replacement can be
waived on the condition that reasonable compliance with the site and
neighborhood standards is not possible. 


      ONE-FOR-ONE REPLACEMENT IN
      PHILADELPHIA
------------------------------------------------------ Appendix II:0.3

Officials of both HUD's field office in Philadelphia and the
Philadelphia Housing Authority generally believe that the one-for-one
replacement requirement limited the authority's options in some cases
and contributed to its inability to demolish its nonviable housing. 
For example, the authority has wanted to resolve the long-term
vacancy problems it has with some of its 7,000 units of
scattered-site housing.  Scattered sites are independent units of
public housing located throughout the city that are not connected to
or part of a larger development.  Many of these residences are over
100 years old.  However, housing officials note that several
obstacles prevent them from replacing this housing as required by the
one-for-one statute, including insufficient funding for replacement
housing, a lack of land on which to build new housing, and
difficulties that the authority would face in meeting the site and
neighborhood standards even if new development funding were
available.  Moreover, the authority found that the deteriorated
conditions of many scattered-site residences would make
rehabilitating them more costly than building new housing on those
sites. 

The one-for-one requirement also affected but was not an overriding
factor in Philadelphia's plans to demolish 129 units in one of its
most problematic projects, the Richard Allen public housing project. 
Under the one-for-one requirement, project restoration could not
begin until HUD approved the demolition and replacement plan, a
process that took HUD and the housing authority three submissions and
about 3 years to accomplish.  Housing authority officials stated that
they did not submit a demolition plan for several reasons.  First,
they believed that federal funding for new housing development was
scarce.  They also perceived that tenants opposed such a plan because
they did not trust the authority to replace the demolished units. 
Finally, authority officials said that they did not want to lose
their recent expenditure of about $7 million to repair the boiler,
replace the electrical system, build new roofs, and improve the
development's sewers. 


      ONE-FOR-ONE REPLACEMENT IN
      ATLANTA
------------------------------------------------------ Appendix II:0.4

Officials of HUD's Atlanta Office and the Atlanta Housing Authority
agreed that the one-for-one requirement, together with the site and
neighborhood standards, increases the cost of public housing.  Costs
increase because land for replacement units that is not already
impacted with a high concentration of low-income families is more
expensive than the land where the housing developments currently
stand.  More expensive land creates an even greater need for new
development funding or section 8 certificates, neither of which,
officials believe, have been sufficient in recent years.  However,
HUD and housing authority officials disagreed on whether the
requirement affected the authority's ability to resolve long-term
vacancy problems. 

According to the authority's acting director of planning,
development, and nonprofits, many of Atlanta's vacant buildings are
in areas where a high concentration of low-income people already
live.  Therefore, site and neighborhood standards prohibit housing
authorities from adding low-income housing in these areas, whether it
is newly constructed or rehabilitated.  Although Atlanta does have
sufficient suitable areas on which to locate public housing, the land
in these areas of the city is more expensive, and the housing
authority often faces community opposition to building public housing
in these neighborhoods.  The authority must negotiate with the
community leaders to obtain approval to build the new public housing,
and these negotiations can be a very lengthy process.  In addition,
to comply with the one-for-one replacement rule and the site and
neighborhood standards, the authority must seek new construction
funding that often is not available.  These issues complicate and
lengthen the process of reducing vacancies through demolition of
nonviable vacant units. 

Two officials in HUD's Georgia Field Office, the chief of special
programs and a housing management specialist, agreed that land in
nonimpacted sectors of the city is more expensive to purchase and
that construction funds for replacement housing have been difficult
to obtain.  These officials also said that community resistance to
new public housing would be likely.  However, they did not agree that
meeting the one-for-one requirement and site and neighborhood
standards would necessarily impede the authority's ability to
demolish or dispose of chronically vacant housing.  Instead, they
believe that managerial problems at the housing authority are more
responsible for the lengthy demolition and replacement process.  HUD
officials said that the housing authority has had difficulty
developing adequate replacement plans.  The plans often are
incomplete and do not provide enough information on how and where the
authority plans to replace the units.  For example, our review of
Atlanta's disposition application (still unapproved by HUD) for the
Gilbert Annex public housing project found scant information on the
housing replacement plan.  Instead of information describing the
suitability of various sites for building public housing or schedules
showing when disposition and replacement will occur, we found two
sentences listing the neighborhoods, according to census data, that
would meet the site and neighborhood standards.  Consequently, HUD
officials will closely review Atlanta's demolition/disposition
applications and will not approve them until the authority can
develop a more comprehensive housing replacement plan. 


TWENTY-SEVEN HOUSING AUTHORITIES
ACCOUNT FOR 50 PERCENT OF TOTAL
VACANCIES (AS OF APRIL 1994)
========================================================= Appendix III

                                                   Vacancies
                               Total       Total        as a
                              vacant       units  percent of
Housing authority              units   available       total
------------------------  ----------  ----------  ----------
Chicago                        6,136      39,531          16
Philadelphia                   4,807      21,826          22
Newark                         3,812      12,977          29
Cuyahoga, OH (Cleveland)       3,377      12,074          28
Dallas                         2,780       6,856          41
District of Columbia           2,596      11,793          22
New Orleans                    2,563      13,417          19
Dade Co. FL                    2,392      11,397          21
Saint Louis                    2,240       6,953          32
Atlanta                        2,093      13,571          15
Baltimore                      1,946      18,063          11
Boston                         1,731      12,302          14
Pittsburgh                     1,729       9,453          18
Buffalo                        1,424       4,976          29
Puerto Rico                    1,409      57,449           2
Houston                        1,357       4,023          34
Cincinnati                       986       8,084          12
New York City                    941     155,629           1
Memphis                          917       7,012          13
Virgin Islands                   910       4,481          20
East St. Louis                   891       2,874          31
Allegheny Co.                    844       4,052          21
Jacksonville                     833       3,033          27
Louisville                       802       5,936          14
Dayton                           750       4,503          17
Kansas City                      734       1,836          40
Minneapolis                      710       6,705          11
------------------------------------------------------------

LOCATIONS OF LARGE, MEDIUM, AND
SMALL PUBLIC HOUSING AUTHORITIES
========================================================== Appendix IV

Figures IV.1, IV.2, and IV.3 below show the locations of large,
medium, and small public housing authorities across the United
States. 

   Figure IV.1:  Locations of
   Large Housing Authorities

   (See figure in printed
   edition.)

   Figure IV.2:  Locations of
   Medium-Sized Housing
   Authorities

   (See figure in printed
   edition.)

   Figure IV.3:  Locations of
   Small Housing Authorities

   (See figure in printed
   edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Eric A.  Marts, Assistant Director
Merrie C.  Nichols-Dixon, Senior Evaluator
Mitchell Karpman, Statistical Analyst

CHICAGO/DETROIT FIELD OFFICE

Gwenetta A.  Blackwell, Senior Evaluator
Sharon E.  Timmins, Senior Evaluator
John A.  Wanska, Senior Evaluator
Frank M.  Zbylski, Information Systems Analyst

BOSTON/NEW YORK FIELD OFFICE

Norman A.  Krieger, Senior Evaluator
Sheila E.  Murray, Evaluator

