HOPE VI: Progress and Problems in Revitalizing Distressed Public Housing
(Letter Report, 07/20/98, GAO/RCED-98-187).

Pursuant to a legislative requirement, GAO reviewed the: (1) progress in
completing capital improvements and implementing community and support
services at HOPE VI sites; (2) primary reasons why progress at some HOPE
VI sites has been slow; (3) extent to which financial leveraging is used
at HOPE VI sites; and (4) Department of Housing and Urban Development's
(HUD) capacity to oversee the program.

GAO noted that: (1) progress in completing capital improvements and
implementing community and support services varies at HOPE VI sites; (2)
overall, the rate of spending on capital improvements is increasing, but
the vast majority of the grant funds remain to be disbursed; (3)
although housing authorities could spend up to 20 percent of the grant
funds awarded in fiscal years 1993 through 1996 for community and
support services to help residents find jobs and become self-sufficient,
the average expenditure was about 12 percent; (4) to track the progress
of capital improvements and community and support services, HUD has
established measures of performance for capital improvements and has
hired a contractor to collect baseline data on community and support
services; (5) at the HOPE VI sites visited, progress in implementing
capital improvements and community and support services has varied with
structural, social, and management issues specific to each site; (6)
legal issues covering the preparation of grant agreements, legislative
and administrative changes in unit replacement and demolition policies,
and limited HUD staffing have also delayed progress at HOPE VI sites;
(7) more complex redevelopment plans have created major opposition among
groups of residents at several sites and produced delays; (8) using HOPE
VI grants to leverage funding from public and private sources has
introduced time-consuming requirements for coordinating the different
sources' procedures and schedules; (9) financial leveraging has
increased over time, and this trend is expected to continue; (10) a 1998
HUD policy limiting a property's total development costs to industry
averages is also expected to encourage leveraging; (11) because HOPE VI
developments are more complex and costlier than most multi-family
housing developments, the new policy will require the use of leveraging
in the future; (12) reorganizing and downsizing have left HUD with fewer
resources for overseeing HOPE VI grants; (13) streamlining has also left
few employees in the field with knowledge of HOPE VI issues; (14) HUD
has hired contractors to provide some additional oversight and has
restored 11 positions to the HOPE VI program; and (15) although these
additions will offset some of the staffing cuts, the new staff will need
time to acquire expertise in the program.

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

 REPORTNUM:  RCED-98-187
     TITLE:  HOPE VI: Progress and Problems in Revitalizing Distressed 
             Public Housing
      DATE:  07/20/98
   SUBJECT:  Housing repairs
             Urban planning
             Housing construction
             Community development programs
             Declining neighborhoods
             Federal aid for housing
             Human resources utilization
             Public housing
             Grant administration
IDENTIFIER:  HUD Hope VI Program
             Community Development Block Grant
             HUD 2020 Management Reform Plan
             
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Cover
================================================================ COVER


Report to Congressional Committees

July 1998

HOPE VI - PROGRESS AND PROBLEMS IN
REVITALIZING DISTRESSED PUBLIC
HOUSING

GAO/RCED-98-187

HOPE VI Program

(385692)


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

  CDBG - Community Development Block Grant
  HOPEVI -
  HUD - Department of Housing and Urban Development
  NOFA - notice of funding availability
  KPMG -
  TDC - total development costs
  VA -
  YMCA -

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


B-279887

July 20, 1998

The Honorable Christopher S.  Bond
Chairman
The Honorable Barbara A.  Mikulski
Ranking Minority Member
Subcommittee on VA, HUD,
 and Independent Agencies
Committee on Appropriations
United States Senate

The Honorable Jerry Lewis
Chairman
The Honorable Louis Stokes
Ranking Minority Member
Subcommittee on VA, HUD,
 and Independent Agencies
Committee on Appropriations
House of Representatives

For years, many of the nation's public housing sites have exemplified
urban decay and substandard living conditions.  To revitalize
severely distressed urban public housing, the Congress, in October
1992, established the Urban Revitalization Demonstration Program. 
HOPE VI, as the program is commonly known, provides grants to public
housing authorities to transform obsolete public housing sites into
attractive, economically viable communities and to improve the lives
of public housing residents through community and support service
programs.  Since fiscal year 1993, the Congress has appropriated over
$3 billion in HOPE VI grants for 81 sites in 55 cities. 

Because of the significant level of federal investment and questions
about progress in the program, House Report 105-175 and Senate Report
105-53, accompanying the fiscal year 1998 appropriations act for the
departments of Veterans Affairs and Housing and Urban Development,
and independent agencies, requested that GAO continue its analysis of
the HOPE VI program.\1

As agreed with your offices, we reviewed (1) the progress in
completing capital improvements and implementing community and
support services at HOPE VI sites, (2) the primary reasons why
progress at some HOPE VI sites has been slow, (3) the extent to which
financial leveraging is used at HOPE VI sites, and (4) the Department
of Housing and Urban Development's (HUD) capacity to oversee the
program.  To perform our review, we obtained data from HUD, public
housing authorities, and HUD contractors on the 81 sites that have
received grants to date.  We also visited 10 sites in eight cities to
gain an in-depth understanding of issues associated with their
redevelopment.  We selected these sites because they were
geographically diverse, had received grants during different fiscal
years, and were at various stages of progress, especially in those
cities that had received grants for two separate developments.  (See
app.  I for further discussion of our objectives, scope, and
methodology.)


--------------------
\1 Public Housing:  Status of the HOPE VI Demonstration Program
(GAO/RCED-97-44, Feb.  25, 1997) provided preliminary information on
the program's expenditures and activities. 


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

Progress in completing capital improvements and implementing
community and support services varies at HOPE VI sites.  Overall, the
rate of spending on capital improvements is increasing, but the vast
majority of the grant funds remain to be disbursed.  Of the 39 sites
that received grants from fiscal year 1993 through fiscal year 1995,
23 have started demolition, new construction, or rehabilitation.  As
of June 1, 1998, 4 of the 42 sites that received grants in fiscal
years 1996 and 1997 have begun demolition.  At 8 of the 10 sites we
visited (which received grants in fiscal years 1993 through 1996),
demolition, new construction, or rehabilitation of the housing units
has begun.  Although housing authorities could spend up to 20 percent
of the grant funds awarded in fiscal years 1993 through 1996 for
community and support services to help residents find jobs and become
self-sufficient, the average expenditure was about 12 percent.  The
10 sites we visited were aware of the need to sustain these services
after their grants run out, and all of the sites have started or
planned to provide services.  To track the progress of capital
improvements and community and support services, HUD has established
measures of performance for capital improvements and has hired a
contractor to collect baseline data on community and support
services. 

At the HOPE VI sites we visited, progress in implementing capital
improvements and community and support services has varied with
structural, social, and management issues specific to each site. 
Legal issues covering the preparation of grant agreements,
legislative and administrative changes in unit replacement and
demolition policies, and limited HUD staffing have also delayed
progress at HOPE VI sites.  More complex redevelopment plans,
especially those proposing reductions in density and requiring the
long-term relocation of some residents, have created major opposition
among groups of residents at several sites and produced delays. 
Finally, using HOPE VI grants to leverage funding from public and
private sources, such as state grants or low-income housing tax
credits, has introduced time-consuming requirements for coordinating
the different sources' procedures and schedules. 

Financial leveraging has increased over time, and this trend is
expected to continue.  During fiscal years 1993 and 1994, when the
HOPE VI grants averaged about $45 million, the program did not
emphasize leveraging.  But by fiscal year 1997, when the average
grant was about $21.6 million, most of the newly selected sites
planned to rely on leveraged financing to accomplish their capital
improvements.  A 1998 HUD policy limiting a property's total
development costs to industry averages is also expected to encourage
leveraging.  Because HOPE VI developments are more complex and
costlier than most multifamily housing developments, the new policy
will require the use of leveraging in the future. 

Reorganizing and downsizing have left HUD with fewer resources for
overseeing HOPE VI grants.  During the past 2 to 3 years, when the
number of grants has more than doubled and leveraged financing has
become more common, staffing cuts in headquarters have reduced the
number of grant managers and experts in leveraged financing from 11
to 4, a reduction of more than 60 percent.  Streamlining has also
left few employees in the field with knowledge of HOPE VI issues. 
HUD has hired contractors to provide some additional oversight, and
in April 1998, the Department decided to restore 11 positions to the
HOPE VI program.  Although these additions will offset some of the
staffing cuts, the new staff will need time to acquire expertise in
the program. 


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

In 1989, the Congress established the National Commission on Severely
Distressed Public Housing to explore the factors contributing to
structural, economic, and social distress; identify strategies for
remediation; and propose a national action plan to eradicate
distressed conditions by the year 2000.  In 1992, the Commission
reported that approximately 86,000, or 6 percent, of the nation's
public housing units could be considered severely distressed because
of their physical deterioration and uninhabitable living conditions,
increasing levels of poverty, inadequate and fragmented services
reaching only a portion of the residents, institutional abandonment,
and location in neighborhoods often as blighted as the sites
themselves.  Although the Commission did not identify specific
locations as severely distressed, it recommended that funds be made
available to address distressed conditions and that these funds be
added to the amounts traditionally appropriated for modernizing
public housing. 

In response to the Commission's report, the Congress, through
appropriations legislation, created the HOPE VI demonstration program
to provide a more comprehensive and flexible approach to revitalizing
distressed urban communities.  Through a combination of capital
improvements and community and support services, the program seeks to
(1) transform public housing communities from islands of despair and
poverty into vital and integral parts of larger neighborhoods and (2)
create environments that encourage and support the movement of
individuals and families toward self-sufficiency.\2

HUD's Office of Urban Revitalization within the Office of Public and
Indian Housing manages the HOPE VI program.  In addition, HUD's
Office of Public Housing Partnerships advises housing authorities on
leveraging opportunities.  HUD has hired three consulting firms to
help housing authorities establish community and support services. 
In 1997, the Department also began hiring contractors, primarily KPMG
Peat Marwick, to develop management systems for HUD and to help
housing authorities oversee HOPE VI revitalization sites. 

To select housing authorities for participation in the HOPE VI
program, HUD publishes a notice of funding availability (NOFA)
setting forth the program's current requirements and available funds. 
Housing authorities then prepare applications from which HUD selects
those that best satisfy the notice's requirements and signs grant
agreements that, in the absence of regulations, serve as contracts
with the housing authorities.  Each grantee then submits a
revitalization plan to HUD for approval; this plan incorporates a
budget and schedule for implementing the grantee's HOPE VI capital
improvements and community and support services.  After approving the
revitalization plan, HUD gives the grantee access to funding from the
Treasury. 


--------------------
\2 Gayle Epp, "Emerging Strategies for Revitalizing Public Housing
Communities," Housing Policy Debate, Vol.  7, No.  3 (1996), pp. 
563-88. 


   PROGRESS OF CAPITAL
   IMPROVEMENTS AND SUPPORT
   SERVICES VARIES
------------------------------------------------------------ Letter :3

Progress in completing capital improvements and implementing
community and support services varies at HOPE VI sites.  Although the
rate of spending for capital improvements has increased, the vast
majority of the grant funds have yet to be disbursed.  While the
planned capital improvements were not complete at any of the HOPE VI
sites as of June 1, 1998, residents were living in rehabilitated or
newly constructed units at 11 sites.  All of the housing authorities
have completed or are developing plans for community and support
services.  Generally, housing authorities have not spent as much as
the program allows for these services.  HUD has established measures
of performance for capital improvements and has begun to collect
baseline data for use in measuring the results of community and
support services. 


      RATE OF SPENDING FOR CAPITAL
      IMPROVEMENTS HAS INCREASED
---------------------------------------------------------- Letter :3.1

Although limited to date, the pace of spending for HOPE VI sites has
accelerated.  Figure 1 shows cumulative grant levels, obligations,
and disbursements as of the beginning of each fiscal year and as of
May 1998.  It also shows that while the program was established in
fiscal year 1993, grant money was not available to housing
authorities until fiscal year 1995. 

   Figure 1:  Total Grant Awards,
   Housing Authority Obligations,
   and Treasury Disbursements

   (See figure in printed
   edition.)

Source:  HUD. 

Because almost all of the sites funded in fiscal years 1996 and 1997
are still in the planning stages, virtually all the disbursements
through March 1998 were for the 39 sites funded during the program's
first 3 fiscal years (1993 through 1995).  Because of the time lag
between planning and construction and many site-specific delays,
disbursements during fiscal year 1997 and the first half of fiscal
year 1998 ($302 million) were more than twice as high as
disbursements during fiscal years 1995 and 1996 ($138 million).  But
as of March 1998, 73 percent of the grants awarded during the first 3
fiscal years remained to be disbursed ($1.1 billion). 

At the 10 sites we visited, 31 percent of the grant awards had been
disbursed.  Figure 2 shows the spending activity, as of May 1998, at
the 10 selected sites. 

   Figure 2:  Grant Awards,
   Housing Authority Obligations,
   and Treasury Disbursements, as
   of May 1998, for Selected Sites

   (See figure in printed
   edition.)

Note:  The totals for the HOPE VI grants include any amounts for
planning and supplemental awards.  Each grant is listed by the year
in which the implementation grant was awarded. 

Source:  HUD. 

The sites nearing completion--Centennial Place in Atlanta, Hillside
Terrace in Milwaukee, and Kennedy Brothers Memorial in El Paso--have
expended the majority of their HOPE VI grants.  In contrast, Boston's
Mission Main and Chicago's Robert Taylor B sites do not have
HUD-approved revitalization plans and do not expect to begin
construction before late 1998 and 2000, respectively. 

New York City has expended only $1.1 million of the $68.6 million
awarded for the Arverne and Edgemere HOPE VI sites, two adjoining
sites that plan to combine two separate grants into one HOPE VI
effort.  Almost half of the disbursement is from a $500,000 planning
grant awarded in fiscal year 1993 and spent on the planning to
revitalize a different public housing site in the neighborhood. 
However, after reaching an impasse with the tenants' association at
the original site, the housing authority shifted the implementation
grant to Edgemere in December 1996.  HUD officials do not expect
rehabilitation at the Arverne and Edgemere sites to begin before late
1999.  (App.  II describes each site we visited.)


      CAPITAL IMPROVEMENTS HAVE
      BEGUN AT MOST EARLY SITES
---------------------------------------------------------- Letter :3.2

Although capital improvements have begun at most of the 39 HOPE VI
sites funded from fiscal year 1993 through fiscal year 1995, very few
are near completion.  According to HUD's data, at 11 sites, some
residents have moved into newly constructed or rehabilitated units,
and at 23 sites, demolition, rehabilitation, or new construction has
started.  There have been no capital improvements at the five
remaining sites.  At several sites, deteriorated high-rise and
mid-rise buildings are being demolished and replaced with
lower-density structures.  In addition, infrastructure improvements,
such as new street patterns, are breaking down the physical barriers
that isolated many HOPE VI sites from the neighboring communities. 
At some sites, mixed-income communities have replaced concentrations
of poverty, and new community centers, together with plans for police
stations, schools, and shopping districts, are helping to integrate
the sites with neighboring areas. 

At 8 of the 10 sites we visited, both demolition and new construction
or rehabilitation have begun.  The results of the capital
improvements at some of the sites were dramatic: 

  -- At Centennial Place in Atlanta, nearly all of the over 1,000
     original units were demolished and replaced with a mixture of
     subsidized and market-rate units of equally high quality.  In
     addition, three of the site's original structures were
     rehabilitated for historic reasons.  Street patterns were
     reworked to reflect the grid pattern found elsewhere, thereby
     helping to integrate the site with the rest of the city.  (See
     fig.  3.)

   Figure 3:  Centennial Place,
   Atlanta, Georgia

   (See figure in printed
   edition.)

  -- At Chicago's Cabrini Homes Extension, after 3 years of delays,
     four of eight high-rise buildings have been demolished as
     planned, and new row houses, duplexes, and mid-rise buildings
     are under construction or have been completed on adjacent
     property.  (See fig.  4.) Of the planned new units, 30 percent
     are reserved for Cabrini families, 20 percent for
     moderate-income families, and 50 percent for households paying
     market rates. 

   Figure 4:  Construction
   Adjacent to Cabrini Homes
   Extension, Chicago, Illinois

   (See figure in printed
   edition.)

  -- At Hillside Terrace in Milwaukee and Kennedy Brothers Memorial
     in El Paso, the capital improvements consisted primarily of
     rehabilitation.  However, some units were demolished at both
     sites to reconfigure the streets, not only to provide easier
     access for residents and public services but also to discourage
     gang-related drug traffic.  Green spaces were substituted for
     concrete at both sites, and street lights and walkways were
     installed to match those of the surrounding neighborhoods.  In
     addition, community centers were expanded.  In El Paso,
     neighbors who had asked that the brick wall around the HOPE VI
     site be built higher to block out the public housing community
     agreed with the site plan, which proposed to demolish the wall
     and replace it with a see-through wrought iron fence.  (See fig. 
     5.)

   Figure 5:  Kennedy Brothers
   Memorial Apartments, El Paso,
   Texas

   (See figure in printed
   edition.)


      FUNDING AVAILABLE FOR
      COMMUNITY AND SUPPORT
      SERVICES HAS DECREASED
---------------------------------------------------------- Letter :3.3

Most of the community and support services at HOPE VI sites are
designed to provide residents with employment training and
opportunities to become more self-sufficient.  When calculated on a
per-unit basis, the funding for these services has decreased since
the program's early years.  However, the decline in funding may not
have much impact on the services, and most sites are working on plans
to sustain the services after the grants run out. 

For the grants awarded from fiscal year 1993 through fiscal year
1996, up to 20 percent of the grant funds could be spent for
community and support services.\3

However, according to HUD's data, at the 39 sites that received
funding during this period, only about 12 percent of the total grant
funding was budgeted, on average, for community and support services. 
Figure 6 shows the budget and spending for community and support
services, as of April 1998, at the 10 sites we visited. 

   Figure 6:  Spending for
   Community and Support Services,
   as of April 1998, for Selected
   Sites

   (See figure in printed
   edition.)

Sources:  HUD and KPMG Peat Marwick. 

Starting with the grants awarded in fiscal year 1997, HUD changed the
allocation for community and support services from up to 20 percent
of the grant funds to up to $5,000 per unit.  The net effect of this
change was to lower the total amount available for such services. 
HUD program officials said that they are not concerned about the
reduction in funding for community and support services because
neither the original nor the revised guidelines would provide enough
support to maintain the services over the long term.  Housing
authority officials we spoke with also expressed little concern about
the decrease because most housing authorities were not spending to
the limit and were attempting to build self-sustaining programs. 

The HOPE VI sites we visited were aware of the need to sustain their
community and support service programs after their HOPE VI funds run
out.  For example, Atlanta's Centennial Place has created a full-time
position for a staff member to focus on fund-raising and
collaborating with local agencies to sustain the programs developed
under HOPE VI.  Other sites, such as Orchard Park in Boston and Pico
Aliso in Los Angeles, had service organizations in the neighborhood
before the HOPE VI program started, and their HOPE VI money has
provided these organizations with facilities and equipment to offer
more comprehensive services.  A March 1998 HUD Inspector General's
report expressed concern that Kennedy Brothers Memorial in El Paso
will not have enough funds to support its current plans for community
and support services unless it leverages additional public and
private support.\4 The El Paso housing authority's executive director
responded by terminating a number of support service contracts and
developing a plan with a community development corporation to
initiate volunteer programs and fund-raising efforts to sustain
operations after the HOPE VI grant runs out. 


--------------------
\3 For the grants awarded from fiscal year 1993 through fiscal year
1995, the guidelines required the locality to match at least 15
percent of the amount reserved for support services. 

\4 HOPE VI Grants:  Housing Authority of the City of El Paso, Texas,
HUD District Inspector General for Audit, Southwest District
(98-FW-201-1003, Mar.  6, 1998). 


      COMMUNITY AND SUPPORT
      SERVICES VARY
---------------------------------------------------------- Letter :3.4

At the 10 sites we visited, we observed a variety of community and
support services designed to improve the lives of the residents. 
These services included community businesses sponsored through the
HOPE VI program; job placement services and entrepreneurial training
programs; technology learning centers affording access to computers;
day care and health care centers; and Boys and Girls Clubs providing
after-school activities.  For example, Centennial Place in Atlanta
and Cabrini Homes Extension in Chicago have community programs
designed to provide residents with the tools needed to launch their
own businesses and become self-sufficient.  Both Pico Aliso in Los
Angeles and Cabrini Homes Extension have silk-screening companies
training residents and providing them with experience in working
together in a productive environment.  Homeboy Industries, the Pico
Aliso silk-screening business, is a profitable venture bringing
residents from different gangs together to work. 

At Hillside Terrace in Milwaukee and Kennedy Brothers Memorial in El
Paso, residents are providing voluntary community services, such as
Neighborhood Watch.  Kennedy Brothers also hired an off-duty police
officer to patrol the site, and residents are removing graffiti to
keep the site clean.  Moreover, according to the El Paso housing
director, residents at other public housing sites are aware of the
social successes at the HOPE VI site and are trying to duplicate them
in their communities through volunteer programs such as Neighborhood
Watch. 


      HUD HAS PERFORMANCE
      INDICATORS FOR CAPITAL
      IMPROVEMENTS AND IS
      DEVELOPING OUTCOME-BASED
      MEASURES FOR SERVICES
---------------------------------------------------------- Letter :3.5

Measures of outcomes are important for tracking the success of the
HOPE VI program.  HUD's Office of Policy Development and Research is
conducting a three-phase, 10-year evaluation of conditions at HOPE VI
sites.  The first phase, completed in August 1996, contained baseline
data on conditions at 15 sites funded in the first year of the
program, historical descriptions of the distressed housing at these
sites, and planned revitalization activities.  The second phase,
expected to begin in the summer of 1998, will assess conditions at
the sites as they are reoccupied.  The third phase will evaluate
conditions at the sites 3 to 5 years after they have been reoccupied. 

HUD's performance plan, required under the Government Performance
Results Act of 1993,\5 lists performance indicators for capital
improvements at HOPE VI sites, but not for community and support
services.  HUD has asked the housing authorities to develop such
measures and has requested baseline data from all HOPE VI grantees
for use in measuring the outcomes of community and support services. 

HUD's performance indicators for HOPE VI capital improvements include
the number of units demolished, rehabilitated, and replaced.  The
replacement units include newly constructed public housing units and
units obtained through Section 8 certificates, which provide rental
assistance to private landlords on behalf of low-income households. 
HUD has contracted with KPMG Peat Marwick to gather data on the
progress of capital improvements at the HOPE VI sites.  (See app. 
III for a chart with information on the status of demolition and unit
revitalization for all sites.)

To create a baseline for measuring the results of community and
support services, HUD asked all HOPE VI grantees for data on
employment, economic development, job training, education, community
building, homeownership, crime reduction, and other social issues.\6
HUD officials told us that they believe it is important to have
evaluative measures to justify their expenditures for these services. 
HUD's effort to collect baseline data should be a first step toward
developing consistent national data on the outcomes of HOPE VI
community and support services. 


--------------------
\5 The Government Performance and Results Act of 1993 requires
federal agencies to prepare annual performance plans to provide
congressional decisionmakers with information on the results to be
achieved for a proposed level of resources.  Specifically, the plans
should clearly inform the Congress and the public of the annual
performance goals for the agency's major programs and activities, the
measures that will be used to gauge performance, and the procedures
that will be used to verify and validate information on performance. 

\6 Many sites were already collecting their own data for evaluating
community and support services.  For example, the housing authority
in Milwaukee was collecting and reporting demographic information,
such as crime statistics and changes in residents' incomes, and
planning to collect activity data, such as the number of residents
obtaining services like day care and health care. 


   PROGRESS AT SITES HAS VARIED
   FOR SEVERAL REASONS
------------------------------------------------------------ Letter :4

Progress at HOPE VI sites has varied for interrelated reasons
associated with conditions at the selected sites, the origin of the
program, the types of capital improvements selected, and the types of
funding used.  These sites have to overcome complex structural,
social, and management challenges that require time to resolve. 
Legal issues and legislative and administrative changes to the
program's requirements have also added time to developments.  In
general, rehabilitation has taken less time than demolition and new
construction, especially when new construction has reduced a
development's density and entailed permanent relocation for some
residents.  The use of leveraged financing has also introduced
time-consuming requirements for coordinating the different funding
sources' procedures and schedules.  These factors have sometimes
acted in combination to delay HOPE VI developments. 


      CONDITIONS AT SITES HAVE
      AFFECTED PROGRESS
---------------------------------------------------------- Letter :4.1

HOPE VI sites generally pose extraordinary physical and social
challenges.  The selected sites exhibit conditions that the HOPE VI
program was designed to reverse, including physical deterioration,
uninhabitable living conditions, high rates of crime and
unemployment, and isolation from the surrounding community.  For
example, New York's Far Rockaway neighborhood, containing both the
Arverne and the Edgemere sites, has been a candidate for major urban
renewal funding for over 20 years.  However, the city has not
committed funding to make major investments in such an isolated
location, according to housing authority officials.  The $25 million
HOPE VI grant at Robert Taylor Homes B in Chicago is for demolishing
the first 5 of 16 high-rise buildings and purchasing or building a
limited number of replacement units in the surrounding neighborhood. 
The Chicago Housing Authority estimates that it will take 10 years to
vacate the Robert Taylor development, where the unemployment rate is
over 90 percent, and bring back an economically viable neighborhood. 
At Los Angeles' Pico Aliso site, relocation took longer than planned,
since many residents could not be moved as anticipated because the
areas were controlled by gangs. 

Despite the physical and social challenges they pose, many HOPE VI
sites are located close to city centers, making them attractive to
investors.  At the same time, residents at some sites have viewed
investors' interest with suspicion, fearing that they will lose their
homes to upscale development.  In some instances, housing authorities
have been able to allay residents' concerns and proceed with capital
improvements; in other instances, the residents' concerns have
delayed redevelopment. 

  -- Atlanta's Centennial Place, conveniently located within walking
     distance of downtown Atlanta, attracted funds from the city,
     private lenders, and community service providers, all of whom
     considered the site a desirable investment.  However, residents
     fearing displacement initially opposed the housing authority's
     revitalization plan, which called for reducing the development's
     density and replacing only one in three public housing units. 
     Eventually, the residents agreed to the plan when the executive
     director promised to allow those who remained in good standing
     (i.e., paid their rent and respected the housing authority's
     rules) to return to the site.

  -- Both Mission Main in Boston and Cabrini Homes Extension in
     Chicago are desirably situated near city centers and have
     attracted private development funds, but residents' concerns
     about the motives of the housing authorities and of the
     developers have, in both cases, delayed development.  At Cabrini
     Homes Extension, where many residents see a leveraging plan as
     an attempted land grab by developers, the residents are suing
     the Chicago Housing Authority to ensure their right to return to
     the site after the capital improvements have been completed. 

HOPE VI sites also pose exceptional management challenges.  Under the
selection criteria that the Congress established for the program's
first 3 years, the housing authorities applying for funding had to be
(1) located in the 40 most populous U.S.  cities, as defined on the
basis of data from the 1990 census, or (2) included on HUD's list of
troubled housing authorities as of March 31, 1992.\7 Of the 24
housing authorities included on that list, 17 received at least one
HOPE VI implementation grant during the program's first 3 years.  In
total, these 17 housing authorities received 21 (55 percent) of the
grants awarded to 39 sites from fiscal year 1993 through fiscal year
1995.  Furthermore, at over half of these 39 sites, major changes in
senior management occurred after the grant was awarded.  Management
turnover limits progress because time is needed to replace and
reorganize staff and allow staff to learn their new duties and build
relationships and trust with the community. 

At 16 of the HOPE VI sites, either HUD or the courts have intervened
in the housing authority's management.  According to HUD officials,
the primary reason for intervention was the inability of housing
authorities to manage and implement the program.  Management problems
were particularly acute at the Washington, D.C., and Chicago housing
authorities.  In Washington, D.C., the housing authority was so
troubled that HUD made its grant award contingent upon the
appointment of an alternative administrator.  This appointment took
about 6 months from the time the grant was awarded, and submitting a
revised revitalization plan to HUD took another 5 months.  In
Chicago, where HUD took over the housing authority's operation after
the housing board resigned, more than 2-1/2 years elapsed before the
revitalization plan for Cabrini Homes Extension was revised and HUD's
approval of the plan was obtained. 


--------------------
\7 Thirteen of 23 troubled housing authorities were located in
qualifying cities. 


      PROGRAM'S ORIGIN HAS CREATED
      LEGAL CHALLENGES AND
      ENCOURAGED CHANGES
---------------------------------------------------------- Letter :4.2

The HOPE VI program's origin has created legal challenges and
encouraged legislative and administrative changes that have further
delayed sites' progress.  The program's origin has also influenced
HUD's assessment of the program's priorities and staffing needs. 

Unlike most public housing programs, which are authorized under the
U.S.  Housing Act of 1937, as amended, and operate under nationally
applicable implementing regulations, the HOPE VI program was created
and has been modified through appropriations legislation.  Rather
than develop implementing regulations that would be difficult to
modify with each legislative change, HUD has incorporated the
program's legislative requirements into periodic notices of funding
availability and into the grant agreements that it signs with
individual housing authorities.  The evolution of the HOPE VI
program's requirements is summarized in figure 7. 

   Figure 7:  Changes to the HOPE
   VI Program Over Time

   (See figure in printed
   edition.)

The HOPE VI program's establishment through the appropriations
process raised legal issues that had to be resolved before HUD could
fully implement the program.  In the absence of regulations, the
grant agreements serve as contracts between HUD and the housing
authorities overseeing the HOPE VI sites.  According to a HUD
official, HUD took 8 months after sending out the letters announcing
the fiscal year 1993 awards to finalize the first grant agreements,
primarily because it was creating regulatory documents, not merely
specifying the grants' conditions.  Other legal issues arose in 1995,
when HUD began encouraging the housing authorities to use their
federal grants to leverage private funds for redevelopment.  HUD took
8 months to develop new regulations on the use of both public and
private funds to finance public housing sites.\8

Annual legislation has affected the HOPE VI program, and HUD has
amended the grant agreements and the program's guidance to reflect
its interpretation of these changes.  For example, until the
Rescissions Act was passed in July 1995, HOPE VI sites were subject
to a rule requiring the replacement of every unit removed from
service.  Although demolition was an option, housing authorities
rarely availed themselves of it when every unit that they tore down
had to be replaced.  After the Rescissions Act suspended the
one-for-one replacement rule, HUD began encouraging housing
authorities to consider demolition as a way of reducing a site's
density.  HUD also interpreted the 1996 appropriations legislation as
adding demolition to HUD's funding criteria.  HUD, therefore,
required each housing authority to demolish at least one building. 
Eventually, HUD concluded that demolition was not always required. 

These legislative and administrative changes and HUD's interpretation
of them affected progress at the sites we visited.  For example, the
Los Angeles housing authority welcomed the suspension of the
one-for-one replacement rule and took advantage of it to revise its
plan for the Pico Aliso site to include demolition and new
construction.  This revision, however, added about 15 months to the
process, according to Los Angeles officials.  In New York City,
issues raised by HUD's interpretation of the 1996 appropriations
legislation as requiring demolition added months to the planning
phase at the Arverne and Edgemere sites, where residents opposed the
housing authority's plan to satisfy the demolition requirement by
removing the top four floors of three buildings at the site, thereby
removing the equivalent of an entire building. 


--------------------
\8 Subpart F of the public housing development regulations. 


      TYPES OF CAPITAL
      IMPROVEMENTS INFLUENCE
      PROGRESS
---------------------------------------------------------- Letter :4.3

The types of capital improvements selected have influenced the pace
of development.  Rehabilitation, which requires less change than
demolition and new construction, has generally proved less
controversial and taken less time.  Plans to build off-site, reduce a
development's density, and/or permanently relocate residents have
encountered more opposition from residents.  For example, in
Milwaukee, existing units were, for the most part, rehabilitated at
Hillside Terrace.  Although residents were required to move while the
work was going on, most will be able to return when it is completed. 
Capital improvements at the site have encountered little opposition
and are progressing on schedule.  Conversely, Boston's Mission Main
planned to exchange some of its land for adjacent land owned by a
local university in order to build a portion of the rental and
homeownership units on the new site, but it could not reach agreement
with the university.  After a year of unsuccessful negotiations, the
mayor vetoed the deal in March 1998 to preclude further delays. 


      LEVERAGING ADDS TIME
---------------------------------------------------------- Letter :4.4

Using grant funds to leverage other public and/or private financing
for development is more complex than relying on grant funds alone and
may take longer.  Combining funds from different sources requires
adhering to and coordinating the different sources' procedures and
schedules, sometimes causing delays.  In addition, many housing
authorities lack the experience necessary to negotiate leveraged
financing arrangements.  However, as discussed in the next section of
this report, leveraging has many benefits. 

The steps involved in using one other funding source--low-income
housing tax credits--illustrate the complexity of leveraged
financing.  To obtain tax credits, which attract private equity for
development, a housing authority must submit an application to the
state and compete with other developers for the credits.  The
application must identify all of the proposed sources and uses of
funds and undergo a subsidy-layering review to ensure that no more
federal assistance is being provided than is necessary to make the
development financially feasible.  If tax credits are awarded for the
development, the housing authority must then recruit investors who
are willing to provide equity in exchange for tax credits.  The
process of obtaining tax credits can add several months to a project. 


   FINANCIAL LEVERAGING IS
   EXPECTED TO INCREASE
------------------------------------------------------------ Letter :5

Even though leveraging is more complex than relying on grant funds
alone, according to HUD's data, the majority of the 81 HOPE VI sites
funded to date are planning to mix public and private financing,
primarily by combining low-income housing tax credits or loans from
private lenders with the HOPE VI grants.  At 30 of the sites, the
combined funds from public and/or private sources exceed the HOPE VI
grant.  Most of the 23 sites selected in the 1997 funding round
reflect the program's new emphasis on forging partnerships and
leveraging outside resources. 

The use of leveraged financing may enable sites to stretch limited
federal dollars, create opportunities for mixed-income developments,
and attract nonprofit and for-profit partners with experience in
leveraged financing.  For example, at Centennial Place in Atlanta,
the housing authority combined low-income housing tax credits and
private funding with the HOPE VI grant to create a mixed-income
community.  The grant funds provided public housing units for
residents with very low incomes, the tax credits financed units for
residents with low to moderate incomes, and the private funding paid
for the development of market-rate units for residents with moderate
to high incomes. 

At Kennedy Brothers Memorial in El Paso, the housing authority is
combining private funds with the HOPE VI grant to produce both public
housing units and identical or similar units that will be available
to home buyers.  At Ellen Wilson in Washington, D.C., the income mix
will be completed by offering, at full market prices, fee simple
units that are identical or similar to the neighboring limited-equity
cooperative units.  These units will be purchased using private
mortgages, and the profits from their sale will establish an
endowment for ongoing neighborhood community and support services. 
However, other sites, such as Arverne and Edgemere in New York and
Robert Taylor Homes B in Chicago, are physically isolated or suffer
from extreme economic distress, making them unattractive to outside
investors.  (Fig.  8 identifies the sources of funding for the 10
sites we visited.)

   Figure 8:  Sources of Funding
   for 10 Selected Sites

   (See figure in printed
   edition.)

Note:  The totals for the HOPE VI grants include any amounts for
planning and supplemental awards.  Each grant is listed by the year
in which the implementation grant was awarded. 

Sources:  HUD and KPMG Peat Marwick. 

Recent appropriations acts have encouraged leveraging by reducing the
size of the HOPE VI grants.  On average, the size of the grants has
declined from about $45 million during fiscal years 1993 and 1994 to
about $21.6 million in fiscal year 1997 (see fig.  9).  To some
extent, this decline is consistent with a change in the 1996
appropriations legislation that eased the program's eligibility
requirements.  As a result of this change, some of the more recently
selected sites are smaller and have greater potential for leveraging
than the original sites. 

   Figure 9:  Average HOPE VI
   Funding, by Fiscal Year

   (See figure in printed
   edition.)

Sources:  HUD and KPMG Peat Marwick. 

HUD anticipates further increases in the use of leveraging after it
implements a new total development cost (TDC) policy, expected to go
into effect with the fiscal year 1998 grants.  Under HUD's former TDC
policy, the per-unit costs of development were capped.  These
costs--including the costs of land acquisition, building acquisition
or construction, builders' overhead and profit, and financing--were
not to exceed the housing industry's standards for multifamily
properties in a given area.  While HOPE VI sites have always been
subject to TDC caps, they have typically received exceptions because
of the extraordinary demolition, remediation, and other costs
involved in urban revitalization.  Under the new policy, applicable
to developments financed with grants awarded in fiscal year 1998 and
beyond, items paid for with HUD funds, including public housing,
HOME, and Community Development Block Grant (CDBG) funds, will not be
eligible for exceptions.  However, items paid for with
non-public-housing funds controlled by a locality, state, or private
sector, including low-income housing tax credits, will not be subject
to the TDC caps.\9 Consequently, HUD officials believe that housing
authorities will be forced to rely on non-HOPE VI funds to a greater
extent. 


--------------------
\9 Developments financed with (1) grants awarded in fiscal years 1993
through 1996 will still be eligible for exceptions and (2) grants
awarded in fiscal year 1997 will receive a 10-percent variance for
demolition and other extraordinary site costs. 


   HUD'S CAPACITY FOR OVERSIGHT IS
   LIMITED
------------------------------------------------------------ Letter :6

During the past 2 to 3 years, staffing cuts in headquarters and the
field have diminished HUD's capacity to oversee the HOPE VI program. 
Although HUD has hired contractors to provide some additional
oversight and recently decided to add 11 positions, the new staff
will need time to become familiar with the program. 

In June 1997, HUD issued its 2020 Management Reform Plan, which calls
for reorganizing and downsizing the agency.  Under this plan, HUD
will cut its staff from 10,500 to 9,000 by the year 2000.  The HOPE
VI program was not exempted from staff cuts.  From March 1995 through
March 1998, the number of grant managers responsible for overseeing
HOPE VI grants dropped from six to two, while the number of HOPE VI
grants more than tripled.  Similarly, from August 1996 (when the
Office of Public Housing Partnerships was established) through March
1998, the number of experts in leveraged financing decreased from
five to two.  During this period, complex leveraged financing
proposals became the norm for HOPE VI sites. 

In 1997, efforts to streamline HUD's field structure left few
employees in the field with knowledge of HOPE VI issues.  In some
instances, field offices with HOPE VI responsibilities were closed,
and in other instances, key staff moved to other locations or new
assignments.  For example, the division director and the site manager
of the Milwaukee field office, who had worked closely with the
Milwaukee housing authority, accepted positions in other field
offices.  According to officials from the Milwaukee housing
authority, their close working relationship with the HUD field office
staff contributed to the success of the city's HOPE VI redevelopment. 

In 1997, HUD hired outside contractors to help develop management
systems and oversee the HOPE VI program.  This action responded, in
part, to an increasing number of reports issued by HUD's Inspector
General documenting improper expenditures and management deficiencies
at individual HOPE VI sites.  In 1997, HUD also began hiring private
"expediters" to help housing authorities move through the HOPE VI
process.  But even with these additional resources, program officials
have expressed concerns about not having enough staff to develop and
implement programs for improving the management of HOPE VI sites. 
Program officials were also concerned that housing authorities were
not as responsive to the consultants as they would have been to HUD
staff. 

In March 1998 testimony before the Subcommittee on VA, HUD, and
Independent Agencies, House Committee on Appropriations, we
questioned whether HUD has the capacity to properly manage the HOPE
VI program.  In April 1998, HUD reevaluated its HOPE VI staffing and
decided to add new positions.  HOPE VI program directors believed the
new positions would help them catch up with the growing workload but
noted that they had lost expertise through the earlier staff cuts. 
For example, the Director of Public Housing Partnership programs said
that it takes a number of months to train a new professional in the
details of underwriting HOPE VI sites. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

After 5 years, the federal government's investment in HOPE VI grants
is beginning to produce visible results in the form of capital
improvements at some sites.  These improvements are helping to break
down the barriers isolating the HOPE VI sites from neighboring areas. 
HUD has developed some outcome-based measures for capital
improvements, as the Government Performance and Results Act requires,
and is collecting and reporting data on rehabilitation, demolition,
and new construction at the sites. 

Although HUD has encouraged grantees to develop performance
indicators for community and support services, it has not established
such indicators itself.  It has, however, hired a contractor to begin
collecting the data needed to establish a baseline for charting the
incremental results of these services across sites.  HUD could use
the data to develop consistent national, outcome-based measures for
community and support services at HOPE VI sites.  Such measures are
important to comply with the Government Performance and Results Act
and to ensure that federal expenditures are producing the intended
results. 

As the HOPE VI program has evolved, its focus has shifted from
revitalizing the most severely distressed public housing sites to
transforming distressed sites with the capacity to leverage outside
resources into mixed-income communities.  This shift has led to
positive results at sites in economically viable locations, such as
Centennial Place in Atlanta and Ellen Wilson in Washington, D.C. 
However, some severely distressed properties in severely distressed
neighborhoods, such as Robert Taylor Homes B in Chicago and Arverne
and Edgemere in New York City, may not be able to attract investment
partners or leverage the funds needed to transform neighborhoods. 
Thus, the current HOPE VI funding model may not be adequate to
revitalize some of the nation's most severely distressed sites. 


   RECOMMENDATION
------------------------------------------------------------ Letter :8

We recommend that the Secretary of Housing and Urban Development use
the baseline data that the Department collects to develop consistent
national, outcome-based measures for community and support services
at HOPE VI sites. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :9

We provided copies of a draft of this report to HUD for its review
and comment.  HUD commented that the report was fair and objective
but expressed some concern with our characterization of the more
recently selected sites as less severely distressed than the sites
selected in the program's early years.  We agree that the more
recently selected sites are suffering from structural and social
distress and are likely to be among the most distressed sites in the
cities that received the recent grants.  But unlike some of the early
sites, whose location in isolated or severely economically distressed
neighborhoods has prevented them from finding leveraging partners,
the sites chosen since 1996 have typically been smaller and located
in areas where private interests have been more willing to invest
funds.  We revised our report to clarify this point. 

HUD also expressed some concern with our recommendation, stating that
because the different sites are expected to tailor their plans to
address the specific needs of their communities and residents, it may
not be possible to establish HOPE VI-wide measures that would be
applicable to all programs.  We agree that the HOPE VI sites are
unique and that the program should not be constrained in ways that
would inhibit creativity.  Yet even though the needs of the
communities and residents may vary by site, the types of community
and support service programs offered at the sites we visited (e.g.,
day care, after-school care, equivalency degree, job training, and
job placement programs) were consistent enough to allow the
collection of national data on the outcomes of these programs. 
Accordingly, we have retained our recommendation to this effect. 
HUD's complete written comments and our responses appear in appendix
IV. 


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

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 others upon
request. 

We conducted our work from August 1997 through June 1998 in
accordance with generally accepted government auditing standards. 
Major contributors to this report include Gwenetta Blackwell, Linda
Choy, Elizabeth Eisenstadt, Andy Finkel, Rich LaMore, Karin Lennon,
and Paul Schmidt. 

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


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

The House Report (105-175) and the Senate Report (105-53)
accompanying the fiscal year 1998 appropriations act for the
departments of Veterans Affairs and Housing and Urban Development,
and independent agencies (P.L.  105-65) included requests for GAO to
study the status of the HOPE VI program to determine why grantees had
not acted more expeditiously.  As requested, we reviewed (1) the
progress in completing capital improvements and implementing
community and support services at HOPE VI sites, (2) the primary
reasons why progress at some HOPE VI sites has been slow, (3) the
extent to which leveraging is planned to be used at HOPE VI sites,
and (4) HUD's capacity to oversee the program. 

To assist us in responding to these objectives, we used data
developed by HUD and HUD's contractor on the 81 sites that had
received awards through 1997, and we visited 10 sites in eight
cities.  We selected these sites because they were geographically
diverse, had received grants during different fiscal years, and were
at various stages of progress, especially in those cities that had
received grants for two separate developments. 

To respond to the first objective, we reviewed the information
developed by HUD's contractor on the 81 sites.  The data included
each grantee's current expenditures for capital improvements; the
number of units demolished, rehabilitated, or scheduled for
demolition or other revitalization activities; and the grantee's
community and support services.  Furthermore, during our site visits,
we gathered additional information on capital improvements and
community and support services.  In several locations, we observed
specific community and support service programs that were in
operation and obtained information on any results to date. 

To assess why progress has been slow at many HOPE VI sites, we
evaluated the impact of the legislative and administrative changes
that have occurred since the program's inception.  Because
appropriations legislation included changes to the program nearly
every year, we assessed the impact of these changes by discussing
them with HUD and housing authority officials, as well as by
reviewing the notices of funding availability that HUD prepared. 
These notices generally reflected the legislative changes.  In
addition, at sites we visited where significant delays had occurred,
we reviewed HUD's files and discussed the delays with HUD
headquarters and field officials.  We also met with housing authority
officials, reviewed their program files, and obtained their views on
how soon they expected revitalization efforts to be completed. 
Finally, we met with representatives of tenant organizations at some
of the sites to obtain their views on what factors contributed to the
delays, what has been done to overcome the delays, and how they think
HUD and housing authority officials have addressed their concerns. 

To assess the extent to which leveraging had been used or is planned
to be used, we reviewed the data collected by HUD's consultants on
each grantee.  We also obtained information on leveraging by speaking
with housing authority officials during out site visits and by
reviewing individual sites' revitalization plans. 

To assess HUD's capacity to oversee the program, we interviewed HUD
officials at headquarters and at the field offices near our selected
sites, and we reviewed HUD's program guidelines, project files, and
status reports.  In addition, we reviewed the correspondence and
required quarterly reports sent by the housing authorities at our
selected sites to HUD.  We also assessed HUD's program staffing
history, current staffing outlook, and use of a contractor hired in
1997 to develop management systems for overseeing the program. 
Finally, we considered what impact HUD's 2020 Management Reform Plan
may have on the HOPE VI program. 

We conducted our work from August 1997 through June 1998 in
accordance with generally accepted government auditing standards. 


CASE STUDIES
========================================================== Appendix II


   CENTENNIAL PLACE
   ATLANTA, GEORGIA
-------------------------------------------------------- Appendix II:1

As figure I.1 shows, the Atlanta Housing Authority was notified of
its implementation award in 1993, and the revitalization of the
Techwood/Clark Howell Homes site has moved forward expeditiously
since, with extensive demolition and new construction.  Centennial
Place, a new mixed-income community, was created on the site. 

   Figure I.1:  Time Line for
   Centennial Place

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:1.1

Centennial Place is the first mixed-income community being developed
with HOPE VI and private funds.  The former Techwood/Clark Howell
public housing site is being transformed as part of a larger effort,
the Olympic Legacy Program, which will revitalize 2,935 units of
public housing and build a new school, YMCA, and hotel with private,
federal, state, and local funds totaling more than $350 million.  The
housing portion of Centennial Place will cost about $84
million--$42.6 million from the HOPE VI grant and the remainder from
low-income housing tax credits and private, state, and local funding. 
Consisting of 900 garden apartment and town house rental units,
Centennial Place is being leased to residents at three income levels: 
40 percent of the households are eligible for public housing, 20
percent qualify for low-income housing tax credit support; and 40
percent pay market rates. 


      FACTORS CONTRIBUTING TO
      SUCCESS
------------------------------------------------------ Appendix II:1.2

The prime location of Centennial Place is a key ingredient in its
success.  The Atlanta Housing Authority and its private-sector
partner, the Integral Partnership of Atlanta (a joint venture of The
Integral Group and McCormack Baron), have marketed the location's
proximity to two major universities (Georgia Tech and Georgia State),
the headquarters for Coca Cola, the downtown area, and Interstates 85
and 75. 

Local support has also benefited Centennial Place.  Relationships
with the city of Atlanta, Fulton County, the United Way, the YMCA,
the Atlanta Public Schools, the Department of Family and Children's
Services, Georgia Tech, Georgia State University, and other state and
local agencies, businesses, and academic institutions will, according
to housing authority officials, facilitate leveraging. 

Careful efforts to relocate all public housing residents through a
choice-based relocation program have forestalled residents'
opposition to the redevelopment of Techwood.  The Atlanta Housing
Authority has just received an award from the National Association of
Housing Redevelopment Organizations for its relocation program.  The
relocation staff usually meet several times with the families
affected by the relocation plan--first in a large group, then with a
few (e.g., five) families, and finally with just one family. 
Two-thirds of the former Techwood residents chose Section 8
certificates, and 95 percent of these families found apartments.  A
former resident sued the housing authority, claiming that it changed
the reoccupancy rules after Centennial Place was completed.  The case
has been settled, and the resident is moving into Centennial Place. 

Now that the development's structures have been revitalized, the
housing authority has shifted its focus to jobs, job training, and
education.  Social services and case management (i.e., identifying
internal and external resources and making referrals to service
providers) will be provided to the public housing residents in a YMCA
located on the property at Centennial Place, as well as in the
historic community center renovated with HOPE VI funds.  Under the
HOPE VI program, residents will be able to participate in a variety
of activities that require training in special skills, necessitating
the establishment of a job and skills bank and various support
service programs.  The educational, training, and self-improvement
programs that were designed under the HOPE VI program are aimed at
helping the residents realize their personal goals. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:1.3

Centennial Place is being developed in five phases.  Phases I and II
are complete, and all units have been leased or have residents
approved for leasing.  Phase III is scheduled for completion in
December 1998.  Phase IV is scheduled for completion by the year
2000, and Phase V is scheduled for completion early in 2001.  Of the
144 units reserved for public housing residents, 96 are currently
occupied by former Techwood/Clark Howell residents. 

   Figure II.2:  Centennial Place

   (See figure in printed
   edition.)


   MISSION MAIN
   BOSTON, MASSACHUSETTS
-------------------------------------------------------- Appendix II:2

As figure II.3 shows, Mission Main was notified of its grant award of
about $50 million in November 1993.  However, the site's
revitalization has been at a virtual standstill since then. 

   Figure II.3:  Time Line for
   Mission Main

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:2.1

Built in 1940, Mission Main originally comprised 1,023 units, but
conversions and reprogramming for nonresidential use reduced that
number to 822.  According to one evaluation, the site is badly
deteriorated, and the physical layout of the site and buildings has
facilitated criminal behavior.  According to 1995 information from
the Boston Housing Authority, 74 percent of the applicants for public
housing who were offered units in Mission Main rejected those units
because of the development's poor physical condition and high crime
rates.\1 Approximately 500 units were occupied in December 1995, when
the housing authority applied to HUD for permission to demolish the
existing units. 


--------------------
\1 According to a consultant's study, in 1993 violent crime
rates--including those for murder, rape, and robbery--were almost
three times higher for Mission Main than for the city of Boston. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:2.2

Selected in fiscal year 1993 to receive one of the first HOPE VI
implementation grants, Mission Main was the type of distressed site
that, according to a HUD official, the Congress wanted to revitalize
when it established the HOPE VI program.  HUD selected it not only
because its distress was well documented but also because its
solutions were well thought out.  HUD believed that its proximity to
one of Boston's major medical communities, several colleges, and
important cultural institutions would facilitate its integration with
the community. 

The original revitalization plan called for rehabilitating the
existing units, but the revised plan proposed to demolish and replace
them with newly constructed town house units.  The revised plan is
expected to cost over $100 million.  Primary funding sources include
about $100 million in federal funds ($39 million from the HOPE VI
grant, $40 million in equity generated through the sale of low-income
housing tax credits, and $21 million from HUD's Comprehensive Grant
Program\2 ) and about $6 million in local funds for infrastructure
work. 

Making Mission Main safe is the first of the development's six
revitalization goals.  The remaining goals include making the housing
sound and attractive, improving the housing authority's
responsiveness, rewarding personal responsibility, integrating the
development into the neighborhood, and reinforcing the community. 

The Boston Housing Authority has planned a community and support
service program for both Mission Main and Orchard Park, another HOPE
VI project located less than 2 miles from Mission Main.  The goal of
this program is to integrate the developments' residents into the
surrounding area's mainstream service network.  According to the
housing authority's plan, HOPE VI funds will be used to fund gaps in
services, not to duplicate existing services.  The program will
address the long-standing issues of poverty, joblessness, and
isolation affecting Mission Main's residents. 

The Boston Housing Authority has not entered into any contracts for
community and support services.  It has begun to identify partners in
the community and is planning to hire an independent contractor to
measure the effectiveness of its plan for community and support
services. 


--------------------
\2 The Comprehensive Grant Program was implemented in fiscal year
1992 and is intended to provide housing authorities with reliable and
predictable funding for capital improvements and modernization. 


      FACTORS CONTRIBUTING TO
      DELAYS
------------------------------------------------------ Appendix II:2.3

Several factors have slowed Mission Main's progress, including
changes in the development's plans and management and opposition from
tenants.  After the site's original HOPE VI director resigned in
March 1995, the new director, hired in May 1995, began to recognize,
with other city officials, that the plan for rehabilitation would
have little impact on revitalizing a significantly distressed
property.  Changing the plan to include demolition and tax credit
leveraging with private developers took several months.  Opposition
from residents distrustful of the housing authority and of these
changes also slowed activity at the site.  According to housing
authority officials, the residents considered the changes too
dramatic and believed they were occurring too fast.  The residents
feared that the housing authority would demolish their homes and not
allow them to return after the renovation. 

When the Boston Housing Authority hired a developer in May 1996, the
residents sided with the developer against the authority.  According
to a housing authority official, the developer told the residents
that they would be equal partners and that the housing authority
would have no role.  As a result of these divisions, the project was
stalled.  In April 1997, HUD issued a default letter to the housing
authority, threatening to remove the grant if the parties did not
move forward.  HUD issued the letter, in part, because the housing
authority had failed to resolve the impasse with the developer and
submit a mixed-income proposal in accordance with its revised
revitalization plan. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:2.4

HUD has appointed an expediter to provide expert advice to both the
housing authority and the developer, as well as to keep HUD apprised
of Mission Main's progress and any problems.  Although the original
developer agreed to step aside when the housing authority requested
permission from HUD to become the developer, the situation has since
changed.  The original developer, according to a HUD official, is
expected to assume responsibility for the development once its
implementation plan is approved. 

HUD's contract auditors recently reviewed the housing authority's and
the developer's expenditures to ensure their legitimacy.  Financial
differences between the housing authority and the developer have been
resolved, HUD has approved funding to pay the outstanding bills, and
the development is expected to go forward.  HUD, however, is still
questioning some of the housing authority's prior expenditures,
especially about $738,000 for support service contracts that were
used to provide services for persons who were not Mission Main
residents.  HUD has asked the housing authority to install the proper
controls in its accounting system.  According to a housing authority
official, only a portion of the amount is in question--the portion
that was used to provide services to tenants in a development
associated with Mission Main.  This official also noted that HUD is
currently awaiting a revised implementation plan from the development
team. 

   Figure II.4:  Mission Main
   Units Awaiting Demolition

   (See figure in printed
   edition.)


   PICO ALISO
   LOS ANGELES, CALIFORNIA
-------------------------------------------------------- Appendix II:3

As figure II.5 shows, Pico Aliso was awarded an implementation grant
in the fall of 1995, but the revitalization effort did not move
forward for some time, primarily because the housing authority
decided to revise the revitalization plan after the Congress
suspended the one-for-one replacement rule.  In July 1997, the
housing authority submitted a plan for accelerating the development,
and the revitalization effort has since proceeded expeditiously.  New
construction began in March 1998. 

   Figure II.5:  Time Line for
   Pico Aliso

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:3.1

Together, the twin housing developments of Pico Gardens and Aliso
Village form the largest public housing complex west of the
Mississippi.  All 577 units at Pico Aliso, built in the 1940s and
1950s, will be demolished, and 421 new units will take their place. 
These will include 280 rental units and 7 units for sale at Pico
Gardens and 74 detached courtyard homes and 60 apartments for senior
citizens in Aliso Extension.  New administrative offices and a child
care center will also be built. 

According to statistics compiled by the Los Angeles Police
Department, the crime rates at Pico Aliso are among the city's
highest, in large part because at least seven gangs operate in the
area.  The site was redesigned with safety and security in mind. 
Flat roofs, which gang members had used as shooting platforms, were
eliminated, as were blind entryways.  Parking lots and open areas
that had previously led to turf wars were also reconfigured.  New
units have been designed with private backyards and individual
entrances.  Community and support service programs are being designed
to foster a cooperative and nurturing spirit among residents. 

The housing authority is working with the city of Los Angeles to
prepare an economic development plan.  The authority also solicited
the participation of the city's community redevelopment agency
because the Pico Aliso site is adjacent to a proposed redevelopment
area.  In addition, the site is located within the East Side Economic
and Employment Incentive Zone, which offers several incentives to
businesses.  Finally, the authority is in partnership with the Los
Angeles Community Development Bank. 

Several entities are working with the housing authority to provide
job opportunities for Pico Aliso residents, such as Homeboy
Industries, Jobs for the Future, the East Los Angeles Skill Center,
and the Los Angeles Conservation Corps.  In addition, two labor
unions--the Laborers International Union of America and the United
Brotherhood of Painters--have established a $500,000 grant to place
22 residents in a 24-month apprenticeship demonstration program. 

Community services provided by the HOPE VI grant include youth
apprenticeship, public safety, and economic development programs;
support services include job training, gang prevention, after-school
tutoring, and a primary health clinic.  In addition, the city of Los
Angeles has made $2 million in federal Community Development Block
Grant (CDBG) funds available for a multipurpose recreational center
at the site.  The Los Angeles Department of Recreation and Parks will
maintain the facility, and other staff for the center will be funded
by a nonprofit organization, the Aliso Pico Business Community,
Incorporated.  Overall, the city has provided $494,730, or about 17
percent of the site's funding, for support services. 

About 250 households opted for Section 8 housing during construction,
and 176 have the option to return to the site.  An additional 30
purchased homes. 


      FACTORS CONTRIBUTING TO
      DELAYS
------------------------------------------------------ Appendix II:3.2

The major cause of delay in starting construction at the Pico Aliso
site was the housing authority's decision to revise the site's
revitalization plan.  The housing authority incurred the delay to
take advantage of the Congress's July 1995 suspension of the
one-for-one replacement rule by reducing the site's density.  The
revision added 15 months to the planning process--3 months to
redesign the architecture, 9 months to revise the plan with the
community, and 3 months to respond to HUD's requests for changes and
to obtain HUD's approval. 

The housing authority also took time to respond to residents who
objected to relocation plans proposing to place them outside the
complex.  Because 99 percent of the development's units are occupied,
there is little room to move residents within the complex.  Gang
territories further complicated the relocation process.  The
revitalization plan states that there are at least 3 major gang
"turfs" within the development and at least 15 others in the
neighborhood.  With the assistance of the League of Women Voters, the
housing authority held an election in which 95 percent of the
households in the development voted.  A new resident advisory
committee was elected and supported the housing authority.  In total,
it took about 3 years for the housing authority to obtain the
residents' trust and persuade the residents to relocate. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:3.3

Demolition has been completed at Pico Gardens and Aliso Extension. 
Construction began for 148 units at Pico Gardens on March 3, 1998,
and for 42 units at Aliso Extension in May. 

   Figure II.6:  Pico Aliso

   (See figure in printed
   edition.)


   HILLSIDE TERRACE MILWAUKEE,
   WISCONSIN
-------------------------------------------------------- Appendix II:4

As figure II.7 shows, the Housing Authority of the City of Milwaukee
was awarded a HOPE VI demonstration grant for Hillside Terrace in
1993, and the development is near completion. 

   Figure II.7:  Time Line for
   Hillside Terrace

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:4.1

Hillside Terrace is the highest-density public housing development in
Milwaukee.  It consists of 540 family units, including two- and
three-story walkups and row houses, built on about 24 acres in 1948
and 1950.  On the one hand, the site is surrounded by a light
industrial and commercial district and is isolated from other
immediate residential areas; on the other hand, it is located just a
few blocks from downtown Milwaukee.  The vacancy rates at Hillside
Terrace, ranging from 6 to 10 percent, were higher than at any of the
housing authority's other sites. 

Streets within the development terminated at its boundaries,
isolating it from the surrounding area.  Without through streets,
residents had limited access to buildings; emergency responders, such
as firefighters and police, were delayed; curbside garbage collection
was nearly impossible; and quiet areas sheltered drug activity. 
Although the buildings were structurally sound, some of their boilers
and heating systems were wearing out, parking facilities and public
lighting were inadequate, and the property was severely eroded.  The
physical conditions discouraged outdoor play or family activities. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:4.2

The housing authority received a $40 million HOPE VI implementation
grant in fiscal year 1993, plus two subsequent amendment grants in
fiscal year 1995 totaling an additional $5.7 million to revitalize
496 of the 540 units at Hillside Terrace.  The goals for the HOPE VI
development were to (1) enhance the marketability of the family units
by reducing their density, (2) reduce the physical isolation of the
site by creating through streets, and (3) encourage economic
self-sufficiency among the residents.  To accomplish these goals, the
housing authority planned to demolish 119 dwelling units in 15
buildings, thereby making way for through streets.  The units were to
be replaced by 79 units at scattered sites outside the development
and 39 Section 8 certificates.  The 377 remaining units were to be
substantially rehabilitated and modernized.  The housing authority
also planned to expand community and support services, aiming
primarily to help residents become permanently self-sufficient. 


      FACTORS CONTRIBUTING TO
      DELAYS AND SUCCESS
------------------------------------------------------ Appendix II:4.3

Because the capital improvements at Hillside Terrace consisted
primarily of rehabilitation, few residents were displaced, and
because the rehabilitation was largely funded through the HOPE VI
grant, the financing was straightforward.  Without the complications
associated with permanent relocation and leveraging, the HOPE VI
development moved forward on schedule.  Some delays took place during
demolition, however, because of underground oil tanks, unmarked
utility lines, and an undocumented brewery tunnel, and another delay
occurred when a contractor filed bankruptcy. 

Housing authority officials ascribed the success of the development
to several factors, including the low rate of turnover in the
authority's management staff; the experience of staff at the housing
authority and the HUD field office; good working relationships with
the residents, the HUD field office, the city, and state agencies;
and a good state economy.  In addition, the public, the media, the
mayor and alderwoman, and the resident council have generally
supported the improvements at Hillside Terrace.  There have been no
lawsuits or organized opposition to the development. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:4.4

The majority of Hillside Terrace's HOPE VI grant has been disbursed,
and the development has progressed on schedule.  The site's physical
improvements are scheduled to be completed by July 1, 1998.  The two
through streets, whose construction required the demolition of 15
buildings, is complete.  As a result, the site is no longer
physically isolated, and it has more green space, playscapes, and
parking.  Street lights and walkways were installed to match those of
other residential areas in the city.  According to residents,
gang-related drug traffic and crime have significantly decreased. 
The three-story walk-ups were rehabilitated to include rear
stairwells and individual entrances, creating defensible space.  The
interiors of all units were substantially upgraded.  The existing
community center was expanded to house current and future support
service agencies, a day care center, and a clinic. 

Relocation was completed while rehabilitation was in progress, and,
according to the housing authority, most residents that chose to
return and met screening requirements have moved back, now that the
work is almost complete.  The demolished units were replaced with new
units completed and under construction on scattered sites, and the
remaining units were replaced with Section 8 certificates or
vouchers.  According to a housing authority report, two Hillside
Terrace residents have purchased new replacement units, and another
is working on financing options.  According to the housing authority,
336 of 355 rehabilitated units are occupied and 22 units are
currently being rehabilitated.  The residents are required to sign an
addendum to their lease in which they agree to undergo an
employability assessment, participate in the resident council and
block watch program, and volunteer 4 hours a month by, for example,
cleaning up litter at the site. 

Community and support services are ongoing and include a neighborhood
mentoring program, a scholarship fund, job training programs, a
resident-owned business program, day care services, preventive health
care services, and educational extension programs available through
the local university.  The housing authority has also provided
training and employment opportunities to residents as construction
inspectors.  Housing authority officials do not believe that they
will spend all of the funds budgeted for community and support
services because many of these programs existed before the HOPE VI
grant was awarded and are self-sustaining programs.  According to an
April 1998 HUD report, the housing authority had spent about 30
percent of the $4.3 million budgeted for community and support
services and management improvements. 

The housing authority has collected and reported demographic
information at Hillside Terrace, such as changes in residents'
incomes and crime statistics.  For example, the authority reported
that the percentage of families living below the poverty level
dropped from 83 percent in 1993 to 63 percent in 1997, and the number
of working families increased from 17 percent in 1993 to 55 percent
in 1997.  Housing authority officials also plan to collect data on
the numbers of residents obtaining services such as day care and
health care. 

During the past 3 years, the housing authority has applied for HOPE
VI grants for two additional developments, but these applications
were not selected. 

   Figure II.8:  Hillside Terrace

   (See figure in printed
   edition.)


   ELLEN WILSON DWELLINGS
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:5

As figure II.9 shows, Ellen Wilson Dwellings was awarded its
implementation grant in late 1993.  Although the grant took some time
to implement, construction at the development is progressing well. 

   Figure II.9:  Time Line for
   Ellen Wilson Dwellings

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:5.1

Built in 1941, Ellen Wilson Dwellings had 134 units, which were
demolished in 1996.  The deteriorated site had been vacant since 1988
when, according to a District of Columbia Housing Authority official,
the authority first planned a significant rehabilitation effort. 
However, the authority found that the costs of the proposed
rehabilitation exceeded the available HUD modernization funds, and
continuous changes in the housing authority's leadership precluded
further progress.  Because Ellen Wilson is located within the
boundaries of the Capitol Hill historic district, a community group
concerned about developing the site formed a community development
corporation in 1991 called the Ellen Wilson Neighborhood
Redevelopment Corporation. 

The community development corporation's goal was to redevelop the
location, although not necessarily as a public housing site.  The
corporation formed a partnership with two companies experienced in
community development to develop a proposal for revitalizing the
area, possibly with the use of Section 8 funding.  However, the HOPE
VI legislation created a more viable source of funding for a
comprehensive revitalization effort.  After the HOPE VI Urban
Revitalization Demonstration Program was established in October 1992,
the housing authority selected the community development
corporation's developer in a competitive process to develop a plan
for mixed-income housing on the Ellen Wilson site. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:5.2

Although Ellen Wilson received a $15.7 million implementation grant
in fiscal year 1993, the first year in which grants were awarded, HUD
later made the award contingent on the appointment of an alternative
administrator.  According to a housing authority official, even
though the firm to serve as alternative administrator was identified
in the HOPE VI grant application, the appointment did not occur until
March 1995.  In June 1995, HUD amended the award, providing an
additional $9.4 million to cover increased costs, including those for
infrastructure and environmental remediation.  The additional funding
also allowed the development to be set up as a cooperative--an
arrangement under which the development will not receive any
operating subsidies from HUD. 

According to a housing authority official, the community development
corporation and the housing authority are beginning to establish a
community and support service program at Ellen Wilson.  A step-up
apprenticeship construction program has been established for public
housing residents in the Ellen Wilson neighborhood to work on
construction of the Ellen Wilson site.  Furthermore, a modified
self-sufficiency program is being established to help individuals,
especially former Ellen Wilson residents, develop a dependable source
of income so that they can qualify to reside in the revised Ellen
Wilson development.  Moreover, the housing authority and the
community development corporation have been working for a year to
identify and develop contacts with all social service providers and
support groups, such as churches and nonprofit organizations, in the
Ellen Wilson neighborhood.  They are also developing a health care
compact under which the residents of Ellen Wilson and surrounding
public housing developments would all be served by one health
maintenance organization. 

According to a housing authority official, future funding for
community and support services will come from an endowment that will
be generated from the expected market-rate sales of 20 homes at Ellen
Wilson built with a market-rate loan of HOPE VI funds.  When these
homes are sold, the construction loans will be repaid.  The profit
from the sales and the repayment of the construction loan will be
invested to establish an endowment to fund ongoing community and
support services. 


      FACTORS CONTRIBUTING TO
      DELAYS
------------------------------------------------------ Appendix II:5.3

Several factors have slowed revitalization at Ellen Wilson, including
problems with the housing authority's management, the neighborhood's
opposition to a public housing development, environmental issues, and
delays in obtaining HUD's approval of the cooperative arrangement and
development costs.  As noted, HUD responded to the site's management
problems by making the initial grant agreement contingent on the
appointment of an alternative administrator.  Subsequently, a
Superior Court judge appointed a receiver for the housing authority,
and a private firm was designated by HUD and the housing authority to
administer the grant.  Once these management issues were resolved,
the project started moving. 

Satisfying the concerns of the neighborhood's residents also took
time.  According to a housing authority official, the residents who
did not want any public housing built were very vigilant about the
proposed development.  These residents raised questions and concerns
with the zoning board, which took time to clear.  In addition, the
housing authority had to replace contaminated soil at the site and
install a holding tank to handle runoff from rain. 

According to a HUD official, the proposed cooperative arrangement and
total development costs took time to approve.  The proposal to
establish a cooperative was the first of its kind at a HOPE VI site. 
Unlike other sites, Ellen Wilson was not requesting any future
operating subsidies from HUD and was not receiving any low-income
housing tax credit funding, and each resident would have an equity
interest in the development. 

According to a HUD official, the total development costs were higher
at Ellen Wilson than at most other HOPE VI sites.  A HUD official
also noted that the need to conform to Capitol Hill's architectural
guidelines--which require such amenities as exterior staircases, tile
and brick fronts, and elevated front yards--and to resolve
environmental problems contributed to these high costs. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:5.4

Development at Ellen Wilson is currently on schedule.  The first
units are to be available in September 1998, and the development is
to be completed by the summer of 1999.  When completed, it will have
134 limited-equity cooperative units and 20 units available for sale
at prevailing markets rates.  All residents will be considered
owners, including those in the 67 units that will be set aside for
households earning 50 percent or less of the area's median income. 
The down payment for each household will be based on 5 percent of its
annual income at the middle of its income band, subject to market
conditions (e.g., 5 percent of the middle of the band covering 0 to
25 percent of the area's median income).  A community development
corporation official noted that a person earning $6 per hour could
qualify for a unit in the lowest income range. 

   Figure II.10:  New Construction
   at Ellen Wilson

   (See figure in printed
   edition.)


   CABRINI HOMES EXTENSION
   CHICAGO, ILLINOIS
-------------------------------------------------------- Appendix II:6

As figure II.11 shows, the Chicago Housing Authority was awarded a
$50 million HOPE VI implementation grant in fiscal year 1994, but HUD
did not approve a revised revitalization plan, which stemmed from
management changes in 1995, until September 1997. 

   Figure II.11:  Time Line for
   Cabrini Homes Extension

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:6.1

Cabrini Homes Extension is the largest of three developments that
make up Cabrini-Green, known in Chicago and nationwide as one of the
country's most distressed public housing sites.  It is located on
Chicago's near north side, adjacent to a high-rent neighborhood and
theater district that is undergoing a boom in the construction of new
single-family homes, row houses, condominiums, and town houses.  In
addition, some of Chicago's most desirable real estate, located on
Michigan Avenue and commonly known as the Magnificent Mile, is just a
few blocks away.  Cabrini-Green is a 70-acre site with 3,606 family
units in 86 residential buildings belonging to three separate
developments--Frances Cabrini Homes (55 row house buildings), Cabrini
Homes Extension (23 high-rise buildings) and William Green Homes (8
high-rise buildings).  Only the row houses meet HUD's minimum housing
quality standards. 

Cabrini Homes Extension, built in 1958, consisted of 1,921 units with
3,695 residents as of 1993.  The 36-acre site also included a
management office, a central heating plant, and a community center. 
About 32 percent of the units at Cabrini Homes Extension were
occupied.  According to the housing authority's reports, the property
is severely distressed, the buildings' design is defective, and the
buildings' systems are deficient and deteriorated.  Because the
site's design included no through streets, the streets create a maze
of dead ends conducive to criminal activity.  Stairwells also shelter
drug deals and physical assaults.  According to the housing
authority, the available resources are not adequate to meet the
site's extensive capital and modernization needs. 

HUD has listed the Chicago Housing Authority as troubled since 1979. 
According to the housing authority itself, it was plagued by
mismanagement and negative opinion, held by the public and residents
alike.  The housing authority's board resigned in May 1995, and HUD
assumed control.  The authority is run by a former HUD assistant
secretary and a five-member executive advisory committee appointed by
HUD. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:6.2

The housing authority received a $50 million HOPE VI implementation
grant in fiscal year 1994 for Cabrini Homes Extension.  The HOPE VI
funds, along with $19 million in public housing development funds,
are to construct or acquire 493 replacement units for families that
are eligible for public housing and to demolish eight distressed
high-rise buildings containing 1,324 deteriorated units at Cabrini
Homes Extension.  The public housing replacement units, representing
about 30 percent of the planned new units, are to be interspersed
with market-rate units.  Of the remaining units, 20 percent are to be
reserved for moderate-income families and 50 percent for households
paying market rates.  The housing authority plans to acquire
approximately 250 replacement units on four new development sites. 

Over $8 million of the site's HOPE VI grant is designated for
community and support services.  The services are designed to promote
self-sufficiency and economic independence.  The services range from
education, to substance abuse intervention, to a variety of economic
development initiatives.  For example, Cabrini Textiles is a silk
screening company training residents and providing work experience in
a productive environment. 

The housing authority has used the HOPE VI funds to leverage
resources from the city and the private sector.  The HOPE VI
development at Cabrini Homes Extension has served as a catalyst for
the city's Near North Side Neighborhood Revitalization Initiative,
which represents a total estimated commitment of $315 million in
public and private funds to transform Cabrini-Green and the
surrounding community.  The initiative will include the construction
of 2,000 new mixed-income housing units (row houses, duplexes, and
mid-rise buildings), a new town center, a commercial district with a
grocery store and shopping facilities, a district police station, new
schools, a library, and a community center. 


      FACTORS CONTRIBUTING TO
      DELAYS
------------------------------------------------------ Appendix II:6.3

Management turnover at the Chicago Housing Authority and changes to
the HOPE VI program led to delays in developing the site's
revitalization plan.  After HUD rejected an application for a HOPE VI
grant for Cabrini Homes Extension in fiscal year 1993, it funded an
application the next year, in accordance with a requirement in the
appropriations act that it fund without further competition housing
authorities that applied in fiscal year 1993.  According to the
housing authority's executive director, a significantly flawed
proposal was funded and set up to fail.  The director at that time
pursued the proposal, submitted a revitalization plan to HUD in March
1995, and resigned 2 months later.  Then, as noted, the housing
authority's board resigned, and HUD took over the authority's
management, changing and expanding the scope of the original plan for
the site.  After taking time to reorganize and try to restore
relationships with the community, the new leadership submitted the
revised revitalization plan to HUD in June 1997, and HUD approved the
plan in September. 

Residents' concerns and legal actions have also contributed to delays
in the site's development.  Both HUD and housing authority officials
told us that because promises made to residents by the housing
authority's former management have not been kept and because
residents view the revised revitalization proposal as a land grab by
the housing authority, the city, and the developers, the residents do
not trust the responsible parties.  For example, the housing
authority's former chairman promised residents that no relocation and
no demolition would take place at two of the buildings until
replacement housing had been built on land currently belonging to the
housing authority.  However, under the revised plan, additional
buildings are to be demolished and residents are to be relocated to
surrounding neighborhoods.  As a result, in October 1996, the local
advisory council at Cabrini-Green entered a lawsuit against the
housing authority and the city.  First, the council claimed that
residents had not been adequately consulted on the development of the
new plan, which increased the number of units to be demolished;
second, it asked that relocation be halted in accordance with
commitments made by the housing authority's former chairman; and
third, it asked that demolition be halted.  According to the housing
authority, the court has ruled that relocation may proceed because
the existing buildings are in such poor condition, and a trial is
scheduled for June 1998.  In addition, the housing authority spent
several months obtaining approval from a federal judge to acquire
approximately 250 replacement units at other sites. 

Finally, because of their complexity, the development proposals and
land transfer agreements have taken time, both for the stakeholders
to submit and develop and for HUD to review and approve.  For
example, the housing authority is finalizing land transfer agreements
with the Chicago Board of Education and the Chicago Park District. 
It has procured surveys and appraisals and has submitted a
disposition application to HUD for approval.  According to the
housing authority, because of their complexity and ambitiousness, the
HOPE VI development and the Near North Side Neighborhood
Revitalization Initiative will take a long time to implement. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:6.4

Four buildings at Cabrini Homes Extension, formerly containing 398
units, have been demolished, and three additional buildings with 327
units have been vacated.  HUD has approved the housing authority's
application to demolish two of the vacated buildings and is reviewing
the other application.  The housing authority has relocated 230
families.  Private developments are under construction and some units
are completed on adjacent property.  The housing authority has
purchased two town house units at one of the developments and has
relocated two Cabrini families in this replacement housing.  The
housing authority has also finished screening Cabrini families
eligible to occupy 16 units at another development. 

Community and support service programs are ongoing, and the housing
authority is tracking training and employment statistics for
residents.  For example, the authority reported that, as of October
1997, over 250 Cabrini residents had been placed in jobs through its
programs. 

The housing authority has continued to negotiate with the local
advisory council. 

   Figure II.12:  High-Rise
   Buildings Awaiting Demolition
   at Cabrini Homes Extension

   (See figure in printed
   edition.)


   ORCHARD PARK
   BOSTON, MASSACHUSETTS
-------------------------------------------------------- Appendix II:7

As figure II.13 shows, Orchard Park received notification in 1995 of
its implementation award.  The revitalization effort has since moved
expeditiously, with extensive demolition and new construction under
way. 

   Figure II.13:  Time Line for
   Orchard Park

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:7.1

Built in 1942, Orchard Park originally contained 711 units.  Its
public housing structure kept its residents physically, socially, and
economically isolated, effectively preventing them from moving out of
the area, and discouraging businesses, investors, and service
providers from moving in.  When planning for the site's
revitalization began, 36 percent of the development's units were
vacant, and 86 percent of the applicants for public housing in Boston
were rejecting Orchard Park because of its poor physical condition
and reputation for severe crime. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:7.2

HUD awarded the Boston Housing Authority a planning grant for Orchard
Park in May 1995.  Four months later, the housing authority received
an implementation grant based on the feasibility, sustainability, and
probability of the site's advancing steadily through all of the
planned phases.  According to a study by a consultant, Orchard Park
was selected for its innovative plan to integrate the development
with the neighborhood through the use of off-site development, fill
vacant lots with privately owned housing, and leverage the HOPE VI
grant with low-income housing tax credits.  The study also noted that
the plan has established a way of doing business that could be
applied to other HOPE VI projects. 

The Orchard Park development is scheduled to take place in five
phases.  During Phase I, families were temporarily relocated while
126 units were rehabilitated.  At the beginning of Phase II, eight
buildings, containing 246 units, were demolished, and 90 new duplex
and town house units are being built.  The first units were to be
available for occupancy in June 1998, and the remaining units are
expected to be completed by December 1998.  Eight more buildings,
containing 220 units, will be demolished during Phase III, and up to
130 new town house units are to be constructed, starting in 1999 and
finishing by the end of 2000.  A public elementary school will also
be built as part of this phase.  The school will include community
space to serve Orchard Park.  During Phase IV, up to 140 rental units
will be constructed, starting in July 1998, bringing the total number
of rental units--whether rehabilitated or newly constructed--to about
486.  Finally, during Phase V, up to 50 new homes will be built. 
Phases IV and V are both off-site, that is, on scattered sites in the
immediate vicinity of the development.  The off-site construction is
expected to be completed by December 2000.  The primary sources of
funding for these revitalization efforts are as follows:  $20.4
million from the HOPE VI grant, about $24 million from the
Comprehensive Improvements Assistance Program,\3 $36.7 million from
low-income housing tax credits, $9 million from the Comprehensive
Grant Program, and $2.2 million in infrastructure work from the city
of Boston. 

The Boston Housing Authority has planned a community and support
service program for both Orchard Park and Mission Main, another HOPE
VI project located less than 2 miles from Orchard Park.  The goal of
this program is to integrate the developments' residents into the
surrounding area's mainstream service network.  According to the
housing authority's plan, HOPE VI funds will be used to fund gaps in
services, not to duplicate existing services.  The program will
address the long-standing issues of poverty, joblessness, and
isolation affecting the residents of Orchard Park and Mission Main. 

The Boston Housing Authority has not entered into any contracts for
community and support services.  It has begun to identify partners in
the community and is planning to hire an independent contractor to
measure the effectiveness of its plan for community and support
services.  According to a housing authority official, the housing
authority is currently responding to comments that it received from
HUD on a 6-month plan for increasing residents' self-sufficiency. 


--------------------
\3 The Comprehensive Improvements Assistance Program was enacted in
1980 to make substantive modernization funding available to housing
authorities through competition to address needs at individual
developments. 


      FACTORS CONTRIBUTING TO
      SUCCESS
------------------------------------------------------ Appendix II:7.3

Orchard Park's success reflects close collaboration from the
beginning among the residents, housing authority, developers, and
city of Boston.  Housing authority staff developed a close working
relationship with the residents during Phase I of the development,
when, starting in January 1995, 126 units were rehabilitated,
primarily with funds from the Comprehensive Improvement Assistance
Program. 

When the housing authority followed up on HUD's suggestion that the
HOPE VI revitalization plan for Orchard Park include demolition and
leveraging with private developers, the residents were willing to
listen.  Housing authority officials believe the goodwill created
with the success of the earlier rehabilitation was the reason for the
positive working relations.  Housing authority staff spent
considerable time with the residents and encouraged their comments at
each stage of the development.  The residents understood, however,
that the housing authority had the final say in all matters. 
Although some tenants used Section 8 certificates to relocate, many
moved to vacant units within the Orchard Park complex.  Units were
available because the Boston Housing Authority had closed the waiting
list at the complex well before rehabilitation was to start.  All
residents, including those who relocated, may return to the site when
construction has been completed. 


      CURRENT STATUS
------------------------------------------------------ Appendix II:7.4

Orchard Park's development is proceeding on schedule.  Construction
of the 90 town houses in Phase II is well under way. 

   Figure II.14:  Orchard Park

   (See figure in printed
   edition.)


   KENNEDY BROTHERS MEMORIAL
   APARTMENTS
   EL PASO, TEXAS
-------------------------------------------------------- Appendix II:8

As figure II.15 shows, the revitalization of Kennedy Brothers
Memorial Apartments began with a planning grant in 1994 and has since
progressed through extensive demolition, rehabilitation, and new
construction.  The revitalization includes plans to construct homes
for sale on newly purchased property adjoining the original site. 

   Figure II.15:  Time Line for
   Kennedy Brothers Memorial
   Apartments

   (See figure in printed
   edition.)


      BACKGROUND
------------------------------------------------------ Appendix II:8.1

Kennedy Brothers Memorial was built in 1973 and contained 364 units
before the revitalization effort started.  When chosen for HOPE VI,
the complex had been voted the "worst" of 30 distressed public
housing sites in El Paso by public housing residents citywide.  Major
problems identified at the site were crime, drugs, and gangs.  The
complex was in a residential neighborhood but was isolated by a stone
wall that encircled it and cut off access to neighboring streets. 
The site was very crowded, and the street patterns and wall attracted
drug smugglers entering the country at a Mexican border crossing a
quarter of a mile away. 


      HOPE VI SELECTION
------------------------------------------------------ Appendix II:8.2

The Housing Authority of the City of El Paso received a $500,000
planning grant in November 1993.  Its revitalization plan was
developed through an inclusionary planning process that brought
together residents, neighbors from the surrounding community, service
providers, and community businesses.  Preliminary architectural
studies were performed and a series of planning meetings were held to
evaluate options and develop the final physical revitalization plan. 

The housing authority was selected to receive a $36.2 million
implementation grant in 1995, after the Congress directed HUD to
award implementation grants to all jurisdictions that had received
planning grants in 1993 or 1994. 


      FACTORS CONTRIBUTING TO
      SUCCESS
------------------------------------------------------ Appendix II:8.3

Housing authority officials believe that starting with a planning
grant was a key factor in their ability to proceed at a rapid rate. 
Early agreement on the site plan by all the parties involved, the
residents' trust of housing authority officials, and the desire of
residents to qualify for homeownership have also contributed to the
successes to date. 

The parties to the planning process agreed that a reconfiguration of
the site, coupled with demolition to reduce density, was needed to
improve security and stop gang-related activities.  The development's
main thoroughfare was cut into two streets that ended in cul-de-sacs
on either side of a central community park to discourage the
thoroughfare's use as an escape route for drug smugglers.  The 8- to
10-foot stone wall was also scheduled for demolition so that the
development could be integrated with the neighborhood.  Fenced
backyards were planned for each unit, and a community center was
designed as the site's focal point, providing residents with day
care, job and computer literacy training, and economic development
programs. 

According to a 1995 HUD-contracted study, the early success at
Kennedy Brothers Memorial was owing, in large part, to the housing
authority's decision to contract with a project manager who focuses
exclusively on HOPE VI developments.  The excellent rapport that the
project manager and the housing authority's executive director,
management director, and site manager developed with the residents at
the beginning of the planning process also promoted agreement on key
issues. 

At Kennedy Brothers Memorial, residents' attitudes appear to have
changed with the revitalization.  According to housing authority and
resident council officials, the residents are taking pride in the
revitalized site, keeping it virtually graffiti-free.  These
officials also acknowledge that HUD's "one strike and you're out"
policy, in place since 1996, has also deterred vandalism.  During our
visit, we talked with residents excited about the new training and
staff development programs and, in particular, about the possibility
of qualifying to purchase one of the 50 homes in the homeownership
program. 


      STATUS
------------------------------------------------------ Appendix II:8.4

Capital improvements are progressing on schedule.  Recently, 240
units were rehabilitated, and many of the former residents have moved
into the revitalized units.  Contractors are now being selected to
construct 124 replacement housing units and to construct the 50 homes
included in the development, scheduled for completion in the first
half of 1999.  The community center is under construction and is
scheduled for completion in July 1998. 

   Figure II.16:  Children's
   Computer Laboratory, Kennedy
   Brothers Memorial Apartments

   (See figure in printed
   edition.)


   ROBERT TAYLOR
   HOMES B
   CHICAGO, ILLINOIS
-------------------------------------------------------- Appendix II:9

As figure II.17 shows, the Chicago Housing Authority was awarded a
$25 million HOPE VI implementation grant in fiscal year 1996 for
Robert Taylor Homes B.  The housing authority submitted its
revitalization plan for the site in January 1998 and is awaiting
HUD's approval.  Demolition started in May 1998, and the project's
completion is expected in 2006. 

   Figure II.17:  Time Line for
   Robert Taylor Homes B

   (See figure in printed
   edition.)

Background

Chicago's State Street Corridor, a 4-mile stretch of public housing,
is the nation's largest, most densely populated public housing
enclave, consisting of 8,215 units concentrated in five developments. 
Robert Taylor Homes is one of the developments; it is divided into
two subdevelopments, A and B, which together contain over 4,300 units
in 28 detached, 16-story buildings.  Robert Taylor Homes B is a
mile-long, 74-acre site, built between 1959 and 1963 and consisting
of 2,400 units in 16 high-rise buildings.  The development contains
some of the poorest census tracts in America.  The community
surrounding Robert Taylor has lost more than half of its population
since the development was built, reportedly because former residents
were afraid of living near the crime-plagued Robert Taylor Homes and
other public housing in the State Street Corridor. 

The property's buildings are poorly designed, building systems are
severely deteriorated, and major building systems chronically fail. 
Inadequate security systems and open-air galleries on each floor
enhance opportunities for crime.  Obsolete heating and electrical
systems, weather-damaged elevator equipment, deteriorated hot water
tanks, and inadequate sanitary waste lines regularly fail, exposing
the housing authority to extraordinary costs to restore and maintain
buildings that do not meet minimal standards of habitability. 
Vacancy rates averaged 33 percent in the buildings.  The development
is known not only for its concentrated poverty but also for
gang-related criminal activities.  According to the revitalization
plan, before community escorts began to walk children from the
development to school, parents kept the children at home for fear
that they would be shot in the cross fire of gang warfare. 

HOPE VI Selection

The Chicago Housing Authority received a $25 million implementation
grant in fiscal year 1996 for Robert Taylor Homes B.  The plan is to
vacate and demolish five buildings (761 units) and purchase or build
251 replacement units off-site in the surrounding community.  These
replacement units are to be dispersed among and indistinguishable
from market-rate housing in the community.  The housing authority
plans to, first, acquire existing units; second, rehabilitate
existing units; and third, if necessary, construct new replacement
units. 

The housing authority has also earmarked HOPE VI funds to provide
community and support services to residents relocated from Robert
Taylor Homes B.  Such services include family transition assistance,
job and computer training, social services, and other assistance as
needed to help integrate the residents with their new surroundings. 

The HOPE VI grant is the first phase of a long-term revitalization
plan that the Chicago Housing Authority is developing in conjunction
with the city of Chicago.  Ultimately, the housing authority intends
to demolish the Robert Taylor high-rises and build a light industrial
park on the vacated land.  The housing authority plans to apply for
future HOPE VI grants and leverage funds from private developers. 
According to the housing authority's estimates, it will take 10 years
to vacate Robert Taylor and even longer to revitalize the community. 

Factors Contributing to Success and Delays

Progress in revitalizing Robert Taylor Homes B will be limited until
HUD approves the housing authority's plan.  Moreover, according to
the housing authority's executive director, implementation will take
a long time, given the complexity of the redevelopment plan.  The
housing authority is appealing a judgment order on its emergency
motion to exempt HOPE VI projects from an earlier court ruling
limiting its development efforts in census tracts with comparatively
high percentages of minority residents.\4 Because the intent of the
earlier ruling is to prevent the housing authority from concentrating
low-income households in certain census tracts, the housing authority
is basing its request for an exemption on the premise that the funds
are to be used to redevelop troubled public housing sites and
neighborhoods, not to increase the number of low-income households. 
According to the housing authority, if the appeal is not successful
the schedule for redevelopment will be lengthened. 

Obstacles to relocating large numbers of families from Robert Taylor
Homes B could also delay development.  For example, the
revitalization plan states that the general community may oppose
relocation because it perceives that residents of Robert Taylor are
likely to be involved in gangs, violence, and drug trafficking. 
Problems with crossing gang lines could endanger families, especially
those with teenage children, and could also present obstacles to
relocation. 

One factor that may facilitate relocation is the housing authority's
work with the local advisory council of residents at Robert Taylor
Homes B.  For example, the housing authority involved the council in
its planning process and gained the council's support for its
revitalization plan. 

Current Status

The housing authority has selected the first three of the five
buildings that HUD has approved for demolition at Robert Taylor Homes
B.  According to the revitalization plan, the housing authority is
vacating the buildings and relocating the residents in the
surrounding community.  As of January 1, 1998, approximately 25
percent of the affected families (112 of 522) had been relocated to
housing of their choice.  The majority of the residents have chosen
Section 8 vouchers for relocation rather than moving to another
Robert Taylor building.  A centrally located community center is
being renovated with funds from the housing authority, the city, and
local community groups.  The center, which is scheduled to open in
the summer of 1998, will house community and support services for the
residents of Robert Taylor Homes B and other public housing
developments in the community.  On May 18, 1998, demolition began on
the first building. 

   Figure II.18:  Public Housing
   on the State Street Corridor

   (See figure in printed
   edition.)


--------------------
\4 Under a court-imposed order, the Chicago Housing Authority is not
allowed to build in "impacted areas," defined as any census tract in
which more than 30 percent of the residents are not white, unless it
simultaneously builds in other areas. 


   ARVERNE/EDGEMERE HOUSES
   FAR ROCKAWAY, NEW YORK
------------------------------------------------------- Appendix II:10

As figure II.19 shows, progress at Arverne/Edgemere Houses has been
slow because the HOPE VI implementation grant was originally awarded
to another site--Beach 41st Street Houses.  All three sites are in
Far Rockaway, a peninsula on the southern edge of Queens, south of
Jamaica Bay and Kennedy Airport.  Some progress is now being made at
the new site. 

   Figure II.19:  Time Line for
   Arverne/Edgemere Houses

   (See figure in printed
   edition.)


      BACKGROUND
----------------------------------------------------- Appendix II:10.1

The Arverne and Edgemere public housing sites are across the street
from each other and less than a mile from the Beach 41st Street site. 
The developments are about a 1-hour commute from downtown Manhattan. 
The economically distressed area lacks the mix of neighborhood
services and amenities needed for a thriving, vibrant community.  In
addition, the high density and current configuration of the buildings
have contributed to vandalism and other criminal activity.  According
to a housing authority report, drive-by shootings and drug
trafficking have exacerbated older residents' fears and distrust of
the young people, especially the young men, living at the sites. 

The Beach 41st Street development was completed in 1970 and had 712
units.  It was the first site selected by the New York City Housing
Authority to receive a HOPE VI grant because it was among the most
economically distressed sites in the city.  In addition, HUD
officials hoped that the HOPE VI effort would push the city to
implement a long-standing urban renewal plan to revitalize the Far
Rockaway section. 

The Arverne site, with 418 units, was completed in 1951; the Edgemere
site, with 1,395 units, was completed in 1961.  Both sites are
physically isolated from viable community institutions and resources,
such as retail outlets, banks, shopping markets, and churches.  Both
jobs and public transportation are scarce in the area. 


      HOPE VI SELECTION
----------------------------------------------------- Appendix II:10.2

The Edgemere site received a $47.7 million HOPE VI implementation
grant in December 1996.  The funding was transferred from Beach 41st
Street Houses after an impasse over the residents' role in the
planning process could not be overcome.  The Beach 41st Street
residents believed they had veto power over the process.  Faced with
the possibility of the funds being recaptured, the housing authority
requested that HUD allow a transfer of funds to assist with the
revitalization of 500 units at Edgemere.  The Arverne and Edgemere
sites had previously received a $400,000 planning grant in fiscal
year 1995.  In fiscal year 1996, the two sites received a $20 million
implementation grant. 

Because the housing authority's revitalization plan considered the
Arverne and Edgemere sites as part of the same HOPE VI development,
HUD combined the HOPE VI grants for the two sites.  In addition to
these funds, the revised implementation plan for the two sites
assumes about $15.1 million in housing authority funds to cover
additional development costs.  About $5 million in low-income housing
tax credits will also be sought to help construct a separate 120-unit
housing complex for the elderly on a nearby parcel of land donated by
the city.  In addition, the plan assumes that the city will provide
about $2.2 million to satisfy the 15-percent matching requirement for
support services. 

The community and support services for Arverne and Edgemere are
designed to provide education and social support for residents
seeking employment--especially those who are in danger of losing
their benefits through welfare reform.  The housing authority has
identified numerous community and support service providers that it
expects to contract with once funds become available.  For example,
the Youth Policy Institute will help residents develop and implement
plans for training, employment, and self-sufficiency.  Communities in
Schools will coordinate educational programs for residents. 

Using funds from the HOPE VI grant and citywide programs, the housing
authority has also developed a plan for creating resident-owned
businesses, intended to make meaningful economic development
opportunities available to HOPE VI residents.  Elements of the plan
include providing access to entrepreneurial training and capacity
building, providing access to the housing authority's citywide
contractor training and Make Your Own Business programs, and offering
ongoing technical assistance and support for residents who have
completed the contractor training or business programs. 


      FACTORS CONTRIBUTING TO
      DELAYS
----------------------------------------------------- Appendix II:10.3

HUD's fiscal year 1996 decision to require demolition precipitated a
series of events that significantly delayed progress.  To satisfy
this requirement--that at least one building be removed from a
site--the Beach 41st Street architect proposed removing several of
the top floors from each of the four 13 story buildings.  The number
of units removed would have been equal to the number in one whole
building.  According to a housing authority official, this solution
to the demolition requirement would have been more expensive than
tearing down the buildings completely.  Furthermore, the concept of
demolition was opposed by the Beach 41st Street site's resident
council, which was concerned about who would be allowed to come back
after the demolition.  Resident council members also viewed
themselves as the housing authority's partner and believed that they
should have veto power over decisions that were being made. 

Although HUD, the housing authority, and the residents negotiated for
6 months, they could not reach agreement, and in December 1996, at
the request of the housing authority, HUD transferred the HOPE VI
funds to Edgemere.  The housing authority then included demolition in
the plans for Edgemere's redevelopment, even though New York City's
political officials were against the concept.  The housing authority
determined that the best way to meet the demolition requirement would
be to remove some top floors from each of three nine-story buildings,
thereby eliminating about 100 units.  Subsequently, the housing
authority withdrew this plan and proposed to convert dwelling units
on the first floor to create space for commercial and community
services.  This approach would also have removed about 100 units. 
The issue became moot when the Congress, in the fiscal year 1998
appropriations act for the departments of Veterans Affairs and
Housing and Urban Development and independent agencies, gave the New
York City Housing Authority the option of not following any HOPE VI
demolition requirements and the housing authority abandoned the plans
for demolishing the 100 units.  Subsequently, the housing authority
proposed removing 32 units from 8 buildings to make room for interior
stairwells in order to meet the city's fire code. 


      CURRENT STATUS
----------------------------------------------------- Appendix II:10.4

In June 1997, the housing authority submitted its revitalization plan
to HUD.  HUD returned the plan with comments for the housing
authority to address.  In February 1998, the housing authority
submitted a revised plan that HUD expects to approve.  Both housing
authority and HUD officials believe that it will take at least 18
months to hire an architect and a developer before any rehabilitation
work can start.  The housing authority can begin to implement the
community and support service plan after the revitalization plan
receives HUD's final approval.  As of June 1998, HUD had not approved
the plan. 

   Figure II.20:  Arverne and
   Edgemere Sites

   (See figure in printed
   edition.)


HOPE VI DEVELOPMENTS, FISCAL YEARS
1993-97
========================================================= Appendix III

                                                                                  Number      Low-
                                                                      Demoliti        of    income                                  Number of   Total
            Name of                  Amount of              Demoliti        on    public   housing  HOME   No income   Number of  homeownersh  number
HOPE VI     developmen       Award     HOPE VI       Total        on  complete   housing       tax  fund  restrictio      rental           ip      of
city        t                 year       grant     funding   planned         d     units   credits     s          ns       units        units   units
----------  ----------  ----------  ----------  ----------  --------  --------  --------  --------  ----  ----------  ----------  -----------  ------
Atlanta     Techwood/           93  $42,562,63  $84,162,84      1081       776       390       180     0         360         930            0     930
             Clark                           5           7
Baltimore   Lafayette           94  $49,663,60  $87,808,60       843       843       311         0     0           0         311           27     338
             Courts                          0           0
Baltimore   Lexington           95  $22,702,00  $70,782,59       677       677       303         0     0           0         303          100     403
             Terrace                         0           6
Boston      Mission             93  $49,992,35  $92,910,70       807       227       535         0     0           0         535            0     535
             Main                            0           7
Boston      Orchard             95  $30,400,00  $81,862,20       528       246       490         0     0           0         490           45     535
             Park                            0           6
Camden      McGuire             94  $42,177,22  $43,205,33       176         0       253         0     0           0         253            0     253
             Gardens                         9           3
Charlotte   Earle               93  $41,740,15  $58,289,97       386       280       294        50     0         100         444           40     484
             Village                         5           1
Chicago     Cabrini             94  $50,000,00  $73,600,00       725       398       493         0     0           0         493            0     493
             Homes                           0           0
             Extension
Cleveland   Outhwaite           93  $50,000,00  $63,960,00         0         0       368         0     0           0         368            0     368
             Homes/                          0           0
             King
             Kennedy
Cleveland   Carver              95  $21,000,00  $74,430,82       445         0       322         0     0         220         542          200     742
             Park                            0           8
Columbus    Windsor             94  $42,053,40  $52,092,73       442       442       432         0     0           0         432            0     432
             Terrace                         8           3
Dallas      Lakewest            94  $26,600,00  $26,780,00         0         0       335         0     0           0         335            0     335
                                             0           0
Denver      Quigg               94  $26,489,28  $32,189,28        20         0       400         0     0           0         400            0     400
             Newton                          8           8
Detroit     Parkside            95  $47,620,22  $100,650,1       575       362       570         0     0           0         570          350     920
             Homes                           7          51
Detroit     Jefferies           94  $49,807,34  $96,962,47      1052       992       402         0     0           0         402            0     402
             Homes                           2           0
El Paso     Kennedy             95  $36,724,64  $39,584,64       124       124       364         0     0           0         364           50     414
             Brothers                        4           4
Houston     APV                 93  $36,602,76  $59,753,52       677       677       600         0     0           0         600            0     600
                                             1           7
Indianapol  Concord/            95  $29,999,01  $30,734,74       310       224       170        50     0           0         220            0     220
 is          Eagle                           0           4
Kansas      Guinotte            93  $47,579,80  $51,317,26       418       262       384         0     0           0         384           28     412
 City        Manor                           0           0
Los         Pico Aliso          93  $50,000,00  $51,747,34       577       243       414         0     0           0         414            7     421
 Angeles                                     0           9
Memphis     LeMoyne             95  $47,762,18  $48,437,18       824         0       458         0     0           0         458            0     458
             Gardens                         2           2
Milwaukee   Hillside            93  $45,689,44  $47,389,44       119       119       456         0     0           0         456            0     456
             Terrace                         6           6
New Haven   Elm Haven           93  $45,331,59  $83,997,49       462        45       368         0     0          41         409           46     455
                                             3           0
New         Desire              94  $44,255,90  $131,337,9      1160       265       600         0     0         400       1,000            0   1,000
 Orleans                                     8          08
Newark      Walsh               94  $49,996,00  $59,786,30       330       330       498         0     0           0         498            0     498
             Homes                           0           0
Oakland     Lockwood            94  $26,510,02  $27,660,02        16        16       438         0     0           0         438            0     438
                                             0           0
Philadelph  Richard             93  $50,000,00  $57,474,00       771       323       408         0     0           0         408            0     408
 ia          Allen                           0           0
Pittsburgh  Allequippa          93  $39,704,19  $127,548,9      1647         0       500         0     0         300         800           52     852
             Terrace                         0          43
Pittsburgh  Manchester          95  $7,695,700  $21,601,67       104       104        45         0     0          22          67           51     118
                                                         6
Puerto      Crisantemo          94  $50,000,00  $87,092,89       456       416       580         0     0           0         580          635   1,215
 Rico        s                               0           6
San         Springview          94  $48,810,29  $51,475,71       421       421       421         0     0           0         421          110     531
 Antonio                                     4           1
San         Mirasol             95  $48,285,50  $50,765,50       500         0       500         0     0           0         500            0     500
 Antonio                                     0           0
San         Bernal/             93  $49,992,37  $61,162,89       484       484       353         0     0           0         353            0     353
 Francisco   Plaza                           7           1
San         Hayes               95  $22,055,00  $38,291,50       294       294       117         0     0          77         194            0     194
 Francisco   Valley                          0           0
Seattle     Holly Park          95  $48,616,50  $176,640,8       893       400       400       384     0          16         800          400   1,200
                                             3          87
Springfiel  John Jay            94  $19,775,00  $31,231,50       599       599       300         0     0           0         300          110     410
 d           Homes                           0           0
St. Louis   Darst-              95  $47,271,00  $47,987,75       758         0       519         0     0           0         519            0     519
             Webbe                           0           9
Washington  Ellen               93  $25,075,95  $27,989,22       134       134       134         0     0          20         154            0     154
 , DC        Wilson                          6           0
=====================================================================================================================================================
Total       Total            93-95  $1,510,541  $2,450,696    19,835    10,723    14,925       664     0       1,556      17,145        2,251  19,396
                                          ,118        ,082
Atlanta     Perry               96  $20,400,00  $41,865,28       944         0       418         0     0           0         418            0     418
             Homes                           0           5
Baltimore   Hollander           96  $20,700,00  $86,947,49      1000         0       265         0     0           0         265           50     315
             Ridge                           0           0
Charlotte   Dalton              96  $24,501,68  $41,898,47       246        83       186         0     0          52         238          131     369
             Village                         4           6
Chester     Lamokin             96  $15,349,55  $36,467,35       216         0       200         0     0           0         200           50     250
             Village                         4           4
Chicago     ABLA (Brks          96  $24,683,25  $30,011,27       450         0       226         0     0           0         226            0     226
             Ext)                            0           5
Chicago     Robert              96  $25,000,00  $29,982,28       787       157       251         0     0           0         251            0     251
             Taylor                          0           0
             Homes B
Chicago     Henry               96  $18,635,30  $26,196,15       746         0       150         0     0           0         150            0     150
             Horner                          0           1
Cleveland   Riverview           96  $29,733,33  $29,733,33       117         0       155         0     0           0         155            0     155
                                             4           4
Detroit     Herman              96  $24,624,16  $32,612,16      1400       700       672         0     0           0         672            0     672
             Gardens                         0           0
Holyoke     Jackson             96  $15,000,00  $28,298,00       219         0       100         0     0          41         100          172     272
             Parkwy                          0           0
Jacksonvil  Durkeevill          96  $21,952,00  $36,372,00       280       280       101         0     0         100         201          258     459
 le          e                               0           0
Kansas      T.B.                96  $13,000,00  $33,943,18        24         0       210         0     0           0         210            0     210
 City        Watkins                         0           3
Louisville  Cotter and          96  $20,000,00  $130,300,0      1116      1066       569         0     0         231         800          450   1,250
             Lang                            0          00
New         St. Thomas          96  $25,000,00  $42,300,00       735         0       390         0   190         195         775            0     775
 Orleans                                     0           0
New York    Arverne/            96  $68,600,95  $95,031,98         0         0     1,813        88     0           0       1,901            0   1,901
             Edgemere                        2           1
Pittsburgh  Bedford             96  $26,792,76  $74,879,76       460         0       260       160     0         240         660            0     660
             Additions                       4           4
San         North               96  $20,400,00  $20,400,00       229         0       229         0     0         126         355            0     355
 Francisco   Beach                           0           0
Spartanbur  Tobe                96  $15,020,36  $26,975,89       266         0       118       100     0           0         218           50     268
 g           Hartell/                        9           9
             Extension
Tucson      Connie              96  $14,969,98  $23,269,98       200         0       190        20     0          40         250           60     310
             Chambers                        0           0
Wilmington  Robert S.           96  $11,620,65  $16,100,59       250       125       140         0     0          50         190            0     190
             Jervay                          5           8
=====================================================================================================================================================
Total       Total            93-96  $1,966,525  $3,334,281    29,520    13,134    21,568     1,032   190       2,631      25,380        3,472  28,852
                                          ,120        ,292
Allegheny   McKees              97  $15,847,16  $68,201,13       182         0        92        54     0          60         206            0     206
 County,     Rocks                           0           5
 PA          Terrace
Baltimore   Murphy/             97  $31,325,39  $58,610,90       793         0        75               0           0          75          185     260
             Julian                          5           1
Buffalo     Lakeview            97  $28,015,03  $124,396,4       554         0       570         0     0           0         570           50     620
             Homes                           8          60
Chester     Oak Street          97  $16,434,20  $34,325,52       192         0       182         9     0           0         191           70     261
 County                                      0           0
Elizabeth,  Pioneer/            97  $28,903,75  $91,874,72       655         0       328               0         380         708            0     708
 NJ          Migliore                        5           3
Helena      Enterprise          97  $1,124,300  $1,306,300        14        14        14               0           0          14            0      14
             Drive
Houston     Allen               97  $21,286,47  $50,132,23         0         0       500               0           0         500            0     500
             Parkway                         0           9
             Village
Jersey      Curries             97  $32,173,53  $105,983,8       621         0       582        24     0          24         630            0     630
 City        Woods                           2          56
Kansas      Heritage            97  $6,570,500  $15,429,13        79         0        88               0          72         160            0     160
 City        House                                       7
Knoxville   College             97  $22,064,12  $37,168,17       320         0       130               0           0         130           75     205
             Homes                           5           5
Nashville   Vine Hill           97  $13,563,87  $17,913,44       128         0       152               0         135         287            0     287
             Homes                           6           2
Orlando     Colonial            97  $6,800,000  $16,400,00         0         0        50               0          60         110           50     160
             Park                                        0
Paterson    Christophe          97  $21,662,34  $116,947,9       498         0       137               0         190         327            0     327
             r                               4          32
             Columbus
             Homes
Peoria      Col. John           97  $16,190,90  $24,850,56       321         0       203               0           0         203            0     203
             Warner                          7           3
             Homes
Philadelph  Schuylkill          97  $26,400,95  $53,387,12                   0       150        25   115          10         300            0     300
 ia          Falls                           1           0
Portsmouth  Ida                 97  $24,810,88  $78,097,83       663         0        35        70     0          12         117           81     198
             Barbour                         3           6
Richmond    Blackwell           97  $26,964,11  $98,031,90       440         0       185       155     0         246         586            0     586
                                             8           5
San         Valencia            97  $23,230,64  $23,230,64                   0       222               0           0         222           38     260
 Francisco   Gardens                         1           1
St.         Jordan              97  $27,000,00  $67,043,18        59         0       400               0           0         400            0     400
 Petersburg  Park                            0           6
Stamford,   Southfield          97  $26,446,06  $54,007,52       502         0       200               0         155         355           15     370
 CT          Village                         3           7
Tampa       Ponce de            97  $32,500,00  $118,188,0      1300         0       900               0         307       1,207           50   1,257
             Leon/                           0          88
             College
Washington  Valley              97  $20,300,00  $47,734,90       403         0       148               0         166         314            0     314
 , DC        Green/                          0           2
             Skytower
Winston-    Kimberly            97  $27,740,85  $42,805,62       205         0       615               0           0         615            0     615
 Salem, NC   Park                            0           4
             Terrace
=====================================================================================================================================================
Total       Total            93-97  $2,463,880  $4,680,348    37,449    13,148    27,526     1,369   305       4,448      33,607        4,086  37,693
                                          ,228        ,504
-----------------------------------------------------------------------------------------------------------------------------------------------------



(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
========================================================= Appendix III



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Department of Housing and
Urban Development's letter dated June 19, 1998. 


   GAO COMMENTS
------------------------------------------------------- Appendix III:1

1.  We revised our report accordingly. 

2.  We revised our report to indicate that 11 positions are being
restored.  The HUD official quoted in our draft report told us that
even if the Department hired highly experienced employees, it would
take a number of months to train them in the details of underwriting
HOPE VI sites.  This official and others we spoke with emphasized
that regardless of the experience and competency of the individuals
hired, it takes time to learn the policies and procedures involved in
structuring public/private financing.  We removed the statement in
the body of the draft report that gaining such expertise could take a
year, but we continue to believe that it will take time. 

3.  We agree that the HOPE VI sites are unique and that the program
should not be constrained in ways that would inhibit creativity.  Yet
even though the needs of the communities and residents vary by site,
the types of community and support service programs offered at the
sites we visited (e.g., day care, after-school care, equivalency
degree, job training, and job placement programs) were consistent
enough to allow the collection of national data on the outcomes of
these programs.  Accordingly, we have retained our recommendation to
this effect. 

4.  No change required. 

5.  We revised our report to state that the more recently selected
sites are smaller and have greater potential for leveraging than the
original sites.  We agree that the recently selected sites are
suffering from structural and social distress and are likely to be
among the most distressed sites in the chosen cities.  But unlike
some of the early sites, which have not been able to attract
leveraging partners, the sites chosen since the criteria for
participation in the program were expanded in 1996 typically have
been smaller and have been located in areas where private interests
are more willing to contribute funding.  We revised our report to
clarify this point. 

6.  We were aware of the study conducted by HUD's Office of Policy
Development and Research and summarized the results of its first
phase in our February 1997 report.\1 We added information to this
report on the results of the first phase of this study and noted that
the second phase is expected to begin in the summer of 1998. 


--------------------
\1 Public Housing:  Status of the HOPE VI Demonstration Program
(GAO/RCED-97-44, Feb.  25, 1997). 


*** End of document. ***