Block Grants for Housing

This report is part of a study undertaken by GAO to provide information regarding housing assistance to lower income families under an overall housing block grant program. The report specifically describes: (1) the experiences of larger entitlement communities in providing housing assistance under the Community Development Block Grant (CDBG) program; (2) the views of local CDBG housing officials on the desirability and form of a new housing block grant; and (3) the design issues for a housing block grant.

GAO found that communities generally emphasized ownership assistance, although they reported that renters were in greater need of assistance, and that they primarily funded rehabilitation activities. Considering that CDBG program limitations prohibit the financing of new construction except under special circumstances, a significant number of communities financed construction activities. The survey showed that communities employed a wide variety of housing finance methods and targeted housing assistance mainly to lower income families. The questionnaire sent to CDBG officials revealed that the level of Federal funding for housing strongly influenced local officials' support for a housing block grant. A large majority of housing officials emphasized program objectives which would provide assistance to low- and moderate-income households living in substandard housing. They also indicated that Federal funding should be allocated to local governments, using an entitlement formula. Most officials favored consolidating Federal housing programs into a block grant to provide rental assistance, rehabilitation, and new construction. GAO concluded that block grants for housing would give local governments greater discretion and flexibility in designing and and implementing housing programs. GAO suggested that Federal technical assistance, innovative financing methods, and information needs might be required under a revised CDBG program.