Duplicative and Unnecessary Renovations Made in the HUD-Subsidized Concord Commons Apartments in Rockford, IL

In response to a congressional request, GAO discussed duplicative and unnecessary repairs approved by the Department of Housing and Urban Development (HUD) at an apartment complex in Rockford, Illinois.

Although HUD spent about $1 million to renovate more than half of the apartments at the complex during 1978 and 1979, all of the apartments are being renovated again by the Rockford Housing Development Corporation using a HUD-insured loan for $2.9 million. In addition, all of the units will receive HUD rent subsidies which will be used in part to repay the HUD-insured loan. This obligation will total more than $14 million over the next 15 years. A GAO inspection of 20 apartments that HUD had previously renovated showed that about half of the items scheduled for replacement were still functional. GAO also observed many items that, in its opinion, needed only minor repairs to be functional. In some instances, the original items were identical to and in virtually the same condition as the replacement items. Evaluators of the renovation proposal only visited damaged apartments and did not take into account the previous repairs. GAO found that the second renovation was undertaken without adequate regard for cost-effectiveness and without sufficient indication that the marketability goals for renting the apartments could be met. Upgrading projects more than necessary results in fewer housing units being made available to needy persons, because renovation costs must be recovered through rents. HUD procedures for repair of multifamily properties are vague and permit considerable latitude in determining the extent of needed repairs. GAO also identified a number of deficiencies in contracting procedures and practices used during the previous renovations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Steven J. Wozny Team: General Accounting Office: Community and Economic Development Division Phone: (202) 426-1780