Elderly Housing

Successes/Problems in Implementing HUD's Cost Containment Requirements Gao ID: RCED-86-55BR December 4, 1985

In response to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) Section 202 Elderly Housing Program to determine: (1) the extent to which HUD cost control efforts were working; (2) additional opportunities for reducing program costs; and (3) who is benefiting from the program.

GAO found that: (1) projects built under the cost containment program had smaller units, fewer amenities, and cost an average of 16 percent less to construct than the projects built before cost containment; (2) without cost containment, it would have cost about $100 million more to finance the 12,400 units HUD approved for funding in fiscal year 1985; (3) problems have been encountered in implementing cost containment, largely because of the use of fair market rents to control costs; (4) program costs could be reduced an additional $19 million annually if more efficiency units were built to house the single elderly; (5) additional savings would be possible if more consideration were given to project costs when selecting projects for funding; (6) most of the beneficiaries in the projects sampled had very low incomes and received substantial rent subsidies under the HUD Section 8 Rental Assistance Program; and (7) most of the projects sampled served few, if any, minorities.

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