Public Housing Vacancies and the Related Impact of HUD's Proposal To Reduce Operating Subsidies

In response to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) public housing program and the reasons for the high levels of vacancies in public housing projects. The public housing program is the nation's largest program designed to provide safe and sanitary housing for low-income families and to assist states and local communities in establishing and operating public housing authorities (PHA) that manage the projects.

GAO found that officials for the PHA's attributed the vacancies to normal turnover, modernization and demolition activities, lack of demand, and poor management. The HUD Inspector General found similar reasons for the vacancies but attributed them primarily to financially troubled PHA's and their inefficient and ineffective use of modernization funds. HUD has financially assisted PHA's by providing subsidies for the construction, operation, and modernization of many projects and has taken actions to reduce vacancies by instituting modernization programs, increasing marketing efforts, demolishing or selling units, and changing maintenance programs. Under current regulations, the operating subsidies cover the difference between PHA-estimated operating costs and anticipated rental income, which provides economic incentive for PHA's to hold vacant units. HUD proposed changing its regulations to improve the management of the public housing stock, control increases in operating subsidies, provide for a more equitable distribution of subsidies, and reduce the incentive for PHA's to hold units vacant. HUD received unfavorable comments on the proposed rule and is considering revisions based on the comments it received.