Public Housing

In response to a congressional request, GAO assessed the adequacy of the Department of Housing and Urban Development's (HUD) oversight of the Annapolis, Maryland, Housing Authority, focusing on why: (1) HUD did not complete an overall management review between 1985 and 1988; and (2) the Housing Authority's operating reserves have declined sharply since 1986.

GAO found that: (1) the HUD Baltimore field office generally followed established procedures in overseeing the Annapolis Housing Authority's operations; (2) because HUD semiannual reviews identified problems with contracting practices, it requested a review by the HUD Office of Inspector General (OIG); (3) the OIG investigation was partially responsible for the indictment and subsequent conviction of the Authority's former executive director on charges of fraud, bribery, and racketeering; (4) the HUD Baltimore office did not timely find such weaknesses in the Authority's modernization program as a $213,000 cost overrun on one project; (5) although HUD did not conduct a required overall management review of the Authority between 1985 and 1988 because of the OIG investigation, HUD conducted other studies during the same period and initiated an overall review in December 1988; (6) the Authority's financial records showed that its operating reserves dropped significantly between 1986 and 1988 due to declining investment income and increasing operating expenditures, particularly maintenance; and (7) although HUD reimbursed the Authority $45,000 in 1989 and provided an additional $80,902 in operating subsidies, the funds only raised the reserve level to about 20 percent of the maximum.