Public Housing

Under the National Affordable Housing Act of 1990, GAO is required to review different ways of developing public housing units. This report compares the approaches taken by public housing authorities in developing housing under the Public Housing Development Program and the Low-Income Housing Tax Credit Program. The former provides direct federal grants, while the latter allows public housing authorities to raise development funds by forming public-private partnerships with investors. The public housing authorities GAO reviewed used the tax credit program to serve tenants and to develop programs that differed from those in the public housing program. For example, the tax credit projects served smaller households and were more likely to be located in predominantly low-income households than were the public housing projects. Furthermore, if the cost inefficiencies suggested by GAO's case study in Montgomery County, Maryland, exist in other tax credit projects, the federal government may find the tax credit program to be the more costly alternative for helping very poor households. Nevertheless, the public housing authorities GAO reviewed found the tax credit program a valuable resource for developing public housing in this period of shrinking federal budgets.

GAO found that: (1) families with children were somewhat more likely to have serious housing problems than the elderly; (2) unlike the public housing program, the tax credit program did not provide PHA with an operating subsidy when tenants could not provide enough rent to cover operating costs; (3) the development of tax credit projects was not subject to Department of Housing and Urban Development (HUD) regulation and review; (4) HUD grants covered almost all of the public housing project development costs, while tax credits only generated enough cash to pay for more than half of the costs of developing the tax credit projects; (5) PHA had higher administrative costs when using the tax credit program; and (6) federal regulations and procedures for the public housing program greatly affected project development and completion.