Assisted Housing

Housing subsidies provided under the government's Section 8 program have enabled nearly 3 million poor families to obtain decent and affordable housing from private owners. The Department of Housing and Urban Development makes this money available through more than 40,000 contracts with local housing agencies, state finance agencies, and private owners. Many of these contracts will expire within five years, and the estimated cost to renew them will soar to more than $15 billion. This report discusses (1) estimated budget authority needs to renew expiring Section 8 rental housing assistance contracts in fiscal years 1994-98, (2) ways to even out the growth in budget authority for contract renewals, and (3) the relationship between budget authority needs to fund contract amendments--additional budget authority for contracts with insufficient remaining funds--and budget authority needs to renew expiring contracts.

GAO found that: (1) although HUD could not accurately determine its budget authority requirements to fund section 8 contract renewals because of persistent inaccuracies in its information systems, contract renewal costs are expected to increase from $6 billion to over $15 billion in 1997 and 1998; (2) several approaches to offset the expected growth in contract renewal budget authority include reformulating contracts, renewing contracts rather than amending them, limiting ongoing assistance, and increasing the current budget authority so that future authority increases will not be needed; (3) increasing HUD budget authority will be difficult because of budget cutbacks and competing demands; (4) there is no clear relationship between budget authority needs for contract amendments and contract renewals, since HUD information systems do not estimate future budget authority needs for section 8 contract amendments; and (5) although HUD expects that future budget authority needs will decline because of the increasing proportion of short-term contracts, existing long-term contracts for other section 8 programs could have substantial amendment needs in the future.