Public Housing

Proposed legislation submitted to Congress by the Department of Housing and Urban Development (HUD) would change how the United States has traditionally funded public housing. Federal aid would no longer flow to public housing authorities but instead would go to households in the form of housing certificates, giving these families the choice of remaining in public housing or moving to rental apartments. HUD believes that this shift in policy would save money and solve several basic problems with public housing, including residents' lack of choice in housing, the concentration of very poor people in very poor neighborhoods, and a lack of discipline in management of public housing because of its insulation from the marketplace. This report analyzes the proposed legislation and (1) describes the cost implications and issues raised by switching from the current public housing program to one using housing certificates and (2) identifies key factors that may affect HUD's plan to provide greater housing choice for public housing residents.

GAO found that: (1) based on an analysis of average costs, HUD believes that housing certificates will cost less than funding public housing developments; (2) there are wide differences in the cost of the two options at individual housing developments; (3) the certificate program would cost less for developments in good shape, but for those housing developments in the worst physical condition, direct funding is less costly; (4) the variations in costs raise important issues, including whether the federal government should pay for the rehabilitation of public housing developments and the added costs of certificates, and whether housing certificates should be targeted initially to developments where they are clearly cost-effective; (5) HUD has not performed the detailed analysis that is needed to provide information for deciding these issues; and (6) factors that will influence residents' actual housing choices include the current tenants' characteristics, their inclination to move, the availability of affordable housing, private landlords' willingness to accept tenants with housing certificates, and HUD compliance with and enforcement of housing discrimination laws.