Multifamily Housing

The Office of Multifamily Housing Assistance Restructuring was established within the Department of Housing and Urban Development (HUD) in 1998 to administer the "mark-to-market" program. This program provides the framework to restructure HUD's portfolio of insured Section 8 multifamily housing projects by "marking" (resetting) rents to market levels and by reducing mortgage debt, if necessary, to permit a positive cash flow. Without restructuring, rents for many insured Section 8 multifamily housing projects would substantially exceed market levels, resulting in higher subsidies under the Section 8 program. This report discusses (1) the Office's progress in obtaining the staffing resources to implement the program, (2) the Office's progress on seven steps that are key to the program's successful implementation, and (3) whether the Office has implemented nine statutory requirements in accordance with the law. This report also discusses the relationship between the Office and other HUD offices, including (1) the extent to which HUD management is involved in directing, reviewing, and approving the Office's activities and how this involvement has affected the Office's operations; (2) whether the Office's Director has complied with the legislative requirements to report to Congress if actions by the HUD Secretary interfere with the Office's ability to carry out the mark-to-market program; and (3) whether the other HUD offices from which the Office must obtain support have provided the support requested.

GAO noted that: (1) although OMHAR's organizational and staffing plans have been finalized, they have not been fully implemented; (2) as of December 13, 1999, OMHAR had on board 64 of the 75 staff that it had the authority to employ in fiscal year (FY) 1999; (3) OMHAR officials attributed the delay in reaching the authorized staffing level in FY 1999 to the normal difficulties associated with staffing an entire office and noted that HUD had taken steps to expedite the hiring process, such as providing OMHAR with priority on all of its personnel actions; (4) OMHAR planned to increase its staffing level to 101 employees in FY 2000; (5) however, language in the Senate Committee report accompanying the FY 2000 HUD appropriations act directed HUD to limit OMHAR to a staffing level of 50 employees until the Office provided the Committee with adequate justification for its staffing needs; (6) recognizing the implications of the report's language, OMHAR plans to provide additional information on its organization and staffing to Congress to justify the need for additional staff; (7) as of December 1999, OMHAR had completed action on 5 of the 7 key aspects of the program's implementation that GAO reviewed and was taking action on the remaining two; (8) while it has not completed the actions in accordance with the original schedules the Office had developed for completing them, OMHAR officials believe that the slippages did not have much of a practical effect on the program's implementation because the Office did not begin to receive a large volume of projects to assign for restructuring until the spring of 1999; (9) the steps that OMHAR has taken thus far on the nine key statutory requirements that GAO reviewed are generally consistent with the act's requirement; (10) however, given the early stage of the program's implementation, OMHAR's actions for some of these requirements have been limited primarily to establishing program procedures in the mark-to-market regulations and in the operating procedures guide; (11) it is to soon for GAO to determine whether the actual implementation of the procedures will be in accordance with statutory requirements; (12) the actions and the functions of the OMHAR Director are subject to the review and the approval of the HUD Secretary; (13) concerning the legislative requirement that the Director of OMHAR report any interference by the HUD Secretary to Congress, the Director told GAO that there has been no encounters of the HUD Secretary interfering with OMHAR's activities; and (14) OMHAR officials believe that HUD's other offices have provided the support necessary to meet OMHAR's operational needs.