Public Housing
Information on Receiverships at Public Housing Authorities Gao ID: GAO-03-363 February 14, 2003About 3,000 public housing authorities--state, county, and municipal agencies--develop and manage low-income housing in cooperation with the Department of Housing and Urban Development (HUD). Since 1979, 15 housing authorities have been placed in the hands of receivers' outside parties designated to manage the authorities during a specific period of time, usually several years. GAO was asked to identify the circumstances that led to receiverships, any differences in the way they operate and in their results, and the factors that have influenced the termination of receiverships.
Receiverships at housing authorities have generally resulted from long-standing, severe, and persistent management problems that led to deterioration of the housing stock. Under an administrative receivership, HUD appoints either a contractor or a HUD employee to take over the housing authority's management. Because receiverships generally involve the complete takeover of a housing authority's management and operations, HUD views receiverships as a last resort when other interventions such as technical assistance or sanctions have failed. HUD has made these decisions on a case-by-case basis. In four cases, decisions to appoint receivers were made by courts. These judicial receiverships stemmed from lawsuits filed against housing authorities because of poor living conditions in public housing. Administrative and judicial receiverships have operated similarly, and all of the receivers have had the same authority to make necessary changes. The specific corrective actions receivers have taken depended on the problems at the individual housing authority. Most receivers have found it necessary to oversee the complete reorganization of the housing authority's management and operations, develop and enforce policies and procedures, and improve physical conditions. In some cases, receivers have had to desegregate public housing to address fair housing violations. Whether under administrative or judicial receivers, nearly all of the 15 authorities showed improvement during their years of receivership. The four housing authorities under judicial receiverships generally have continued to demonstrate strong performance; for example, performance scores have improved and have generally remained high. While housing authorities under administrative receiverships have also made improvements, some still demonstrated a significant problem with housing units in very poor physical condition. According to HUD officials, HUD ends administrative receiverships when it is clear not only that conditions at the housing authority have improved but also that the authority's management can sustain the improvements. The decisions to end judicial receiverships are made by judges. To date, four administrative and two judicial receiverships have been terminated.
GAO-03-363, Public Housing: Information on Receiverships at Public Housing Authorities
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Report to the Chairman, Subcommittee on Housing and Transportation,
Committee on Banking, Housing, and Urban Affairs, U.S. Senate:
February 2003:
Public Housing:
Information on Receiverships at Public Housing Authorities:
GAO-03-363:
GAO Highlights:
Highlights of GAO-03-363, a report to Subcommittee on Housing and
Transportation, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate:
Why GAO Did This Study:
About 3,000 public housing authorities”state, county, and
municipal agencies”develop and manage low-income housing in
cooperation with the Department of Housing and Urban
Development (HUD). Since 1979, 15 housing authorities have been
placed in the hands of receivers”outside parties designated to
manage the authorities during a specific period of time, usually
several years. GAO was asked to identify the circumstances that led
to receiverships, any differences in the way they operate and in their
results, and the factors that have influenced the termination of
receiverships.
What GAO Found:
Receiverships at housing authorities have generally resulted from
longstanding, severe, and persistent management problems that led
to deterioration of the housing stock. Under an administrative
receivership, HUD appoints either a contractor or a HUD employee to
take over the housing authority‘s management. Because receiverships
generally involve the complete takeover of a housing authority‘s
management and operations, HUD views receiverships as a last resort
when other interventions such as technical assistance or sanctions
have failed. HUD has made these decisions on a case-by-case basis.
In four cases, decisions to appoint receivers were made by courts.
These judicial receiverships stemmed from lawsuits filed against
housing authorities because of poor living conditions in public
housing.
Administrative and judicial receiverships have operated similarly,
and all of the receivers have had the same authority to make necessary
changes. The specific corrective actions receivers have taken depended
on the problems at the individual housing authority. Most receivers
have found it necessary to oversee the complete reorganization of the
housing authority‘s management and operations, develop and enforce
policies and procedures, and improve physical conditions. In some
cases, receivers have had to desegregate public housing to address
fair housing violations.
Whether under administrative or judicial receivers, nearly all of the
15 authorities showed improvement during their years of receivership.
The four housing authorities under judicial receiverships generally
have continued to demonstrate strong performance; for example,
performance scores have improved and have generally remained high.
While housing authorities under administrative receiverships have also
made improvements, some still demonstrated a significant problem with
housing units in very poor physical condition.
According to HUD officials, HUD ends administrative receiverships when
it is clear not only that conditions at the housing authority have
improved but also that the authority‘s management can sustain the
improvements. The decisions to end judicial receiverships are made by
judges. To date, four administrative and two judicial receiverships
have
been terminated.
Contents:
Letter:
Results in Brief:
Background:
Receiverships at Housing Authorities Have Resulted from Severe, Long-
standing Problems:
Administrative and Judicial Receiverships Have Operated Similarly, but
Specific Remedies Have Varied:
Both Administrative and Judicial Receiverships Have Shown Improvement:
Criteria for Ending Receiverships Vary:
Agency Comments:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Administrative Receiverships:
Beaumont Housing Authority (TX):
Camden Housing Authority (NJ):
Chicago Housing Authority (IL):
East St. Louis Housing Authority (IL):
Lafayette Housing Authority (LA):
Housing Authority of New Orleans (LA):
Orange County Housing Authority (TX):
St. James Parish Housing Authority (LA):
San Francisco Housing Authority (CA):
Springfield Housing Authority (IL):
Wellston Housing Authority (MO):
Appendix III: Judicial Receiverships:
Boston Housing Authority:
Chester Housing Authority:
Housing Authority of Kansas City:
District of Columbia Housing Authority:
Appendix IV: GAO Contacts and Staff Acknowledgements:
GAO Contacts:
Acknowledgments:
Tables Tables:
Table 1: Administrative Receiverships as of December 2002:
Table 2: Judicial Receiverships as of December 2002:
Table 3: Change in Performance Scores for Housing Authorities under
Judicial or Administrative Receivership:
Table 4: Change in Performance Scores for Housing Authorities under
Administrative Receivership, Based on Size of the Authority:
Figure:
Figure 1: PHA Performance under Receivership:
Abbreviations:
HUD: Department of Housing and Urban Development:
PHA: Public Housing Authority:
PHAS: Public Housing Assessment System:
PHMAP: Public Housing Management Assessment Program:
February 14, 2003:
The Honorable Wayne Allard
Chairman, Subcommittee on Housing
and Transportation
Committee on Banking, Housing
and Urban Affairs
United States Senate:
Dear Mr. Chairman:
About 3,000 public housing authorities--state, county, and municipal
agencies--develop and manage low-income housing in cooperation with the
Department of Housing and Urban Development (HUD). HUD provides
funding--nearly $7 billion annually--and has contracts with these
authorities that require them to maintain decent, safe, and sanitary
properties and manage programs according to HUD‘s regulations and
requirements. Despite expenditures of this magnitude, many public
housing properties have been unsafe and unsanitary for several decades.
Some have violated fair housing requirements by maintaining segregated
public housing. HUD provides technical assistance to authorities with
such problems, and also can impose sanctions such as removing housing
authority officials to help prompt corrective actions.[Footnote 1] HUD
may also place a housing authority under administrative receivership--
taking over the authority‘s management and operations.
Based on information from HUD, since 1979, 15 housing
authorities[Footnote 2] have been placed in the hands of receivers--HUD
officials or outside parties designated to manage the authorities
during a specific period of time, usually several years. HUD initiated
11 of these receiverships, while 4 were initiated by courts, generally
in response to lawsuits from residents of public housing. Whether HUD-
initiated (administrative) or ordered by a court (judicial),
receiverships have had the same goal: to correct the problems at the
housing authority and improve the residents‘ standard of living.
As agreed with your office, this report provides information about
receiverships at public housing authorities, specifically addressing
the following questions:
* What circumstances led HUD to place public housing authorities under
administrative receiverships and judges to order judicial
receiverships?
* What are the differences, if any, in the way administrative and
judicial receiverships have operated and in the kinds of actions
receivers have taken?
* What are the differences, if any, in the results achieved with
administrative and judicial receiverships?
* What factors have influenced the decision to terminate some
receiverships?
To address the objectives, we interviewed HUD headquarters and field
staff, housing authority officials, and the receivers themselves;
reviewed public housing laws, policies and procedures; and reviewed
documents concerning the impact of the receiverships on the housing
authorities. For 8 of the authorities, we obtained and analyzed HUD‘s
performance scores during the periods before and after receivers were
appointed; these scores were unavailable for the other 7 authorities
because their receivership predated HUD‘s scoring system or for other
reasons. While we report changes in HUD‘s scores for these authorities,
the small number of receiverships of each type preclude using the
scores to statistically identify possible distinctions between
administrative and judicial receiverships. Further, we did not explore
other factors that might have contributed to changes in scores. We
performed our work from February 2002 through December 2002 in
accordance with generally accepted government auditing standards.
Details about our methodology are in appendix I.
Results in Brief:
Receiverships at housing authorities have generally resulted from long-
standing, severe management problems that persisted despite repeated
interventions and led to deterioration of the housing stock. Because
receiverships generally involve the complete takeover of a housing
authority‘s management and operations, HUD views them as a last resort
and has imposed them only when interventions such as technical
assistance or sanctions have failed. HUD initiated some of the
administrative receiverships when the severity of the problems
indicated that the authorities were not complying with their agreements
with HUD. This has generally occurred when housing authorities allowed
their public housing units to deteriorate. In some cases, HUD has taken
over housing authorities for their failure to meet fair housing
requirements. HUD has made these decisions on a case-by-case basis. The
judicial receiverships stemmed from lawsuits filed against housing
authorities because of poor living conditions in public housing. The
judges in these cases determined that the problems at the authorities
were so severe that only a receivership could remedy the situation.
Administrative and judicial receiverships have operated similarly, and
all of the receivers have had the same authority to make necessary
changes. The specific corrective actions receivers have taken depended
on the problems at the individual housing authority. For example,
receivers have replaced and rehabilitated public housing units that are
in poor physical condition. Most receivers have found it necessary to
oversee the complete reorganization of the housing authority‘s
management and operations, develop and enforce policies and procedures,
and improve physical conditions. In some cases, receivers have had to
desegregate public housing to address fair housing violations.
Whether under administrative or judicial receivers, nearly all of the
15 authorities showed improvement during their years of receivership,
according to changes in HUD‘s assessed scores and/or other evidence.
The 4 housing authorities under judicial receiverships generally have
continued to demonstrate strong performance; performance scores have
improved and have generally remained high. While housing authorities
under administrative receiverships have also made improvements, some
continued to demonstrate a significant problem with housing units in
very poor physical condition.
According to HUD officials, HUD ends an administrative receivership
when it is clear not only that conditions at the housing authority have
improved, but also that the authority‘s management can sustain the
improvements. Of the 4 housing authorities whose receiverships HUD has
terminated, 2 have maintained the improvements and 1 has experienced a
recurrence of former problems. The fourth receivership officially ended
in September of 2002--too recently to assess sustainability. The
decisions to end judicial receiverships are made by judges. Two
judicial receiverships have been terminated because of the improvements
at the housing authorities, and both housing authorities have
maintained their assessed performance levels.
Background:
Under the Housing Act of 1937, as amended, Congress created the federal
public housing program to help communities provide housing for low-
income families. Congress annually appropriates funds for the program
and HUD allocates them to public housing authorities (PHA). PHAs are
typically created under state law, and a locally appointed board of
commissioners approves their decisions. HUD and the PHAs have an annual
contributions contract--a written contract under which HUD agrees to
make payments to the PHA and the PHA agrees to administer the housing
program in accordance with HUD regulations and requirements. HUD
provides the housing authorities with several types of assistance
including:
* operating subsidies to cover the difference between rent payments and
operating expenses;
* capital funds to improve the physical condition of properties and
upgrade the management and operation of existing public housing
developments; and:
* HOPE VI grants, on a competitive basis, to revitalize severely
distressed public housing. These grants fund the capital costs of
improvements such as major rehabilitation and new construction, the
demolition of severely distressed public housing, and community and
support services for residents.[Footnote 3]
In fiscal year 2000, HUD began implementing the Public Housing
Assessment System (PHAS) to improve the department‘s ability to measure
PHAs‘ performance. From 1991 until 2001, HUD had used the Public
Housing Management Assessment Program (PHMAP) to evaluate public
housing authorities. Both systems measure the same basic elements, but
the earlier system is based on self-certified information from the
housing authorities and does not include an independent physical
inspection or input from the public housing residents--both integral
parts of the new assessment system. The new system has three major
indicators as follows:
* The physical inspection indicator determines whether the housing
authority is providing decent, safe, and sanitary housing to its
residents.
* The financial condition indicator determines whether the PHA has
sufficient financial resources and is capable of effectively managing
those resources.
* The management operations indicator measures PHAs‘ management
performance.
Finally, a survey measures residents‘ satisfaction with their living
conditions. While this performance system has not yet been fully
implemented, we concluded in our March 2002 report that it has the
potential to provide a more reliable basis for evaluating housing
authorities‘ performance than the previous system.
If a housing authority receives an overall score of less than 60
percent under the Public Housing Assessment System, or a score of less
than 60 percent of the available points under more than one of the
three major indicators (physical, financial, and managerial), it is
designated as a ’troubled“ PHA. HUD assigns a recovery team to each
troubled PHA and develops a plan to remedy the problems. Initially, HUD
may offer technical assistance and training to a troubled authority.
HUD may also sanction an authority, for example, by withholding
funding. In some cases, HUD has entered into special agreements with
PHAs that allow them flexibility in addressing unusual challenges. For
example, at the Chicago Housing Authority, HUD waived some of its
regulations for 10 years and allowed the authority to consolidate its
capital and operating funds into a single block grant. The housing
authority was thus able to undertake a large-scale redevelopment
project to replace or redevelop most of its public housing.
Finally, HUD may place a housing authority under an administrative
receivership. The department has the authority[Footnote 4] to take
possession of all or part of the PHAs operation and management.
Generally, the receiver replaces the top management of the housing
authority and dissolves the board of commissioners--the body that
approves housing authority management decisions. Typically, HUD will
assign one of its employees or hire a contractor to act as the board
while the housing authority is under receivership. HUD will then
develop a plan for improvement based on what needs to be done at the
housing authority. Since 1985, HUD has placed 11 housing authorities
under administrative receivership; these are listed in table 1.
Additionally, judges have placed 4 housing authorities under judicial
receivership since 1979; these are in table 2.
The Quality Housing and Work Responsibility Act of 1998 requires that
HUD place poorly performing housing authorities under receivership if
they are not able to substantially improve their performance--that is,
to improve their scores under the new assessment system to 60--within 2
years. The act directs HUD to take over all or part of the operations
of PHAs with fewer than 1,250 units or to seek a court-appointed
receiver. For PHAs with 1,250 or more units, HUD must seek a court-
appointed receiver. However, HUD is still making adjustments to the new
scoring system and has not fully implemented it. Thus, no PHAs have
been placed in receivership on the basis of their performance scores
alone.
The following tables show the status of housing authorities under
receivership as of December 2002. The tables show the primary problems
that prompted the housing authorities placement under receivers,
according to HUD and housing authority data. However, most of the
housing authorities were placed in receivership for several reasons,
and some degree of management difficulty underlies the reasons for all
of the receiverships.
Table 1: Administrative Receiverships as of December 2002:
Housing authority: Beaumont (TX); Reason for receivership: Fair
housing; Date placed under receivership: October 2000; Status of
receivership: In progress.
Housing authority: Camden (NJ); Reason for receivership: Physical/;
management; Date placed under receivership: August 1997; Status of
receivership: In progress.
Housing authority: Chicago (IL); Reason for receivership: Physical/;
management; Date placed under receivership: May 1995; Status of
receivership: Terminated May 1999.
Housing authority: East St. Louis (IL); Reason for receivership:
Physical/; management; Date placed under receivership: October 1985;
Status of receivership: In progress.
Housing authority: Lafayette (LA); Reason for receivership: Fair
housing/; management; Date placed under receivership: February 1995;
Status of receivership: Terminated September 2002.
Housing authority: New Orleans (LA); Reason for receivership: Physical/
management; Date placed under receivership: February 1996; Status of
receivership: In progress.
Housing authority: Orange County (TX); Reason for receivership: Fair
housing; Date placed under receivership: September 1993; Status of
receivership: In progress.
Housing authority: St. James Parish (LA); Reason for receivership:
Physical/; management; Date placed under receivership: April 2001;
Status of receivership: In progress.
Housing authority: San Francisco (CA); Reason for receivership:
Physical/; management; Date placed under receivership: March 1996;
Status of receivership: Terminated September 1997.
Housing authority: Springfield (IL); Reason for receivership: Physical/
management; Date placed under receivership: March 1996; Status of
receivership: Terminated September 1997.
Housing authority: Wellston (MO); Reason for receivership: Physical;
Date placed under receivership: July 1996; Status of receivership: In
progress.
[End of table]
Source: GAO and HUD.
Note: In 1996, HUD placed the Housing Authority of New Orleans in a
partial receivership and in 2002 placed the authority in a full
administrative receivership.
Table 2: Judicial Receiverships as of December 2002:
Housing authority: Boston (MA); Reason for receivership: Physical/;
management; Date placed under receivership: July 1979; Status of
receivership: Terminated September 1990.
Housing authority: Chester (PA); Reason for receivership: Physical;
Date placed under receivership: August 1994; Status of receivership: In
progress.
Housing authority: Kansas City (MO); Reason for receivership: Physical;
Date placed under receivership: July 1993; Status of receivership: In
progress.
Housing authority: District of Columbia; Reason for receivership:
Physical/ management; Date placed under receivership: May 1995; Status
of receivership: Terminated September 2000.
[End of table]
Source: GAO and HUD.
Receiverships at Housing Authorities Have Resulted from Severe, Long-
standing Problems:
The problems that compel HUD and the courts to place public housing
authorities in receivership are serious physical, financial, and
managerial deficiencies that violate agreements between HUD and the
authority and that have persisted despite repeated interventions. The
courts have imposed all four judicial receiverships to date in response
to lawsuits that also involve the poor condition of public housing
properties. (Appendixes II and III, respectively, discuss the details
of these administrative and judicial receiverships.):
HUD Uses Receiverships When Other Approaches Have Been Unsuccessful:
The PHAs that HUD has placed under receivership have generally had
severe management problems resulting in poorly maintained housing.
These problems violate the agreements between the PHAs and HUD, which
require that public housing be maintained according to HUD‘s standards-
-decent, safe, and sanitary. HUD has placed housing authorities under
receivership after long-standing and severe problems that have not
responded to other HUD interventions, such as training or sanctions.
HUD has also taken over PHAs that were violating fair housing
requirements by maintaining segregated public housing developments,
where the segregation could not be addressed by other means.
Management difficulties are typically the cause of persistent problems
at PHAs, according to HUD and housing authority officials. Managers may
lack experience or may refuse to comply with HUD‘s requirements. For
example, HUD determined that the St. James Parish Housing Authority in
Louisiana could not fulfill its mission because of ineffective
management. According to HUD officials, the public housing units at St.
James were in deplorable condition and were deteriorating ’at an
alarming rate.“ HUD also cited high turnover rates among managers and
insufficient training as the reasons the Housing Authority of New
Orleans was unable to manage its maintenance and modernization
programs. Eight of the 11 administrative receiverships involved PHAs
that had problems with the physical condition of their units. For
example, the Camden Housing Authority, the Housing Authority of New
Orleans, the St. James Parish Housing Authority, and the Wellston
Housing Authority were not completing routine maintenance on their
public housing units before going into receivership. At the Chicago
Housing Authority, most of the public housing had been poorly designed,
was old, and was deteriorating.
At three PHAs, HUD took control of the management and operations
primarily to address racial segregation in the public housing
developments. HUD placed the Beaumont, Lafayette, and Orange County
Housing Authorities under receivership in order to desegregate the
public housing developments. At the Beaumont and the Orange County
housing authorities, HUD is under court order (Young v. Martinez) to
take actions to facilitate desegregation. When the PHAs failed to
desegregate the developments, HUD decided to place both under
receivership. HUD took over the Lafayette Housing Authority because the
management was maintaining its public housing waiting lists based on
race, ensuring that its developments were segregated.
In one case, HUD assumed control of a single program without placing
the entire housing authority in receivership. According to HUD
officials, the Puerto Rico Public Housing Administration lacked the
capacity to manage its HOPE VI program. HUD hired a contractor to help
manage the projects and provide technical assistance, but the housing
authority was not properly overseeing the program. A report issued by
HUD‘s Inspector General in March of 2001 reported a total breakdown of
the housing authority‘s ability to administer its HOPE VI project.
According to the report, the authority lacked effective management and
accounting controls over its federal funds and did not effectively
monitor the activities of the contracted project manager. HUD officials
told us that the situation has improved, and that the program will be
returned to the Puerto Rico Housing Administration in the near future.
Lawsuits over Poor Living Conditions Prompted Judicial Receiverships:
To date, all judicial receiverships at PHAs have resulted from lawsuits
filed by residents and have involved the very poor physical condition
of public housing units. All four of the housing authorities under
judicial receivership had similar histories of problems. Besides the
poor condition of the occupied public housing units, the housing
authorities had high vacancy rates because units had been deemed
uninhabitable. As a result, those on waiting lists for public housing
could not obtain housing, the neighborhoods surrounding the empty units
deteriorated, and crime near the abandoned housing rose. According to
HUD and PHA officials, poor management, corruption, and local political
interference were the underlying causes of the problems at these
housing authorities.
When residents in Kansas City, Missouri, filed suit against the housing
authority, the judge ordered the PHA to rehabilitate or repair all
housing developments in poor condition. When it failed to comply with
the order, the judge ordered the PHA into receivership and named a
receiver to oversee the redevelopment of public housing in the city. In
Boston, according to a PHA official and the former receiver, the
housing authority had lost control of its public housing developments
before it went into receivership. Criminals controlled the
developments, the PHA had stopped trying to maintain occupied units,
and it failed to board up vacant units. Finally, residents filed suit,
and the judge ordered the receivership. At the Chester Housing
Authority, the judge made the decision to place the PHA in receivership
after touring the developments and witnessing the poor living
conditions and the drug dealing that went on in front of them,
according to the attorney for the case. At the District of Columbia
Housing Authority, the judge ordered the PHA into receivership after 2
years of investigating and detailing the poor condition of the public
housing developments.
Administrative and Judicial Receiverships Have Operated Similarly, but
Specific Remedies Have Varied:
Administrative and judicial receiverships have operated similarly in
that they usually both involve the complete takeover of a PHA‘s
management and operations or of an entire program within a PHA. Both
types of receivers have the same authority to implement any necessary
changes to improve the PHA‘s performance. However, the remedies
receivers apply vary, largely because the situations that result in
receiverships differ. The nature and extent of the problems determine
the kinds of goals that are set and the way they are addressed.
Both Administrative and Judicial Receiverships Involve the Complete
Takeover of a PHA‘s Management and Operations:
Once a PHA goes into receivership, the receiver has the authority to
take full control of management and operations. The PHA‘s management
relinquishes control of the housing authority to the receiver, and the
locally elected board of commissioners is dissolved. In most cases, the
receiver replaces the top management positions at the housing authority
and institutes new policies and procedures to affect improvements. For
example, when the Housing Authority of Kansas City entered a judicial
receivership, the receiver brought staff from his consulting firm to
fill top management positions. The receiver and his staff rewrote
personnel standards, personnel policies, and procurement policies in
order to restore the PHA‘s accountability. Similarly, under an
administrative receivership at the St. James Parish Housing Authority,
the receiver hired a new executive director, established a system of
financial controls, developed new personnel policies, and put in place
new maintenance guidelines for the public housing developments. At the
Housing Authority of New Orleans, HUD and the City of New Orleans
initially agreed to a partial or ’quasi“ receivership in 1996. It
replaced the board of commissioners with a contractor and appointed an
executive monitor to oversee the PHA‘s management and operations. When
the housing authority had shown little improvement after several years,
HUD imposed a full administrative receivership in January 2002 with a
HUD employee as the receiver.
Although the legal authority of the administrative and judicial
receiverships are the same, court-appointed receivers may be better
able to effectively use their authority according to officials of
several housing authorities and public housing experts that we spoke
with. According to these officials, the court-appointed receivers are
more insulated from local politics and better able to make necessary
changes at the housing authority.
Receivers‘ Actions Respond to Specific Problems:
Actions imposed by receivers to remedy problems at a PHA respond to the
specific problems that need to be addressed. In all of the judicial
receiverships and several of the administrative receiverships, the
receiver has taken action to redevelop or rebuild a substantial portion
of the public housing developments. Following are the examples of
actions to remedy specific problems:
* At the Housing Authority of Kansas City, the receiver had every
public housing unit either rebuilt or rehabilitated because of the poor
condition of the housing stock.
* Similarly, at the Chicago Housing Authority, the receiver tore down
some of the deteriorated and poorly designed housing developments.
* At the three PHAs where racial segregation was the problem, the
receivers implemented plans to desegregate the public housing
developments. At the Beaumont and Orange County Housing Authorities,
for instance, HUD-appointed receivers provided incentives such as
moving expenses to persuade public housing residents to move.
Receivers may also take other actions to prevent future problems in
addition to responding to short-term needs. Examples of actions to
prevent future problems are as follows:
* At the Boston Housing Authority, the receiver permanently disbanded
the board of commissioners because it had been a source of some of the
PHA‘s original problems--the board was not conducive to effective
management. According to the receiver and housing authority officials,
the members of the board did not have the necessary skills or political
independence to make the right decisions for the housing authority.
Currently, the top official for the Boston Housing Authority reports
directly to the Mayor.
* At the District of Columbia Housing Authority, the receiver
facilitated the restructuring of the housing authority so that it would
become a separate entity rather than a department of the city. This
restructuring allowed the PHA‘s management more control over its
operations and budget.
Both Administrative and Judicial Receiverships Have Shown Improvement:
According to HUD‘s assessed performance scores and/or other evidence,
nearly all of the 15 authorities showed improvement during their years
of receivership whether under administrative or judicial receivers.
While the numbers are too small to statistically identify differences
between judicial and administrative receiverships, we found that this
pattern of improvement was consistent for the 4 housing authorities
under judicial receiverships. Performance scores under judicial
receiverships have generally remained high. In contrast, some housing
authorities under administrative receiverships still demonstrate
problems such as housing units in poor physical condition and high
turnover among managers. In reviewing the 5 authorities under
administrative receivership for which a sufficient number of HUD‘s
assessed performance scores were available, we also noted that the 2
largest housing authorities showed more improvement than the 3 small
and medium-sized authorities in the initial years of receivership;
however, the small and medium-sized housing authorities improved their
scores more over the long run.
PHAs Have Made Progress under Receivership:
Most housing authorities under receivership demonstrated some type of
progress, regardless of the initial problems. Almost all the
authorities that were placed under receivership because of severe
physical problems with their public housing units improved the physical
condition of their units. For example, the Camden Housing Authority,
the District of Columbia Housing Authority, the Wellston Housing
Authority, and the Housing Authority of Kansas City all had problems
with the physical condition of their units prior to being placed in
receivership. Throughout their receiverships, all of these housing
authorities improved the physical condition of their units through
extensive rehabilitation and modernization efforts.
The three housing authorities (Beaumont, Orange County, and Lafayette)
that were placed in receivership because of racial segregation also
showed overall improvement, based on their performance scores. While
HUD‘s performance scores do not have a component that captures the
progress made in desegregating developments, they do indicate that, in
recent years, these housing authorities generally made progress in
improving the management of the agency and the physical condition of
the housing stock. The Lafayette Housing Authority was in troubled
status when it was taken over by HUD in 1995 but managed to receive
performance scores that were high enough under the receivership to
remove that designation.
Overall, HUD‘s assessed performance scores show a pattern of
improvement at housing authorities placed in receivership. The eight
housing authorities for which a sufficient number of performance scores
were available showed a median increase in their overall performance
score of about 27 percent after 2 years of receivership and about 41
percent after 3 years of receivership. The last scores for PHAs--the
last available score for PHAs currently under receivership and the
score for the final year for PHAs that are out of receivership--showed
a median increase of about 67 percent (see fig. 1).
Figure 1: PHA Performance under Receivership:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Note: We analyzed HUD data on seven receiverships for the 2-year mark
and eight receiverships for the 3-year and last score marks. The last
score category represents the last available score for housing
authorities still under receivership and the final score under
receivership for terminated receiverships. Median percentage increases
are rounded to the nearest percent.
Although the number of available performance scores was not sufficient
for the above analysis, the scores that were available for an
additional 4 housing authorities also showed a general pattern of
improvement. The Beaumont, Camden, East St. Louis, and the Springfield
Housing Authorities showed some improvement in their performance scores
during receivership.
Improvements Have Been Consistent at Authorities under Judicial
Receiverships:
All of the four housing authorities that have been or are currently
under judicial receivership (Boston, District of Columbia, Kansas City,
and Chester) have generally shown consistent improvements. Following
are examples of improvements at these authorities:
* At the Housing Authority of Kansas City, Missouri, several units were
either rehabbed or redeveloped during the receivership, and new
procurement and personnel policies were instituted. By the late 1990s,
the housing authority was consistently achieving lower crime rates,
higher rent collections, and a higher occupancy rate.
* The District of Columbia Housing Authority demolished several vacant
public housing units and extensively modernized others in order to
improve the physical condition of its developments. According to a
senior housing authority official, every unit that needed work was
rehabilitated or modernized. Financial management systems were also put
in place during the receivership, which allowed the housing authority
better access to funding.
* The housing stock at the Chester Housing Authority also improved
during receivership. The PHA has conducted revitalization work on
several developments and has been able to decentralize all operations
and implement agencywide standard operating procedures.
Further, all of these authorities continue to progress. Turnover among
managers has decreased, and performance scores have been high.
In contrast, while housing authorities under administrative
receiverships have also made improvements, some are still experiencing
problems. For example, the public housing units at the Housing
Authority of New Orleans, Louisiana, are still in very poor physical
condition. Additionally, according to HUD officials, the housing
authority still has significant management problems that have led to
further HUD involvement in the receivership.
While the numbers are too small to statistically identify differences
between judicial and administrative receiverships, we noted that HUD‘s
assessed performance scores for the housing authorities under judicial
receivership showed a generally consistent pattern of improvement. The
data for the eight authorities for which a sufficient number of
performance scores were available are shown in table 3.
Table 3: Change in Performance Scores for Housing Authorities under
Judicial or Administrative Receivership:
Housing authority: PHAs under judicial receiverships.
Housing authority: Chester; Score at beginning of receivership: PHAs
under judicial receiverships: 41.97; Score at
2 years into receivership: PHAs under judicial receiverships: 71.67;
Score at 3
years into receivership: PHAs under judicial receiverships: 83.23; Last
score under receivership: PHAs under judicial receiverships: 90.
Housing authority: Kansas City; Score at beginning of receivership:
PHAs under judicial receiverships: 51.46; Score at
2 years into receivership: PHAs under judicial receiverships: 60.82;
Score at 3
years into receivership: PHAs under judicial receiverships: 74.71; Last
score under receivership: PHAs under judicial receiverships: 80.
Housing authority: District of Columbia; Score at beginning of
receivership: PHAs under judicial receiverships: 37.80; Score at
2 years into receivership: PHAs under judicial receiverships: N/A;
Score at 3
years into receivership: PHAs under judicial receiverships: 79.25; Last
score under receivership: PHAs under judicial receiverships: 72.
Housing authority: PHAs under administrative receiverships.
Housing authority: Chicago; Score at beginning of receivership: PHAs
under judicial receiverships: 51.07; Score at
2 years into receivership: PHAs under judicial receiverships: 64.73;
Score at 3
years into receivership: PHAs under judicial receiverships: 69.96; Last
score under receivership: PHAs under judicial receiverships: 65.
Housing authority: Lafayette; Score at beginning of receivership: PHAs
under judicial receiverships: 25.69; Score at
2 years into receivership: PHAs under judicial receiverships: 83.73;
Score at 3
years into receivership: PHAs under judicial receiverships: 73.06; Last
score under receivership: PHAs under judicial receiverships: 85.
Housing authority: New Orleans; Score at beginning of receivership:
PHAs under judicial receiverships: 48.18; Score at
2 years into receivership: PHAs under judicial receiverships: 85.16;
Score at 3
years into receivership: PHAs under judicial receiverships: 61; Last
score under receivership: PHAs under judicial receiverships: 43.
Housing authority: Orange County; Score at beginning of receivership:
PHAs under judicial receiverships: 64.76; Score at
2 years into receivership: PHAs under judicial receiverships: 71.90;
Score at 3
years into receivership: PHAs under judicial receiverships: 47.86; Last
score under receivership: PHAs under judicial receiverships: 87.
Housing authority: Wellston; Score at beginning of receivership: PHAs
under judicial receiverships: 43.91; Score at
2 years into receivership: PHAs under judicial receiverships: 42.45;
Score at 3
years into receivership: PHAs under judicial receiverships: 50; Last
score under receivership: PHAs under judicial receiverships: 78.
[End of table]
Source: GAO and HUD.
Note: The Boston Housing Authority is not included in the judicial
receiverships due to the receivership ending before performance score
assessments began. The District of Columbia Housing Authority did not
receive an overall performance score after 2 years in receivership (FY
1997). The last score category represents the last available score for
housing authorities still under receivership and the final score under
receivership for terminated receiverships. For all housing authorities
in this table, scoring assessments began under PHMAP and continued
under PHAS. See appendix I for more information.
Improvements Varied by Housing Authority Size:
While again the numbers of housing authorities are too small to
statistically make distinctions, we also noted that among the five
administrative receiverships for which a sufficient number of
performance scores were available, the 3 small and medium-sized housing
authorities experienced higher increases in performance scores, over
longer timelines, than the 2 very large housing authorities. The scores
for these authorities are shown in table 4.
Table 4: Change in Performance Scores for Housing Authoritiesunder
Administrative Receivership, Based on Size of the Authority:
Housing authority: Small and medium-sized PHAs.
Housing authority: Lafayette; Score at beginning of receivership: Small
and medium-sized PHAs: 25.69; Score at 2: years into receivership:
Small and medium-sized PHAs: 83.73; Score at 3: years into
receivership: Small and medium-sized PHAs: 73.06; Last score under
receivership: Small and medium-sized PHAs: 85.
Housing authority: Orange County; Score at beginning of receivership:
Small and medium-sized PHAs: 64.76; Score at 2: years into
receivership: Small and medium-sized PHAs: 71.90; Score at 3: years
into receivership: Small and medium-sized PHAs: 47.86; Last score under
receivership: Small and medium-sized PHAs: 87.
Housing authority: Wellston; Score at beginning of receivership: Small
and medium-sized PHAs: 43.91; Score at 2: years into receivership:
Small and medium-sized PHAs: 42.45; Score at 3: years into
receivership: Small and medium-sized PHAs: 50; Last score under
receivership: Small and medium-sized PHAs: 78.
Housing authority: Very large PHAs.
Housing authority: Chicago; Score at beginning of receivership: Small
and medium-sized PHAs: 51.07; Score at 2: years into receivership:
Small and medium-sized PHAs: 64.73; Score at 3: years into
receivership: Small and medium-sized PHAs: 69.96; Last score under
receivership: Small and medium-sized PHAs: 65.
Housing authority: New Orleans; Score at beginning of receivership:
Small and medium-sized PHAs: 48.18; Score at 2: years into
receivership: Small and medium-sized PHAs: 85.16; Score at 3: years
into receivership: Small and medium-sized PHAs: 61; Last score under
receivership: Small and medium-sized PHAs: 43.
[End of table]
Source: GAO and HUD.
Note: The last score category represents the last available score for
housing authorities still under receivership and the final score under
receivership for terminated receiverships. The analysis could only be
done on 3 of the 6 small and medium-sized housing authorities and 2 of
the 5 large or very large-sized housing authorities under
administrative receivership. For all housing authorities in this table,
scoring assessments began under PHMAP and continued under PHAS. See
appendix I for more information.
Most of the small and medium-sized PHAs that have been placed in
administrative receivership have had less severe physical problems than
the large and very large housing authorities. For example, the three
PHAs that HUD placed in receivership because of racial segregation can
be classified as small or medium-sized. The receiverships at these
three PHAs have focused primarily on ensuring that the segregation
patterns end. For the most part, these housing authorities do not have
the severe physical deterioration of their housing stock that large
PHAs such as Chicago have. While other small and medium-sized PHAs
under administrative receivership have had some physical problems with
their public housing units, management, or both, the scale of the
issues has been limited by the housing authority‘s size.
In contrast, large and very large housing authorities have often had
significant physical and management problems that have required
substantial work. The housing authorities of New Orleans, Chicago, and
Camden have all had substandard housing units, high turnover rates for
top managers, and weak internal controls. These PHAs have had to
undertake major rehabilitation of public housing developments and
initiate changes in personnel, procurement, and other policies in order
to correct the deficiencies that led to receivership. In some cases,
the improvements have not been sustained. For example, some public
housing developments in both New Orleans and Chicago are still in poor
physical condition.
Criteria for Ending Receiverships Vary:
No set guidelines exist for ending either administrative or judicial
receiverships because both are handled on a case-by-case basis.
Receiverships that have been terminated have ranged from as little as
one and a half years (Springfield and San Francisco) to approximately
11 years (Boston). To date, most of the current receiverships have
lasted approximately 5 to 9 years.[Footnote 5] Of the receiverships
included in our review, only 4 administrative and 2 judicial
receiverships have been terminated.
HUD‘s regulations, past or current, do not prescribe when HUD returns a
PHA to local control once it‘s under an administrative receivership.
The criteria HUD uses to make this decision vary depending on the
problems that led to receivership and the severity of those problems.
Judges make the determination to end judicial receiverships on the
basis of a PHA‘s progress in satisfying the initial goals set for the
receivership. The judge‘s criteria have varied depending on the level
of improvement that is deemed necessary to overcome the problems that
led to the receivership.
HUD‘s Termination Decisions Consider Severity of Problems:
To date, HUD has terminated four receiverships--the Chicago Housing
Authority, the Lafayette Housing Authority, the San Francisco Housing
Authority, and the Springfield Housing Authority. The Chicago Housing
Authority was in receivership for approximately 4 years as HUD
privatized some functions, developed plans to improve maintenance and
security operations, and began to rebuild and rehabilitate the housing
stock. Once HUD completed these improvements and removed the PHA from
troubled status, HUD began discussions with the Mayor for the return of
the housing authority to local control. The receivership ended in May
1999. While the housing authority has continued to have some problems
with its housing stock since 1999, it has sustained enough of the
improvements that were made under the receivership and, thus, has
avoided further intervention in its public housing program. In
addition, HUD has entered into agreements with the authority that will
lead to a complete physical transformation of its public housing
developments within 10 years.
At the Lafayette Housing Authority, HUD decided not to terminate the
receivership until all concerns about racial segregation had been
addressed. The PHA was taken over as a result of severe management
problems--the management was purposely segregating public housing
developments by race, according to HUD officials. It was also in
troubled status when it went into receivership, with an overall
performance score of 25.69 percent for fiscal year 1995. It was removed
from troubled status in 1998 after receiving a performance score of
83.73 percent for fiscal year 1997. However, HUD kept the authority in
receivership because of racial segregation issues and did not end the
receivership until the PHA enacted policies to bring the housing
authority in full compliance with fair housing requirements. Once these
policies were in place and HUD determined that the PHA could sustain
the improvements, HUD terminated the receivership. The PHA was
officially turned back over to local control on September 17, 2002.
At the San Francisco Housing Authority, HUD decided to terminate the
receivership after the Mayor appointed a new board and strategies had
been initiated to turn the PHA around. HUD had taken over the PHA in
March 1996 at the Mayor‘s request, after he had fired the executive
director and commissioners. HUD sent a recovery team of HUD officials,
consultants, and employees from other housing agencies to assess the
PHA‘s operations and develop strategies to deal with the problems. The
acting HUD Assistant Secretary for Public and Indian Housing assumed
the role of the board of commissioners. HUD also contracted to fill
several key management positions to continue the recovery efforts and
once the Mayor had appointed a new board member, HUD decided to turn
the housing authority back over to local control. The housing authority
was officially handed over to the new board in September 1997.
The Springfield Housing Authority (SHA) voluntarily transferred
operational control to HUD in 1996. The housing authority was in
troubled status and HUD agreed to monitor the SHA after it signed a
Memorandum of Agreement (MOA) that was designed to correct the housing
authority‘s deficiencies. A HUD official assumed the role of the board
of commissioners throughout the receivership. Under the MOA, the SHA
had made progress on several fronts, including quality of physical work
and budget controls. In September 1997, the housing authority was
removed from troubled status and HUD decided to transfer the SHA back
to local control. The short receivership ended that month when the SHA
board of commissioners passed a resolution accepting control of the
housing authority.
Judges Have Terminated Receiverships That Met Their Goals:
Thus far, judges have terminated two of the four judicial
receiverships--the Boston Housing Authority and the District of
Columbia Housing Authority. The receiverships ended when the judges
determined that the housing authorities had met specific criteria or
made substantial improvements at the PHAs. The Boston Housing Authority
was initially placed in receivership in 1979 after residents filed a
lawsuit against the housing authority alleging uninhabitable living
conditions in the city‘s public housing developments. In general, the
PHA had problems carrying out basic functions of a housing authority.
According to the receiver and a BHA official, the housing authority
also had problems controlling crime in its public housing developments.
The judge decided to return the PHA to local control after the housing
authority improved the conditions that had led to receivership.
Additionally, according to the receiver, he and the judge wanted the
board of directors permanently disbanded and an effective manager
appointed. After the authority accomplished these measures, the judge
agreed to release the PHA from the receiver‘s control and give the
agency back to the city, with the Mayor acting as the receiver and the
court maintaining supervision of the housing authority. The court‘s
active supervision of the PHA ended in 1990. According to the current
Administrator of the Boston Housing Authority, the PHA has been able to
maintain the governance structure and some of the improvements made
under the receivership. The housing authority has achieved strong
performance scores the last couple of years, and according to HUD
officials, this is reflective of the progress that the PHA has made.
The District of Columbia Housing Authority was placed under a judicial
receivership because of poor living conditions and failure to make
vacant units available for residents. For these reasons, a lawsuit was
filed against the housing authority, and the presiding judge placed the
PHA in receivership. The judge‘s criteria for ending the receivership
were performance scores of 70 or higher for 2 consecutive years of
assessment. The PHA was able to meet this requirement after extensive
rehabilitation and modernization work on its public housing units and
the reshaping of its administrative and financial management systems.
The receivership ended in September 2000, and the PHA currently
operates as an independent agency in cooperation with the D.C.
government.
Agency Comments:
We provided a draft of this report to HUD for its comment and review.
We received comments from the Director, Field Operations Staff, and the
Director, Troubled Agency Recovery Operations, who generally concurred
with the content of this report. HUD commented that further analysis
should be conducted on the differences between judicial and
administrative receiverships, because it believes that judicial
receiverships are more costly than administrative receiverships. In
addition, HUD provided technical comments, which we incorporated in
this report as appropriate.
We are sending copies of this report to the Chairman and Ranking
Minority Member, Senate Committee on Banking Housing and Urban Affairs;
the Ranking Minority Member, Subcommittee on Housing and
Transportation, Senate Committee on Banking, Housing, and Urban
Affairs; the Chairman and Ranking Minority Member, House Committee on
Financial Services; the Chairman and Ranking Minority Member,
Subcommittee on Housing and Community Opportunity, House Committee on
Financial Services. We will send copies to the Secretary of Housing and
Urban Development and the Director of the Office of Management and
Budget. We also will send copies to other interested parties, and we
will make copies available to others upon request. In addition, the
report will be available at no charge on the GAO Web site at http://
www.gao.gov. Please contact me at (202) 512-8678 if you or your staff
have any questions about this report. Key contributors to this report
are listed in appendix IV.
Sincerely yours,
Signed by David G. Wood:
David G. Wood
Director, Financial Markets and
Community Investment:
[End of section]
Appendixes:
[End of section]
Appendix I: Scope and Methodology:
We gathered information on 15 public housing authorities (PHA) that
have been under receivership. We excluded one receivership that HUD
initiated after we began our study (Shelby County Housing Authority).
We interviewed PHA officials, HUD officials who either were involved
with a receivership or are now helping to monitor a PHA, and when we
could, the receivers for the PHAs.
To identify the circumstances that led the Department of Housing and
Urban Development (HUD) or the courts to impose receiverships, we
reviewed HUD‘s guidance and policies regarding receiverships. In
addition, we gathered information and obtained documents on the events
and conditions at the PHAs that preceded each receivership. We also
interviewed several housing authority officials, officials from
industry groups, lawyers that handled the lawsuits resulting in
receiverships, and HUD officials that had been involved in
receiverships.
To identify potential differences in the way administrative and
judicial receiverships operate, we interviewed officials involved with
administrative receiverships and officials involved with judicial
receiverships, including several receivers. In addition, we reviewed
documentation on the actions receivers took to address the problems at
the PHAs. We examined the impact of these actions on the PHAs.
To identify the conditions that lead to the termination of
receiverships, we examined relevant documentation from HUD and the
receivers and interviewed officials who were directly involved with a
termination. In order to assess the performance of PHAs under
receivership, we obtained all the performance scores from both the old
and new scoring systems that were available for the 15 PHAs we
reviewed. The data covered fiscal years 1991 (when performance
assessments first began) through 2001 (the latest year for which scores
were available). Performance scores were not available for all housing
authorities for some years. The Boston and East St. Louis Housing
Authorities were placed under receivership several years before HUD
began assessing PHAs. The San Francisco and Camden Housing Authorities
did not have an assessment score for the year that each housing
authority was placed under receivership. Other receiverships began
recently or lasted less than 2 years and, consequently, the housing
authorities had very few performance scores. The Beaumont Housing
Authority receivership and St. James Parish Housing Authority
receivership began in 2000 and 2001, respectively. The Springfield
Housing Authority receivership lasted less than 2 years. Where
possible, we examined changes in performance scores for these seven
housing authorities while they were under receivership.
For eight PHAs that had performance scores at the time the receivership
began and whose receiverships lasted at least 2 years, we conducted
further analysis on the changes in performance scores that occurred
during the receivership. We used the score for the fiscal year that a
housing authority went into receivership as the beginning of
receivership score. We used the 2-and 3-year intervals so that the
assessments would reflect the effects of the receivers‘ actions as
fully as possible. We used the final score for terminated receiverships
in order to show the progress made during the entire receivership. For
housing authorities still under receivership, we used the last
available score to show as much of the progress made as possible. In
either case, this score was the score for the fiscal year that the
housing authority was last assessed while under receivership. :
We used HUD‘s criteria to determine the size of PHAs. These criteria
are based on the number of public housing units in a housing
authority‘s stock, as follows:
* Very large, more than 6,599 units;
* Large, 1,250 units to 6,599 units;
* Medium, 500 units to 1,249 units;
* Small, 100 units to 499 units; and:
* Very small, less than 100 units.
We conducted our work from February 2002 through December 2002 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Administrative Receiverships:
Beaumont Housing Authority (TX):
The Department of Housing and Urban Development (HUD) took over the
public housing authority (PHA) in 2000 because of racial segregation in
the public housing developments. The Beaumont Housing Authority is one
of several housing authorities in East Texas bound by the Young v.
Martinez, Final Judgment and Decree, which makes HUD responsible for
addressing racial segregation in public housing developments. When the
Beaumont Housing Authority failed to take the necessary steps to
desegregate its public housing, HUD assumed control of the PHA‘s
management and operations. Initially, HUD removed all the managers and
the board of commissioners and hired a contractor to evaluate the
problems and develop a work plan for improvement. A HUD staff person is
currently the Acting Executive Director, and another HUD staff person
has replaced the board of commissioners.
According to HUD officials, the problems at the Beaumont Housing
Authority have effectively been remedied. The developments have been
desegregated, and HUD believes that the current management is capable
of operating the housing properly. HUD officials are currently
preparing to end the receivership and to turn back the housing
authority to local control. The Acting Executive Director is currently
interviewing candidates for the position of Executive Director, and HUD
has asked the Mayor of Beaumont to appoint an advisory committee that
will become the board of commissioners once HUD ends the receivership.
Camden Housing Authority (NJ):
HUD took over the Camden Housing Authority in 1997 with the concurrence
of the mayor of Camden. The PHA had a long history of problems. It was
unable to provide decent, safe, and sanitary housing; had poor internal
controls; was not complying with federal regulations; and political
influence was interfering with its ability to improve, according to HUD
officials.
HUD hired consultants to manage the housing authority and designated a
HUD official to act as the board of commissioners. After assessing the
conditions at the PHA, the consultants instituted initiatives to clean
and repair the housing projects, improve management‘s relationship with
the residents, and improve the PHA‘s organizational structure. Longer-
term improvement efforts focused on modernizing the properties and
improving property management, maintenance, financial management,
administration, security, resident initiatives, and strategic
planning. The housing authority now has an executive director in
charge, but a HUD official continues to oversee management and
operations. Although the Camden Housing Authority is performing well,
HUD is not returning it to local control at this time because of the
instability of City of Camden, which the state of New Jersey has
recently placed under receivership.
Chicago Housing Authority (IL):
The Chicago Housing Authority has had a long history of management
problems and distressed housing conditions. HUD had designated the PHA
as ’troubled“ as far back as 1979, when the department first began to
focus on poorly performing PHAs. The Chicago PHA had weak internal
controls, fiscal problems, and frequent turnover among its top
management. In addition, the PHA‘s housing was some of the worst in the
country--old, deteriorating, and poorly designed for the climate.
In 1995, HUD took control of the PHA‘s management and operations and
put HUD employees in charge. HUD reorganized the PHA‘s management,
privatized some functions, developed plans to improve maintenance and
security, and began to rebuild and rehabilitate the housing stock. HUD
returned the housing authority to local control by 1999 after the PHA
had improved its performance scores enough for HUD to lift its
’troubled“ designation. According to HUD officials, however, even
though the Chicago PHA was no longer technically troubled, it still was
not completely ’fixed“ because many of its housing developments were
still in poor condition. However, after HUD returned the housing
authority to local control it agreed to a grant of $1.5 billion over 10
years so the PHA could carry out a transformation plan that calls for
demolishing 18,000 public housing units and rehabilitating or
redeveloping another 25,000.
East St. Louis Housing Authority (IL):
HUD took control of the East St. Louis Housing Authority in 1985.
According to HUD officials, the PHA was mismanaged, routine maintenance
was not being completed on the public housing units, modernization
funds were being improperly used, and housing authority officials had
been indicted for crimes that included larceny and embezzlement.
Additionally, the city was in political chaos, contributing to the
problems at the PHA, according to HUD officials.
HUD hired a contractor to manage the PHA and implement needed changes.
The contractor reorganized the staff, rewrote all policies, and created
a merit-based personnel system. In addition, it rehabilitated or
repaired about one-third of the public housing units and established a
maintenance program to keep the units in compliance with HUD‘s
standards. Currently, the PHA is performing well. An executive director
runs the management and operations, and a full board of commissioners
is in place. However, according to HUD officials, the PHA will remain
under receivership--they do not believe the city is in a condition to
operate the housing authority because of its financial problems. HUD
officials responsible for monitoring the East St. Louis PHA believe
that if they return it to local control now, it would not sustain the
improvements that have been made under the receivership.
Lafayette Housing Authority (LA):
HUD took over the Lafayette Housing Authority in 1995 as a result of
severe management problems and racial segregation in the public housing
developments. The PHA was placing families in public housing
developments based on their race rather than on their place on the
waiting list. HUD disbanded the PHA‘s board of commissioners and hired
a new Executive Director. HUD staff also developed new policies and
procedures for placing families in public housing and provided the
technical assistance needed to bring the authority back into compliance
with fair housing requirements. HUD returned the Lafayette PHA to local
control in 2002.
Housing Authority of New Orleans (LA):
The Housing Authority of New Orleans had a long history of management
problems, and its public housing has long been in very poor condition.
In 1996, HUD entered into a ’cooperative endeavor agreement“ with the
city of New Orleans in order to correct problems at the PHA. Under this
agreement, HUD dissolved the PHA‘s board of commissioners and chose a
HUD representative as Executive Monitor to oversee the authority‘s
progress in implementing improvements. The improvement plan focused
mainly on rehabilitating and redeveloping the deteriorating public
housing stock.
In 2002, after the PHA had made little progress, HUD took control of
the PHA‘s management and operations. A team of HUD officials is now in
complete control of the management of the housing authority. According
to HUD officials involved in the receivership, they are working on
reallocating staff resources, reorganizing the PHA‘s structure, and
cutting back on unnecessary expenditures. They have procurement,
management, and financial problems yet to address. According to HUD
officials, they are also making progress toward improving the condition
of the housing stock through several new construction and
rehabilitation projects.
Orange County Housing Authority (TX):
HUD took over the Orange County Housing Authority in 1993 because of
the management‘s failure to desegregate its public housing. As it is
with the Beaumont Housing Authority, HUD is responsible for
facilitating desegregation of Orange County public housing under Young
v. Martinez, Final Judgment and Decree. A HUD staff person currently
serves as the board of commissioners, and HUD has contracted with the
Executive Director of a neighboring PHA to manage the day-to-day
operations. HUD staff involved with the receivership told us that they
had succeeded in desegregating public housing developments in three of
the PHA‘s four communities. HUD staff felt that they had done as much
as they could to desegregate the public housing developments and
attempted to place the PHA under local control. However, local
officials refused, according to HUD. As a result, HUD now plans to
dismantle the housing authority. Public housing developments in two of
the communities will be sold, although the units will remain as
affordable housing. The developments in the remaining two communities
will be transferred to another PHA.
St. James Parish Housing Authority (LA):
HUD took over the St. James Parish Housing Authority in 2001 after the
authority had been in troubled status for almost 8 years. The PHA was
poorly managed, was not completing routine maintenance on its public
housing units, and was not boarding up vacant units. It had been under
the supervision of HUD‘s Office of Troubled Agency Recovery since 1997
and began receiving assistance from HUD‘s Troubled Agency Recovery
Center (TARC) in 1998. The PHA improved after receiving TARC
assistance, but it continued to have problems--for example, it did not
keep financial records and much of its housing stock was in disrepair-
-violating the provisions of its Memorandum of Agreement (MOA) with
HUD.
HUD hired a consulting firm to run the management and operations of the
PHA and to act as the board of commissioners. According to TARC
officials, the consulting firm established financial controls, put in
place new policies and procedures (including new personnel policies),
and provided extensive training to staff at the facility. According to
HUD officials, the PHA is currently doing well. The staff are now
completing routine maintenance and following the consulting firm‘s
policies and procedures. The housing authority now has an Executive
Director, and HUD is training members of an advisory board that will
become the board of commissioners once HUD returns the PHA to local
control.
San Francisco Housing Authority (CA):
HUD took over the San Francisco Housing Authority in 1996 after the
Mayor of San Francisco requested HUD‘s assistance. The PHA had
managerial problems, high crime at its public housing developments, and
problems with the physical condition of the units. HUD sent a team of
consultants, HUD officials, and employees of other PHAs to act as
managers and correct the problems. A HUD official functioned as the
board of commissioners. HUD‘s recovery efforts included implementing
new policies and procedures and reorganizing the PHA. HUD returned the
PHA to local control in 1997. Several years after the PHA was returned
to local control, it developed financial difficulties and sought the
assistance of HUD‘s TARC. The TARC continues to monitor and provide
assistance the San Francisco Housing Authority.
Springfield Housing Authority (IL):
The Springfield Housing Authority voluntarily transferred operational
control to HUD in 1996. The PHA was in ’troubled“ status, and its
deficiencies were not being corrected. The board of commissioners
resigned, and a HUD official assumed its role.
In September 1996, the housing authority signed an MOA that was aimed
at addressing the PHA‘s problems. Under the MOA, the PHA was able to
make some changes, including improving its contract administration,
modernizing its budget controls, raising the quality of construction
work, and improving the physical condition of the housing stock. By
September 1997, the PHA had improved enough to be removed from troubled
status and returned to local control.
Wellston Housing Authority (MO):
HUD took over the Wellston Housing Authority in 1996 after a series of
problems and 3 years of poor performance scores. The PHA had severe
management and financial problems, as well as problems with the
physical condition of its housing units. HUD initially had staff from
its local area office act as the board of commissioners and executed an
agreement with a nearby PHA to oversee the day-to-day management and
operations. According to officials of the managing PHA, the Wellston
Housing Authority was in a state of chaos. They found severe physical
deficiencies in the public housing units, rents had not been collected,
and there were no records to determine who lived in the public housing
or whether residents were qualified to live there. According to HUD
officials, the management of the housing authority prior to
receivership was dysfunctional.
According to officials responsible for operating the housing authority
at the beginning of the receivership, they had to recreate all of the
management and information systems and inspect all the units to
determine maintenance needs. They had to reverify all the residents‘
incomes and determine whether or not residents had been paying rent.
The management team completed a physical needs assessment of the units
to determine the health and safety violations that needed to be
addressed and routine repairs that were required. After the initial
problems were resolved, the HUD Office of Troubled Agency Recovery in
Cleveland took over the oversight of the PHA and hired an Executive
Director to run the day-to-day operations. HUD also hired a contractor
to act as the board. The contractor is currently training members of an
advisory board that will eventually act as the board of commissioners
once HUD returns the PHA to local control. According to HUD and housing
authority officials, the public housing units are now in good condition
and the housing authority is operating properly.
[End of section]
Appendix III: Judicial Receiverships:
Boston Housing Authority:
The Boston Housing Authority was initially placed in receivership on
July 25, 1979, after tenants filed a class-action lawsuit in 1975
claiming unsafe and unsanitary living conditions at the public housing
authority‘s (PHA) developments. The court‘s decision was affirmed on
February 4, 1980. The next day the court appointed a receiver to take
any and all actions needed to bring conditions in the housing units
into compliance with the state‘s sanitary code and all other laws
regulating the conditions and habitability of housing. The court gave
the receiver all the powers that a housing authority‘s board of
commissioners or executive director could exercise. The board of
commissioners, which had contributed to the PHA‘s management problems,
was disbanded and a new management structure was later put in place.
The court would closely oversee the receivership‘s progress through
weekly meetings, written reports, and hearings.
During the receivership, the housing authority undertook several
improvements, including stabilizing and fully redeveloping several
developments, rehabilitating vacant and dilapidated buildings, making
extensive capital commitments, and overhauling maintenance systems. The
redevelopment efforts resulted in the complete redesign and
rehabilitation of several large developments and the conversion of one
into a privately owned, mixed-income development. By 1984, the PHA had
made enough progress to end the tenure of the initial receiver.
Boston‘s Mayor assumed the powers of the receiver and appointed an
administrator to exercise those powers. The new team continued the
efforts of the past receiver, particularly working to reduce vacancies
by rehabilitating empty units. These efforts substantially reduced the
number of vacancies. The PHA also developed initiatives in operational
areas such as security, tenant selection, and litigation.
The receivership terminated in September 1990 with the judge noting
that supervision was no longer necessary because of the extensive
improvements the PHA had made during the 1980s. According to Department
of Housing and Urban Development (HUD) officials, the Boston Housing
Authority is currently performing well and has received high
performance scores in the last few years.
Chester Housing Authority:
The Chester Housing Authority (Pennsylvania) was placed in receivership
in August 1994 based on a class-action lawsuit filed in 1990. The
lawsuit claimed that HUD had permitted and approved the de facto
demolition of units in public housing developments by allowing them to
deteriorate. At the time, the PHA was not repairing and renting its
vacant units, and HUD was already overseeing the PHA after declaring it
in violation of its contract in 1991. According to the lawyer for the
plaintiffs, the judge agreed with the plaintiffs, finding that HUD had
in effect constructively demolished the PHA‘s units by allowing them to
deteriorate. The receiver was charged with reorganizing the PHA,
redeveloping and rebuilding the crumbling and unsanitary units, and
helping to create mixed-income communities in the developments and
neighborhoods.
Throughout the receivership, the PHA has improved on several fronts. It
embarked on a revitalization effort that has culminated in the award of
two HOPE VI grants to rebuild two of the most dilapidated developments.
It has made progress in demolishing units and building new ones to
replace them at other developments. According to PHA officials, it has
also formed its own police force to provide better security at the
developments. On the management side, the PHA has converted to an
asset-management structure by decentralizing all operations and
converting to site-based accounting and maintenance, and moving staff
from centralized offices to specific developments. Each site now has
its own waiting list for tenants and its own inventory, and all leasing
functions occur at the sites. The PHA has been reorganized and has
implemented new standard operating procedures for each department that
have been approved by HUD and the court.
The PHA‘s performance scores have been high for the last 2 years but
the housing authority remains under receivership. According to PHA
officials, the main concern about ending the receivership is the
ability of local authorities to manage it. The City of Chester has
faced significant decline and was designated as a distressed
municipality in the past. PHA and local HUD officials believe that
since the court is concerned about ending the receivership, in all
likelihood, some type of monitoring will continue once the receivership
ends.
Housing Authority of Kansas City:
The Housing Authority of Kansas City (Missouri) went into receivership
after a lawsuit alleging uninhabitable conditions and fair housing
violations in public housing developments. According to the attorney
who filed the lawsuit in 1989, the living conditions in the
developments were very poor and vacancies so high that the situation
was tantamount to demolishing the units. On November 25, 1991, a
Consent Decree was entered into that was aimed at improving the PHA,
but the PHA repeatedly violated it. In July 1993, a U.S. District Court
judge placed the PHA in receivership and in September 1994 appointed a
receiver.
Since the appointment of the receiver, the PHA has focused on
rebuilding distressed communities and improving the quality of the
housing stock. The housing authority has modernized several
developments and received HOPE VI grants that it has used to completely
redevelop some dilapidated developments and scattered-site units. It
has also made other improvements, installing community gardens,
playgrounds, and new curbs and gutters. On the management side, the PHA
has implemented new procurement and personnel policies. According to
the receiver, the receivership team reorganized the PHA and created
standards for planning and development, construction, and development
management. Finally, the PHA has taken steps during the receivership to
promote self-sufficiency among residents.
Overall, the PHA has lowered crime rates, raised rent collections, and
increased occupancy rates during the receivership. In addition, it now
serves almost twice the number of households as it did in September
1994. Currently, the housing authority is in the final stage of
receivership. In September 2002, the local board of commissioners was
reconstituted. The receiver is now a Special Master, with oversight
responsibilities for both the board and the PHA.
District of Columbia Housing Authority:
The District of Columbia Housing Authority was placed in receivership
in May 1995 after tenants filed a lawsuit in 1993. The lawsuit focused
on two claims: first, that the PHA had constructively demolished public
housing units by failing to maintain and allocate them to those on a
waiting list, and, second, that the PHA had violated its contract with
HUD by failing to maintain its units in decent, safe, and sanitary
condition. Additionally, public housing was under the Mayor‘s control
prior to the receivership and during that time, turnover of management
was high. According to a study done on the receivership, the agencies
operating public housing went through 13 different directors between
1979 and 1995. After negotiations on the receivership, the Mayor of the
District of Columbia, HUD, and the plaintiffs‘ counsel entered into a
written agreement that allowed the receiver virtually unlimited powers
to manage the agency; the presiding judge would have oversight
responsibility.
When the receivership began, the housing authority had a number of
problems. According to PHA officials, the developments were
deteriorating, and many units were in poor physical condition.
Management systems either worked inadequately or not at all. To address
these problems, during the first year, the receiver focused on
establishing the administrative and financial management systems
necessary to proceed with needed improvements in the housing stock and
the agency itself. The next step was a redevelopment strategy aimed at
improving physical conditions by reducing density, integrating design
features that would deter criminal activity, and substantially
improving architecture, in part by incorporating architectural
characteristics of surrounding communities. These efforts included
three HOPE VI revitalization projects, three HOPE VI demolition
projects, and four home ownership projects. Additionally, the housing
authority created an Occupied Unit Rehabilitation Program to complete
all deferred maintenance. The plan called for installing new flooring,
kitchen appliances, and bathroom fixtures and making other repairs to
units. The PHA also rehabilitated several vacant units that needed
extensive rehabilitation. Finally, it decentralized its administrative
structure in an effort to increase responsiveness and accountability.
The receivership produced improvements in the consistency of operations
within the agency, reduced the number of vacant units, and improved the
physical condition of the PHA‘s housing stock. The District of Columbia
Housing Authority Act of 1999, which was enacted in February 2000,
allowed the PHA to become independent and maintain control over
personnel, financial, and procurement matters while working with the
government of the District of Columbia. The receivership ended in
September 2000, after the PHA met the judge‘s criteria for terminating
the receivership by receiving a performance score of 70 or higher for 2
consecutive years of annual HUD assessments.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
David G. Wood, (202) 512-8678
Paul Schmidt, (312) 220-7681:
Acknowledgments:
In addition to those individuals named above, Emily Chalmers,
Jacqueline Garza, Curtis Groves, Tarek Mahmassani, and John McGrail
made major contributions to this report.
FOOTNOTES
[1] We discuss the tools HUD uses to address problems at Public Housing
Authorities in: U.S. General Accounting Office, Public Housing
Authorities: New Assessment System Holds Potential for Evaluating
Performance, GAO-02-282 (Washington D.C.: Mar. 15 2002).
[2] After we began our review, HUD initiated an additional receivership
at the Shelby County Housing Authority in Tennessee. We did not include
this receivership in our study.
[3] See U. S. General Accounting Office, Public Housing: HOPE VI
Leveraging Has Increased, but HUD Has Not Met Annual Reporting
Requirement GAO-03-91 (Washington, D.C.: November 2002).
[4] 42 U.S.C. 1437 d (j) (3) (A) (iv).
[5] There are 10 receiverships in progress that are included in this
review, 7 of which are in this range. There are three that are not in
this range: the Beaumont Housing Authority (2 years), the St. James
Parish Housing Authority (1.6 years), and the East St. Louis Housing
Authority (17 years).
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