Public Housing
Information on the Financing, Oversight, and Effects of the HOPE VI Program Gao ID: GAO-07-1025T June 20, 2007Since fiscal year 1992, the Department of Housing and Urban Development (HUD) has awarded more than $6 billion in HOPE VI program grants to public housing authorities to revitalize severely distressed public housing and provide supportive services to residents. HUD has encouraged housing authorities to use their HOPE VI grants to attract, or leverage, funding from other sources, including other federal, state, local, and private-sector sources. Projects funded with public and private funds are known as mixed-finance projects. This testimony is based primarily on three reports that GAO issued between November 2002 and November 2003, focusing on (1) the financing of HOPE VI projects, including the amounts of funds leveraged from non-HOPE VI sources; (2) HUD's oversight and administration of the program; and (3) the program's effects on public housing residents and neighborhoods surrounding HOPE VI sites. As requested, the statement summarizes the key findings from these reports, the recommendations GAO made to HUD for improving HOPE VI program management, and HUD's actions in response to the recommendations.
In its November 2002 report, GAO found that housing authorities expected to leverage--for each HOPE VI dollar received--$1.85 in funds from other sources, and that the authorities projected generally increasing amounts of leveraged funds. GAO also found that even with the general increase in projected leveraging, 79 percent of the budgeted funds in mixed-finance projects that HUD had approved through fiscal year 2001 came from federal sources. GAO recommended that HUD provide the Congress with annual reports on the HOPE VI program, as required by statute, and provide data on the amounts and sources of funding used at HOPE VI sites. HUD has submitted these reports to Congress since fiscal year 2002. According to the 2006 report, HOPE VI grantees have cumulatively leveraged, from the program's inception through the second quarter of fiscal year 2006, $1.28 for every HOPE VI grant dollar expended. In its May 2003 report, GAO found that HUD's oversight of the HOPE VI program had been inconsistent for several reasons, including a shortage of grant managers and field office staff and confusion about the role of field offices. A lack of enforcement policies also hampered oversight; for example, HUD had no policy regarding when to declare a grantee in default of the grant agreement or apply sanctions. GAO made several recommendations designed to improve HUD's management of the program. HUD concurred with these recommendations and has taken actions in response, including publishing guidance outlining the oversight responsibility of field offices and notifying grantees that they would be in default of their grant agreement if they fail to meet key deadlines. In its November 2003 report, GAO found that most of the almost 49,000 residents that had been relocated as of June 2003 had moved to other public or subsidized housing; small percentages had been evicted, moved without giving notice, or vacated for other reasons. Grantees expected that about half of the original residents would return to the revitalized sites. Limited HUD data and information obtained during GAO's site visits suggested that the grantee-provided community and supportive services had yielded some positive outcomes, such as job training and homeownership. Finally, GAO's analysis of Census and other data showed that neighborhoods surrounding 20 HOPE VI sites (awarded grants in 1996) experienced improvements in several indicators used by researchers to measure neighborhood change, such as educational attainment levels, average household income, and percentage of people in poverty. However, for a number of reasons, GAO could not determine the extent to which the HOPE VI program was responsible for the changes.
GAO-07-1025T, Public Housing: Information on the Financing, Oversight, and Effects of the HOPE VI Program
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Testimony:
Before the Subcommittee on Housing, Transportation, and Community
Development, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Wednesday, June 20, 2007:
Public Housing:
Information on the Financing, Oversight, and Effects of the HOPE VI
Program:
Statement of David G. Wood, Director:
Financial Markets and Community Investments:
GAO-07-1025T:
GAO Highlights:
Highlights of GAO-07-1025T, a testimony to the Subcommittee on Housing,
Transportation, and Community Development, Committee on Banking,
Housing, and Urban Affairs, U.S. Senate
Why GAO Did This Study:
Since fiscal year 1992, the Department of Housing and Urban Development
(HUD) has awarded more than $6 billion in HOPE VI program grants to
public housing authorities to revitalize severely distressed public
housing and provide supportive services to residents. HUD has
encouraged housing authorities to use their HOPE VI grants to attract,
or leverage, funding from other sources, including other federal,
state, local, and private-sector sources. Projects funded with public
and private funds are known as mixed-finance projects.
This testimony is based primarily on three reports that GAO issued
between November 2002 and November 2003, focusing on (1) the financing
of HOPE VI projects, including the amounts of funds leveraged from non-
HOPE VI sources; (2) HUD‘s oversight and administration of the program;
and (3) the program‘s effects on public housing residents and
neighborhoods surrounding HOPE VI sites. As requested, the statement
summarizes the key findings from these reports, the recommendations GAO
made to HUD for improving HOPE VI program management, and HUD‘s actions
in response to the recommendations.
What GAO Found:
In its November 2002 report, GAO found that housing authorities
expected to leverage”for each HOPE VI dollar received”$1.85 in funds
from other sources, and that the authorities projected generally
increasing amounts of leveraged funds. GAO also found that even with
the general increase in projected leveraging, 79 percent of the
budgeted funds in mixed-finance projects that HUD had approved through
fiscal year 2001 came from federal sources. GAO recommended that HUD
provide the Congress with annual reports on the HOPE VI program, as
required by statute, and provide data on the amounts and sources of
funding used at HOPE VI sites. HUD has submitted these reports to
Congress since fiscal year 2002. According to the 2006 report, HOPE VI
grantees have cumulatively leveraged, from the program‘s inception
through the second quarter of fiscal year 2006, $1.28 for every HOPE VI
grant dollar expended.
In its May 2003 report, GAO found that HUD‘s oversight of the HOPE VI
program had been inconsistent for several reasons, including a shortage
of grant managers and field office staff and confusion about the role
of field offices. A lack of enforcement policies also hampered
oversight; for example, HUD had no policy regarding when to declare a
grantee in default of the grant agreement or apply sanctions. GAO made
several recommendations designed to improve HUD‘s management of the
program. HUD concurred with these recommendations and has taken actions
in response, including publishing guidance outlining the oversight
responsibility of field offices and notifying grantees that they would
be in default of their grant agreement if they fail to meet key
deadlines.
In its November 2003 report, GAO found that most of the almost 49,000
residents that had been relocated as of June 2003 had moved to other
public or subsidized housing; small percentages had been evicted, moved
without giving notice, or vacated for other reasons. Grantees expected
that about half of the original residents would return to the
revitalized sites. Limited HUD data and information obtained during
GAO‘s site visits suggested that the grantee-provided community and
supportive services had yielded some positive outcomes, such as job
training and homeownership. Finally, GAO‘s analysis of Census and other
data showed that neighborhoods surrounding 20 HOPE VI sites (awarded
grants in 1996) experienced improvements in several indicators used by
researchers to measure neighborhood change, such as educational
attainment levels, average household income, and percentage of people
in poverty. However, for a number of reasons, GAO could not determine
the extent to which the HOPE VI program was responsible for the
changes.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1025T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact David G. Wood at (202)
512-8678 or woodd@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to be here today as the Subcommittee
considers legislation to reauthorize the HOPE VI program. In 1992,
Congress established the Urban Revitalization Demonstration Program,
commonly known as HOPE VI, administered by the Department of Housing
and Urban Development (HUD). Under this program, HUD competitively
awards grants for revitalizing distressed public housing--through
rehabilitation or demolition and construction of new, mixed-income
developments--and for improving the lives of public housing residents
through supportive services such as child care and job training. By
providing funds for a combination of capital improvements and community
and supportive services, the program seeks not only to improve the
living environment for public housing residents, but also to help
improve surrounding neighborhoods and decrease the concentration of
very low-income families.
Since fiscal year 1992, HUD has awarded more than $6 billion in HOPE VI
grants to public housing authorities. Grant agreements, which serve as
contracts between HUD and the grantees, specify the activities that the
housing authorities must complete and key deadlines they must meet. To
increase the number of affordable housing units developed at HOPE VI
sites, HUD has encouraged housing authorities to use their HOPE VI
grants to attract, or leverage, funding from other sources, including
other federal, state, local, and private-sector sources. Projects
funded with a combination of public and private funds are known as
mixed-finance projects. HUD also has encouraged housing authorities to
leverage additional funds for supportive services.
My testimony is based primarily on a series of three reports concerning
the program that we issued between November 2002 and November
2003.[Footnote 1] These reports focused on (1) the financing of HOPE VI
projects, including the amounts of funds leveraged from non-HOPE VI
sources, (2) HUD's oversight and administration of the program, and (3)
the program's effects on public housing residents and neighborhoods
surrounding HOPE VI sites. As you requested, my statement summarizes
the key findings from our work, the recommendations we made to HUD for
improving HOPE VI program management, and HUD's actions in response to
the recommendations.
In Brief:
* In our November 2002 report, which examined the extent to which
housing authorities had leveraged HOPE VI funds with other sources of
financing, we found that for revitalization grants awarded since the
program's inception through fiscal year 2001, housing authorities
expected to leverage--for each HOPE VI dollar received--$1.85 in funds
from other sources, and that the authorities projected generally
increasing amounts of leveraged funds. However, HUD considered the
level of leveraging to be somewhat higher, because it treated as
"leveraged" other public housing funds that the housing authorities
would have received even in the absence of their HOPE VI grants. Our
analysis of mixed-finance projects HUD had approved through fiscal year
2001 indicated that 79 percent of the budgeted funds came from federal
sources. This was a higher proportion than HUD data indicated, because
HUD did not treat funds that grantees received through low-income
housing tax credits as federal funds--even though the credits represent
forgone federal income and are therefore a cost to the federal
government. Finally, our analysis also showed that although the
majority of funds budgeted overall for supportive serves were HOPE VI
funds, the amount of non-HOPE VI funds budgeted for supportive services
had increased dramatically since the program's inception. We
recommended that HUD provide the Congress with annual reports on the
HOPE VI program, as it was required by statute to do, and to include in
the reports the amounts and sources of funding used at HOPE VI sites.
The first such report that HUD submitted to Congress was for fiscal
year 2002. Based on data reported in HUD's 2006 annual report, HOPE VI
grantees have cumulatively leveraged, from the program's inception
through the second quarter of fiscal year 2006, $1.28 for every HOPE VI
grant dollar expended.
* In our May 2003 report, which examined several issues concerning
HUD's management of the program, we found that the department's
oversight had been inconsistent for several reasons, including limited
numbers of grant managers and field office staff, and confusion about
the role of field offices; however, in response to our recommendations,
HUD has taken steps designed to address these problems. We found a
number of instances of limited oversight; for example, by the end of
2002, HUD field offices had not conducted any of the required annual
reviews for 8 out of 20 grants awarded 6 years earlier. According to
field office managers, the reviews had not been performed either
because they lacked staff or because the offices did not understand
their role in HOPE VI oversight. We also found that the status of work
at HOPE VI sites varied, with construction completed at less than 10
percent of the 165 sites that had received revitalization grants
through fiscal year 2001; that many grantees had missed deadlines
specified in their grant agreements; and that HUD lacked clear
enforcement policies to deal with such grantees. We made several
recommendations designed to improve HUD's management of the program.
HUD concurred with these recommendations and has taken actions in
response, including publishing guidance on the oversight responsibility
of field offices and notifying grantees that they would be in default
of their grant agreement should key deadlines not be met. Because we
have not examined HUD's oversight of the program since the 2003 report,
we do not know the extent to which HUD's actions have corrected the
problems we identified.
* In our November 2003 report, which focused on resident issues and
changes in the neighborhoods surrounding HOPE VI sites, we found that
public housing residents at HOPE VI sites had been affected in varying
ways by the program, and that the neighborhoods surrounding the HOPE VI
sites we examined had generally experienced improvements in indicators
such as education, income, and housing, although we could not determine
the extent to which HOPE VI contributed to the changes.[Footnote 2]
Most of the almost 49,000 residents that had been relocated as of June
30, 2003, had moved to other public housing or subsidized housing, and
that small percentages had been evicted, moved without giving notice,
or vacated for other reasons. At the time of our study, the grantees
expected that about half of the original residents would return to the
revitalized sites. The grantees had involved the public housing
residents of HOPE VI sites in project plans to varying degrees. They
had also provided a variety of community and supportive services to
residents, and limited HUD data and information obtained during our
site visits suggested that these had yielded at least some positive
outcomes; for example, 31 of 49 participants in a Housing Authority of
Pittsburgh health worker training program had obtained employment.
Finally, according to our analysis of census and other data, the
neighborhoods in which 20 HOPE VI sites (1996 grantees) are located had
experienced improvements in a number of indicators used by researchers
to measure neighborhood change, such as educational attainment levels,
average household income, and percentage of people in poverty. However,
for a number of reasons, we could not determine the extent to which the
HOPE VI program was responsible for the changes.
Background:
In 1992 the National Commission on Severely Distressed Public Housing
(the Commission) reported that approximately 86,000, or 6 percent, of
the nation's public housing units were severely distressed--
characterized by physical deterioration and uninhabitable living
conditions, high levels of poverty, inadequate and fragmented services,
institutional abandonment, and location in neighborhoods often as
blighted as the public housing sites themselves. In response to the
Commission's report, Congress established the Urban Revitalization
Demonstration Program, more commonly known as HOPE VI, at HUD. The
program awards grants to public housing authorities (PHA). The grants
can fund, among other things, the demolition of distressed public
housing, capital costs of major rehabilitation, new construction, and
other physical improvements, and community and supportive service
programs for residents, including those relocated as a result of
revitalization efforts. Beginning in 1996 with the adoption of the
Mixed-Finance Rule, PHAs were allowed to use public housing funds
designated for capital improvements, including HOPE VI funds, to
leverage other public and private investment to develop public housing
units. Public funding can come from federal, state, and local sources.
For example, HUD itself provides capital funding to housing agencies to
help cover the costs of major repair and modernization of units.
Private sources can include mortgage financing and financial or in-kind
contributions from nonprofit organizations.
HUD's requirements for HOPE VI revitalization grants are laid out in
each fiscal year's notice of funding availability (NOFA) and grant
agreement. NOFAs announce the availability of funds and contain
application requirements, threshold requirements, rating factors, and
the application selection process. Grant agreements, which change each
fiscal year, are executed between each grantee and HUD and specify the
activities, key deadlines, and documentation that grantees must meet or
complete. NOFAs and grant agreements also contain guidance on resident
involvement in the HOPE VI process. HUD encourages grantees to
communicate, consult, and collaborate with affected residents and the
broader community, but allows grantees the final decision-making
authority. Grant applications are screened to determine whether they
meet the eligibility and threshold requirements in the NOFA. A review
panel (which may include the Deputy Assistant Secretary for Public
Housing Investments, the Assistant Secretary for Public and Indian
Housing, and other senior HUD staff) recommends the most highly rated
applications for selection, subject to the amount available for
funding.
HUD's Office of Public Housing Investments, housed in the Office of
Public and Indian Housing, manages the HOPE VI program. Grant managers
within the Office of Public Housing Investments are primarily
responsible for overseeing HOPE VI grants. They approve changes to the
revitalization plan and coordinate the review of the community and
supportive services plan that each grantee submits.[Footnote 3] In
addition, grant managers track the status of grants by analyzing data
on the following key activities: relocation of original residents,
demolition of distressed units, new construction or rehabilitation,
reoccupancy by some original residents, and occupancy of completed
units. Public and Indian Housing staff located in HUD field offices
also play a role in overseeing HOPE VI grants, including coordinating
and reviewing construction inspections. Beginning in fiscal year 1999,
HUD began to encourage HOPE VI revitalization grant applicants to form
partnerships with local universities to evaluate the impact of their
proposed HOPE VI revitalization plans.[Footnote 4]
In 2003, Congress reauthorized the HOPE VI program and required us to
report on the extent to which public housing for the elderly and non-
elderly persons with disabilities was severely distressed. We
subsequently reported that available data on the physical and social
conditions of public housing are insufficient to precisely determine
the extent to which developments occupied primarily by elderly persons
and non-elderly persons with disabilities are severely
distressed.[Footnote 5] Using HUD's data on public housing
developments--buildings or groups of buildings---and their tenants, we
identified 3,537 developments primarily occupied by elderly residents
and non-elderly persons with disabilities. Data from HUD and other
sources indicated that 76 (2 percent) of these 3,537 developments were
potentially severely distressed.
Grantees Had Projected A General Increase in Leveraged Funds, Primarily
From Federal Sources:
According to our analysis of HUD data for our November 2002 report,
housing authorities expected to leverage an additional $1.85 in funds
from other sources for every dollar received in HOPE VI revitalization
grants awarded since the program's inception through fiscal year
2001.[Footnote 6] However, HUD considered the amount of leveraging to
be slightly higher because it treated as "leveraged" both (1) HOPE VI
grant funds competitively awarded for the demolition of public housing
units and (2) other public housing capital funds that the housing
authorities would receive even in the absence of the revitalization
grants. Even when public housing funds were excluded from leveraged
funds, our analysis of HUD data showed that projected leveraging had
increased; for example, 1993 grantees expected to leverage an
additional $0.58 for every HOPE VI grant dollar (excluding public
housing funds), while 2001 grantees expected to leverage an additional
$2.63 from other sources (excluding public housing funds). But, our
analysis of HUD data through fiscal year 2001 also indicated that 79
percent of funds that PHAs had budgeted came from federal sources, when
low-income housing tax credit funding was included. Finally, our
analysis showed that although the majority of funds budgeted overall
for supportive services were HOPE VI funds, the amount of non-HOPE VI
funds budgeted for supportive services increased dramatically since the
program's inception. Specifically, while 22 percent of the total funds
that fiscal year 1997 grantees budgeted for supportive services were
leveraged funds, 59 percent of the total that fiscal year 2001 grantees
budgeted were leveraged funds.
Although HUD had been required to report leveraging and cost
information to the Congress annually since 1998, it had not done so at
the time of our 2002 report. As required by law, this annual report is
to include the cost of public housing units revitalized under the
program and the amount and type of financial assistance provided under
and in conjunction with the program. We recommended that the Secretary
of Housing and Urban Development provide these annual reports to
Congress and include in these annual reports, among other things,
information on the amounts and sources of funding used at HOPE VI
sites, including equity raised from low-income housing tax credits, and
the total cost of developing public housing units at HOPE VI sites,
including the costs of items subject to HUD's development cost limits
and those not subject.[Footnote 7]
In response to this recommendation, HUD issued annual reports to
Congress for fiscal years 2002 through 2006 that include information on
the amounts and sources of funding used at HOPE VI sites. In each of
these reports, HUD included the amount of funds leveraged from low-
income housing tax credits in its data on non-federal funds.[Footnote
8] Based on data reported in the 2006 annual report, since the
program's inception HOPE VI grantees have cumulatively leveraged $1.28
per HOPE VI grant dollar expended.[Footnote 9] Currently, we have work
underway examining, among other things, how and the extent to which
leveraging occurs in several federal programs, including the HOPE VI
program.
HUD's Oversight of Projects and Enforcement of Program Requirements Had
Been Inconsistent:
Our May 2003 report found that a variety of factors diminished HUD's
ability to oversee HOPE VI grants.[Footnote 10] In particular, the
limited numbers of grant managers, a shortage of field office staff,
and confusion about the role of field offices had diminished the
agency's ability to oversee HOPE VI grants. Our site visits showed that
HUD field staff was not systematically performing required annual
reviews. For example, for revitalization grants awarded in 1996, some
never received an annual review and no grant had had an annual review
performed each year since the grant award. From our interviews with
field office managers, we determined that there were two reasons why
annual reviews were not performed. First, many of the field office
managers we interviewed stated that they simply did not have enough
staff to get more involved in overseeing HOPE VI grants. Second, some
field offices did not seem to understand their role in HOPE VI
oversight. For instance, one office thought that the annual reviews
were primarily the responsibility of the grant managers. Others stated
that they had not performed the reviews because construction had not
yet started at the sites in their jurisdiction or because they did not
think they had the authority to monitor grants.
As a result of our findings, we recommended that HUD clarify the role
of HUD field offices in HOPE VI oversight and ensure that the offices
conducted required annual reviews. In response to this recommendation,
HUD published new guidance in March 2004 that clarified the role of HUD
field offices in HOPE VI oversight and the annual review requirements.
According to the guidance, HUD field office responsibilities include
conducting an annual risk assessment, which should consider such
factors as missed deadlines and adverse publicity and should be used to
determine whether an on-site review should be conducted and which areas
of the HOPE VI grant should be reviewed. The published guidance
included a risk assessment form and sample monitoring review reports.
While HUD's action was responsive to our recommendation, we have not
examined the extent to which it has corrected the problems we
identified in our 2003 report.
Our 2003 report also noted that the status of work at HOPE VI sites
varied, and that the majority of grantees had missed one or more of
three major deadlines specified in their grant agreements: the
submission of a revitalization plan to HUD, the submission of a
community and supportive services plan to HUD, and completion of
construction. We made recommendations to HUD designed to ensure better
compliance with grant agreements. More specifically:
* Of the 165 sites that received revitalization grants through fiscal
year 2001, 15 had completed construction at the time of our
review.[Footnote 11] Overall, at least some units had been constructed
at 99 of the 165 sites, and 47 percent of all HOPE VI funds had been
expended. In general, we found that the more recently awarded grants
were progressing more quickly than earlier grants. For example, fiscal
year 1993 grantees had taken an average of 31 months to start
construction. In contrast, the fiscal year 2000 grantees started
construction an average of 10 months after their grant agreement was
executed.[Footnote 12] HUD cited several reasons that may explain this
improvement, such as later grantees having more capacity than the
earlier grantees, the applications submitted in later years being more
fully developed to satisfy NOFA criteria, and HUD placing greater
emphasis on reporting and accountability.
To further improve its selection of HOPE VI grantees, we recommended
that HUD continue to include past performance as an eligibility
requirement in each year's NOFA--that is, to take into account how
housing authorities had performed under any previous HOPE VI grant
agreements. In response to this recommendation, HUD stated in its
fiscal year 2004 NOFA that a HOPE VI application would not be rated or
ranked, and would be ineligible for funding, if the applicant had an
existing HOPE VI revitalization grant and (1) development was
delinquent due to actions or inactions that were not beyond the control
of the grantee and (2) the grantee was not making substantial progress
towards eliminating the delinquency. According to the fiscal year 2006
NOFA, the ratings of applicants that received HOPE VI grants between
1993 and 2003 can be lowered for failure to achieve adequate progress.
* For at least 70 percent of the grants awarded through fiscal year
1999, grantees had not submitted their revitalization plans or
community and supportive services plans to HUD on time.[Footnote 13]
Moreover, the large majority of grantees had also missed their
construction deadlines; in the case of 9 grants, no units had been
constructed as of the end of December 2002. HUD had taken some steps to
encourage adherence to its deadlines; for example, HUD began requiring
applicants to provide a certification stating that they had either
procured a developer for the first phase of development, or that they
would act as their own developer.
However, HUD did not have an official enforcement policy to deal with
grantees that missed deadlines. As a result, we recommended that HUD
develop a formal, written enforcement policy to hold public housing
authorities accountable for the status of their grants. HUD agreed with
this recommendation, and in December, 2003 notified several grantees
that they were nearing deadlines and that failure to meet these
deadlines could result in HUD placing the grant in default. According
to the 2006 NOFA, HUD may withdraw funds from grantees that have not
proceeded within a reasonable timeframe, as outlined in their program
schedule.
About Half of Public Housing Residents Were Expected to Return to
Revitalized Sites, while Evidence Suggested That Communities
Surrounding Some HOPE VI Sites Had Improved:
In our November 2003 report, we found that most residents at HOPE VI
sites had been relocated to other public housing, or other subsidized
housing, and that grantees expected that about half of the original
residents would return to the revitalized sites.[Footnote 14] In our
examination of sites that had received HOPE VI grants in 1996, we found
that the housing authorities had involved public housing residents in
the planning and implementation process to varying degrees. Further,
HUD data and information obtained during our site visits suggested that
the supportive services provided public housing residents yielded at
least some positive outcomes. Finally, according to our analysis of
census and other data, the neighborhoods in which 1996 HOPE VI sites
are located had generally experienced positive improvements in
educational attainment levels, average household income, and percentage
of people in poverty, although we were unable to determine the extent
to which the HOPE VI program contributed to these changes.
Most Original Residents Were Relocated to Other Public Housing, and
About Half Were Expected to Return to Revitalized HOPE VI Sites:
According to HUD data, approximately 50 percent of the almost 49,000
residents that had been relocated as of June 30, 2003, had been
relocated to other public housing; about 31 percent had used vouchers
to rent housing in the private market; approximately 6 percent had been
evicted; and about 14 percent had moved without giving notice or
vacated for other reasons. However, because HUD did not require
grantees to report the location of original residents until 2000,
grantees had lost track of some original residents. Although grantees,
overall, expected that 46 percent of all the residents that occupied
the original sites would return to the revitalized sites, the
percentage varied greatly from site to site. A variety of factors may
have affected the expected return rates, such as the numbers and types
of units to be built at the revitalized site and the criteria used to
select the occupants of the new public housing units.
Among 1996 Grant Sites, Resident Involvement in the HOPE VI Process
Varied, While Supportive Services Yielded Some Positive Outcomes:
We found that the extent to which the 1996 grantees involved residents
in the HOPE VI process varied.[Footnote 15] Although all of the 1996
grantees held meetings to inform residents about revitalization plans
and solicit their input, some of them took additional steps to involve
residents in the HOPE VI process. For example, in Tucson, Arizona, the
housing authority waited until the residents had voted their approval
before submitting the revitalization plan for the Connie Chambers site
to the city council. In other cases, litigation or the threat of
litigation ensured resident involvement. For instance, under a
settlement agreement, the Chicago Housing Authority's decisions
regarding the revitalization of Henry Horner Homes were subject to the
approval of the Horner Resident Committee.
Overall, based on the information available at the time of our 2003
report, grantees had provided a variety of community and supportive
services, including case management and direct services such as
computer and job training programs. Grantees had also used funds set
aside for community and supportive services to construct facilities
where services were provided by other entities. Information we
collected during our visits to the 1996 sites, as well as limited HUD
data on all 165 grants awarded through fiscal year 2001, indicated that
HOPE VI community and supportive services had achieved or contributed
to positive outcomes. For example, 31 of 49 participants in a Housing
Authority of Pittsburgh health worker training program had obtained
employment, while 114 former project residents in Louisville, Kentucky
had enrolled in homeowner counseling and 34 had purchased a home.
1996 HOPE VI Communities Experienced Positive Changes:
According to our analysis of census and other data, the neighborhoods
in which 1996 HOPE VI sites are located generally have experienced
improvements in a number of indicators used to measure neighborhood
change, such as educational attainment levels, average housing values,
and percentage of people in poverty. For example, our analysis showed
that in 18 of 20 HOPE VI neighborhoods, the percentage of the
population with a high school diploma increased, in 13 neighborhoods
average housing values increased, and in 14 neighborhoods the poverty
rate decreased between 1990 and 2000. For a number of reasons--such as
relying on 1990 and 2000 census data even though HOPE VI sites were at
varying stages of completion--we could not determine the extent to
which HOPE VI contributed to these changes. However, we found that
several studies conducted by universities and private institutions also
showed that the neighborhoods in which HOPE VI sites are located had
experienced positive changes in income, employment, community
investment, and crime indicators. For example, one study found that per
capita income in eight selected HOPE VI neighborhoods increased an
average of 71 percent, compared with 14.5 percent for the cities in
which these sites are located, between 1989 and 1999.
We also observed that the HOPE VI program also may influence changes in
neighborhood indicators by demolishing older, distressed public housing
alone. For example, in the 6 HOPE VI neighborhoods where the original
public housing units were demolished, but no on-site units had been
completed, measured educational attainment and income levels increased.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions at this time.
Contacts and Acknowledgments:
For further information on this testimony, please contact David G. Wood
at (202) 512-8678. Individuals making key contributions to this
testimony included Alison Gerry, John McGrail, Lisa Moore, Paul
Schmidt, and Mijo Vodopic.
FOOTNOTES
[1] The three reports are Public Housing: HOPE VI Leveraging Has
Increased, but HUD Has Not Met Annual Reporting Requirement, GAO-03-91
(Washington, D.C.: Nov. 15, 2002); Public Housing: HUD's Oversight of
HOPE VI Sites Needs to Be More Consistent, GAO-03-555 (Washington,
D.C.: May 30, 2003); and Public Housing: HOPE VI Resident Issues and
Changes in Neighborhoods Surrounding Grant Sites, GAO-04-109
(Washington, D.C.: Nov. 21, 2003).
[2] In examining neighborhood effects, we included only the projects
that received grants in 1996. These were the first awarded after HUD
allowed revitalization to be funded with a combination of public and
private funds, which has become the HOPE VI model; further, because
program effects can occur over time, focusing on the earlier projects
may have increased the chances of detecting any such effects.
[3] The revitalization plan includes the grantee's HOPE VI application,
budgets, a community and supportive services plan, a relocation plan,
and any supplemental submissions that HUD requests following its review
of the HOPE VI application or as a result of a visit to the site. The
community and supportive services plan contains a description of the
supportive services that will be provided to residents, proposed steps
and schedules for establishing arrangements with service providers,
plans for actively involving residents in planning and implementing
supportive services, and a system for monitoring and tracking the
performance of the supportive services programs as well as resident
progress.
[4] GAO-04-109.
[5] Public Housing: Distressed Conditions in Developments for the
Elderly and Persons with Disabilities and Strategies Used for
Improvement, GAO-06-163 (Washington, D.C.: December 9, 2005)
[6] GAO-03-91. To determine the extent to which grantees had leveraged
federal and nonfederal funds, we analyzed data from HUD's HOPE VI
reporting system on grants awarded. This data primarily consisted of
budgeted or projected funds.
[7] Pursuant to the Quality Housing and Work Responsibility Act of
1998, HUD's total development cost policy limits the amount of public
housing funds--including HOPE VI funds--that housing authorities may
spend to construct a public housing unit. This per-unit limit does not
apply to funds leveraged from other sources.
[8] In 2002 HUD reported the amount of funds budgeted for grants. For
the annual reports covering fiscal years 2003 through 2006, HUD
reported the amounts of funds expended for grants.
[9] U.S. Department of Housing and Urban Development, 2006 Annual
Report to Congress on HOPE VI, (Washington, D.C.: January 2007). Data
based on funds expended as of the second quarter of fiscal year 2006.
Total HOPE VI grant dollars expended include revitalization and
demolition grants.
[10] GAO-03-555.
[11] GAO-03-555.
[12] At the time of our analysis, 9 of the fiscal year 2000 grantees
had not started construction. As a result, we could not be sure that
the fiscal year 2000 grantees, as a whole, had moved faster than
earlier grantees. Until these grantees start construction, we cannot be
sure that the fiscal years 1999 and 2000 grantees, as a whole, have
moved faster than earlier grantees.
[13] We omitted from our analysis 5 fiscal year 1995 grants that were
awarded during a second round of funding because each grantee signed a
grant agreement with HUD that contained unique deadlines specific to
that grant. The revitalization plan deadlines for the fiscal years 2000
and 2001 grants had not yet passed at the time of our study.
[14] GAO-04-109.
[15] GAO-04-109.
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