Public Housing

Americans want government that is more businesslike and better managed--a government that can cut costs without curtailing services. To meet this demand for economy and efficiency, governments at all levels are looking at ways to manage their assets as a business, including the use of private management to maximize their return on buildings and facilities. The nation's 1.3 million public housing units, which each year receive nearly $6 billion in federal funding, are a good candidate for such review. This report answers the following questions: What is the basis for the Office of Management and Budget's 1998 assertion that privatizing public housing management could save $200 million annually and for the belief of housing personnel and experts that adopting private management for public housing could lead to more cost-effective use of public housing resources? To what extent have housing authorities adopted private management strategies, what experiences have they had in implementing these strategies, and what primary obstacles have they met in adopting private management? Do opportunities exist for the Department of Housing and Urban Development to encourage housing authorities to make more cost-effective use of their resources by considering private management as an alternative to in-house management?

GAO noted that: (1) OMB does not have quantitative support for its assertion that allowing the private sector to bid on contracts for managing all 3,200 public housing authorities could save as much as $200 million annually; (2) however, OMB staff, private management firms, and several housing authorities told GAO that they believe private management could achieve significant savings; (3) OMB staff believe that a more cost-effective use of public housing resources could be achieved by establishing measurable performance standards and by privatizing the management of housing developments or authorities that do not meet the standards; (4) most housing authorities employ contractors to provide at least some services or perform tasks such as grounds-keeping and maintenance; (5) however, only about 18 percent of the very large and large and only a handful of the medium-sized, small, and very small housing authorities GAO surveyed have contracted with private property managers to operate entire developments; (6) for the most part, private management has increased rental revenues, operating efficiencies, and the quality of housing services; (7) before implementing private management, housing authorities have had to overcome a number of obstacles, including their historical reliance on in-house management and on centralized--rather than project-based--budgeting and accounting systems, the possibility that contractors would displace their employees, and the fears of residents about changes in their quality of life under private management; (8) HUD had multiple opportunities to encourage the more cost-effective use of public housing resources through strategies such as private management; (9) over the next few months, HUD will have occasions to encourage housing authorities to adopt cost-conscious operating strategies, including private management, as the Department develops regulations to implement public housing reform legislation enacted in 1998 and as it introduces its new public housing assessment system; (10) HUD has begun to develop outcome and output indicators for its annual performance plan that would allow it to measure whether housing authorities are adopting cost-conscious management approaches; and (11) in total, these activities would indicate to housing authorities that HUD considers the cost-effective use of resources a high priority and supports the authorities' adoption of new strategies, such as private management, to lower costs and improve quality.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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