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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) HUDís oversight and administration of the program; 
and (3) the programís 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 HUDís actions 
in response to the recommendations. 

What GAO Found: 

In its November 2002 report, GAO found that housing authorities 
expected to leverageófor each HOPE VI dollar receivedó$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 programís 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 HUDís 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 HUDís 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 
GAOís site visits suggested that the grantee-provided community and 
supportive services had yielded some positive outcomes, such as job 
training and homeownership. Finally, GAOís 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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