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Testimony: 

Before the Subcommittee on Housing and Community Opportunity, Committee 
on Financial Services, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EST: 

Wednesday, December 5, 2007: 

Rental Housing: 

Information on Low-Income Veterans' Housing Conditions and 
Participation in HUD's Programs: 

Statement of David G. Wood, Director: 

Financial Markets and Community Investment: 

Rental Housing: 

GAO-08-324T: 

GAO Highlights: 

Highlights of GAO-08-324T, a testimony before the Subcommittee on 
Housing and Community Opportunity, Committee on Financial Services, 
House of Representatives. 

Why GAO Did This Study: 

Veterans returning from service in Iraq and Afghanistan could increase 
demand for affordable rental housing. Households with low incomes (80 
percent or less of the area median income) generally are eligible to 
receive rental assistance from the Department of Housing and Urban 
Developmentís (HUD) housing choice voucher, public housing, and project-
based programs. However, because rental assistance is not an 
entitlement, not all who are eligible receive assistance. 

This testimony, based on a 2007 report, discusses (1) the income status 
and demographic and housing characteristics of veteran renter 
households, (2) how HUDís rental assistance programs treat veteran 
status (whether a person is a veteran or not) and whether they use a 
veteranís preference, and (3) the extent to which HUDís rental 
assistance programs served veterans in fiscal year 2005. The 2007 
report discussed in this testimony made no recommendations. 

What GAO Found: 

In 2005, an estimated 2.3 million veteran renter households had low 
incomes. The proportion of veteran renter households that were low 
income varied by state but did not fall below 41 percent. Further, an 
estimated 1.3 million, or about 56 percent of these low-income veteran 
households nationwide, had housing affordability problemsóthat is, 
rental costs exceeding 30 percent of household income (see map for 
state percentages). Compared with other (nonveteran) renter households, 
however, veterans were somewhat less likely to be low income or have 
housing affordability problems. 

HUDís major rental assistance programs are not required to take a 
householdís veteran status into account when determining eligibility 
and calculating subsidy amounts, but eligible veterans can receive 
assistance. The majority of the 41 largest public housing agencies that 
administer the housing choice voucher or public housing programs had no 
veteransí preference for admission. The 13 largest performance-based 
contract administrators that oversaw most properties under project-
based programs reported that owners generally did not adopt a veteransí 
preference. 

In fiscal year 2005, an estimated 11 percent of all eligible low-income 
veteran households (at least 250,000) received assistance, compared 
with 19 percent of nonveteran households. Although the reasons for the 
difference are unclear, factors such as differing levels of need for 
affordable housing among veteran and other households could influence 
the percentages. 

Figure: Percentage of Low-Income Veteran Renter Households with Housing 
Affordability Problems, by State, 2005: 

This figure is a map of the United States with highlighted states 
showing percentages of low-income veteran renter households with 
housing affordability problems, by state, 2005. 

[See PDF for image] 

Source: GAO analysis of sample survey data from 2005 American Community 
Survey; Art Explosion (map). 

[End of figure] 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-324T. For more information, contact David 
G. Wood at (202) 512-8678 or woodd@gao.gov. 

[End of section] 

Madam Chairwoman and Members of the Subcommittee: 

I appreciate the opportunity to be here today to discuss our work on 
the housing conditions of veterans with low incomes and their 
participation in HUD's rental assistance programs. As you know, 
disproportionately large numbers of military veterans have appeared 
among the homeless population in recent years, raising concerns about 
the incomes and housing conditions of veterans who rent, rather than 
own, their homes. According to the Department of Veterans Affairs (VA), 
on any given night at least 194,000 veterans were homeless in fiscal 
year 2005--about one-third of the adult homeless population--and many 
veteran renters could be on the verge of homelessness if they have low 
incomes or precarious living conditions in overcrowded or substandard 
housing.[Footnote 1] The return of more veterans from service in Iraq 
and Afghanistan--some with significant physical and psychological 
challenges--could increase demand for affordable housing with 
supportive services such as mental health and substance abuse 
treatment. 

The Department of Housing and Urban Development (HUD) is the primary 
federal provider of rental housing assistance through its housing 
choice voucher, public housing, and project-based programs. Vouchers 
assist households in paying rent for units of their choice in the 
private market, while public housing and project-based programs assist 
households by subsidizing the rents of specifically designated units. 
These programs generally serve low-income households--those with 
incomes that are 80 percent or less of their local area median incomes. 
However, because the rental assistance programs are not entitlement 
programs--the extent of assistance is limited by the amount of 
appropriated funds--not all renter households that are eligible receive 
assistance. My testimony refers to households that do not receive 
rental assistance as "unassisted." 

My statement is based on our August 2007 report, Rental Housing: 
Information on Low-Income Veterans' Housing Conditions and 
Participation in HUD's Programs.[Footnote 2] Specifically, my statement 
discusses (1) the income status and demographic and housing 
characteristics of veteran renter households; (2) how HUD's rental 
assistance programs treat veteran status (that is, whether a person is 
a veteran or not) and veteran-specific benefits in determining 
eligibility and subsidy amounts; (3) the extent to which public housing 
agencies and property owners--third parties who administer rental 
assistance programs on HUD's behalf--establish veterans' preferences in 
their administrative and tenant selection plans; and (4) the extent to 
which HUD's rental assistance programs served veteran households in 
fiscal year 2005. 

In preparing our recent report, we analyzed data from the Bureau of the 
Census' (Census) 2005 American Community Survey (ACS) on the income 
status and demographic and housing characteristics of veteran 
households. Using income categories established by HUD for calendar 
year 2005, we estimated the number of veteran households in the ACS 
with incomes that were low (80 percent or less of the area median 
income), very low (50 percent or less of the area median income), and 
extremely low (30 percent or less of the area median income).[Footnote 
3] We also used information on veteran households in ACS to describe 
certain demographic characteristics, and the cost and quality of their 
housing.[Footnote 4] To determine how HUD's rental assistance programs 
treat a household's veteran status (that is, whether the household 
includes a veteran or not) in determining eligibility and subsidy 
amounts, we reviewed HUD's eligibility policies and regulations on 
rental assistance programs and interviewed officials from HUD and VA. 
To determine whether public housing agencies and property owners 
participating in HUD's programs have established a veterans' preference 
for households, we interviewed officials from the 41 largest agencies 
that administer the public housing program and/or the voucher program, 
and from the 13 largest performance-based contract administrators that 
oversee property management under project-based rental assistance 
programs.[Footnote 5] Information on preferences, however, is not 
statistically generalizable to the other public housing agencies and 
property owners. Finally, to determine the extent to which HUD's rental 
assistance programs served veteran households in fiscal year 2005, we 
matched data from HUD on program participants with data from VA on 
living veterans and used these matched data to estimate the percentage 
of low-income veteran renter households that received HUD assistance. 
For all of our research objectives, we consulted with officials from 
various housing and veteran groups. We conducted our work in Atlanta, 
Boston, Chicago, Los Angeles, and Washington, D.C., from March 2006 
through July 2007 in accordance with generally accepted government 
auditing standards. 

In brief, we found the following: 

In 2005, an estimated 2.3 million veteran renter households, or about 
53 percent of all veteran renter households nationwide, were low income 
(their household incomes were 80 percent or less of their areas' median 
household incomes), and more than half of these low-income households 
had problems affording their rent. The number of low-income veteran 
renter households varied considerably by state, from a high of 236,000 
in California (representing 10 percent of all low-income veteran 
renters nationwide) to less than 6,000 in Wyoming. While the 
percentages of renter households that were low-income varied by state, 
in no state did the proportion fall below 41 percent. In terms of 
demographic characteristics, we found the following: 

* More than one-third of low-income veteran renter households included 
a veteran who was elderly or had a disability.[Footnote 6] 

* An estimated 1.3 million, or about 56 percent of low-income veteran 
renter households, had housing affordability problems--that is, their 
rental costs exceeded 30 percent of their household incomes. The extent 
of housing affordability problems varied significantly by state. For 
example, Nevada had the highest percentage of low-income veteran 
renters with affordability problems (about 70 percent), while North 
Dakota had the lowest percentage (about 37 percent). 

* Nationally, a small percentage (less than 3 percent) of low-income 
veteran renters lived in overcrowded or inadequate housing. 

Finally, in general, veteran renter households were less likely to be 
low-income, have affordability problems, or live in overcrowded or 
inadequate housing than were other (nonveteran) households. 

HUD's major rental assistance programs are not required to take a 
household's veteran status into account when determining eligibility 
and calculating subsidy amounts, but eligible veterans can receive 
assistance. HUD is not required to collect, and does not collect, any 
information that identifies the veteran status of assisted households. 
When determining income eligibility and subsidy amounts, HUD generally 
does not distinguish between income sources that are specific to 
veterans, such as VA-provided benefits, and other sources of income; 
rather, HUD takes into account the type of income, such as whether it 
is recurring or not. Finally, although HUD rental assistance programs 
generally do not target veterans, HUD allocated about 1,800 vouchers in 
the early 1990s for placing formerly homeless veterans with severe 
psychiatric or substance abuse disorders into affordable rental 
housing, but usage of these vouchers has been declining--as of the end 
of fiscal year 2006, about 1,000 vouchers remained in use. 

The majority of the 41 largest public housing agencies we contacted 
have no veterans' preference for admission to their public housing or 
voucher programs, and all of the 13 largest performance-based contract 
administrators we contacted told us that owners of project-based 
properties that they oversee generally do not have a veterans' 
preference. Specifically, according to our interviews with 34 of the 
largest housing agencies that administer public housing programs, 14 
(about 41 percent) offered a veterans' preference in fiscal year 2006, 
and 13 of the 40 largest agencies (about 33 percent) that administer 
the housing choice voucher program offered a veterans' preference. 
Officials from all of the 13 largest contract administrators told us 
that owners of project-based properties that they oversee generally do 
not employ a veterans' preference when selecting tenants. 

Low-income veteran households were less likely to receive HUD rental 
assistance than other low-income households (that is, nonveteran 
households). Specifically, of all low-income veteran households, an 
estimated 11 percent received HUD rental assistance in fiscal year 
2005, whereas an estimated 19 percent of other low-income households 
received assistance. Although the reasons for the difference are 
unclear, based on our analyses and discussions with HUD officials, 
various factors could influence the percentage of eligible veteran 
households that receive HUD rental assistance--for example, different 
levels of need for affordable housing among veteran and other 
households and public housing agencies' and property owners' use of 
veterans' preference. In fiscal year 2005, at least 250,000 low-income 
veteran households received rental assistance under HUD's programs-- 
representing about 6 percent of all households that received such 
assistance. Compared with other (nonveteran) assisted households, 
veteran assisted households were as likely to be elderly but were more 
likely to have a disability. 

Background: 

According to Census data, in 2005 an estimated 21.9 million households, 
or 20 percent of the 111.1 million households nationwide, were "veteran 
households"--that is, they had at least one member who was a military 
veteran. Most veteran households--about 80 percent--owned their own 
homes, a significantly higher percentage than was the case for other 
(nonveteran) households (about 64 percent). About 4.3 million veteran 
households rented their homes. Census data also show that renter 
households were more likely to be low-income than were owner-occupied 
households; in 2005, about 66 percent of renter households were low- 
income while 32 percent of homeowners were low-income. 

VA, through a variety of programs, provides federal assistance to 
veterans who are homeless, and also provides homeownership assistance, 
but does not provide rental assistance. One of the agency's largest 
programs for homeless veterans is the Homeless Providers Grant and Per 
Diem program, which provides funding to nonprofit and public agencies 
to help temporarily shelter veterans. VA also administers eight other 
programs for outreach and treatment of homeless veterans.[Footnote 7] 
In addition to its homelessness programs, VA provides a variety of 
programs, services, and benefits to veterans and their 
families.[Footnote 8] 

HUD provides rental housing assistance through three major programs-- 
housing choice voucher, public housing, and project-based. In fiscal 
year 2005, these programs provided rental assistance to about 4.8 
million households and paid about $28 billion in rental subsidies. 
These three programs generally serve low-income households--that is, 
households with incomes less than or equal to 80 percent of their local 
area median incomes. Most of these programs have targets for households 
with extremely low incomes--30 percent or less of their area median 
incomes. HUD-assisted households generally pay 30 percent of their 
monthly income, after certain adjustments, toward their unit's rent. 
[Footnote 9] HUD pays the difference between the household's 
contribution and the unit's rent (under the voucher and project-based 
programs) and the difference between the public housing agencies' 
operating costs and rental receipts for public housing. 

More Than Half of Low-Income Veteran Renter Households Had Housing 
Affordability Problems: 

According to our analysis of ACS data, of the 4.3 million veteran 
households that rented their homes, an estimated 2.3 million, or about 
53 percent were low-income in 2005. As shown in table 1, the largest 
share of these 2.3 million households was concentrated in the highest 
low-income category--that is, 50.1 to 80 percent of the area median 
income--with somewhat smaller shares in the two lower categories. The 
table also shows that other renter households (that is, households 
without a veteran member) were even more likely to be low-income than 
veteran renter households. 

Table 1: Veteran and Other Renter Households, by Income Category, 2005: 

Income category (as a percentage of the area median income): All low 
income (80% or less); 
Veteran household: Number: 2,282,720; 
Veteran household: Percentage: 53%; 
Other household: Number: 22,012,930; 
Other household: Percentage: 68%. 

Income category (as a percentage of the area median income): 50.1 to 
80%; 
Veteran household: Number: 966,865; 
Veteran household: Percentage: 22; 
Other household: Number: 6,774,065; 
Other household: Percentage: 21. 

Income category (as a percentage of the area median income): 30.1 to 
50%; 
Veteran household: Number: 674,085; 
Veteran household: Percentage: 16; 
Other household: Number: 6,101,435; 
Other household: Percentage: 19. 

Income category (as a percentage of the area median income): 30% or 
less; 
Veteran household: Number: 641,770; 
Veteran household: Percentage: 15; 
Other household: Number: 9,137,430; 
Other household: Percentage: 28. 

Income category (as a percentage of the area median income): Not low 
income (greater than 80%); 
Veteran household: Number: 2,023,755; 
Veteran household: Percentage: 47; 
Other household: Number: 10,452,230; 
Other household: Percentage: 32. 

Source: GAO analysis of sample survey data from 2005 ACS. 

[End of table] 

The estimated numbers of low-income veteran renter households in 2005 
varied greatly by state, from some 236,000 in California--the most of 
any state--to less than 6,000 in each of 3 states--Delaware, Vermont, 
and Wyoming. [Footnote 10] The percentages of veteran renter households 
that were low-income in 2005 also varied considerably by state, from 
about 65 percent in Michigan to about 41 percent in Virginia. Further 
details on how these figures varied by state, including maps, can be 
found in appendix I. In addition, a significant proportion of low- 
income veteran renter households included a veteran who was elderly or 
had a disability. Specifically, an estimated 816,000 (36 percent of 
these veteran households) had at least one veteran who was elderly 
(that is, 62 years of age or older); and 887,000 (39 percent) had at 
least one veteran member with a disability. 

More Than Half of Low-Income Veteran Renters Had Problems Affording 
Their Rents: 

According to our analysis of ACS data, an estimated 1.3 million low- 
income veteran households, or about 56 percent of the approximate 2.3 
million such households, had rents that exceeded 30 percent of their 
household income in 2005 (see table 2). These veteran renter households 
had what HUD terms "moderate" or "severe" problems affording their 
rent.[Footnote 11] Specifically, about 31 percent of low-income veteran 
renter households had moderate affordability problems, and about 26 
percent had severe affordability problems. The remainder either paid 30 
percent or less of their household income in rent, reported zero 
income, or did not pay cash rent. In comparison, a higher proportion of 
other low-income renter households had moderate or severe housing 
affordability problems. 

Table 2: Housing Affordability for Low-Income Renter Households, 2005: 

Affordability category: Affordability problem; 
Veteran household: Number: 1,284,540; 
Veteran household: Percentage: 56%; 
Other household: Number: 13,855,530; 
Other household: Percentage: 63%. 

Affordability category: Affordability problem: Moderate; 
Veteran household: Number: 699,470; 
Veteran household: Percentage: 31; 
Other household: Number: 6,260,495; 
Other household: Percentage: 28. 

Affordability category: Affordability problem: Severe; 
Veteran household: Number: 585,070; 
Veteran household: Percentage: 26; 
Other household: Number: 7,595,035; 
Other household: Percentage: 35. 

Affordability category: No affordability problem; 
Veteran household: Number: 763,640; 
Veteran household: Percentage: 33; 
Other household: Number: 6,264,690; 
Other household: Percentage: 28. 

Affordability category: Zero income/no cash rent; 
Veteran household: Number: 234,535; 
Veteran household: Percentage: 10; 
Other household: Number: 1,892,710; 
Other household: Percentage: 9. 

Source: GAO analysis of sample survey data from 2005 ACS. 

Note: Totals may not add due to rounding. 

[End of table] 

The extent of housing affordability problems among low-income veteran 
renter households varied significantly by state in 2005 (see fig. 1). 
The median percentage of low-income veteran renters with affordability 
problems nationwide was 54 percent. California and Nevada had the 
highest proportions of affordability problems among low-income veteran 
renter households--about 68 and 70 percent, respectively. North Dakota 
and Nebraska had the smallest--about 37 and 41 percent, respectively. 

Figure 1: Percentage of Low-Income Veteran Renter Households with 
Housing Affordability Problems, by State, 2005: 

This figure is a map of the United States with highlighted states 
showing percentages of low-income veteran renter households with 
housing affordability problems, by state, 2005. 

[See PDF for image] 

Source: GAO analysis of sample survey data from 2005 American Community 
Survey; Art Explosion (map). 

Note: Three states and the District of Columbia had margins of error of 
more than 10 percentage points. 

[End of figure] 

Small Percentage of Low-Income Veteran Renter Households Lived in 
Overcrowded or Inadequate Housing: 

A relatively small percentage of veteran households lived in 
overcrowded or inadequate housing in 2005. Specifically, an estimated 
73,000, or 3 percent, of low-income veteran renter households lived in 
overcrowded housing--housing with more than one person per room--and 
less than 18,000, or about 1 percent, lived in severely overcrowded 
housing--housing with more than one and a half persons per 
room.[Footnote 12] In contrast, an estimated 1.5 million, or 7 percent, 
of other low-income renter households lived in overcrowded housing, and 
about 423,000, or 2 percent, lived in severely overcrowded housing. 

Finally, ACS data indicate that a very small share of low-income 
veteran renters lived in inadequate housing. ACS provides very limited 
information about the quality of the housing unit; the survey 
classifies a unit as inadequate if it lacks complete plumbing or 
kitchen facilities, or both.[Footnote 13] In 2005, an estimated 53,000, 
or 2 percent, of low-income veteran renter households lived in 
inadequate housing. In comparison, an estimated 334,000, or 2 percent, 
of other households lived in inadequate housing. 

HUD Rental Assistance Programs Do Not Take Veteran Status into Account 
When Determining Eligibility or Subsidy Amounts: 

HUD's major rental assistance programs are not required to take a 
household's veteran status into account when determining eligibility 
and calculating subsidy amounts. (Consequently, HUD does not collect 
any information that identifies the veteran status of assisted 
households.) As with other households, veterans can benefit from HUD 
rental assistance provided that they meet all of the programs' income 
and other eligibility criteria. For example, assisted households must 
meet U.S. citizenship requirements and, for some of the rental 
assistance programs, HUD's criteria for an elderly household or a 
household with a disability. 

When determining income eligibility and subsidy amounts, HUD generally 
does not distinguish between income sources that are specific to 
veterans, such as VA-provided benefits, and other types of income. HUD 
policies define household income as the anticipated gross annual income 
of the household, which includes income from all sources received by 
the family head, spouse, and each additional family member who is 18 
years of age or older. Specifically, annual income includes, but is not 
limited to, wages and salaries, periodic amounts from pensions or death 
benefits, and unemployment and disability compensation.[Footnote 14] 
HUD policies identify 39 separate income sources and benefits that are 
excluded when determining eligibility and subsidy amounts. These 
exclusions relate to income that is nonrecurring or sporadic in nature, 
health care benefits, student financial aid, and assistance from 
certain employment training and economic self-sufficiency 
programs.[Footnote 15] 

We found that, based on HUD's policies on income exclusions, most types 
of income and benefits that veteran households receive from VA would be 
excluded when determining eligibility for HUD's programs and subsidy 
amounts. Many of the excluded benefits relate to payments that veteran 
households receive under certain economic self-sufficiency programs or 
nonrecurring payments such as insurance claims. Of the benefits 
included, most are associated with recurring or regular sources of 
income, such as disability compensation, pensions, and survivor death 
benefits. 

Of the 39 exclusions, we found that two income exclusions specifically 
applied to certain veteran households but, according to HUD, these 
exclusions are rarely used. These income exclusions are (1) payments 
made to Vietnam War-era veterans from the Agent Orange Settlement Fund 
and (2) payments to children of Vietnam War-era veterans who suffer 
from spina bifida. The two exclusions are identified in federal 
statutes that are separate from those authorizing the three major 
rental assistance programs.[Footnote 16] 

HUD does provide rental assistance vouchers specifically to veterans 
under a small program called the Housing and Urban Development-Veterans 
Affairs Supportive Housing program (HUD-VASH). Established in 1992, HUD-
VASH is jointly funded by HUD and VA and offers homeless veterans an 
opportunity to obtain permanent housing, as well as ongoing case 
management and supportive services. HUD allocated these special 
vouchers to selected public housing agencies that had applied for 
funding, and VA was responsible for identifying participants based on 
specific eligibility criteria, including the veteran's need for 
treatment of a mental illness or substance abuse disorder.[Footnote 17] 
Under the HUD-VASH initiative, HUD allocated 1,753 vouchers from fiscal 
years 1992 through 1994. HUD funded these vouchers for 5 years and, if 
a veteran left the program during this period, the housing agency had 
to reissue the voucher to another eligible veteran.[Footnote 18] 
According to VA officials, after the 5-year period ended, housing 
agencies had the option of continuing to use their allocation of 
vouchers for HUD-VASH, or could discontinue participation whenever a 
veteran left the program (that is, the housing agency would not provide 
the voucher to another eligible veteran upon turnover). VA stated that 
after the 5-year period ended, many housing agencies decided not to 
continue in HUD-VASH after assisted veterans left the program; instead, 
housing agencies exercised the option of providing these vouchers to 
other households under the housing choice voucher program.[Footnote 19] 
As a result, the number of veterans that receive HUD-VASH vouchers has 
declined. Based on information from VA, about 1,000 veterans were in 
the program as of the end of fiscal year 2006, and absent any policy 
changes, this number is likely to decline to 400 because housing 
agencies responsible for more than 600 vouchers have decided not to 
continue providing these vouchers to other veterans as existing 
participants leave the program. 

Congress statutorily authorized HUD-VASH as part of the Homeless 
Veterans Comprehensive Assistance Act of 2001.[Footnote 20] Under the 
act, Congress also authorized HUD to allocate 500 vouchers each fiscal 
year from 2003 through 2006--a total of 2,000 additional vouchers. In 
December 2006, Congress extended this authorization through fiscal year 
2011--allocating an additional 2,500 vouchers or 500 each year. 
However, HUD has not requested, and Congress has not appropriated, 
funds for any of the vouchers authorized from fiscal years 2003 through 
2007.[Footnote 21] 

Most Contacted Housing Agencies and Owners of Project-Based Properties 
Did Not Offer Veterans' Preference for Admission to HUD's Rental 
Assistance Programs: 

Currently, HUD's policies give public housing agencies and owners of 
project-based properties the discretion to establish preferences for 
certain groups when selecting households for housing assistance. 
Preferences affect only the order of applicants on a waiting list for 
assistance; they do not determine eligibility for housing assistance. 
Before 1998, federal law required housing agencies and property owners 
to offer a preference to eligible applicants to their subsidized 
housing programs who (1) had been involuntarily displaced, (2) were 
living in substandard housing, or (3) were paying more than half their 
income for rent. Public housing agencies were required by law to 
allocate at least 50 percent of their public housing units and 90 
percent of their housing choice vouchers to applicants who met these 
criteria. Similarly, project-based owners had to allocate 70 percent of 
their units to newly admitted households that met these criteria. The 
Quality Housing and Work Responsibility Act of 1998 (QHWRA) gave more 
flexibility to housing agencies and project-based property owners to 
administer their programs, in part by eliminating the mandated housing 
preferences.[Footnote 22] Although it gave housing agencies and owners 
more flexibility, QHWRA required that public housing agencies and 
owners target assistance to extremely low-income households.[Footnote 
23] 

Under QHWRA, housing agencies and owners of project-based properties 
may, but are not required to, establish preferences to better direct 
resources to those with the greatest housing needs in their areas. 
Public housing agencies can select applicants on the basis of local 
preferences provided that their process is consistent with their 
administrative plan.[Footnote 24] HUD policy requires housing agencies 
to specify their preferences in their administrative plans, and HUD 
reviews these preferences to ensure that they conform to 
nondiscrimination and equal employment opportunity requirements. 
Similarly, HUD policy allows owners of project-based properties to 
establish preferences as long as the preferences are specified in their 
written tenant selection plans.[Footnote 25] While HUD requires housing 
agencies and property owners to disclose their preferences in their 
administrative or tenant selection plans, HUD officials said the 
department does not compile or systematically track this information 
because public housing agencies and property owners are not required to 
have preferences. 

Most of the 41 public housing agencies we contacted used a preference 
system for admission to their public housing and housing choice voucher 
programs, but less than half offered a veterans' preference. As shown 
in table 3, of the 34 largest housing agencies that administered the 
public housing program, 29 established preferences for admission to the 
program and 14 used a veterans' preference. Similarly, of the 40 
housing agencies that administered the housing choice voucher program, 
34 used admission preferences, and 13 employed a preference for 
veterans. According to public housing agency officials, the most common 
preferences used for both programs were for working families, 
individuals who were unable to work because of age or disability, and 
individuals who had been involuntarily displaced or were homeless. Of 
course, veterans could benefit from these admission preferences if they 
met the criteria. 

Table 3: Number of Contacted Housing Agencies That Used a Preference 
System in Their Public Housing and Housing Choice Voucher Programs: 

Public housing agency's use of preferences: Agencies with a preference 
system; 
Public housing: 29; 
Vouchers: 34. 

Public housing agency's use of preferences: With a veterans' 
preference; 
Public housing: 14; 
Vouchers: 13. 

Public housing agency's use of preferences: Without a veterans' 
preference; 
Public housing: 15; 
Vouchers: 21. 

Public housing agency's use of preferences: Agencies with no preference 
system; 
Public housing: 5; 
Vouchers: 6. 

Source: GAO. 

Note: Of the 41 housing agencies we contacted, 7 did not administer a 
public housing program and 1 did not administer a voucher program. 

[End of table] 

Some of the public housing agencies we contacted offered veterans' 
preferences because their states required them to do so. Other housing 
agency officials told us they offered a veterans' preference because 
they believed it was important to serve the needs of low-income 
veterans since they had done so much for the well-being of others. 
Public housing agencies that we contacted that did not offer a 
veterans' preference gave various reasons for their decisions. Some 
officials told us that the housing agency did not need a veterans' 
preference because veteran applicants generally qualified under other 
preference categories, such as elderly or disabled. One housing agency 
official we contacted said a veterans' preference was not needed 
because of the relatively small number of veterans in the community. 

According to all of the performance-based contract administrators we 
contacted, owners of project-based properties that they oversee 
generally did not employ a veterans' preference when selecting tenants. 
Ten of the 13 largest contract administrators told us, based on their 
review of property owners' tenant selection plans, that owners of 
project-based properties generally did not employ preferences for any 
specific population.[Footnote 26] Officials from the remaining three 
contract administrators said they were aware of some property owners 
offering preferences to individuals who had been involuntarily 
displaced, working families, or those unable to work because of age or 
disability. However, all the contract administrators we contacted 
either said that property owners did not use preferences or agreed that 
the use of preferences, including a veterans' preference, among owners 
of properties with project-based assistance was limited. HUD officials 
to whom we spoke also stated, based on their experience with tenant 
selection plans, that the use of preferences at project-based 
properties likely was infrequent. 

At Least 250,000 Veteran Households Received HUD Rental Assistance, but 
Veterans Were Less Likely to Receive Such Assistance Than Other Low- 
Income Households: 

Low-income veteran renter households were less likely to receive HUD 
rental assistance than other households. As shown in table 4, of the 
total 2.3 million veteran renter households with low incomes, about 
250,000 (or 11 percent) received HUD assistance. In comparison, of the 
22 million other renter households with low incomes, 4.1 million (about 
19 percent) received HUD assistance.[Footnote 27] (As noted previously, 
although HUD is the largest provider of federal rental housing 
assistance to low-income households, it is not the sole source of such 
assistance. Thus, these percentages likely understate the actual share 
of all eligible veteran renter households that receive federal rental 
assistance.) 

Table 4: Estimated Number of Low-Income Veteran and Other Renter 
Households, by HUD Assistance, 2005: 

Households in thousands. 

HUD assisted; 
Veteran household: Number: 254; 
Veteran household: Percentage: 11%; 
Other household: Number: 4,147; 
Other household: Percentage: 19%. 

Unassisted; 
Veteran household: Number: 1,794; 
Veteran household: Percentage: 78; 
Other household: Number: 15,933; 
Other household: Percentage: 73. 

With an affordability problem; 
Veteran household: Number: 1,285; 
Veteran household: Percentage: 56; 
Other household: Number: 13,856; 
Other household: Percentage: 63. 

Without an affordability problem[A]; 
Veteran household: Number: 509; 
Veteran household: Percentage: 22; 
Other household: Number: 2,117; 
Other household: Percentage: 10. 

Other[B]; 
Veteran household: Number: 235; 
Veteran household: Percentage: 10; 
Other household: Number: 1,893; 
Other household: Percentage: 9. 

Sources: GAO analysis of VA's Beneficiary Identification and Records 
Location Subsystem (BIRLS), HUD's Public and Indian Housing Information 
Center (PIC) and Tenant Rental Assistance Certification System (TRACS), 
and sample survey data from 2005 ACS. 

[A] ACS does not identify households that receive federal rental 
assistance. Therefore, to determine the number of unassisted low-income 
households without an affordability problem, we took the difference 
between the number of HUD-assisted households derived from HUD data 
systems and ACS' reported number of low-income renter households 
without an affordability problem. We assumed that HUD-assisted 
households were included in ACS data among those households that did 
not have an affordability problem. 

[B] "Other" includes households that reported zero income or paid no 
cash rent. 

[C] Household counts and percentages may not add due to rounding. 

[End of table] 

The reasons why other households were nearly twice as likely as veteran 
households to receive HUD assistance are unclear. However, based on our 
analyses and discussions with agency officials, we identified some 
potential explanations. For example: 

* As previously noted, although a significant proportion of low-income 
veteran households face affordability problems, an even larger 
proportion of other (nonveteran) households face more severe 
affordability problems. Thus, the level of veteran demand for rental 
assistance may be lower than that of nonveteran households. 

* Also as previously noted, HUD rental assistance programs do not take 
veteran status into account when determining eligibility, and most 
public housing agencies and property owners do not offer veterans' 
preferences. As a result, these policy decisions likely focus resources 
on other types of low-income households with housing needs. 

* Although low-income households generally are eligible to receive 
rental assistance from HUD's three programs, statutory requirements 
mandate that a certain percentage of new program participants must be 
extremely low income. These targeting requirements may lead to a higher 
share of HUD rental assistance going to nonveteran households because 
veteran households generally are less likely to fall within the 
extremely low-income category. 

The estimated 250,000 veteran households that received HUD rental 
assistance in 2005 constituted about 6 percent of all HUD-assisted 
households. The housing choice voucher program served the largest 
number of veteran households, followed by the project-based program, 
and public housing (see fig. 3). However, a slightly higher proportion 
of veteran households participated in the public housing program (6.9 
percent) than participated in the voucher (5.7 percent) and project- 
based (5.2 percent) programs. 

Figure 2: Number and Percentage of Low-Income Veteran Households 
Assisted by the Voucher, Public Housing, and Project-Based Programs, 
Fiscal Year 2005: 

This figure is a combination bar and pie chart showing number and 
percentage of low income veteran households assisted by the voucher, 
public housing, and project-based programs, fiscal year 2005. 

[See PDF for image] 

Source: GAO analysis of VA's Beneficiary Identification and Records 
Location Subsystem and HUD's Public Housing Information Center and 
Tenant Rental Assistance Certification System. 

[End of figure] 

We found some similarities in the demographic characteristics of 
veterans and other assisted households we analyzed. For example: 

* Compared with other assisted households, HUD-assisted veteran 
households were as likely to be elderly. Specifically, in fiscal year 
2005, about 75,000, or 30 percent, of assisted veteran households were 
elderly, and about 1.3 million, or 31 percent, of other assisted 
households were elderly. 

* HUD-assisted veteran households were more likely to have a 
disability. In fiscal year 2005, HUD provided assistance to about 
88,000 veteran households with a disability, or about 34 percent of 
assisted veteran households. In comparison, 1.2 million or 28 percent 
of other assisted households had a disability. 

Our August 2007 report contains additional information on the 
demographic and income characteristics of veteran and nonveteran 
households, as well as the extent to which HUD programs take veteran 
status into account when determining eligibility and subsidy amounts. 

Madam Chairwoman, this concludes my prepared statement. I would be 
happy to answer any questions at this time. 

Contact and Acknowledgement: 

For further information on this testimony, please contact David G. Wood 
at (202) 512-8678 or woodd@gao.gov. Contact points from our Office of 
Congressional Relations may be found on the last page of this 
statement. Individuals making key contributions to this testimony 
included Marianne Anderson, Michelle Bowsky, Daniel Garcia-Diaz, John 
T. McGrail, Josephine Perez, and Rose Schuville. 

[End of section] 

Appendix I: Numbers and Percentages of Low-Income Veteran Renter 
Households by State: 

The estimated numbers of low-income veteran renter households in 2005 
varied greatly by state, as shown in figure 4. The estimated median 
number of low-income veteran renters in any state was about 34,000. 
California had significantly more low-income veteran renter households 
than any other state--more than 236,000, or about 10 percent of all 
such households nationwide--followed by Texas with about 142,000, and 
New York with about 135,000. The states with the smallest number of low-
income veteran households were Vermont, Delaware, and Wyoming with less 
than 6,000 each. 

Figure 3: Number of Low-Income Veteran Renter Households, by State, 
2005: 

This figure is a map of the United States highlighted with the number 
of low-income veteran renter households, by State, 2005. 

[See PDF for image] 

Source: GAO analysis of sample survey data from 2005 ACS; Art Explosion 
(map). 

Note: Twenty-two states had margins of error of more than 10 percent, 
and two states and the District of Columbia had margins of error that 
were more than 20 percent. 

[End of figure] 

As shown in figure 5, the percentages of veteran renter households that 
were low-income in 2005 also varied considerably by state. Michigan had 
the highest percentage--about 65 percent of its veteran renter 
households were low income, while Virginia had the lowest--about 41 
percent. 

Figure 4: Percentage of Veteran Renter Households That Were Low-Income, 
by State, 2005: 

This figure is a map of the United States highlighted with the 
percentage of veteran renter households that were low-income, by state, 
2005. 

[See PDF for image] 

Source: GAO analysis of sample money data from 2005 ACS; Art Explosion 
(map). 

[End of figure] 

Footnotes:  

[1] We use the Bureau of the Census's definition of a veteran: 
generally, a person who is 18 years of age or older and has served on 
active duty in the U.S. Army, Navy, Air Force, Marine Corps, or Coast 
Guard in the past, but is no longer on active duty. Persons who have 
served in the National Guard or Military Reserves are classified as 
veterans only if they have been called or ordered to active duty. 

[2] GAO-07-1012. This report was mandated by the conference report 
accompanying the Fiscal Year 2006 Military Quality of Life and Veterans 
Affairs Appropriations Act. 

[3] Not included in the 2005 ACS survey universe are individuals who 
live in group quarters--which include college dormitories, correctional 
facilities, and certain types of nursing facilities and hospitals--or 
homeless individuals. 

[4] Unless otherwise noted, all reported numeric estimates derived from 
ACS are subject to sampling errors of plus or minus 10 percent or less 
of the value of those numeric estimates. 

[5] We contacted or visited 41 different public housing agencies. Of 
these, 33 administered both the public housing and voucher programs, 7 
administered the voucher program only, and 1 administered the public 
housing program only. Nationwide, there are more than 4,000 public 
housing agencies. 

[6] In this testimony, we consider a veteran renter household to be 
elderly if at least one veteran member was 62 years or older. A veteran 
renter household with a disability contains at least one veteran member 
with a disability as defined by Census. 

[7] See GAO, Homeless Veterans Programs: Improved Communications and 
Follow-up Could Further Enhance the Grant and Per Diem Program, GAO-06-
859 (Washington, D.C.: Sept. 11, 2006). 

[8] U.S.C. Title 38, Part II General Benefits, and Part III 
Readjustment and Related Benefits. 

[9] A tenant's rent is based on a family's anticipated gross annual 
income--that is, income from all sources received by the family head, 
spouse, and each additional family member who is 18 years of age or 
older, less applicable exclusions and deductions. There are 44 
different types of income exclusions and deductions. 

[10] Estimates derived from the ACS, like all survey data, contain 
sampling errors (that is, such estimates would be different if the 
survey had selected another sample). Since each sample could have 
provided different estimates, we express our confidence in the 
precision of this sample's results as 90 percent confidence intervals. 
We express this type of error as a margin of error, which is the 
difference between an estimate and its upper or lower confidence 
interval, and we express the margin of error as a percentage. The 
margins of errors were larger for Vermont, Delaware, and Wyoming 
(exceeding plus or minus 20 percent) than those for the other states 
because of the relatively small sample size used to derive the 
estimates (see app. II in GAO-07-1012 for margins of error for each 
state and the District of Columbia). 

[11] HUD classifies a housing affordability problem as "moderate" if 
housing costs are between 30.1 percent and 50 percent of household 
income and "severe" if housing costs are more than 50 percent. 

[12] HUD's regulation defines housing overcrowding as a housing unit 
with 1.01 or more persons per room (see 24 C.F.R. 791.402) but does not 
provide a definition for severe overcrowding. The measure of severe 
overcrowding to which we refer in this report (1.51 or more persons per 
room) is commonly used for statistical reporting purposes. 

[13] According to ACS, a housing unit has complete plumbing if it has 
(1) hot and cold piped water, (2) a flush toilet, and (3) a bathtub or 
shower and complete kitchen facilities if it has (1) a sink with piped 
water, (2) a stove or range, and (3) a refrigerator. 

[14] 24 C.F.R. 5.609. 

[15] In addition to these 39 income exclusions, program administrators 
must also apply five income deductions to determine the household's 
adjusted income--that is, the amount of income used to calculate the 
household's rental contribution, which include standard amounts for 
each dependent and for elderly family members and those with 
disabilities. See 24 C.F.R. 5.611. 

[16] Pub. L. Nos. 101-201 and 104-204. 

[17] The veteran also must meet HUD's eligibility requirements for the 
housing choice voucher program. 

[18] HUD Notices of Funding Availability for the Section 8 Set-Aside 
for Homeless Veterans with Severe Psychiatric or Substance Abuse 
Disorders, Fiscal Years 1992, 1993, and 1994. 

[19] According to the VA, veterans receiving HUD-VASH vouchers may 
leave the program because, for example, they no longer need or qualify 
for assistance. 

[20] Pub. L. No. 107-95. 

[21] Recently, the HUD fiscal year 2008 appropriations bill, H.R. 3074, 
contains $75 million for the HUD-VASH program. The vouchers funded by 
the appropriation are to remain available for homeless veterans upon 
turnover. The House recently adopted the conference report accompanying 
H.R. 3074. 

[22] The use of the federal preference requirement was temporarily 
suspended by the continuing resolution enacted in January 1996 through 
the appropriations act for fiscal year 1998. 

[23] Specifically, QHWRA required that not less than 75 percent of new 
program participants under the voucher program and not less than 40 
percent under the public housing and project-based Section 8 programs 
be extremely low income. 

[24] A public housing agency's administrative plan is a comprehensive 
guide to the agency's policies, programs, operations, and strategies 
for meeting local housing needs and goals. There are two parts to the 
plan: (1) the 5-Year Plan, which each housing agency submits to HUD 
once every fifth public housing agency's fiscal year and (2) the Annual 
Plan, which is submitted to HUD every year. 

[25] A tenant selection plan is a comprehensive guide that describes 
the owners' tenant selection policies and procedures. These plans 
include descriptions of the eligibility requirements and income limits 
for admission. 

[26] According to HUD policy, a preference for households that are 
involuntarily displaced by government action or natural disaster 
generally applies to properties that have a HUD-insured mortgage. 

[27] Since a significant portion of HUD-assisted households have very 
low-and extremely low-incomes, we also estimated the share of veteran 
renter households in these two income categories and found that about 
19 percent of them received HUD assistance (compared with about 27 
percent of other households). 

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