Housing:

More Can Be Done To Measure HUD's Success in Using Millions of Dollars for Rehabilitating Housing

CED-81-98: Published: Jul 14, 1981. Publicly Released: Jul 14, 1981.

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GAO examined the current status of actions taken by the Department of Housing and Urban Development (HUD) on recommendations GAO made to the agency in a previous report. In this report, GAO estimated that $150 million of a total $200 million in grants was directly granted to property owners to cover their rehabilitation costs in fiscal year 1980. By combining grant assistance to homeowners for housing rehabilitation with other funds, or by using loans to replace grants wherever feasible, GAO said that HUD should be able to more efficiently and effectively use millions of dollars annually in its Community Development Block Grant (CDBG) Program. HUD agreed with GAO that direct grants for housing rehabilitation were costly and sometimes inappropriate, but disagreed with the recommendation that CDBG regulations be amended to prohibit the use of grants unless grants are combined with other resources. Instead HUD believes that, through concerted technical assistance, its efforts to encourage communities to use more cost-effective financing techniques can achieve the desired results.

GAO believes that the HUD technical assistance effort should help in assisting communities to adopt more effective and efficient rehabilitation financing techniques; however, HUD lacks sufficient data to determine how successful its efforts have been and whether additional steps are needed. If HUD intends to rely on its technical assistance efforts, then it needs to develop performance standards and compare them with reliable management data to enable HUD to measure overall progress in meeting its objectives. GAO also found in its followup work that: (1) existing management data were inaccurate, thus preventing HUD from effectively monitoring recent changes to restrict the use of certain funds for refinancing home mortgages; and (2) the improved use of available data systems, and the establishment of performance standards, could improve monitoring of and technical assistance to local communities in meeting objectives of giving loan priority to certain persons.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should prepare periodic reports using existing data systems to routinely monitor the HUD objective that communities give loan priority to low and moderate-income borrowers.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should use the improved management data, and accompanying performance standards, to measure the progress area offices and communities are making to reduce their reliance on the use of direct grants in rehabilitating housing. HUD should also consider whether additional actions, such as incentives, are needed to reward communities for stretching block grant funds by adopting financing methods more cost effective than direct grants.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should establish performance standards in conjunction with these block grant rehabilitation data systems, stating the HUD goals for using more cost-effective rehabilitation financing methods.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should revise the grantee performance reports to require that information reported on block grant expenditures for housing rehabilitation indicate the amount spent through the use of rehabilitation grants versus loans. HUD should also incorporate this information on expenditures into its computer system as it has done for block grant budgets to enable routine and timely comparisons between planned and actual expenditures.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should improve the existing HUD monitoring capabilities by revising the application forms for collecting information on the planned uses of block grant funds to require that, in the case of housing rehabilitation activities, local communities indicate the amount of funds they plan to budget for rehabilitation grants versus loans.

    Agency Affected: Department of Housing and Urban Development

  6. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should establish performance standards to be used with reliable management data on refinancing and loan priority given to low and moderate-income borrowers, clearly stating the HUD goals for anticipated levels of performance. The performance standards should be communicated to field staffs and communities and used to focus the HUD technical assistance activities.

    Agency Affected: Department of Housing and Urban Development

 

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