More Accessible HUD Data Could Help Efforts to Preserve Housing for Low-Income Tenants
GAO-04-20: Published: Jan 23, 2004. Publicly Released: Feb 23, 2004.
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The Department of Housing and Urban Development (HUD) has subsidized the development of over 23,000 properties by offering owners favorable long-term mortgage financing or rental assistance payments in exchange for owners' commitment to house low-income tenants. When owners pay off mortgages--the mortgages "mature"--the subsidized financing ends, raising the possibility of rent increases. GAO was asked to determine the number of HUD mortgages that are scheduled to mature in the next 10 years, the potential impact on tenants, and what HUD and others can do to keep these properties affordable.
Nationwide, the HUD mortgages on 2,328 properties--21 percent of the 11,267 subsidized properties with HUD mortgages--are scheduled to mature in the next 10 years, but among states this percentage varies significantly: from 7 percent in Alabama, to 53 percent in South Dakota. About three-quarters of these mortgages are scheduled to mature in the last 3 years of the 10-year period. A CD-ROM (GAO-04-210SP) that accompanies this report provides property-level data for subsidized properties with mortgages scheduled to mature. Impacts on tenants depend on tenant protections available under program statutes and regulations, as well as on property owners' decisions about their properties. While about 134,000, or 57 percent, of the rental units in the 2,328 properties are protected by rental assistance contracts, tenants in over 101,000 units without rental assistance are at risk of paying higher rents after mortgage maturity because no requirement exists to protect tenants when HUD mortgages mature. Absent specific requirements, property owners' decisions on whether to continue serving low-income tenants after their HUD mortgages mature depend on many factors, including neighborhood incomes, property conditions, and owners' missions. Of the 32 properties with HUD mortgages that matured during the past 10 years, 16 have rental assistance contracts that continue to subsidize at least some units, and 10 of the remaining 16 that GAO was able to contact offer rents that are affordable to tenants with incomes below 50 percent of area median income. HUD does not offer incentives to owners to keep properties affordable upon mortgage maturity. While many state and local agencies GAO surveyed offer incentives to preserve affordable housing, they have not directed them specifically at properties where HUD mortgages mature. Most of the agencies do not track HUD mortgage maturity dates for subsidized properties. In addition, although HUD's Web site contains detailed property-level data, some state and local agencies perceive that the information is not readily available. Refer to GAO-04-211SP for survey details.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: In a letter dated April 23, 2004, HUD wrote that it would (1) create a new page on HUD's website that provides relevant data on HUD projects that can be printed without the need for separate database management software, by April 30, 2004, (2) obtain input from the 4 trade associations used in the GAO survey by May 31, 2004, and (2) incorporate any suggestions in an expanded database by August 30, 2004, which will be updated annually. In letters dated October 1, 2004, to the executive directors of the 4 organizations included in the GAO report survey, HUD's Director, Office of Asset Management (1)informed the organizations of an additional listing on HUD's website done in response to the GAO report that identifies all subsidized projects with mortgages that mature over the next 10 years and requested that they inform the HUD websites (2)requested feedback as to preferred formats and file layouts.
Recommendation: To help state and local housing agencies track HUD-subsidized properties that may leave HUD's programs upon mortgage maturity or for other reasons, the Secretary of HUD should solicit the views of state and local agencies to determine (1) the specific information concerning HUD-subsidized properties that would be most useful to their affordability preservation efforts and (2) the most effective format for making this information available, and then use the results to modify the current means of conveying the data on these properties to make the data more widely available and useful.
Agency Affected: Department of Housing and Urban Development