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Project-Based Rental Assistance: HUD Should Streamline Its Processes to Ensure Timely Housing Assistance Payments

GAO-06-57 Published: Nov 15, 2005. Publicly Released: Dec 15, 2005.
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Highlights

 

The Department of Housing and Urban Development (HUD) provides subsidies, known as housing assistance payments, under contracts with privately owned, multifamily projects so that they are affordable to low-income households. Project owners have expressed concern that HUD has chronically made late housing assistance payments in recent years, potentially compromising owners'ability to pay operating expenses, make mortgage payments, or set aside funds for repairs. GAO was asked to discuss the timeliness of HUD's monthly housing assistance payments, the factors that affect payment timeliness, and the effects of delayed payments on project owners.

 

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Housing and Urban Development To improve the timeliness of housing assistance payments and mitigate the effects on owners when payments are delayed, the Secretary of Housing and Urban Development should streamline and automate the contract renewal process to prevent processing errors and delays and eliminate paper/hard-copy requirements to the extent practicable.
Closed – Not Implemented
As of September 2010, HUD had not completed its efforts to streamline and automate the contract renewal process, although it had taken some steps and had additional efforts underway. HUD's interim steps included consolidating its accounting system and migrating approximately 4,500 project-based contracts from traditional to project-based contract administrators. HUD also was in the beginning stages of contracting for a business process reengineering project that would implement an integrated budget forecasting model and recommend workflow management improvements. However, the improvements that HUD described would not necessarily include automating the contract renewal process, and HUD did not have a firm date for completing this project.
Department of Housing and Urban Development To improve the timeliness of housing assistance payments and mitigate the effects on owners when payments are delayed, the Secretary of Housing and Urban Development should develop systematic means to better estimate the amounts that should be allocated and obligated to project-based housing assistance payment contracts each year, monitor the ongoing funding needs of each contract, and ensure that additional funds are promptly obligated to contracts when necessary to prevent payment delays.
Closed – Implemented
According to HUD's FY09 budget request, during 2007, HUD employed an outside contractor to conduct a clean-up and analyze all of the project-based rental assistance contracts. As a result of this analysis, HUD believes that it will be able to incrementally fund all program contract renewals through fiscal year 2009 and into the first 2 months of fiscal year 2010. Moreover, the improved contract data will help HUD project future program needs by providing verified data for contract funding dates, renewal dates, and monthly costs. HUD plans to maintain and update this data.
Department of Housing and Urban Development To improve the timeliness of housing assistance payments and mitigate the effects on owners when payments are delayed, the Secretary of Housing and Urban Development should notify owners if their monthly housing assistance payments will be late and include in such notifications the date by which HUD expects to make the monthly payment to the owner.
Closed – Not Implemented
As of September 2010, HUD had not implemented a method to notify owners if their housing assistance payments were likely to be late. HUD was in the preliminary stages of contracting for a business process reengineering project that is intended to develop a series of tools for improving the budget and funding functions of project-based rental assistance programs. The planned tools would include the capability to promptly identify cases where a payment is anticipated to be late and automatically generate an e-mail alerting the project owner affected. HUD did not have a firm date for completing this project. In the interim, budget and funding staff monitor the payment portfolio monthly to assure adequate funding or allocate additional funding as needed.

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Topics

Contract administrationFederal aid for housingHousing programsInternal controlsLate paymentsLow income housingPerformance measuresSubsidiesHousing projectsTimeliness