Rental Rehabilitation With Limited Federal Involvement:

Who Is Doing It? At What Cost? Who Benefits?

RCED-83-148: Published: Jul 11, 1983. Publicly Released: Jul 11, 1983.

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In response to a congressional request, GAO reviewed rental housing rehabilitation activities funded by the Community Development Block Grant (CDBG) Program.

GAO assessed the rental rehabilitation programs in 73 communities across the Nation which managed CDBG programs during the past 3 years. GAO found that: (1) few communities have had recent experience in designing, implementing, or evaluating rental rehabilitation programs; (2) rehabilitation costs averaged about $7,000 per unit and frequently included improvements beyond those needed to eliminate housing deficiencies; (3) subsidies may have been greater than necessary because localities did not tailor finance methods to the projects' situations; and (4) localities often did not know whether lower income households were being assisted or displaced by rehabilitation because data were not kept. GAO concluded that, under the present CDBG Program, the potential for the displacement of lower income households and the targeting of rental rehabilitation programs to benefit the poor is strong.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs, to facilitate national oversight of any new rental housing grant program, should consider explicitly defining the intended program beneficiaries and the extent to which rehabilitated units must be occupied by those beneficiaries.

  2. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs, to facilitate national oversight of any new rental housing grant program, should consider requiring the Department of Housing and Urban Development to report to Congress on a periodic basis as to the overall progress of the program and certain minimum reporting requirements should include consolidated, verified information from all local governments on costs, services delivered, and program beneficiaries.

  3. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs, to facilitate national oversight of any new rental housing grant program, should consider requiring each participating local government to submit annual reports to the Department of Housing and Urban Development showing what it has accomplished during the fiscal year.

  4. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs, to facilitate national oversight of any new rental housing grant program, should consider requiring communities to have project owners provide standardized income and other demographic information annually to the local administering government on each household residing in an assisted housing unit so that the results can be aggregated at the national level, or make some alternative provision for collecting this information.

  5. Status: Closed - Not Implemented

    Comments: The Senate Committee on Housing and Urban Affairs believes the provisions enacted provide enough controls at this time. Therefore, it does not plan to take action on this recommendation now or in the future.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs should consider the option of including explicit cost controls such as requiring communities to enter into agreements with landlords restraining rents in subsidized units for some period of time to the lower of: (1) rents affordable by the program's lower income beneficiaries (without additional rent subsidies), or (2) rents necessary to cover increases in debt service and owner equity.

  6. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs should consider the option of including explicit cost controls such as limiting Federal rehabilitation expenditures generally to those necessary to correct substandard conditions or repair major systems in danger of failure, thus extending the useful life of housing units.

  7. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The Senate Committee on Banking, Housing, and Urban Affairs should consider the option of including explicit cost controls such as placing an overall dollar limit on the per-unit rehabilitation funding provided by the program.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HUD is implementing a cash and management information system. The information that will be gathered includes costs, tenant benefits and demographics on each household residing in the assisted units. Its actions are not fully responsive because the system only applies to the new rental rehabilitation program and not the CDBG program.

    Recommendation: The Secretary of Housing and Urban Development should explore requiring communities to evaluate their CDBG rental rehabilitation program in terms of cost effectiveness, tenant benefits, and displacement of lower income households.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Housing and Urban Development should explore requiring communities to have project owners provide standardized income and other demographic information annually to the local administering government on each household residing in a CDBG-assisted housing unit so that the results can be aggregated at the national level, or make some alternative provision for collecting this information.

    Agency Affected: Department of Housing and Urban Development

 

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