Insights Into Major Urban Development Action Grant Issues

RCED-84-55: Published: Mar 5, 1984. Publicly Released: Mar 5, 1984.

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GAO examined the Urban Development Action Grant (UDAG) Program, focusing on: (1) the accuracy of the Department of Housing and Urban Development's (HUD) information on the results of completed projects; (2) the participation of small cities in the program; and (3) the requirements governing monies that recipient cities can generate by loaning action grant funds to private developers.

GAO found that, between January 1978 and November 1983, UDAG funded $3 billion in grants to distressed communities for economic revitalization and neighborhood reclamation projects. The HUD information system, however, did not provide complete information on program results realized from the 12 completed projects reviewed by GAO. GAO also found that many of the most economically distressed small cities did not participate in UDAG because they: (1) were unfamiliar with the program; (2) had insufficient city government capacity to plan a program project; and (3) had difficulty obtaining adequate private sector involvement. In addition, many recipients were repaying UDAG loans by developers before completion of the intended UDAG projects, but there is no clear policy on whether cities can use these early repayments for additional community and economic development activities.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HUD maintained that the application information is the minimum amount needed to make informed funding decisions. GAO survey results indicated that the application process was a significant problem for small cities. As the report noted, the application form remains complex and is used for both modest funding requests and for multimillion dollar requests. Additional follow-up is not needed.

    Recommendation: The Secretary, HUD, to help increase participation in the UDAG program of cities with populations below 50,000, should develop and test a streamlined application form for use by small cities.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Not Implemented

    Comments: The Administration wants to terminate the program, and no action will be taken in response to the recommendation. No further follow-up action is needed.

    Recommendation: The Secretary, HUD, to help increase participation in the UDAG program of cities with populations below 50,000, should develop comprehensive UDAG information materials to help educate small cities and the private sector about the program.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Not Implemented

    Comments: HUD plans no action in response to this recommendation because of increased small city funding in 1983 and 1984. The report recognized the 1983 increases; however, a plan is recommended, in part, to guide and coordinate the various small city efforts conducted by HUD headquarters, field offices, and technical assistance contractors. No further follow-up efforts are needed.

    Recommendation: The Secretary, HUD, to help increase participation in the UDAG program of cities with populations below 50,000, should develop a plan aimed at helping severely distressed small cities participate in the UDAG program by: (1) identifying highly distressed, potentially eligible small cities that have not applied for, or received, funding; and (2) establishing goals and criteria for selecting small cities to receive technical assistance to help them participate in the UDAG program.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Implemented

    Comments: HUD stated that part one of this recommendation would not be cost-effective due to severe UDAG automated data processing budget cuts. HUD is taking action on part two of this recommendation. Action was verified and an accomplishment report was prepared. No further follow-up efforts are needed.

    Recommendation: The Secretary, HUD, should direct the UDAG information system to: (1) record each UDAG project's expectations according to the grant agreement or its amendment; and (2) use additional, available information provided by grantees on project results up to the time HUD considers a project complete.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Not Implemented

    Comments: The Administration wants to terminate this program, and no action will be taken in response to this recommendation. No further follow-up is needed.

    Recommendation: The Secretary, HUD, should develop and issue policy guidance defining the circumstances under which cities should be able to use early UDAG repayments.

    Agency Affected: Department of Housing and Urban Development

 

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