Pursuant to a congressional request, GAO reviewed the Housing Authority of New Orleans (HANO), focusing on: (1) its major operational difficulties; (2) the causes of those problems; and (3) the Department of Housing and Urban Development's (HUD) corrective actions and the effects of those actions.

GAO found that: (1) HANO has been unable to implement and maintain effective maintenance, modernization, and rehabilitation programs; (2) in 1994, none of the 150 HANO housing units that HUD sampled met HUD housing quality standards; (3) although HANO has over $200 million in unspent modernization grants that have accumulated over the past decade, its housing units continue to deteriorate and unit vacancies remain at over 25 percent; (4) the HANO board of commissioners has not effectively governed HANO and has interfered with its day-to-day operations, hiring, and contracting; (5) this interference has slowed HANO management improvements, prevented its staff from performing effectively, and resulted in the cancellation of modernization contracts; (6) HUD and its New Orleans Field Office have not helped to improve HANO operations; (7) unsuccessful HUD attempts to correct HANO mismanagement have included punitive actions, imposing private management, and limiting the board of commissioners' authority; (8) in 1994, HUD entered into a partnership with New Orleans to avoid a federal takeover of HANO, hold local officials responsible for HANO performance, and improve management and housing conditions; and (9) in February 1996, HUD declared HANO in breach of its contract and entered into a new partnership with New Orleans.