Federal Housing Programs: What They Cost and What They Provide

In fiscal year 1999, the federal government provided housing assistance to about 5.2 million renter households at a cost of about $28.7 billion in outlays and tax credits. Of this amount, more than $15 billion supported housing units developed under production programs that no longer receive appropriations to produce new or rehabilitated units. This report focuses on six programs that continue to increase the number of households assisted by the federal government: the housing voucher program, which is the largest source of federal funds for housing assistance, and five production programs, that now receive federal funds to produce new or rehabilitate units. GAO found that production programs are more expensive than housing vouchers. GAO estimates that the total per-unit costs for housing production programs are from 32 to 59 percent greater than for housing vouchers in the first year and from 12 to 27 percent greater over 30 years. If costs were the only consideration, the production programs reviewed in this report should have been replaced with vouchers. However, in many markets, production programs are the only sources of new affordable rental units, and use restrictions will keep these units affordable for decades to come, limiting the impact of market forces on the supply of affordable units. There are also substantial differences in the housing and services provided under each of the production programs that must be considered. Finally, in many urban areas, the production programs have formed an integral part of an overall community development strategy. As a matter of public policy, the benefits of increasing the supply of affordable units, providing additional services for special needs populations, and revitalizing distressed communities must be weighed against the alternative benefits of serving more households at a lower average cost through vouchers.