Public Housing:

Converting to Housing Certificates Raises Major Questions About Cost

RCED-95-195: Published: Jun 20, 1995. Publicly Released: Jun 29, 1995.

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Pursuant to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) legislative proposal to convert its public housing program to a certificate program, focusing on: (1) the cost implications of transitioning from the current public housing program to a housing certificate program; and (2) key factors that may affect HUD plans to provide greater housing choices for public housing residents.

GAO found that: (1) based on an analysis of average costs, HUD believes that housing certificates will cost less than funding public housing developments; (2) there are wide differences in the cost of the two options at individual housing developments; (3) the certificate program would cost less for developments in good shape, but for those housing developments in the worst physical condition, direct funding is less costly; (4) the variations in costs raise important issues, including whether the federal government should pay for the rehabilitation of public housing developments and the added costs of certificates, and whether housing certificates should be targeted initially to developments where they are clearly cost-effective; (5) HUD has not performed the detailed analysis that is needed to provide information for deciding these issues; and (6) factors that will influence residents' actual housing choices include the current tenants' characteristics, their inclination to move, the availability of affordable housing, private landlords' willingness to accept tenants with housing certificates, and HUD compliance with and enforcement of housing discrimination laws.

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