Use of Housing Subsidies

GAO discussed the Department of Housing and Urban Development's (HUD) Section 8 Moderate Rehabilitation Program, focusing on: (1) its analysis of one project; and (2) the financial ramifications and the associated impact on low-income families of using the program and tax credits. GAO noted that: (1) the developer used subsidies under the program and tax credits to generate substantial cash flows; (2) there were no standards or guidelines governing the amount of proceeds a developer could realize above the cost of acquiring and rehabilitating section 8 properties; and (3) at the project it reviewed, HUD could have assisted another 259 households at the same funding level. GAO also noted that: (1) program changes limited the amount of subsidies allowed and their use; and (2) recent legislative changes placed greater responsibility on state credit-allocation agencies and prohibited the use of tax credits in conjunction with the section 8 program.