Estimating Preservation Program's Cost

Pursuant to a congressional request, GAO examined the Department of Housing and Urban Development's (HUD) computer model for estimating its low-income housing preservation program costs, focusing on the model's ability to make reliable annual budget estimates for the preservation program. GAO noted that: (1) the model cannot reliably estimate the program's annual funding needs, primarily because it cannot predict when project owners will apply for preservation incentives and how long it will take HUD to process these applications; (2) the model's overall design, data, and key assumptions are reasonable and well founded; (3) because of the model's limitations, HUD has relied more on actual program experience to estimate annual budget costs; and (4) it could not determine whether use of the budget estimation process based on actual program experience resulted in more realistic cost estimates because information on actual costs for fiscal years 1994 and 1995 was not available.