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entitled 'Elderly Housing: Project Funding and Other Factors Delay
Assistance to Needy Households' which was released on June 17, 2003.
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Report to the Special Committee on Aging, U.S. Senate:
May 2003:
Elderly Housing:
Project Funding and Other Factors Delay Assistance to Needy Households:
GAO-03-512:
GAO Highlights:
Highlights of GAO-03-512, a report to Special Committee on Aging, U.S.
Senate
Why GAO Did This Study:
According to the Department of Housing and Urban Development (HUD),
the most widespread and urgent housing problem facing elderly
households is affordability. About 3.3 million elderly renter
households in the United States have very low incomes (50 percent or
less of median area income). The Section 202 Supportive Housing for
the Elderly Program provides capital advances (grants) to nonprofit
organizations to develop affordable rental housing exclusively for
these households. GAO was asked to determine the role of the Section
202 program in addressing the need for affordable elderly housing and
the factors affecting the timeliness of approving and constructing new
projects.
What GAO Found:
HUD’s Section 202 program provides a valuable housing resource for
very low income elderly households. Although they represent a small
share of all elderly households, very low income elderly renters have
acute housing affordability problems because of their limited income
and the need for supportive services. The Section 202 program, which
offers about 260,000 rental units nationwide and ensures that
residents receive rental assistance and access to services that
promote independent living, is the only federal program devoted
exclusively to providing this type of housing. However, even with the
program’s exclusive focus, Section 202 has reached only about an
estimated 8 percent of very low income elderly households.
About three-quarters of Section 202 projects in GAO’s analysis did not
meet HUD’s time guideline for gaining approval to start construction.
These delays held up the delivery of housing assistance to needy
elderly households by nearly a year compared with projects that met
HUD’s guideline. Several factors contributed to these delays, in
particular capital advances that were not sufficient to cover
development costs. Project sponsors reported that insufficient capital
advances often forced them to spend time seeking additional funds from
HUD and other sources. Although HUD’s policy is to provide sufficient
funding to cover the cost of constructing a modestly designed project,
HUD has acknowledged that its capital advances for the Section 202
program sometimes fall short. Other factors affecting the timeliness
of the approval process include inadequate training and guidance for
field staff responsible for the approval process, inexperienced
project sponsors, and local zoning and permit requirements.
What GAO Recommends:
GAO is making recommendations to reduce the time required for projects
to receive approval from HUD to start construction. Specifically, GAO
is recommending that HUD assess the effectiveness of the methods it
uses to calculate the size of the Section 202 capital advances and
make any appropriate changes to them. GAO is also making other
recommendations to improve HUD’s administration and oversight of the
202 program’s performance.
GAO provided a draft of this report to HUD for comment. HUD agreed
with the report’s conclusions and recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-512.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact David G. Wood at
(202) 512-8678 or WoodD@gao.gov.
[End of section]
Letter:
Results in Brief:
Background:
Section 202 Is an Important Source of Housing for Elderly Households
with Very Low Incomes:
Section 202 Projects Reviewed Generally Did Not Meet Guidelines for
Timeliness:
Various Factors Can Impede the Timely Processing of Projects:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Budget Information for the Section 202 Program:
Section 202 Appropriations:
Section 202 Unexpended Balances:
Appendix III: Data Issues Concerning the American Housing Survey:
Appendix IV: Federal Housing Programs and the Elderly:
Housing Production Programs That Develop Elderly Housing:
Target Households:
Annual Housing Production Levels:
Appendix V: Section 202 Program Data:
Appendix VI: Survey of HUD Field Office Representatives:
Appendix VII: Survey of Section 202 Sponsors and Consultants:
Appendix VIII: Comments from the Department of Housing and Urban
Development:
Tables:
Table 1: HUD Income Categories:
Table 2: Field Office Performance in Approving Projects for
Construction within 18 and 24 Months:
Table 3: Field Office Performance and Problems with Funding
Issues:
Table 4: Annual Appropriations for the Housing for Special
Populations Account in Fiscal Years 1998-2002:
Table 5: Annual Balances of Unexpended Appropriations for
Section 202 in Fiscal Years 1998-2002:
Table 6: Housing Units Occupied by Homeowner and Renter
Elderly Households in 2001:
Table 7: Income Categories for Elderly Homeowner and Renter
Households in 2001:
Table 8: Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in 2001:
Table 9: Moderate or Severe Rent Burden of Unassisted Very Low
Income Elderly Renter Households by Region in 2001:
Table 10: Number of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in
Metropolitan Areas in 2001:
Table 11: Proportion of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in
Metropolitan Areas in 2001:
Table 12: Number of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in
Nonmetropolitan Areas in 2001:
Table 13: Proportion of Elderly Renter Households with Very Low
Incomes by Subsidy Status and Rent Burden in
Nonmetropolitan Areas in 2001:
Table 14: Active Federal Rental Housing Production and Insurance
Programs by Household Type Served and Program Rent
Levels:
Table 15: Approximate Volume of New Production of Housing Units
by Active Federal Rental Housing Programs:
Table 16: Distribution of Section 202 Projects, Capital Advance
Funds, and PRAC Funds, by Fiscal Year and Construction
Approval Status:
Table 17: Status of Metropolitan and Nonmetropolitan Projects in
Gaining Construction Start Approval, Projects Funded in
Fiscal Years 1998 to 2000:
Table 18: Field Office Performance in Approving Projects to Start
Construction, All Projects Funded in Fiscal Years 1998 to
2000:
Table 19: Field Office Performance in Approving Metropolitan
Projects to Start Construction, All Metropolitan Projects
Funded in Fiscal Years 1998 to 2000:
Table 20: Field Office Performance in Approving Nonmetropolitan
Projects to Start Construction, All Nonmetropolitan
Projects Funded in Fiscal Years 1998 to 2000:
Table 21: Average Duration of Stages of Section 202 Project
Development, Projects Funded Fiscal Years 1998 to 2000
That Were Approved to Start Construction:
Table 22: Factors Cited by HUD in Approved Time Extensions for
Section 202 Projects Funded in Fiscal Years 1998 to
2000:
Figures:
Figure 1: U.S. Homeowners and Renters in 2001:
Figure 2: Housing Cost Burdens of Very Low Income Elderly
Renter Households in 2001:
Figure 3: Units Developed under Section 202 Compared with All
Units Occupied by Very Low Income Elderly Renter
Households, 1985 to 2001:
Figure 4: Section 202 Project Processing:
Figure 5: Average Elapsed Time for Completed Section 202
Projects Funded in Fiscal Years 1998 and 1999:
Figure 6: Section 202 Unexpended Fund Balances as of End of
Fiscal Year End 2002:
Figure 7: Survey Responses—Insufficient Capital Advances and
Other Project Funding Issues:
Figure 8: Survey Responses—Field Office Staff Issues:
Figure 9: Survey Responses—HUD Program Administration
Issues:
Abbreviations:
AHS: American Housing Survey:
AMI: area median income:
BMIR: below-market interest rate:
DAP: Development Application Processing System:
FHA: Federal Housing Administration:
HFA: housing finance agencies:
HUD: Department of Housing and Urban Development:
PRAC: project rental assistance contract:
REMS: Real Estate Management System:
Letter
May 30, 2003:
The Honorable Larry Craig
Chairman
The Honorable John Breaux
Ranking Minority Member
Special Committee on Aging
United States Senate:
According to the Department of Housing and Urban Development (HUD), the
most widespread and urgent housing problem facing elderly households is
affordability--that is, finding housing that is not too expensive
relative to household income.[Footnote 1] In 2001, there were about 26
million households nationwide in which the householder or householder's
spouse was 62 years or older.[Footnote 2] Of these elderly households,
about 3.3 million were renters with very low incomes, which HUD defines
as 50 percent or less of area median income. The Section 202 Supportive
Housing for the Elderly Program (the Section 202 program) provides
funds to nonprofit organizations to develop affordable rental housing
exclusively for very low income elderly households that are not
receiving other forms of housing assistance. In fiscal year 2002, the
Section 202 program received about $783 million in appropriations to
fund, among other things, the construction of over 6,000 rental units.
The Section 202 program provides two types of financial support to
nonprofit sponsors that develop and operate projects. First, project
sponsors receive a capital advance, or a grant, to cover land and
construction costs for projects of modest design that comply with HUD's
minimum property standards. HUD determines the amounts of capital
advances using its published development cost limits, adjusted for
areas with high construction costs. HUD's policy is to have the capital
advance cover total development costs without the need for sponsors to
obtain additional funding from other sources. Second, after the project
is completed and elderly tenants move in, the sponsor receives monthly
rental assistance payments to defray some of the operating expenses.
The combination of a debt-free project and rental assistance payments
enables project sponsors to offer units at rents that are generally
equal to 30 percent of the renter's income. Section 202 also has
requirements to ensure that sponsors make the appropriate supportive
services, such as housekeeping and transportation, available to elderly
tenants.
Each year HUD announces the availability of Section 202 funds.
Potential project sponsors submit their applications for these funds to
HUD's field offices. An application includes the description of the
sponsor's nonprofit status, past experiences in providing housing and
supportive services, and the housing needs of the elderly in the market
area to be served. Once the applications are ranked according to
criteria published in the Federal Register, field offices make their
selection recommendations to HUD headquarters. If HUD headquarters
approves these recommendations, HUD reserves funds for these proposed
projects and sends notification letters to project sponsors. Between
the time HUD sends notification letters and approves the start of
construction, the sponsors' must complete, and HUD must approve, design
plans and other documentation. These actions are referred to as project
processing. Generally, 45 of HUD's 81 field offices are responsible for
processing Section 202 projects.
HUD's guidelines stipulate that HUD field offices and project sponsors
should complete project processing within 18 months of the date the
funding is awarded.[Footnote 3] However, the field offices may grant
extensions of up to 6 months. Delays in processing hold up the
distribution of funds and contribute to the program's annual unexpended
balances.[Footnote 4] Between fiscal years 1998 and 2002, for example,
the program's unexpended balances increased from about $4.8 billion to
$5.2 billion. Delays in processing also hinder efforts to provide much-
needed housing to very low income elderly renter households.
This report addresses the role of the Section 202 program in responding
to the housing affordability needs of elderly renter households with
very low incomes and the program's timeliness in processing projects
for construction and expending appropriated funds. As agreed with your
offices, our report discusses: (1) the role of the Section 202 program
in meeting the housing needs of elderly renter households with very low
incomes, (2) the extent to which Section 202 projects meet HUD's time
guideline for project processing, and (3) the factors that keep Section
202 projects from meeting HUD's time guideline for project processing.
To address these objectives, we analyzed data from the American Housing
Survey and other sources on the affordability of rental housing for
very low income elderly households and the levels of assistance the
Section 202 program provides.[Footnote 5] In addition, we reviewed HUD
program and budget data, surveyed all HUD field offices that process
Section 202 projects, conducted site visits at selected offices,
surveyed and interviewed project sponsors and consultants experienced
in working with the Section 202 program, and observed a HUD training
program on processing Section 202 projects. Unless stated otherwise,
our analysis focused on Section 202 projects funded between fiscal
years 1998 and 2000. Lack of reliable program data prevented us from
reviewing all Section 202 projects funded before fiscal year 1998.
Appendix I provides detailed information on our scope and methodology.
We conducted our work primarily in Washington, D.C., between May 2002
and March 2003, in accordance with generally accepted government
auditing standards.
Results in Brief:
As the only federal housing program that targets all of its rental
units to very low income elderly households, Section 202 is an
important source of affordable housing for these households. Because
very low income elderly households often have difficulty affording
market rents, program funding is directed to localities based in part
on their proportions of elderly renter households that have a housing
affordability problem--that is, that pay over 30 percent of their
income for rent. Nationwide, about half of the 3.3 million elderly
renter households with very low incomes have a housing affordability
problem and do not receive government housing assistance. Section 202
insulates tenants in housing units subsidized by the program from
increases in housing costs by limiting rents to 30 percent of household
income. Section 202 provided housing for an estimated one-fifth of the
1.3 million renter households that received government housing
assistance. Even with the program's exclusive focus on these
households, Section 202 has reached less than 8 percent of eligible
households. And though some other federal programs provide more rental
housing for the elderly, they do not focus exclusively on the very low
income group.
More than 70 percent of Section 202 projects funded between 1998 and
2000 were delayed--that is, these projects took longer than the 18
months set out in HUD's guidelines to proceed from the date of the
funding award to the date of HUD's approval to start construction.
However, a majority of projects were approved for construction within
24 months, or 18 months plus the 6-month discretionary extension.
Projects located in metropolitan areas were more than twice as likely
as projects in nonmetropolitan areas to exceed the 18-month guideline.
Further, projects that exceeded the 18-month guideline ultimately took
an average of 11 months longer to finish than projects that met the
time guideline, and these delayed projects contributed to the program's
unexpended fund balances. At the end of fiscal year 2002, 14 percent of
the Section 202 program's $5.2 billion in unexpended funds was
associated with projects that had not yet been approved for start of
construction after 18 months.
Several factors impeded the timely processing of projects, according to
project sponsors, consultants, and HUD field office staff. First,
despite HUD's development cost policy, the capital advances that HUD
awards do not always cover the cost of developing projects. Field
offices, sponsors, and consultants reported that this factor often
prolonged processing time, in part because sponsors needed to seek
additional funding. We found that field offices that cited capital
advance shortfalls and the need for sponsors to seek outside funding
were less likely to have met the 18-month processing time guideline,
compared with field offices that did not report these problems. Second,
field offices, sponsors, and consultants reported that inconsistent
implementation of procedures HUD adopted to streamline processing by
field office staff, as well as limited training and out-of-date
guidance on processing policies and procedures, impeded timely
processing. Third, prolonged response times from HUD headquarters on
requests for additional funds or time have affected processing times,
according to project sponsors and consultants and HUD field offices.
Fourth, HUD's project monitoring system has limitations that may impede
HUD's ability to oversee project timeliness. Finally, field offices,
sponsors, and consultants reported that other factors--including
inexperienced sponsors and local requirements in areas such as
permitting and zoning--negatively affected processing time for some
projects.
This report contains recommendations to the Secretary of HUD designed
to improve both the timeliness of project processing and program
oversight.
Background:
Elderly households occupied about 25 percent (26 million) of the
approximately 106 million housing units in the U.S. in 2001, according
to the Housing Survey. A large majority of these elderly households
were homeowners. The homeownership rate was considerably higher for
elderly households than for nonelderly households (fig.1). A smaller
share of elderly households (19 percent) rented their homes. These
elderly renter households comprised about 15 percent of all renter
households nationwide.
Figure 1: U.S. Homeowners and Renters in 2001:
[See PDF for image]
[End of figure]
The Housing Act of 1959 (P.L. 86-372) established the Section 202
program, which began as a direct loan program that provided below-
market interest rate loans to private nonprofit developers, among
others, to build rental housing for the elderly and people with
disabilities. In 1990, the Cranston-Gonzalez National Affordable
Housing Act (P.L. 101-625) modified Section 202 by converting it from a
direct loan program into a capital advance program. In addition, the
1990 act created Section 811, another capital advance program, to
produce housing specifically for people with disabilities and limited
Section 202 to housing for the elderly.
In its current form, Section 202 provides capital advances--effectively
grants--to private nonprofit organizations (usually referred to as
sponsors or owners) to pay for the costs of developing elderly rental
housing. As long as rents on the units remain within the program's
guidelines for at least 40 years, the sponsor does not have to pay back
the capital advance. HUD calculates capital advances in accordance with
development cost limits that it determines annually. These limits must
account for several factors, including the costs of construction,
reconstruction, or rehabilitation of supportive housing for the elderly
that meets applicable state and local housing and building codes. HUD
must, by statute, use current data that reflect these costs for each
market area.[Footnote 6] HUD's policy is that these limits should cover
the reasonable and necessary costs of developing a project of modest
design that complies with HUD's minimum property standards,
accessibility requirements, and project design and cost standards. Once
HUD calculates a capital advance, the amount is placed on reserve, and
the funds are made available to the sponsor.[Footnote 7]
To be eligible to receive Section 202 housing assistance, tenants must
have (1) one household member who is at least 62 years old and (2)
household income that does not exceed the program's income limits. HUD
has established general income categories that it and other federal
agencies use to determine eligibility for many federal rental housing
assistance programs (table 1).[Footnote 8] These amounts are subject to
adjustments in areas with unusually high or low incomes or housing
costs and are published. Only very low income households--those with
incomes below 50 percent of the area's median income--are eligible for
the Section 202 program.
Table 1: HUD Income Categories:
Income category: Low income; Percent of area median income: 80%.
Income category: Very low income; Percent of area median income: 50%.
Income category: Extremely low income; Percent of area median income:
30%.
Source: HUD.
Note: HUD does not officially refer to this category as "extremely low
income," but the term is commonly used by housing experts to describe
households that have incomes that do not exceed 30 percent of area
median income.
[End of table]
Very low income households in Section 202 projects generally pay 30
percent of their income for rent. Because tenants' rent payments are
not sufficient to cover the property's operating costs, the project
sponsor receives an operating subsidy from HUD, called a project rental
assistance contract. Under the project rental assistance contract, HUD
pays the difference between the property's operating expenses (as
approved by HUD) and total tenant rental receipts.[Footnote 9] Section
202 rental assistance is a project-based subsidy and, as such, is tied
to rental units. The households receiving assistance can benefit from a
project-based subsidy only while living in Section 202 units.
For fiscal year 2002, Congress appropriated about $783 million for the
Section 202 program to fund the construction of over 6,000 new units as
well as new multiyear rental assistance contracts, service
coordinators, renewals of expiring rental assistance contracts, and
other activities as authorized by Section 202. From year to year, the
Section 202 program has carried balances of unexpended appropriated
dollars. According to HUD, in fiscal year 2002, the unexpended balance
for Section 202 was approximately $5.2 billion. About 41 percent of
this balance was for capital advance funds and 59 percent for rental
assistance funds. Generally, some of the program's unexpended funds
have not yet been awarded to projects, and others are attributable to
projects that have not begun construction. Once construction begins,
funds are expended over several years during the construction phase and
during the term of the project rental assistance contract. See appendix
II for additional budgetary data for the Section 202 program.
Section 202 Is an Important Source of Housing for Elderly Households
with Very Low Incomes:
Section 202 is the only federal housing program that targets all of its
rental units to very low income elderly households. Because these
households often have difficulty affording market rents, program
funding is directed to localities based in part on their proportions of
elderly renter households that have a housing affordability problem--
that is, that pay over 30 percent of their income for rent and do not
receive housing assistance. Nationwide, about 1.7 of the 3.3 million
elderly renter households with very low incomes have a housing
affordability problem. Section 202 insulates tenants in housing units
subsidized by the program from increases in housing costs by limiting
rents to 30 percent of household income. The program is a significant
source of new and affordable housing for very low income elderly
households: in 2001, 1.3 million such households received government
housing assistance (about 40 percent of the total), and Section 202
provided housing for roughly one-fifth of them. Even with the program's
exclusive focus on the very low income elderly, Section 202 has reached
only a small share of eligible households. Though some other federal
programs provide more housing for the elderly, they do not focus
exclusively on these renter households.
Section 202 Targets Very Low Income Elderly Households and Makes
Supportive Services Available:
Congress specifically intended the Section 202 program to serve very
low income elderly households and to expand the supply of affordable
housing that can accommodate the special needs of this group.[Footnote
10] HUD takes into account the level of need for the kind of housing
Section 202 provides when allocating program funds to the field
offices. Thus, the criteria for allocating funds to the offices
include, among other things, the total number of very low income
elderly renters in the area and the number in this group that pay more
than 30 percent of their incomes for rent.
HUD's allocation formula takes into account the amount of rent
households pay in relation to their income. According to the American
Housing Survey, in 2001 about 1.7 million households paid over 30
percent of their income for rent.[Footnote 11] HUD classified the "rent
burden" these households face as either "moderate"--between 31 and 50
percent of household income--or "severe"--more than 50 percent of
household income. As figure 2 illustrates, about 35 percent (over 1
million) of all elderly renter households with very low incomes had
severe rent burdens, and about 15 percent (about 500,000) had moderate
rent burdens.[Footnote 12] For detailed data on housing needs of these
households, including data for metropolitan and nonmetropolitan areas,
see appendix III.
Figure 2: Housing Cost Burdens of Very Low Income Elderly Renter
Households in 2001:
[See PDF for image]
Note: Other includes households that reported zero or negative income
or no rent burden.
[End of figure]
Since Section 202 provides projects with rental assistance payments
that cover a portion of the rent for each unit, the tenants themselves
pay rents that equal a percentage of their household incomes--generally
30 percent. This percentage remains constant, so the amount of rent
tenants pay increases only when household income rises, protecting them
from rent increases that might be imposed in the private housing market
when, for example, market conditions change. In contrast, low income
elderly renter households that do not receive this type of assistance-
-especially those with very low incomes--are vulnerable to high rent
burdens and increases in housing costs. Most of these households have
few or no financial resources, such as cash savings and other
investments, and rely primarily on fixed incomes that may not increase
at the same rate as housing costs.
Section 202 serves another important function, potentially allowing
households to live independently longer by offering tenants a range of
services that support independent living--for example, meal services,
housekeeping, personal assistance, and transportation. HUD ensures that
sponsors have the managerial capacity to assess residents' needs,
coordinate the provision of supportive services, and seek new sources
of assistance to ensure long-term support. HUD pays a small portion of
the costs of providing these services through its rental assistance
payments.[Footnote 13]
Section 202 Provides an Estimated One-fifth of All Government-
subsidized Housing for Very Low Income Elderly Renters:
Section 202 is an important source of housing for elderly households
with very low incomes.[Footnote 14] Between 1998 and 2001, Section 202
approved the construction of from 3,890 to 7,350 assisted units
annually, for an average of about 5,690 units. According to the
American Housing Survey, in 2001 about 1.3 million, or 40 percent, of
elderly renter households with very low incomes received some form of
rental assistance in 2001 from a government housing program, including
Section 202, public housing, or housing vouchers (fig. 2).[Footnote 15]
According to our analysis of HUD program data, about 260,000 Section
202 units with rental assistance contracts (assisted units) generally
served very low income elderly households through 2001. Taken together,
these two sources of data suggest that around one-fifth of
the 1.3 million assisted households identified in the American Housing
Survey received assistance from Section 202.[Footnote 16]
Although Section 202 is an important source of affordable elderly
housing, the program reached a relatively small fraction of very low
income elderly renter households. Between 1985 and 2001 the number of
units assisted under the Section 202 program grew by about 4 percent
annually, while the number of very low income elderly renter households
declined by almost 1 percent annually. Yet at any given point in this
period, Section 202 had reached no more than about 8 percent of these
households that were eligible for assistance under the program (fig.
3). Also, during this period, many of these elderly renter households
with very low incomes--ranging from about 45 to 50 percent--had housing
affordability problems.
Figure 3: Units Developed under Section 202 Compared with All Units
Occupied by Very Low Income Elderly Renter Households, 1985 to 2001:
[See PDF for image]
[End of figure]
Other federal programs that develop rental housing generally target
different income levels, serve other populations in addition to the
elderly (including families with children and people with disabilities)
and do not require housing providers to offer supportive services for
the elderly. For example, the Low-Income Housing Tax Credit Program,
the largest of all current production programs, subsidizes the
construction of about 86,000 units annually. However, according to one
source, only around 13,200 of these units are intended for the elderly-
-and, unlike Section 202, not all of these units serve very low income
elderly renter households.[Footnote 17] In addition, these programs
also do not have specific requirements ensuring that supportive
services be available to elderly tenants. Appendix IV provides
additional information on other federal housing programs.
Section 202 Projects Reviewed Generally Did Not Meet Guidelines for
Timeliness:
According to HUD policy, Section 202 projects should complete project
processing and be approved to start construction within 18 months after
they are funded. Overall, 73 percent of Section 202 projects funded
between fiscal years 1998 and 2000 did not meet this processing time
guideline. However, about 55 percent of the projects were approved
within 24 months. Projects located in metropolitan areas were about
twice as likely as projects in nonmetropolitan areas to take more than
18 months to be approved. The percentage of projects approved within
the specified time frame differed widely across HUD's field offices,
with field offices located in the northeast and west approving the
lowest percentages. As well as taking longer to complete than other
projects--thus delaying benefits to very low income elderly tenants--
projects that were not approved for construction after the 18-month
time frame accounted for 14 percent of the Section 202 program's
balance of unexpended appropriations.
HUD Expects Projects to Be Approved to Start Construction within 18
Months:
Once HUD has made a funding award for a Section 202 project, HUD field
office staff and project sponsors must complete various tasks,
meetings, and paperwork before construction can commence (fig. 4). In
this report, we refer to the tasks that take place between (1) the date
when HUD sends a funding award letter to the sponsor and (2) the date
that HUD authorizes the sponsor both to begin construction and to start
drawing down the capital advance amount (initial closing) as project
processing. The duration of the project processing period depends, in
part, on project sponsors' timeliness in submitting the required
documentation to HUD's field office reviewers. For example, sponsors
must create owner corporations, hire consultants, obtain local permits
and zoning approval, and design architectural and cost plans, among
other things. HUD field offices must review all documentation before
projects can be approved for construction.
Figure 4: Section 202 Project Processing:
[See PDF for image]
[End of figure]
As figure 4 illustrates, HUD's current time guideline for project
processing is 18 months. Individual field offices have the discretion
to extend processing for up to 6 more months without approval from HUD
headquarters, but all extensions beyond those additional 6 months (that
is, 24 months after the funding award) require approval from
headquarters. After construction is authorized to begin, HUD gradually
expends capital advance funds to cover development costs incurred by
the sponsor. When construction is completed, HUD approves the final
costs, and sponsors can begin leasing to eligible tenants. Over time,
sponsors draw down funds from the reserved rental assistance amounts to
support operating costs.
To help assure that field office staff and project sponsors could
complete project processing requirements within the 18-month time
guideline, HUD adopted changes in 1996 that were intended to streamline
procedures.[Footnote 18] One of the key changes included requiring
field office staff to accept sponsor-provided certifications of
architectural plans, cost estimates, and land appraisals. Previously,
field office staff performed detailed technical reviews of these items.
According to HUD policy, these streamlined procedures should have been
used to process all projects in our analysis, which were funded between
fiscal years 1998 and 2000.
HUD Took Longer Than 18 Months to Approve Most Projects for
Construction:
Most Section 202 projects that received funding awards did not receive
approval to begin construction within the 18-month guideline set out by
HUD. Altogether, 73 percent of projects funded from fiscal years 1998
through 2000 did not meet the 18-month guideline. These projects
accounted for 79 percent of the nearly $1.9 billion in funding awarded
to projects during this period. The percentage of projects exceeding
the guideline remained relatively stable over the years at around 72
percent (fiscal year 1998) to 75 percent (fiscal year 2000). During
this period, the projects located in metropolitan areas (72 percent of
all projects) were about twice as likely as projects in nonmetropolitan
areas to exceed the 18-month guideline (see app. V for more
detail).[Footnote 19]
HUD field offices may grant up to 6-month extensions after the 18-month
guideline for projects needing more time to gain approval to start
construction, and many projects were approved within that 6-month time
frame. HUD approved 55 percent of the projects funded from fiscal years
1998 through 2000 for construction within 24 months of the funding
award--27 percent within 18 months and 28 percent within 19 to 24
months. The remaining 45 percent of projects took more than 24 months
to be approved. In addition, metropolitan projects were about twice as
likely as nonmetropolitan projects to take more than 24 months to gain
approval to start construction.
Field Offices' Performance in Meeting the Time Guideline Varied:
We looked at the performance of the 45 individual HUD field offices
that process Section 202 projects and found that they had varying
degrees of success in meeting the 18-month guideline. We evaluated
their performance by estimating the percentage of projects approved for
construction (project approval rate) within 18 months for each field
office. Among these offices, the median project approval rate for
construction within 18 months was 22 percent (table 2), but field
offices' performance varied widely. Eight field offices had no projects
that met the 18-month guideline, while more than 90 percent of projects
at one office did (see app. V for a breakdown of approval rates by
field office). Field offices' performance varied by region, with those
located in the northeast and west being least likely to approve
projects within 18 months of the funding award. Table 2 also shows the
rate of projects approved within 24 months.
Table 2: Field Office Performance in Approving Projects for
Construction within 18 and 24 Months:
Median project approval rate for field offices:
All field offices; Median project approval rate for field offices:
Within 18 months: 22%; Within 24 months: 60%.
Offices in northeast; Median project approval rate for field offices:
Within 18 months: 9%; Within 24 months: 36%.
Offices in west; Median project approval rate for field offices: Within
18 months: 15%; Within 24 months: 41%.
Offices in south; Median project approval rate for field offices:
Within 18 months: 34%; Within 24 months: 71%.
Offices in midwest; Median project approval rate for field offices:
Within 18 months: 29%; Within 24 months: 71%.
Source: GAO analysis of HUD's Development Application Processing (DAP)
System, December 2002.
Note: The Puerto Rico field office is included in the median
calculation for all field offices, but it is not part of any region,
according to the Bureau of the Census definition.
[End of table]
Delayed Projects Affect the Program's Production Times and
Expenditures:
Meeting processing time guidelines is important because most of the
delays in total production time--that is, the time between funding
award and construction completion--stem from the project processing
phase. When we compared the average total production times for
completed projects that did not meet HUD's 18-month processing
guideline and those that did, the delayed projects took 11 months
longer than other projects to proceed from funding award to
construction completion (fig. 5). Since the average time taken for the
construction phase was very similar for all projects, most of the 11-
month difference in total production time was attributable to the extra
10 months that delayed projects took to complete the processing phase.
Figure 5: Average Elapsed Time for Completed Section 202 Projects
Funded in Fiscal Years 1998 and 1999:
[See PDF for image]
Note: Projects funded in fiscal year 2000 are excluded from this
analysis because no delayed projects had completed construction.
[End of figure]
Delayed processing of Section 202 projects also affected the Section
202 program's overall balances of unexpended appropriations. At the end
of fiscal year 2002, for example, HUD had a total of $5.2 billion in
unexpended Section 202 funds (fig. 6). A relatively small part of these
unexpended funds--about 14 percent--was attributable to projects that
had not yet been approved to start construction, even though they had
exceeded HUD's 18-month processing time guideline. Consequently, none
of the funds reserved for these projects had been expended. By
contrast, the remaining 86 percent of unexpended funds were associated
with projects for which HUD was in the process of expending funds for
construction or rental assistance. For example, almost half of the
unexpended balances--about 48 percent--resulted from projects that had
already been completed but were still drawing down their rental
assistance funds as intended under the multiyear project rental
assistance contract between HUD and the project sponsor. (For
additional details on unexpended fund balances, see app. II.):
Figure 6: Section 202 Unexpended Fund Balances as of End of Fiscal Year
2002:
[See PDF for image]
Note: Other includes projects under construction and funding for other
program purposes.
[End of figure]
Various Factors Can Impede the Timely Processing of Projects:
Our review of projects funded from fiscal years 1998 through 2000 shows
that several factors can prevent Section 202 projects from meeting the
18-month processing time guideline, including: issues related to
capital advances, field office practices and the training and guidance
that HUD has provided to field office staff, and HUD's program
administration and oversight. First, despite HUD's intent, capital
advances were not always sufficient to meet development costs.
According to some sponsors and consultants, this factor often led
sponsors to seek funding from other sources, including other HUD
programs, which takes time. Second, some field offices, sponsors, and
consultants reported that some field office staff had not fully
implemented HUD's streamlined processing procedures and that HUD had
offered only limited training and guidance to field office staff on
processing policies and procedures. Third, additional time was needed
for cases in which HUD headquarters responded to project sponsors'
requests for additional funds or processing time. Fourth, limitations
in HUD's project monitoring system impeded its ability to oversee
project processing. Finally, factors external to HUD, such as sponsors'
level of development experience and requirements established by local
governments, also hindered processing.
Insufficient Capital Advances Caused Some Sponsors to Seek Other
Funding:
Although HUD policy intends for capital advances to fund the cost of
constructing a modestly designed project, capital advances have not
always been sufficient to cover these expenses.[Footnote 20] HUD field
staff, project sponsors, and consultants reported that program limits
on capital advances often kept projects from meeting HUD's time
guideline for approving projects for construction. Most field offices,
and every sponsor and consultant that we surveyed, reported that
insufficient capital advances negatively affected project processing
time, and a substantial majority of respondents indicated that this
problem occurred frequently (fig. 7). Many respondents also reported
that securing secondary financing to supplement the capital advance
amount often added to processing time. According to some sponsors and
consultants, the capital advance amounts set by HUD were often
inadequate to cover land, labor, and construction costs as well as fees
imposed by local government. As a result, sponsors had to seek
secondary financing from other federal, state, and local resources--
including other HUD programs--or redesign projects to cut costs, or
both. Some sponsors and consultants said that the search for secondary
financing could add months to the construction approval process because
funding application and award cycles for other programs varied and
because sponsors had to meet HUD's documentation requirements for every
additional funding source before the agency could authorize
construction.
Figure 7: Survey Responses--Insufficient Capital Advances and Other
Project Funding Issues:
[See PDF for image]
[End of figure]
HUD has recognized that the development cost limits it uses to
calculate capital advances have sometimes been inadequate and that, as
a result, a number of sponsors have had to seek additional funding to
construct their projects. According to a HUD official, the agency is
currently considering initiating a study to determine how to calculate
capital advances that can cover project development costs.
Our survey and program data showed that field offices that reported
problems with insufficient capital advances and sponsors securing
secondary financing had a lower percentage of projects that met the 18-
month time guideline than other offices (table 3).[Footnote 21] The
median percentage of projects meeting the 18-month guideline was much
lower for field offices that reported these problems than those that
did not. In addition, field offices in the northeast and west--the
regions with the lowest percentage of projects meeting the processing
time guideline (see table 2 above)--were more likely than those in the
south and midwest to report having problems with these factors.
Table 3: Field Office Performance and Problems with Funding Issues:
All field offices; Median rate of projects approved within 18 months:
22%.
Field offices that reported insufficient capital advances and problems
with sponsors obtaining secondary financing.
Both factors are problems; Median rate of projects approved within 18
months: 18%.
Neither factor is a problem; Median rate of projects approved within 18
months: 40%.
Source: GAO survey of HUD field offices and Section 202 sponsors and
consultants.
Note: Of the 44 field offices that responded to the survey, 25 reported
having problems with both factors and 15 reported having problems with
neither factor. Three field offices reported problems with only one of
the factors, and one field office did not respond to the questions.
[End of table]
Varying Field Office Practices and Inadequate Staff Training and
Guidance Affected Timely Processing:
Differences in the procedures field offices use to approve projects for
construction and the extent of staff training and experience affected
project processing time. For example, most consultants and sponsors in
our survey responded that the unwillingness of field office staff to
implement policy changes that HUD had adopted to streamline processing
caused delays, as did insufficient training for and inexperience of
field office staff (fig. 8). About 40 percent of them also reported
that these problems occurred frequently. In addition, some consultants
and sponsors whom we interviewed told us that some field offices
continued to conduct much more detailed and time-consuming technical
reviews of project plans than HUD's current policies require. These
sponsors and consultants said that field staff departing from program
guidelines caused confusion for sponsors about the type of information
HUD required and delayed the process of obtaining HUD's approval to
begin construction. A majority of HUD field office representatives also
reported that a lack of staff training and experience can have a
negative effect on processing time. However, HUD field office staff
regarded these problems, as well as staff unwillingness to implement
policy changes, as infrequent problems. HUD officials at headquarters
acknowledged that some field staff were performing technical reviews
contrary to program guidelines, but the officials did not know how many
staff were doing so.
Figure 8: Survey Responses--Field Office Staff Issues:
[See PDF for image]
[End of figure]
HUD has provided limited guidance for field office staff on processing
policies and procedures, which would ensure that all staff are up to
date on the most current guidelines and requirements. In 1999, HUD
headquarters issued a memorandum that reminded field office staff to
process projects in accordance with streamlined procedures that had
been adopted in 1996, such as replacing detailed technical review of
project plans by field office staff with sponsor-provided
certifications. Yet at the time of our review, most field office staff
had not received any formal training on Section 202 project processing.
According to HUD, in 2002, the agency required representatives from
each field office to attend the first formal training on project
processing for field office staff since at least 1992. Although HUD
headquarters expected those who attended to relay what they had learned
to other staff members in their own offices, our survey showed that by
November 2002 no on-site training had occurred at about a quarter of
the field offices. Also, only two field offices (5 percent) reported
that training was relayed in a formal setting.
We also found that HUD's field office staff was relying on out-of-date
program handbooks that did not reflect the streamlined processing
procedures.[Footnote 22] Although HUD stated that the agency intended
to issue revised handbooks in order to ensure that all field offices
follow current procedures, it had not yet done so at the time of our
review. Based on written comments in our survey, some field office
staff felt that an updated handbook would aid in the timely processing
of Section 202 projects.
Administrative and Oversight Weaknesses at HUD Headquarters Contributed
to Delays:
The time that HUD headquarters took to make certain administrative
decisions also added to the time taken to process Section 202 projects.
HUD headquarters must approve all requests for additional time to
complete processing beyond 24 months after funding award and for
additional capital advance funds. A HUD official noted that projects
must already have exceeded the 18-month time guideline, and the
discretionary 6-month extension, before HUD headquarters would be
called on to approve a request for a time extension beyond 24 months.
However, most of the field office representatives and project sponsors
and consultants in our survey agreed that the time HUD headquarters
took to make these decisions further prolonged processing time, with
many respondents reporting that this issue was a frequent problem (fig.
9).
Figure 9: Survey Responses--HUD Program Administration Issues:
[See PDF for image]
[End of figure]
Further, HUD's project monitoring system was not as effective as it
could have been and may have impeded HUD's oversight of project
processing. HUD officials stated that, to monitor project processing,
headquarters has periodically used its Development Application
Processing (DAP) system to identify projects that exceeded the 18-month
processing time guideline. In addition, the officials stated that
headquarters contacted field offices on a
quarterly basis to discuss the status of these delayed
projects.[Footnote 23] Nevertheless, HUD headquarters officials have
acknowledged that there are data inaccuracies in the DAP system, and
the agency has instituted efforts to improve the system's reliability
in identifying delayed projects. Furthermore, according to HUD, the DAP
system does not collect data that would allow both headquarters and
field office staff to follow a project through every stage of
development and, as a result, many field offices maintain their own
tracking systems to monitor projects through these stages. The lack of
reliable, centralized data on the processing of Section 202 projects
has limited HUD headquarters' ability to oversee projects' status,
determine problematic processing stages, and identify field offices
that might need additional assistance. HUD officials stated that
enhancing the DAP system is a priority, but that a lack of funding has
hindered such efforts.
Issues External to HUD Caused Some Delays:
Finally, other factors outside of HUD's direct control kept some
projects from meeting time guidelines. Ninety-five percent of field
office representatives and 90 percent of sponsors and consultants
surveyed reported that project processing time was negatively affected
when project sponsors were inexperienced. Nearly 60 percent of field
offices, and almost 40 percent of sponsors and consultants, indicated
that this problem occurred frequently. Local government requirements
also negatively affected project processing, according to about 60
percent of field offices and about 85 percent of sponsors and
consultants. About 35 percent of field offices and about 60 percent of
sponsors and consultants reported that these requirements were
frequently a problem. Also about 70 percent of field offices, sponsors,
and consultants reported that, specifically, the local zoning process
had a negative effect on project processing time, with about 40 percent
of field offices and about 50 percent of sponsors and consultants
indicating that this problem was frequent.
Most field offices, sponsors, and consultants reported that other
factors, such as community opposition and environmental issues,
affected processing times but were not frequent problems for Section
202 projects. Although about 50 percent of field offices, and about 60
percent of sponsors and consultants, reported that community opposition
had a negative effect on project processing time when it occurred, less
than 10 percent of field offices, and about 30 percent of sponsors and
consultants, reported such opposition to be a frequent problem. Also,
about 50 percent of field offices, sponsors, and consultants indicated
that environmental problems negatively affect processing when they
occur, but only about 20 percent of them considered environmental
problems to occur frequently. Appendixes VI and VII provides additional
details on the results of our survey of HUD field office staff,
sponsors, and consultants.
Conclusions:
The housing affordability problems of very low income elderly renter
households--although they represent a small share of all elderly
households--are particularly acute. These households represent one of
the more vulnerable populations in the nation given their small incomes
and need for supportive services. Considering the urgent housing needs
of the Section 202 program's target population, ensuring that its
projects are completed as soon as possible is critical. Delays in
timely Section 202 processing can prolong project completion, on
average, by nearly a year and result in higher balances of unexpended
funds. Awarding capital advances that are sufficient to cover project
development costs can alleviate delays by averting the need for
sponsors to seek secondary financing or request approval from HUD
headquarters for additional funding. While sufficient capital advance
funding for projects, absent additional appropriations, can result in
fewer units funded annually, it can also result in the prompt delivery
of housing assistance to needy households and in the reduction of
unexpended balances attributable to delayed projects. In addition,
issuing an updated program handbook and providing adequate formal
training can help in timely project processing by ensuring that staff
are accountable for applying and interpreting HUD policies and
procedures in a consistent manner. Finally, HUD's project monitoring
system, in its current form, is not as effective as it can be and may
hinder HUD's oversight. Maintaining reliable, centralized data on the
processing of Section 202 projects is essential to overseeing projects'
status as well as determining problematic processing stages.
Recommendations:
To reduce the time required for projects to receive approval to start
construction, we recommend that the Secretary of Housing and Urban
Development direct the Assistant Secretary for Housing to (1) evaluate
the effectiveness of the current methods for calculating capital
advances and (2) make any necessary changes to these methods, based on
this evaluation, so that capital advances adequately cover the
development costs of Section 202 projects consistent with HUD's project
design and cost standards. In addition, to improve the performance of
HUD field office and headquarters staff in processing projects in a
timely manner, we recommend that HUD:
* provide regular training to ensure that all field office staff are
knowledgeable of and held accountable for following current processing
procedures,
* update its handbook to reflect current processing procedures, and:
* improve the accuracy and completeness of information entered in the
DAP system by field office staff and expand the system's capabilities
to track key project processing stages.
Agency Comments and Our Evaluation:
We provided a draft of this report to HUD for its review and comment.
In a letter from the Assistant Secretary for Housing (see app. VIII),
HUD agreed with the report's conclusions, stating that the report
demonstrated an excellent understanding of the importance of the
Section 202 program in delivering affordable housing to very low income
elderly households. HUD also concurred with the recommendations and
provided information on how it intends to implement them. Regarding our
recommendations concerning HUD's capital advance formula, the agency
agreed that, in some locations, capital advances may be insufficient to
cover project development costs and that delays can result when
sponsors must seek additional funds from other sources. However, HUD
also noted that increasing the per-unit development cost limits would
result in fewer units constructed. Our draft report reached the same
conclusion, but also stated that sufficient capital advances yield
important benefits, such as the prompt delivery of housing assistance
to needy households.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to interested members of Congress and congressional committees. We also
will send copies to the HUD Secretary and make copies available to
others upon request. In addition, the report will be available at no
charge on the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-8678 or Paul Schmidt at (312) 220-7681,
if you or your staff have any questions concerning this report. Key
contributors to this report were Susan Campbell, Emily Chalmers, Mark
Egger, Daniel Garcia-Diaz, Curtis Groves, Ron La Due Lake, Marc Molino,
Melissa Roye, William Sparling, and Julianne Stephens.
David G. Wood
Director,
Financial Markets and Community Investment:
Signed by David G. Wood:
FOOTNOTES
[1] U.S. Department of Housing and Urban Development. Housing Our
Elders. (Washington, D.C.: 1999). Also see Commission on Affordable
Housing and Health Facility Needs for Seniors in the 21st Century. A
Quiet Crisis in America: A Report to Congress. (Washington, D.C.:
2003).
[2] A householder is the person whose name is on the lease, deed, or
mortgage. We chose 62 years to be consistent with HUD's definition of
elderly.
[3] These guidelines are based on HUD regulation (24 C.F.R. 891.165).
[4] Unexpended balances include cumulative budget authority that has
not been spent (outlayed) and that may be carried over from one year to
the next. These balances may include either obligated or unobligated
funds.
[5] The survey, which the Bureau of the Census conducts for HUD,
collects data on the nation's housing in odd-numbered years. The
national sample covers approximately 55,700 housing units. All
numerical estimates derived from the American Housing Survey have
sampling errors of ±10 percent or less of the value of those numerical
estimates, unless otherwise noted. All percentage estimates have
sampling errors of ±6 percentage points or less, unless otherwise
noted.
[6] 12 U.S.C. 1701q(h)(1).
[7] In addition, HUD requires a minimum capital investment (generally
not to exceed $10,000) to assure the sponsor's commitment to the
housing.
[8] These other agencies include the Internal Revenue Service within
the Department of the Treasury and Rural Housing Service within the
Department of Agriculture. Both of these agencies administer affordable
rental housing programs.
[9] The term on rental assistance contracts is 5 years, although HUD
has authorized these contracts for as long as 20 years. After these
contracts expire, HUD renews them for 5 years, subject to the
availability of funds.
[10] 12 U.S.C. 1701q(a).
[11] As in other surveys, estimates from the American Housing Survey
are subject to both sampling and nonsampling errors. Appendix III
provides the sampling error for all estimates presented in this report
and discusses the types of nonsampling errors that may affect the
estimates.
[12] The sampling error for these half a million households with
moderate rent burden was about ±78,410.
[13] Tenants can also make co-payments to defray some of the services
expenses.
[14] The exact share of elderly units provided through the Section 202
program in relation to all federal housing programs cannot be
calculated because many of these programs are used in combination with
each other.
[15] These programs are described in appendix IV.
[16] Since this estimate is derived from two different sources, we
cannot give a precise percentage, and thus, this estimate is intended
to be illustrative. Appendixes I and III contain discussions of the
data limitations in both of these sources.
[17] Seniors Commission 2002, 53.
[18] HUD Notice H 96-102.
[19] HUD allocates Section 202 funding among field offices using a
formula that targets funds based on the unmet needs of elderly renter
households with housing problems. Also, the program allocates 85
percent of funding to metropolitan areas and 15 percent to
nonmetropolitan areas.
[20] See 66 Fed. Reg. 6647 (22 Jan. 2001).
[21] We considered a field office to have a problem with insufficient
capital advances and securing secondary financing if it reported that
both of these factors occurred often to always. We considered a field
office not to have a problem with these two factors if it reported that
both of them occurred seldom or sometimes.
[22] Handbook No. 4571.5 was issued on July 21, 1992. Handbook No.
4571.3 REV-1 was issued on April 9, 1993.
[23] The agency has made some progress in approving some of these
projects for construction or canceling them if they are no longer
feasible. For example, 16 of the 169 projects that were pending
construction approval at the end of fiscal year 2002 were approved for
construction by December 2002, and 6 others had their funding awards
canceled.
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
We conducted this review to address: (1) the role of the Section 202
program in meeting the housing needs of elderly renter households with
very low incomes, (2) the extent to which Section 202 projects meet the
Department of Housing and Urban Development's (HUD) time guidelines for
project processing, and (3) the factors that keep Section 202 projects
from meeting HUD's time guidelines for project processing.
To determine the role of the Section 202 program in meeting housing
needs of elderly households, we analyzed household income and rental
housing cost data from the American Housing Survey. The Bureau of the
Census performs the survey for HUD every odd-numbered year. Appendix
III provides a detailed discussion of the American Housing Survey. We
also reviewed studies that involved the housing needs of elderly
households.
To determine the extent to which HUD's Section 202 and other housing
programs serve elderly households, we used data from HUD's Real Estate
Management System (REMS) as of the beginning of calendar year 2003.
Specifically, we analyzed information on the overall number of
properties and their associated units under Section 202 and other
housing programs that serve the needs of elderly households. Although
we did not independently verify the accuracy of the program data, we
did perform internal checks to determine (1) the extent to which the
data fields were populated, (2) the reasonableness of the values
contained in the data fields, and (3) if any aberrations existed in the
data we used. We concluded that the REMS data was reliable for purposes
of this report. We also reviewed relevant regulations, policies, and
procedures for Section 202 and other active federal programs.
To explore the issue of timeliness in processing and some of the
factors that may impede timely processing, we reviewed HUD program and
budget data from HUD's Development Application Processing (DAP) System
as of the end of calendar year 2002. Because HUD headquarters officials
told us that program data from this system was not reliable for Section
202 projects funded before fiscal year 1998, we limited our review of
Section 202 projects to those funded from fiscal years 1998 to 2000.
While we did not independently verify the accuracy of the program data
from this system, we periodically discussed the accuracy and
interpretation of the data we used with HUD officials. In addition, we
compared file records for projects funded since fiscal year 1998 with
the data entered in the system for those projects by three HUD field
offices that process Section 202 projects and generally found the data
to be accurate. Also, we performed internal checks to determine the
extent to which the data fields in DAP were populated and the
reasonableness of the values contained in these fields. In cases where
the data were not reasonable or questions arose, we contacted a HUD
official to identify and correct errors. To determine the reasons why
HUD awarded time extensions for certain projects listed in the system,
we compiled and analyzed HUD's published notices of these extensions in
the Federal Register.
We also used a questionnaire to survey of all HUD field offices that
process Section 202 projects. About 98 percent (44 out of 45) of the
field offices that process Section 202 projects completed the
questionnaire. We also conducted site visits at the Greensboro and
Richmond field offices to obtain field office staff perceptions on
factors that may impede timely processing. In addition, to gain a
fuller perspective on these issues, we surveyed sponsors and
consultants, identified by HUD and others, that were experienced in
working with Section 202 projects. Collectively, these sponsors and
consultants worked on approximately 260 projects since fiscal year 1998
representing approximately 40 percent of Section 202 units funded. In
addition, we observed a HUD training session on processing Section 202
projects in August 2002.
We conducted our work primarily in Washington, D.C., between May 2002
and March 2003, in accordance with generally accepted government
auditing standards.
[End of section]
Appendix II: Budget Information for the Section 202 Program:
This appendix provides information on the Housing for Special
Populations appropriations account, which provides funding for the
Section 202 and Section 811 programs.[Footnote 1] In fiscal year 2002,
Congress appropriated over $1 billion for the Housing for Special
Populations account--of which $783 million was earmarked for the
Section 202 program. From year to year, the Section 202 program carries
significant balances of unexpended appropriated funds. In fiscal year
2002, the unexpended balance for the Section 202 program was $5.2
billion.
Section 202 Appropriations:
In fiscal year 2002, Congress appropriated over $1 billion for the
Housing for Special Populations appropriations account, which provides
funding for both the Section 202 Supportive Housing for the Elderly and
the Section 811 Supportive Housing for Persons with Disabilities
Programs.[Footnote 2] Since fiscal year 1998, a total of $4.6 billion
in appropriations were made available for both programs (table 4). In
fiscal year 2002, the lion's share of the appropriations for the
Housing for Special Populations account, about $783 million or 76
percent, went to the Section 202 program to fund, among other things,
capital advances and project rental assistance contracts (PRACs) for
new projects and PRAC renewals for existing projects.[Footnote 3] Since
fiscal year 1998, about $3.6 billion have been appropriated for the
Section 202 program. Appropriations for the Section 202 program in
nominal dollars (that is, unadjusted for inflation) have increased
since fiscal year 1998 at an average annual rate of about 5 percent.
However, appropriations for Section 202 in constant 1998 dollars have
increased by an average rate of about 2 percent annually.
Table 4: Annual Appropriations for the Housing for Special Populations
Account in Fiscal Years 1998-2002:
Nominal dollars in millions.
1998; Housing for Special Populations:
$839; Section 202 Supportive Housing for
the Elderly: $645; Section 811 Supportive
Housing for Persons with Disabilities: $194.
1999; Housing for Special Populations:
854; Section 202 Supportive Housing for
the Elderly: 660; Section 811 Supportive
Housing for Persons with Disabilities: 194.
2000; Housing for Special Populations:
911; Section 202 Supportive Housing for
the Elderly: 710; Section 811 Supportive
Housing for Persons with Disabilities: 201.
2001; Housing for Special Populations:
994; Section 202 Supportive Housing for
the Elderly: 777; Section 811 Supportive
Housing for Persons with Disabilities: 217.
2002; Housing for Special Populations:
1,024; Section 202 Supportive Housing for
the Elderly: 783; Section 811 Supportive
Housing for Persons with Disabilities: 241.
Total; Housing for Special Populations:
4,622; Section 202 Supportive Housing for
the Elderly: 3,575; Section 811 Supportive
Housing for Persons with Disabilities: 1,047.
Source: GAO analysis of HUD data.
[End of table]
Section 202 Unexpended Balances:
The Section 202 program carries significant balances of unexpended
appropriations from year to year. Unexpended balances include the
cumulative amount of budget authority that has not been spent
(outlayed) and may consist of either obligated or unobligated funds.
Some of the unexpended balances are expected to be carried over
annually for various programmatic reasons, including the time required
for project sponsors to prepare their application for program funds and
finalize plans as well as the time required for HUD's field offices to
review and process them. However, some unexpended funds can also result
from problems in the timeliness of project processing. Between fiscal
years 1998 and 2002, the program's unexpended balance increased from
about $4.8 billion to $5.2 billion. In nominal dollars, this balance
has increased by an average annual rate of about 2 percent between
fiscal years 1998 and 2002. In constant 1998 dollars, unexpended
balances for Section 202 actually decreased by an average rate of less
than 1 percent annually. Table 5 shows the annual balances of
unexpended appropriations for the Section 202 program since fiscal year
1998.
Table 5: Annual Balances of Unexpended Appropriations for Section 202
in Fiscal Years 1998-2002:
Nominal dollars in millions; [Empty].
Section 202 Supportive Housing for the Elderly; $4,839; Fiscal year:
1999: $4,998; Fiscal year: 2000: $5,048; Fiscal year: 2001: $5,138;
Fiscal year: 2002: $5,219.
Capital advance; 1,774; Fiscal year: 1999: 1,789; Fiscal year: 2000:
1,949; Fiscal year: 2001: 2,041; Fiscal year: 2002: 2,164.
PRAC (rental assistance); 3,065; Fiscal year: 1999: 3,209; Fiscal year:
2000: 3,099; Fiscal year: 2001: 3,097; Fiscal year: 2002: 3,055.
Housing for Special Populations; 6,343; Fiscal year: 1999: 6,547;
Fiscal year: 2000: 6,701; Fiscal year: 2001: 6,899; Fiscal year: 2002:
7,074.
Source: GAO analysis of HUD data.
[End of table]
As table 5 shows, unexpended PRAC funds account for a large share of
the total unexpended balances for the Section 202 program as well as
for the overall Housing for Special Populations account. Before fiscal
year 1997, HUD provided individual projects with PRAC amounts that
covered rental assistance payments generally for 20 years. Since fiscal
year 1997, HUD provided PRAC amounts that covered rental assistance
payments for 5 years. In both cases, PRAC funds are obligated, but
remain unexpended, for multiple years after project occupancy--unlike
capital advance funds, which are fully expended by project completion.
With the reduction of the PRAC term from 20 to 5 years, HUD expects
PRAC funds to comprise a declining share of the overall unexpended
balance for the Section 202 program.
[End of section]
Appendix III: Data Issues Concerning the American Housing Survey:
In reporting on the housing affordability problems of elderly renter
households with very low incomes, this report relies on data from the
2001 American Housing Survey (AHS). We assessed the reliability of the
data by reviewing AHS documentation, performing electronic testing of
the data files to check for completeness of data files, and replicating
published tables.[Footnote 4] We determined that the data are reliable
enough for the purposes of this report.
AHS is a probability sample of about 55,700 housing units interviewed
between August and November 2001.[Footnote 5] Because this sample is
based on random selections, the specific sample selected is only one of
a large number of samples that might have been drawn. Since each sample
could have provided different estimates, we express our confidence in
the precision of this sample's results as 95 percent confidence
intervals (for example, +7 percentage points). This is the interval
that would contain the actual population value for 95 percent of the
samples that could have been drawn. As a result, we are 95 percent
confident that each of the confidence intervals in this report will
include the true values in the study population. In the following
section, we provide 95 percent confidence intervals for the estimates
used in this report. We calculated these confidence intervals by adding
and subtracting the sampling error for each estimate to or from the
estimate itself.[Footnote 6]
Estimates from the survey are also subject to certain nonsampling
errors, such as incomplete data and wrong answers. According to the
survey documentation, errors due to incomplete data and wrong answers
can be greater than sampling errors for some survey questions.[Footnote
7] Of the survey questions we rely upon for our analysis (age, tenure,
income, housing costs, rent subsidies, and location), the survey
question on income was subject to a high level of inconsistency in
survey responses. Also relevant to this report, AHS is known to
underreport income when compared to the Current Population Survey and
other independent sources. However, our analysis concentrates on
elderly renters with very low income, for which this should be less of
an issue. According to a Census study based on relatively older data
(from the early 1980s), much of the underreporting of income in the
survey seems to derive from interest and dividend income as well as
wages and salary.[Footnote 8] Consequently, the underreporting of
income may be less of a problem among very low income elderly
households who do not tend to rely on these sources of income.
Generally, HUD's own internal analysis suggests that very low income
renters in AHS tend to report their income more accurately than other
groups. For example, in an unpublished analysis, HUD found that the
income reported by very low income renters in the 1989 AHS was about 2
percent greater than the income reported in the 1990 Decennial Census.
Nonetheless, current information on the extent of underreporting,
especially among elderly renter households with very low incomes, is
not available.
The survey also collects data on the type of government housing
assistance the household receives. For example, it asks if the
household lives in a unit owned by a public housing authority or
receives vouchers. However, households surveyed may misreport their
specific programs. As a result, the survey does not provide sufficient
and reliable detail on the specific housing assistance program that is
serving the household. According to the survey documentation, units
requiring income verification are usually subsidized.
Table 6 shows the distribution of units that are occupied by homeowners
and renters in 2001. A great majority of elderly households were
homeowners. About 21 million (± 460,000) of 26 million (± 498,000)
elderly households owned their homes. Elderly renter households
consisted of about 5 million (± 242,000) households.
:
Table 6: Housing Units Occupied by Homeowner and Renter Elderly
Households in 2001:
[See PDF for image]
Source: GAO analysis of the American Housing Survey, 2001.
[End of table]
Table 7 provides details on the estimated number of households who
owned or rented their homes by income category (very low income and low
income) in 2001. About 3.7 million (± 208,000) elderly renter
households have very low incomes. About 4.3 million (± 223,000) elderly
renter households have low incomes. These figures include households
that do not pay cash rent. Based on the data from tables 6 and 7, over
four-fifths (85 ± 2 percent) of elderly renter households have low
incomes and approximately three-quarters (73 ± 3 percent) have very low
incomes.
Table 7: Income Categories for Elderly Homeowner and Renter Households
in 2001:
[See PDF for image]
Source: GAO analysis of the American Housing Survey, 2001.
[End of table]
Table 8 shows the number of units occupied by elderly renter households
with very low incomes by subsidy status and rent burden. About 1.7
million (± 141,000) elderly renter households with very low incomes
have moderate or severe rent burdens. The majority of these actually
have severe rent burdens. About 1.3 million (± 125,000) renter
households with very low incomes receive some form of government
assistance. Households that do not pay cash rent appear in the tables
above in this appendix for informational purposes. However, since they
do not pay cash rents, we exclude these households from our estimates
of rent burdens in this report.
:
:
Table 8: Elderly Renter Households with Very Low Incomes by Subsidy
Status and Rent Burden in 2001:
[See PDF for image]
Source: GAO analysis of the American Housing Survey, 2001.
[End of table]
Table 9 looks at unassisted elderly renter households with rent
burdens. Of the 1.7 million (± 141,000) households with rent burdens,
about 60 percent are located either in the northeast or the south
regions. The northeast and south contained about 542,000 (± 81,000) and
477,000 (± 76,000), respectively, of the nation's rent burdened elderly
renter households with very low incomes.
Table 9: Moderate or Severe Rent Burden of Unassisted Very Low Income
Elderly Renter Households by Region in 2001:
[See PDF for image]
Source: GAO analysis of the American Housing Survey, 2001.
[End of table]
The following four tables show the number and proportion of units
occupied by elderly renter households with very low incomes by subsidy
status and rent burden in metropolitan areas (tables 10 and 11) and
nonmetropolitan areas (tables 12 and 13). About 1.4 million (± 131,000)
elderly renter households with very low incomes in metropolitan areas
and 234,000 (± 53,000) in nonmetropolitan areas have moderate or severe
rent burden (tables 10 and 12). The proportion of households with rent
burdens was generally higher in metropolitan areas than in
nonmetropolitan areas (tables 11 and 13). In addition, households in
nonmetropolitan areas were less likely than those in metropolitan areas
to have severe rent burdens.
Table 10: Number of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Metropolitan Areas in 2001:
[See PDF for image]
Source: GAO analysis of the American Housing Survey, 2001.
[End of table]
Table 11: Proportion of Elderly Renter Households with Very Low Incomes
by Subsidy Status and Rent Burden in Metropolitan Areas in 2001:
Renter households: Subsidized; Estimate: 38%; Sampling error: 3%; 95
percent confidence interval: From: 35%; 95 percent confidence interval:
To: 41%.
Renter households: Unassisted; Estimate: 62%; Sampling error: 3%; 95
percent confidence interval: From: 59%; 95 percent confidence interval:
To: 65%.
Renter households: Zero income; Estimate: 4%; Sampling error: 1%; 95
percent confidence interval: From: 3%; 95 percent confidence interval:
To: 5%.
Renter households: No rent burden; Estimate: 6%; Sampling error: 2%; 95
percent confidence interval: From: 4%; 95 percent confidence interval:
To: 8%.
Renter households: Rent burden; Estimate: 52%; Sampling error: 3%; 95
percent confidence interval: From: 48%; 95 percent confidence interval:
To: 55%.
Renter households: Moderate rent burden; Estimate: 14%; Sampling error:
2%; 95 percent confidence interval: From: 12%; 95 percent confidence
interval: To: 17%.
Renter households: Severe rent burden; Estimate: 37%; Sampling error:
3%; 95 percent confidence interval: From: 34%; 95 percent confidence
interval: To: 41%.
Source: GAO analysis of the American Housing Survey, 2001:
[End of table]
Table 12: Number of Elderly Renter Households with Very Low Incomes by
Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001:
[See PDF for image]
[End of table]
Table 13: Proportion of Elderly Renter Households with Very Low Incomes
by Subsidy Status and Rent Burden in Nonmetropolitan Areas in 2001:
Renter households: Subsidized; Estimate: 48%; Sampling error: 7%; 95
percent confidence interval: From: 40%; 95 percent confidence interval:
To: 55%.
Renter households: Unassisted; Estimate: 52%; Sampling error: 7%; 95
percent confidence interval: From: 45%; 95 percent confidence interval:
To: 60%.
Renter households: Zero income; Estimate: 3%; Sampling error: 3%; 95
percent confidence interval: From: 0%; 95 percent confidence interval:
To: 5%.
Renter households: No rent burden; Estimate: 6%; Sampling error: 4%; 95
percent confidence interval: From: 3%; 95 percent confidence interval:
To: 10%.
Renter households: Rent burden; Estimate: 43%; Sampling error: 7%; 95
percent confidence interval: From: 36%; 95 percent confidence interval:
To: 50%.
Renter households: Moderate rent burden; Estimate: 21%; Sampling error:
6%; 95 percent confidence interval: From: 15%; 95 percent confidence
interval: To: 27%.
Renter households: Severe rent burden; Estimate: 22%; Sampling error:
6%; 95 percent confidence interval: From: 16%; 95 percent confidence
interval: To: 28%.
Source: GAO analysis of the American Housing Survey, 2001:
[End of table]
Excluded from these estimates are the housing affordability needs of
very low income homeowners. Although homeowners can experience housing
affordability problems, homeowners and renters face different
challenges in affording their homes. Unlike renters, homeowners have
equity in their homes--about 68 percent (± 1 percent) of elderly
homeowners own their homes free and clear. In addition, elderly
homeowners face certain challenges in maintaining their housing, such
as paying for property maintenance and accessibility
modification.[Footnote 9] As a result, rental programs, such as Section
202, do not directly address the problems homeowners experience.
[End of section]
Appendix IV: Federal Housing Programs and the Elderly:
The federal government has multiple housing programs that subsidize the
development of rental properties. Many of these programs also subsidize
the development of properties that are intended to serve primarily
elderly households. Unlike Section 202, most federal housing programs
do not target a single type of household. Rather, they serve many
different types of households, such as families with children, people
with disabilities, and the elderly, and they produce units with rents
that are affordable to households at different income levels.
Housing Production Programs That Develop Elderly Housing:
In addition to Section 202, the federal government has multiple active
housing production programs that continue to expand the number of
assisted households by subsidizing the development of new rental
housing. These federal programs, described below, can also subsidize
individual rental properties that are intended primarily to serve
elderly households.
Active Housing Production Programs:
* Low-Income Housing Tax Credits and Tax-Exempt Multifamily Housing
Bonds provide federal tax incentives for private investment and are
often used in conjunction with other federal and state subsidies in the
production of new and rehabilitated rental housing.
* HOME Investment Partnerships provides formula-based grants to states
and localities to build, acquire, or rehabilitate affordable rental
housing or provide tenant-based rental assistance.[Footnote 10]
* Section 515/521 Rural Rental Assistance provides below-market loans
and rental assistance to support the development of rental housing in
rural areas.
* Multifamily mortgage insurance programs provide mortgage insurance
for the development of rental housing without federally-funded interest
rate subsidies or project-based rental assistance.[Footnote 11]
The Housing Choice Voucher program (housing vouchers) is another
important source of assistance for elderly households. The program
supplements tenants' rental payments in privately owned, moderately
priced apartments chosen by the tenants. Currently, about 260,000 of
the approximately 1.5 million voucher households are elderly. However,
unlike the Section 202 or other programs discussed, housing vouchers is
not a production program and does not directly subsidize the
development of new or rehabilitated housing.
In addition to the active housing production programs, the federal
government also has programs that no longer subsidize the development
of rental properties but, in some cases, continue to provide operating
subsidies, rental assistance payments, or other subsidies for rental
properties that were developed under these programs in the past. Over
the years, these inactive housing production programs, described in the
next section, subsidized many rental properties that were intended
primarily to serve elderly households.
Inactive Housing Production Programs:
* Public Housing financed the development and operation of properties
managed and owned by local housing authorities.[Footnote 12]
* Section 236 and Section 221(d)(3) Below Market Interest Rate provided
mortgage insurance for the development of rental housing with federally
funded interest rate subsidies.
* Section 8 project-based rental assistance programs provided project-
based rental assistance to properties that were financed with
Department of Housing and Urban Development (HUD) mortgage insurance,
tax exempt bonds, and below-market interest rate loans.[Footnote 13]
Target Households:
Unlike Section 202, most active federal housing programs do not target
a single type of household. Rather, they serve many different types of
households, such as families with children, persons with disabilities,
and the elderly. Furthermore, most federal housing programs target
households at different income levels, not just households with very
low incomes (50 percent or less of area media income) as does Section
202. Table 14 provides information on targeted household types and rent
levels of the active housing production and insurance programs.
Table 14: Active Federal Rental Housing Production and Insurance
Programs by Household Type Served and Program Rent Levels:
Rental housing production program: Section 202 Supportive Housing;
Household type served: Elderly; Program rent levels affordable to
households with: 50% or less of area median income (AMI) for all
units.
Rental housing production program: Low-Income Housing Tax Credits;
Household type served: Multiple household types; Program rent levels
affordable to households with: 50% of AMI for 20% of units or; 60% of
AMI for 40% of units.
Rental housing production program: Tax-Exempt Multifamily Housing
Bonds; Household type served: Multiple household types; Program rent
levels affordable to households with: 50% of AMI for 20% of units or;
60% of AMI for 40% of units.
Rental housing production program: HOME Investment Partnerships;
Household type served: Multiple household types; Program rent levels
affordable to households with: 65% of AMI for all units and; 50% of
AMI for 20% of units.
Rental housing production program: Section 811 Supportive Housing;
Household type served: Persons with disabilities; Program rent levels
affordable to households with: 50% or less of AMI for all units.
Rental housing production program: Section 515 Rural Rental Housing
with Section 521 rental assistance; Household type served: Primarily
families and the elderly; Program rent levels affordable to households
with: 80% of AMI or less for all 515 units with rental assistance.
Rental housing production program: FHA multifamily mortgage
insurance[A]; Household type served: Multiple household types; Program
rent levels affordable to households with: No income requirements/
market rate rents.
Source: GAO.
[A] These mortgage insurance programs are Section 221(d)(4), Section
221(d)(3), and Rental Housing for the Elderly (Section 231). In recent
years, few mortgages have been insured with Section 231 because
borrowers who intend to develop elderly rental properties rely on
Section 221(d)(4) or Section 221(d)(3).
[End of table]
Low-Income Housing Tax Credits (tax credits), Tax-Exempt Multifamily
Housing Bonds (tax-exempt bonds), and HOME set aside some of their
units for very low-income households and can provide housing for the
elderly (table 14). Congress has granted considerable latitude to state
and local agencies that administer these programs in deciding who will
be
served with federal housing resources.[Footnote 14] In addition,
mortgage insurance programs for multifamily rental properties under
HUD's Federal Housing Administration (FHA) currently do not have any
specific age or income requirements for tenants. However, since rents
for newly developed FHA-insured properties are often set at market
levels, these programs may not be able to reach very low-income
households without the use of other subsidies.
Annual Housing Production Levels:
Although Section 202's annual production levels are small when compared
to the total production levels of other housing programs, such as tax
credits--the largest of all current production programs--Section 202,
nonetheless, is a relatively important source of subsidized rental
housing units for the elderly. Table 15 presents the volume of new
production by rental housing production program. The volume of housing
production illustrates individual program activity but, due to
limitations in the data, it is not possible to accurately estimate what
percentage of elderly units produced through federal housing programs
is from Section 202 because units produced through these programs can
overlap with each other. For example, HOME funding can be used in
conjunction with programs such as tax credits, tax-exempt bonds, or HUD
mortgage insurance programs to finance new production. As a result,
adding units together for any of the programs in table 15 will likely
result in double counting.
Table 15: Approximate Volume of New Production of Housing Units by
Active Federal Rental Housing Programs:
Production program: Section 202 Supportive Housing; Approximate number
of new or rehabilitated per annum: Elderly units: 5,700; Approximate
number of new or rehabilitated per annum: Total units: 5,700.; Percent
of total: Elderly units: 100%.
Production program: Low-Income Housing Tax Credits; Approximate number
of new or rehabilitated per annum: Elderly units: 13,200; Approximate
number of new or rehabilitated per annum: Total units: 86,000.
Percent of total: 15%.
Production program: Tax-Exempt Multifamily Housing Bonds; Approximate
number of new or rehabilitated per annum: Elderly units: 5,600;
Approximate number of new or rehabilitated per annum: Total units:
33,300; Percent of total: 17%.
Production program: HOME Investment Partnerships; Approximate number of
new or rehabilitated per annum: Elderly units: 4,000; Approximate
number of new or rehabilitated per annum: Total units: 17,000; Percent
of total: Elderly units: 24%.
Production program: Section 515 Rural Rental Housing; Approximate
number of new or rehabilitated per annum: Elderly units: 800;
Approximate number of new or rehabilitated per annum: Total units:
1,800; Elderly units: 44%.
Production program: Section 811 Supportive Housing; Approximate number
of new or rehabilitated per annum: Elderly units: NA; Approximate
number of new or rehabilitated per annum: Total units: 1,300; Percent
of total: Elderly units: NA.
Production program: FHA multifamily mortgage insurance; Approximate
number of new or rehabilitated per annum: Elderly units: 900;
Approximate number of new or rehabilitated per annum: Total units:
26,400; Percent of total: Elderly units: 3%.
Source: GAO.
Notes: For Section 202, Section 811, and the FHA multifamily mortgage
insurance programs, we estimated the average number of total and
elderly units endorsed annually from 1998 to 2001 based on HUD program
data. We reported the number of elderly units for tax credits based on
the 2002 report from the Commission on Affordable Housing and Health
Facility Needs for Seniors in the 21ST Century and for tax-exempt bonds
based on the National Council of State Housing Agencies' State HFA
Factbook: 2001 NCSHA Annual Survey Results. In addition, for tax
credits, we estimated the average number of units placed in service
annually from 1998 to 2000 based on HUD's Low-Income Housing Tax Credit
Database. Finally, we relied on estimates from program officials for
HOME and Section 515.
[End of table]
Due to differing sources of data and, in some cases, lack of official
data, these estimates are rough approximations of actual production
activity and are intended to be illustrative. Many of these programs
overlap with each other. As a result, adding units together for any of
the programs will likely result in double counting.
[End of section]
Appendix V: Section 202 Program Data:
This appendix provides additional information on the extent to which
Section 202 projects meet the Department of Housing and Urban
Development's (HUD's) 18-month processing time guideline. In
particular, we present data on projects' status in meeting the
guideline, HUD field offices' rate of success in meeting the guideline,
and the factors cited by HUD in its approvals of processing time
extensions. Table 16 profiles the projects funded in fiscal years 1998
through 2000 according to the projects' status in gaining HUD's
approval to start construction.
Table 16: Distribution of Section 202 Projects, Capital Advance Funds,
and PRAC Funds, by Fiscal Year and Construction Approval Status:
Fiscal year: 1998:
Number of projects: Met
18-month guideline: 47; Exceeded 18-month guideline: Approved for
construction after 18 months: 108; Exceeded 18-month guideline: Pending
approval for construction: 11; Exceeded 18-month guideline: Funding
award cancelled: 0.
Percent of projects: Met 18-month
guideline: 28%; Exceeded 18-month guideline: Approved for
construction after 18 months: 65%; Exceeded 18-month guideline:
Pending approval for construction: 7%; Exceeded 18-month guideline:
Funding award cancelled: -.
Capital advance funds: Met 18-month
guideline: $113 million; Exceeded 18-month guideline: Approved for
construction after 18 months: $337 million; Exceeded 18-month
guideline: Pending approval for construction: $43 million; Exceeded
18-month guideline: Funding award cancelled: -.
PRAC funds (rental assistance); Met 18-
month guideline: $23 million; Exceeded 18-month guideline: Approved
for construction after 18 months: $68 million; Exceeded 18-month
guideline: Pending approval for construction: $9 million; Exceeded
18-month guideline: Funding award cancelled: -.
Total funds: Met 18-month guideline:
$136 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $406 million; Exceeded 18-month guideline: Pending
approval for construction: $52 million; Exceeded 18-month guideline:
Funding award cancelled: -.
Percent of total funds: Met 18-month
guideline: 1999: 23%; Exceeded 18-month guideline: Approved for
construction after 18 months: 1999: 68%; Exceeded 18-month guideline:
Pending approval for construction: 1999: 9%; Exceeded 18-month
guideline: Funding award cancelled: 1999: -.
Fiscal year: 1999:
Number of projects: Met
18-month guideline: 44; Exceeded 18-month guideline: Approved for
construction after 18 months: 84; Exceeded 18-month guideline: Pending
approval for construction: 34; Exceeded 18-month guideline: Funding
award cancelled: 3.
Percent of projects: Met 18-month
guideline: 27%; Exceeded 18-month guideline: Approved for
construction after 18 months: 51%; Exceeded 18-month guideline:
Pending approval for construction: 21%; Exceeded 18-month guideline:
Funding award cancelled: 2%.
Capital advance funds: Met 18-month
guideline: $108 million; Exceeded 18-month guideline: Approved for
construction after 18 months: $284 million; Exceeded 18-month
guideline: Pending approval for construction: $127 million; Exceeded
18-month guideline: Funding award cancelled: $15 million.
PRAC funds; Met 18-month guideline:
$22 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $57 million; Exceeded 18-month guideline: Pending
approval for construction: $28 million; Exceeded 18-month guideline:
Funding award cancelled: $3 million.
Total funds: Met 18-month guideline:
$130 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $341 million; Exceeded 18-month guideline: Pending
approval for construction: $155 million; Exceeded 18-month guideline:
Funding award cancelled: $18 million.
Percent of total funds: Met 18-month
guideline: 2000: 20%; Exceeded 18-month guideline: Approved for
construction after 18 months: 2000: 53%; Exceeded 18-month guideline:
Pending approval for construction: 2000: 24%; Exceeded 18-month
guideline: Funding award cancelled: 2000: 3%.
Fiscal year: 2000:
Number of projects: Met
18-month guideline: 41; Exceeded 18-month guideline: Approved for
construction after 18 months: 40; Exceeded 18-month guideline: Pending
approval for construction: 82; Exceeded 18-month guideline: Funding
award cancelled: 0.
Percent of projects: Met 18-month
guideline: 25%; Exceeded 18-month guideline: Approved for
construction after 18 months: 25%; Exceeded 18-month guideline:
Pending approval for construction: 50%; Exceeded 18-month guideline:
Funding award cancelled: -.
Capital advance funds; Met 18-month
guideline: $109 million; Exceeded 18-month guideline: Approved for
construction after 18 months: $124 million; Exceeded 18-month
guideline: Pending approval for construction: $283 million; Exceeded
18-month guideline: Funding award cancelled: -.
PRAC funds; Met 18-month guideline:
$21 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $27 million; Exceeded 18-month guideline: Pending
approval for construction: $58 million; Exceeded 18-month guideline:
Funding award cancelled: -.
Total funds; Met 18-month guideline:
$131 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $150 million; Exceeded 18-month guideline: Pending
approval for construction: $341 million; Exceeded 18-month guideline:
Funding award cancelled: -.
Percent of total funds; Met 18-
month guideline: Total: 21%; Exceeded 18-month guideline: Approved for
construction after 18 months: Total: 24%; Exceeded 18-month guideline:
Pending approval for construction: Total: 55%; Exceeded 18-month
guideline: Funding award cancelled: Total: -.
Total:
Number of projects;
Met 18-month guideline: 132; Exceeded 18-month guideline: Approved for
construction after 18 months: 232; Exceeded 18-month guideline: Pending
approval for construction: 127; Exceeded 18-month guideline: Funding
award cancelled: 3.
Percent of projects; Met 18-month
guideline: 27%; Exceeded 18-month guideline: Approved for
construction after 18 months: 47%; Exceeded 18-month guideline:
Pending approval for construction: 26%; Exceeded 18-month guideline:
Funding award cancelled: 1%.
Capital advance funds; Met 18-month
guideline: $330 million; Exceeded 18-month guideline: Approved for
construction after 18 months: $746 million; Exceeded 18-month
guideline: Pending approval for construction: $453 million; Exceeded
18-month guideline: Funding award cancelled: $15 million.
PRAC funds; Met 18-month guideline:
$66 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $152 million; Exceeded 18-month guideline: Pending
approval for construction: $94 million; Exceeded 18-month guideline:
Funding award cancelled: $3 million.
Total funds; Met 18-month guideline:
$396 million; Exceeded 18-month guideline: Approved for construction
after 18 months: $897 million; Exceeded 18-month guideline: Pending
approval for construction: $547 million; Exceeded 18-month guideline:
Funding award cancelled: $18 million.
$18 million: Percent of total funds; Met
18-month guideline: 21%; Exceeded 18-month
guideline: Approved for
construction after 18 months: 48%; Exceeded 18-month guideline: Pending
approval for construction: 29%;
Exceeded 18-month guideline: Funding award cancelled: 1%.
Source: GAO analysis of HUD Development Application Processing (DAP)
System, December 2002.
Note: Percentages do not always add to 100 because of rounding. Total
funds do not always equal the sum of capital advance and project rental
assistance contract (PRAC) funds because of rounding.
[End of table]
Table 17 compares the status of projects located in metropolitan and
nonmetropolitan areas in gaining approval to start construction within
either 18 or 24 months. In both cases, metropolitan projects were about
twice as likely as projects in nonmetropolitan areas to take more than
either 18 or 24 months to be approved. That is, the odds of a
metropolitan project taking more than 18 or 24 months to be approved
for construction were about twice the odds of a nonmetropolitan project
taking more than 18 or 24 months, respectively.
Table 17: Status of Metropolitan and Nonmetropolitan Projects in
Gaining Construction Start Approval, Projects Funded in Fiscal Years
1998 to 2000:
[See PDF for image]
Source: GAO analysis of HUD DAP system, December 2002.
[End of table]
Tables 18, 19, and 20 present the rate of project approvals within
either 18 or 24 months for all field offices that have responsibility
for processing Section 202 projects. Table 18 shows the results for all
projects, table 19 shows the results only for projects located in
metropolitan areas, and table 20 shows the results for projects located
in nonmetropolitan areas. The rate of project approvals for each field
office is the percentage of projects, funded between fiscal years 1998
and 2000, that HUD approved for construction within the 18-month
processing time guideline or within the 24-month period after the
funding award--that is, 18 months plus the 6-month discretionary
extension.
Table 18: Field Office Performance in Approving Projects to Start
Construction, All Projects Funded in Fiscal Years 1998 to 2000:
Field office: Atlanta; Project approval rate (%): Within 18 months: 11;
Project approval rate (%): Within 24 months: 67; Number of projects: 9.
Field office: Baltimore; Project approval rate (%): Within 18 months:
18; Project approval rate (%): Within 24 months: 36; Number of
projects: 11.
Field office: Birmingham; Project approval rate (%): Within 18 months:
80; Project approval rate (%): Within 24 months: 80; Number of
projects: 5.
Field office: Boston; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 15; Number of projects:
20.
Field office: Buffalo; Project approval rate (%): Within 18 months: 29;
Project approval rate (%): Within 24 months: 64; Number of projects:
14.
Field office: Caribbean; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of projects:
2.
Field office: Charleston; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of projects:
3.
Field office: Chicago; Project approval rate (%): Within 18 months: 21;
Project approval rate (%): Within 24 months: 57; Number of projects:
14.
Field office: Cleveland; Project approval rate (%): Within 18 months:
8; Project approval rate (%): Within 24 months: 58; Number of projects:
12.
Field office: Columbia; Project approval rate (%): Within 18 months:
78; Project approval rate (%): Within 24 months: 89; Number of
projects: 9.
Field office: Columbus; Project approval rate (%): Within 18 months:
50; Project approval rate (%): Within 24 months: 56; Number of
projects: 16.
Field office: Denver; Project approval rate (%): Within 18 months: 33;
Project approval rate (%): Within 24 months: 58; Number of projects:
12.
Field office: Des Moines; Project approval rate (%): Within 18 months:
29; Project approval rate (%): Within 24 months: 71; Number of
projects: 7.
Field office: Detroit; Project approval rate (%): Within 18 months: 50;
Project approval rate (%): Within 24 months: 70; Number of projects:
10.
Field office: Fort Worth; Project approval rate (%): Within 18 months:
43; Project approval rate (%): Within 24 months: 71; Number of
projects: 14.
Field office: Greensboro; Project approval rate (%): Within 18 months:
93; Project approval rate (%): Within 24 months: 93; Number of
projects: 14.
Field office: Hartford; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 10; Number of projects:
10.
Field office: Houston; Project approval rate (%): Within 18 months: 14;
Project approval rate (%): Within 24 months: 71; Number of projects: 7.
Field office: Indianapolis; Project approval rate (%): Within 18
months: 67; Project approval rate (%): Within 24 months: 83; Number of
projects: 6.
Field office: Jackson; Project approval rate (%): Within 18 months: 25;
Project approval rate (%): Within 24 months: 75; Number of projects: 4.
Field office: Jacksonville; Project approval rate (%): Within 18
months: 13; Project approval rate (%): Within 24 months: 50; Number of
projects: 16.
Field office: Kansas City; Project approval rate (%): Within 18 months:
29; Project approval rate (%): Within 24 months: 71; Number of
projects: 7.
Field office: Knoxville; Project approval rate (%): Within 18 months:
50; Project approval rate (%): Within 24 months: 100; Number of
projects: 6.
Field office: Little Rock; Project approval rate (%): Within 18 months:
83; Project approval rate (%): Within 24 months: 100; Number of
projects: 18.
Field office: Los Angeles; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 30; Number of projects:
20.
Field office: Louisville; Project approval rate (%): Within 18 months:
67; Project approval rate (%): Within 24 months: 92; Number of
projects: 12.
Field office: Manchester; Project approval rate (%): Within 18 months:
9; Project approval rate (%): Within 24 months: 64; Number of projects:
11.
Field office: Milwaukee; Project approval rate (%): Within 18 months:
6; Project approval rate (%): Within 24 months: 39; Number of projects:
18.
Field office: Minneapolis; Project approval rate (%): Within 18 months:
45; Project approval rate (%): Within 24 months: 91; Number of
projects: 11.
Field office: Nashville; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 80; Number of
projects: 10.
Field office: New Orleans; Project approval rate (%): Within 18 months:
27; Project approval rate (%): Within 24 months: 45; Number of
projects: 11.
Field office: New York; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 36; Number of projects:
22.
Field office: Newark; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 22; Number of projects: 9.
Field office: Oklahoma City; Project approval rate (%): Within 18
months: 67; Project approval rate (%): Within 24 months: 67; Number of
projects: 3.
Field office: Omaha; Project approval rate (%): Within 18 months: 50;
Project approval rate (%): Within 24 months: 100; Number of projects:
6.
Field office: Philadelphia; Project approval rate (%): Within 18
months: 18; Project approval rate (%): Within 24 months: 41; Number of
projects: 17.
Field office: Phoenix; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 22; Number of projects: 9.
Field office: Pittsburgh; Project approval rate (%): Within 18 months:
11; Project approval rate (%): Within 24 months: 33; Number of
projects: 9.
Field office: Portland; Project approval rate (%): Within 18 months:
27; Project approval rate (%): Within 24 months: 64; Number of
projects: 11.
Field office: Providence; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 40; Number of
projects: 5.
Field office: Richmond; Project approval rate (%): Within 18 months: 8;
Project approval rate (%): Within 24 months: 17; Number of projects:
12.
Field office: San Antonio; Project approval rate (%): Within 18 months:
20; Project approval rate (%): Within 24 months: 60; Number of
projects: 5.
Field office: San Francisco; Project approval rate (%): Within 18
months: 7; Project approval rate (%): Within 24 months: 38; Number of
projects: 29.
Field office: Seattle; Project approval rate (%): Within 18 months: 22;
Project approval rate (%): Within 24 months: 44; Number of projects: 9.
Field office: St Louis; Project approval rate (%): Within 18 months:
22; Project approval rate (%): Within 24 months: 89; Number of
projects: 9.
Field office: Total (all offices); Project approval rate (%): Within 18
months: 27; Project approval rate (%): Within 24 months: 55; Number of
projects: 494.
Source: GAO analysis of HUD DAP system, December 2002.
[End of table]
Table 19: Field Office Performance in Approving Metropolitan Projects
to Start Construction, All Metropolitan Projects Funded in Fiscal Years
1998 to 2000:
Field office: Atlanta; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 67; Number of metropolitan
projects: 6.
Field office: Baltimore; Project approval rate (%): Within 18 months:
22; Project approval rate (%): Within 24 months: 44; Number of
metropolitan projects: 9.
Field office: Birmingham; Project approval rate (%): Within 18 months:
67; Project approval rate (%): Within 24 months: 67; Number of
metropolitan projects: 3.
Field office: Boston; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 19; Number of metropolitan
projects: 16.
Field office: Buffalo; Project approval rate (%): Within 18 months: 18;
Project approval rate (%): Within 24 months: 55; Number of metropolitan
projects: 11.
Field office: Caribbean; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
metropolitan projects: 2.
Field office: Charleston; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
metropolitan projects: 1.
Field office: Chicago; Project approval rate (%): Within 18 months: 25;
Project approval rate (%): Within 24 months: 50; Number of metropolitan
projects: 12.
Field office: Cleveland; Project approval rate (%): Within 18 months:
10; Project approval rate (%): Within 24 months: 60; Number of
metropolitan projects: 10.
Field office: Columbia; Project approval rate (%): Within 18 months:
100; Project approval rate (%): Within 24 months: 100; Number of
metropolitan projects: 4.
Field office: Columbus; Project approval rate (%): Within 18 months:
54; Project approval rate (%): Within 24 months: 62; Number of
metropolitan projects: 13.
Field office: Denver; Project approval rate (%): Within 18 months: 14;
Project approval rate (%): Within 24 months: 29; Number of metropolitan
projects: 7.
Field office: Des Moines; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 80; Number of
metropolitan projects: 5.
Field office: Detroit; Project approval rate (%): Within 18 months: 56;
Project approval rate (%): Within 24 months: 67; Number of metropolitan
projects: 9.
Field office: Fort Worth; Project approval rate (%): Within 18 months:
46; Project approval rate (%): Within 24 months: 69; Number of
metropolitan projects: 13.
Field office: Greensboro; Project approval rate (%): Within 18 months:
86; Project approval rate (%): Within 24 months: 86; Number of
metropolitan projects: 7.
Field office: Hartford; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 10; Number of metropolitan
projects: 10.
Field office: Houston; Project approval rate (%): Within 18 months: 14;
Project approval rate (%): Within 24 months: 71; Number of metropolitan
projects: 7.
Field office: Indianapolis; Project approval rate (%): Within 18
months: 60; Project approval rate (%): Within 24 months: 80; Number of
metropolitan projects: 5.
Field office: Jackson; Project approval rate (%): Within 18 months: -;
Project approval rate (%): Within 24 months: -; Number of metropolitan
projects: 0.
Field office: Jacksonville; Project approval rate (%): Within 18
months: 13; Project approval rate (%): Within 24 months: 50; Number of
metropolitan projects: 16.
Field office: Kansas City; Project approval rate (%): Within 18 months:
33; Project approval rate (%): Within 24 months: 67; Number of
metropolitan projects: 6.
Field office: Knoxville; Project approval rate (%): Within 18 months:
33; Project approval rate (%): Within 24 months: 100; Number of
metropolitan projects: 3.
Field office: Little Rock; Project approval rate (%): Within 18 months:
75; Project approval rate (%): Within 24 months: 100; Number of
metropolitan projects: 4.
Field office: Los Angeles; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 30; Number of
metropolitan projects: 20.
Field office: Louisville; Project approval rate (%): Within 18 months:
80; Project approval rate (%): Within 24 months: 100; Number of
metropolitan projects: 5.
Field office: Manchester; Project approval rate (%): Within 18 months:
25; Project approval rate (%): Within 24 months: 50; Number of
metropolitan projects: 4.
Field office: Milwaukee; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 27; Number of
metropolitan projects: 11.
Field office: Minneapolis; Project approval rate (%): Within 18 months:
33; Project approval rate (%): Within 24 months: 83; Number of
metropolitan projects: 6.
Field office: Nashville; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 80; Number of
metropolitan projects: 5.
Field office: New Orleans; Project approval rate (%): Within 18 months:
25; Project approval rate (%): Within 24 months: 75; Number of
metropolitan projects: 4.
Field office: New York; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 36; Number of metropolitan
projects: 22.
Field office: Newark; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 22; Number of metropolitan
projects: 9.
Field office: Oklahoma City; Project approval rate (%): Within 18
months: 67; Project approval rate (%): Within 24 months: 67; Number of
metropolitan projects: 3.
Field office: Omaha; Project approval rate (%): Within 18 months: 50;
Project approval rate (%): Within 24 months: 100; Number of
metropolitan projects: 4.
Field office: Philadelphia; Project approval rate (%): Within 18
months: 21; Project approval rate (%): Within 24 months: 43; Number of
metropolitan projects: 14.
Field office: Phoenix; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 40; Number of metropolitan
projects: 5.
Field office: Pittsburgh; Project approval rate (%): Within 18 months:
14; Project approval rate (%): Within 24 months: 43; Number of
metropolitan projects: 7.
Field office: Portland; Project approval rate (%): Within 18 months:
17; Project approval rate (%): Within 24 months: 33; Number of
metropolitan projects: 6.
Field office: Providence; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 40; Number of
metropolitan projects: 5.
Field office: Richmond; Project approval rate (%): Within 18 months:
13; Project approval rate (%): Within 24 months: 25; Number of
metropolitan projects: 8.
Field office: San Antonio; Project approval rate (%): Within 18 months:
25; Project approval rate (%): Within 24 months: 75; Number of
metropolitan projects: 4.
Field office: San Francisco; Project approval rate (%): Within 18
months: 0; Project approval rate (%): Within 24 months: 43; Number of
metropolitan projects: 21.
Field office: Seattle; Project approval rate (%): Within 18 months: 13;
Project approval rate (%): Within 24 months: 38; Number of metropolitan
projects: 8.
Field office: St Louis; Project approval rate (%): Within 18 months:
17; Project approval rate (%): Within 24 months: 83; Number of
metropolitan projects: 6.
Field office: Total (all offices); Project approval rate (%): Within 18
months: 22; Project approval rate (%): Within 24 months: 51; Number of
metropolitan projects: 356.
Source: GAO analysis of HUD DAP system, December 2002.
[End of table]
Table 20: Field Office Performance in Approving Nonmetropolitan
Projects to Start Construction, All Nonmetropolitan Projects Funded in
Fiscal Years 1998 to 2000:
Field office: Atlanta; Project approval rate (%): Within 18 months: 33;
Project approval rate (%): Within 24 months: 67; Number of
nonmetropolitan projects: 3.
Field office: Baltimore; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 2.
Field office: Birmingham; Project approval rate (%): Within 18 months:
100; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 2.
Field office: Boston; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 4.
Field office: Buffalo; Project approval rate (%): Within 18 months: 67;
Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 3.
Field office: Caribbean; Project approval rate (%): Within 18 months: -
; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Charleston; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 2.
Field office: Chicago; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 2.
Field office: Cleveland; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 50; Number of
nonmetropolitan projects: 2.
Field office: Columbia; Project approval rate (%): Within 18 months:
60; Project approval rate (%): Within 24 months: 80; Number of
nonmetropolitan projects: 5.
Field office: Columbus; Project approval rate (%): Within 18 months:
33; Project approval rate (%): Within 24 months: 33; Number of
nonmetropolitan projects: 3.
Field office: Denver; Project approval rate (%): Within 18 months: 60;
Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 5.
Field office: Des Moines; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 50; Number of
nonmetropolitan projects: 2.
Field office: Detroit; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 1.
Field office: Fort Worth; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 1.
Field office: Greensboro; Project approval rate (%): Within 18 months:
100; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 7.
Field office: Hartford; Project approval rate (%): Within 18 months:
-; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Houston; Project approval rate (%): Within 18 months: -;
Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Indianapolis; Project approval rate (%): Within 18
months: 100; Project approval rate (%): Within 24 months: 100; Number
of nonmetropolitan projects: 1.
Field office: Jackson; Project approval rate (%): Within 18 months: 25;
Project approval rate (%): Within 24 months: 75; Number of
nonmetropolitan projects: 4.
Field office: Jacksonville; Project approval rate (%): Within 18
months: -; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Kansas City; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 1.
Field office: Knoxville; Project approval rate (%): Within 18 months:
67; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 3.
Field office: Little Rock; Project approval rate (%): Within 18 months:
86; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 14.
Field office: Los Angeles; Project approval rate (%): Within 18 months:
-; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Louisville; Project approval rate (%): Within 18 months:
57; Project approval rate (%): Within 24 months: 86; Number of
nonmetropolitan projects: 7.
Field office: Manchester; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 71; Number of
nonmetropolitan projects: 7.
Field office: Milwaukee; Project approval rate (%): Within 18 months:
14; Project approval rate (%): Within 24 months: 57; Number of
nonmetropolitan projects: 7.
Field office: Minneapolis; Project approval rate (%): Within 18 months:
60; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 5.
Field office: Nashville; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 80; Number of
nonmetropolitan projects: 5.
Field office: New Orleans; Project approval rate (%): Within 18 months:
29; Project approval rate (%): Within 24 months: 29; Number of
nonmetropolitan projects: 7.
Field office: New York; Project approval rate (%): Within 18 months:
-; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Newark; Project approval rate (%): Within 18 months: -;
Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Oklahoma City; Project approval rate (%): Within 18
months: -; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Omaha; Project approval rate (%): Within 18 months: 50;
Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 2.
Field office: Philadelphia; Project approval rate (%): Within 18
months: 0; Project approval rate (%): Within 24 months: 33; Number of
nonmetropolitan projects: 3.
Field office: Phoenix; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 4.
Field office: Pittsburgh; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 2.
Field office: Portland; Project approval rate (%): Within 18 months:
40; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 5.
Field office: Providence; Project approval rate (%): Within 18 months:
-; Project approval rate (%): Within 24 months: -; Number of
nonmetropolitan projects: 0.
Field office: Richmond; Project approval rate (%): Within 18 months: 0;
Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 4.
Field office: San Antonio; Project approval rate (%): Within 18 months:
0; Project approval rate (%): Within 24 months: 0; Number of
nonmetropolitan projects: 1.
Field office: San Francisco; Project approval rate (%): Within 18
months: 25; Project approval rate (%): Within 24 months: 25; Number of
nonmetropolitan projects: 8.
Field office: Seattle; Project approval rate (%): Within 18 months:
100; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 1.
Field office: St Louis; Project approval rate (%): Within 18 months:
33; Project approval rate (%): Within 24 months: 100; Number of
nonmetropolitan projects: 3.
Field office: Total (all offices); Project approval rate (%): Within 18
months: 39; Project approval rate (%): Within 24 months: 67; Number of
nonmetropolitan projects: 138.
Source: GAO analysis of HUD DAP system, December 2002.
[End of table]
Table 21 shows the average number of months that projects took to
complete various stages of the development process between Congress's
appropriation of funds for the Section 202 program and completion of
construction. For projects funded between fiscal years 1998 and 2000
that had been approved to start construction at the time of our
analysis, the average time taken from appropriation to approval to
start construction was 36 months. Projects that had also completed
construction took another 11 months, on average, from beginning to end
of construction. From appropriation to end of construction, the average
time taken was 47 months or almost 4 years.
Table 21: Average Duration of Stages of Section 202 Project
Development, Projects Funded Fiscal Years 1998 to 2000 That Were
Approved to Start Construction:
[See PDF for image]
Source: GAO analysis of HUD DAP system, December 2002.
[A] The average time for construction is based on a total of 193 projects
that completed construction: 110 from 1998, 69 from 1999, and 114 from
2000.
[B] The number of projects includes only projects that were approved to
start construction. An additional 11 projects from 1998, 37 projects
from 1999, and 82 projects from 2000 were not approved for construction
at the time of our analysis.
[End of table]
Table 22 summarizes the factors that HUD cited in extending the
processing time for projects beyond 24 months after the funding award.
This table draws on extension waivers approved between January 1998 and
June 2002 for projects funded between fiscal years 1998 and 2000,
showing the number and percentage of extended projects affected by each
factor.
Table 22: Factors Cited by HUD in Approved Time Extensions for Section
202 Projects Funded in Fiscal Years 1998 to 2000:
Factor:
Financing and cost issues; Number of extended projects affected: 29;
Percent of extended projects affected: 35%.
Seeking additional funding; Number of extended projects affected: 17;
Percent of extended projects affected: 20%.
Construction issues[A]; Number of extended projects affected: 11;
Percent of extended projects affected: 13%.
Other financial issues; Number of extended projects affected: 5;
Percent of extended projects affected: 6%.
State and local government issues; Number of extended projects
affected: 27; Percent of extended projects affected: 32%.
Historic preservation; Number of extended projects affected: 1; Percent
of extended projects affected: 1%.
Local review, approval, or permits; Number of extended projects
affected: 17; Percent of extended projects affected: 20%.
Zoning issues; Number of extended projects affected: 11; Percent of
extended projects affected: 13%.
Other state and local issues; Number of extended projects affected: 3;
Percent of extended projects affected: 4%.
Design/architect issues; Number of extended projects affected: 15;
Percent of extended projects affected: 18%.
Site change; Number of extended projects affected: 14; Percent of
extended projects affected: 17%.
Environmental issues; Number of extended projects affected: 8; Percent
of extended projects affected: 10%.
Site control; Number of extended projects affected: 8; Percent of
extended projects affected: 10%.
Community concerns/local opposition; Number of extended projects
affected: 8; Percent of extended projects affected: 10%.
Other site issues; Number of extended projects affected: 7; Percent of
extended projects affected: 8%.
Legal challenges; Number of extended projects affected: 6; Percent of
extended projects affected: 7%.
General delay in project processing[B]; Number of extended projects
affected: 19; Percent of extended projects affected: 23%.
Source: GAO analysis of HUD data.
Note: GAO analyzed HUD-approved project processing time extensions. 84
projects received a total of 103 extensions. Percentages do not total
100 because many projects received extensions for multiple reasons.
[A] Construction issues include increased construction costs and
difficulty finding a qualified contractor or obtaining a bid within the
capital advance amount.
[B] General delays in project processing include cases where HUD cited
the need for time for sponsors to submit or modify required paperwork
and for HUD to review paperwork, without stating a more specific
reason.
[End of table]
[End of section]
Appendix VI: Survey of HUD Field Office Representatives:
[See PDF for image]
[End of figure]
[End of section]
Appendix VII: Survey of Section 202 Sponsors and Consultants:
[See PDF for image]
[End of figure]
[End of figure]
[End of section]
Appendix VIII: Comments from the Department of Housing and Urban
Development:
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D.C.
20410-8000:
May 15, 2003:
OFFICE OF THE ASSISTANT SECRETARY:
FOR HOUSING-FEDERAL HOUSING COMMISSIONER:
Mr. David G. Wood Director:
Financial Markets and Community Investment United States General
Accounting Office Washington, DC 20548:
Dear Mr. Wood:
Thank you for the opportunity to provide comments on the General
Accounting Office (GAO) draft report: ELDERLY HOUSING: Project Funding
and Other Factors Delay Assistance to Needy Households (GAO-03-512).
The GAO report reflects an excellent understanding of the importance of
the Section 202 Supportive Housing Program in the delivery of
affordable housing to very low-income elderly households. We are
pleased that one of your observations of the report is that only a
relatively small part of the unexpended funds, about 14 percent, are
associated with pipeline projects that have exceeded HUD's 18-month
processing time guideline. The report also verifies that the number of
projects scheduled to reach construction start will double in the next
6 months, suggesting that the remaining projects represent an even
smaller share of the unexpended balances --approximately 7 percent. Our
comments do not question the conclusions in the report. Instead, they
are provided to give an indication of the progress we have made in
reducing the Section 202 pipeline since 2001.
In a report prepared for GAO in early fiscal year 2002, the Department
identified 118 Section 202 pipeline projects that had exceeded HUD's
processing time guidelines. As a result of the Department's aggressive
efforts to close, in particular, these pipeline projects; there are
only
36 of these projects remaining in the pipeline. We expect most of these
remaining projects to reach construction start by the end of the
current fiscal year. We are working diligently with our field offices
to assist the sponsors of 8 projects that were funded in Fiscal Year
1997 or earlier to reach a construction start by the end of this fiscal
year.
The Department certainly recognizes the importance of timely processing
for the Section 202 program and we have made that a priority. We
believe substantial improvement has been made since the end of FY 2000,
the concluding date for the analysis in this report. Due to increased
Headquarters monitoring, the number of projects reaching construction
start within 24 months has increased by 10 percent. In addition, late
in the last fiscal year, we conducted training to our field office
staff on processing Section 202 applications for the first time in ten
years.
The Department is aware that in some areas of the country, capital
advances may be insufficient to cover the cost of developing Section
202 projects. We have initiated steps to examine how HUD's Section 202
development cost limits compare with other objectively measurable
indicators of local construction costs. We are also aware that when
sponsors seek additional funds from other sources, the development time
is increased. However, if the Department increased the allowable per
unit cost limitations, there would be a reduction in the number
of units built under the Section 202 program. In addition, the
successful partnerships that have been developed with states,
localities and other interested parties over time would disappear. We
plan to explore this issue with the stakeholders of the Section 202
program early this summer.
Our specific comments on the Report's recommendations are as follows:
Recommendation:
* Evaluate the effectiveness of the current methods for calculating
capital advances.
Response:
We agree with this recommendation. We have already initiated steps to
examine how HUD's Sections 202 and 811 development cost limits compare
with other objectively measurable indicators of local construction
costs.
Recommendation:
* Make any necessary changes to these methods, based on this evaluation,
so that capital advances adequately cover the development costs of
Section 202 projects consistent with HUD's project design and cost
standards.
Response:
We will consider this recommendation and will be discussing this
recommendation with Section 202 stakeholders this summer.
Recommendation:
* Provide regular training to ensure that all field office staff are
knowledgeable of and held accountable for following current processing
procedures.
Response:
We agree with this recommendation. As noted in this report, during
Fiscal Year 2002, we provided the first training to field staff in 10
years. Subject only to resource limitations, we will continue to
implement an effective training program. Our next training will include
technical processing training for field staff to assure that there is
consistent processing in the field offices.
Recommendation:
* Update its handbook to reflect current processing procedures.
Response:
We agree with this recommendation. We have begun the process of
consolidating and updating the Section 202 Program Handbooks.
Recommendation:
* Improve the accuracy and completeness of information entered in the
Development Application Processing (DAP) system by field office staff
and expand the system's capabilities to track key processing stages.
Response:
We agree with this recommendation. There was an intensive effort to
verify the accuracy of the information in the DAP system during Fiscal
Year 2002. Expanding the capabilities of the DAP system is a top
Information Technology priority of the Office of Housing.
The Department is committed to ensuring that the Section 202 Program
continues to address the need for affordable elderly housing. GAO's
assistance in monitoring this program and the Department's performance
has been very beneficial.
John C. Weicher:
Assistant Secretary for Housing - Federal Housing Commissioner:
Signed by John C. Weicher:
[End of section]
(250083):
FOOTNOTES
[1] For fiscal year 2004, HUD proposed to separate the Housing for
Special Populations account into two accounts--Housing for the Elderly
and Housing for Persons with Disabilities.
[2] The period of availability for obligating Section 202 funds has
been limited in recent years. The fiscal year 2003 appropriations act,
for example, requires HUD to obligate fiscal year 2003 funds for the
Section 202 program by the end of fiscal year 2006. Under 31 U.S.C.
1552, HUD is required to disburse, and the project owner to expend, all
obligated Section 202 funds by the end of the fifth fiscal year after
the period of availability for obligation ends--in the case of Section
202 funds for fiscal year 2003, no later than the end of fiscal year
2011. Any remaining balance (whether obligated or unobligated) in the
account after the fifth year is to be canceled and is not available for
obligation or expenditure.
[3] PRACs provide rental assistance payments to a property to pay the
difference between the units' approved operating costs and the tenant
rental contributions (generally 30 percent of adjusted income).
[4] U.S. Census Bureau, Current Housing Reports - Series H150/01,
American Housing Survey for the United States: 2001. This report can be
found at http://ww.huduser.org/datasets/ahs.html.
[5] For a description of the sample design, refer to Appendix B of U.S.
Census Bureau, Current Housing Reports - Series H150/01, American
Housing Survey for the United States: 2001.
[6] The formulas and methodology for computing these sampling errors
are provided in Appendix D of U.S. Census Bureau, Current Housing
Reports - Series H150/01, American Housing Survey for the United
States: 2001.
[7] A more complete discussion of these sources of error (including
response inconsistencies for various questions) can be found in
Appendix D of the Census' Current Housing Reports for 2001.
[8] U.S. Census Bureau, Current Housing Reports - Series H121/95-01,
American Housing Survey: A Quality Profile, July 1996.
[9] In the absence of additional income, an elderly homeowner can,
among other things, downsize to a more affordable home, seek property
tax relief, or access the home's equity through a home equity
conversion mortgage ("reverse mortgage").
[10] HOME also provides homeownership assistance.
[11] Although properties with FHA-insured multifamily mortgages today
are often termed unassisted because they do not receive project-based
rental assistance, projects may receive grants, tax concessions,
subsidies, and other subsidies from federal, state, and local
governments.
[12] Since 1994, public housing has not received new appropriations to
fund incremental units. HUD funds the replacement of existing public
housing units through the HOPE VI program. This program, however, does
not increase the supply of affordable housing.
[13] These programs included Section 8 New Construction/Substantial
Rehabilitation, Section 8 Loan Management Set Aside, Section 8 Property
Disposition, and Section 8 Moderate Rehabilitation. Some of these
programs overlapped with other mortgage subsidy programs.
[14] For example, every year the Internal Revenue Service requires that
the state agencies responsible for awarding tax credits under the tax
credit program submit updated plans that outline how they will
distribute their allocations of tax credits. See HUD's 2002 report
Analysis of State-Qualified Allocation Plans for the Low-Income Housing
Tax Credit Program.
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