Background

A number of HUD’s large grant programs are subject to the AFFH  requirement. These programs include the following:    CDBG program: The CDBG program is authorized by Title I of the  Housing and Community Development Act of 1974, as amended. The  program provides annual grants to states, metropolitan areas, and urban  counties to fund an extensive array of community development activities,  such as providing decent housing and a suitable living environment and  expanding economic opportunities that primarily benefit Americans of   modest financial means. The CDBG program was funded at about $3.6  billion in fiscal year 2009, making CDBG the largest grant program, with  the largest number of grantees.
HOME program: The HOME program is the largest government-sponsored  affordable housing production program. HOME was authorized under Title  II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as  amended, and provides grants to states and localities, often in partnership  with local nonprofit groups. These grants are used to fund a wide range of  activities that build, buy, and rehabilitate affordable housing for rent or  sale and provide direct rental assistance to low-income people. The  program was funded at about $1.8 billion in fiscal year 2009.
HOPWA program: HOPWA is intended to address the urgent housing  needs of low-income Americans living with HIV/AIDs, who are  disproportionately represented in low-income minority communities.  HOPWA funds may be used for a wide range of housing, social services,  program planning, and development costs. HOPWA funds also may be  used for health care and mental health services, chemical dependency  treatment, nutritional services, case management, assistance with daily  living, and other supportive services. HOPWA was funded at about $310  million in fiscal year 2009.
ESG program: The ESG provides homeless persons with basic shelter and  essential supportive services. It also provides short-term homeless  prevention assistance to persons at imminent risk of losing their own  housing due to eviction, foreclosure, or utility shutoffs. The ESG was  funded at about $1.7 billion, in fiscal year 2009.

		AI Requirement Established in HUD Regulations

To help ensure that grantees receiving funds through the CDBG and other  formula grant programs are meeting the AFFH requirements, HUD  regulations require them to prepare and maintain AIs. HUD defines the AI  as a comprehensive review of potential impediments and barriers to the  right to be treated fairly when seeking housing. The AI is expected to  cover public and private policies, practices, and procedures affecting  housing choice and assess how they all affect the location, availability, and  accessibility of housing. Grantees are also to develop strategies and  actions to overcome these barriers based on history, circumstances, and  experiences. In effect, the AI is a tool that is intended to serve as the basis  for fair housing planning; provide essential information to policymakers,  administrative staff, housing providers, lenders, and fair housing advocate;  and assist in building public support for fair housing efforts. Grantees may  use a portion of their CDBG and other grant funds to prepare their AIs,  and AIs may be prepared by the grantees themselves or under contract  with external parties, such as fair housing groups, consultants,  universities, or others.
While HUD regulations require grantees to prepare AIs, other requirements  pertaining to these local planning documents are limited. For example,  HUD has not issued regulations specifying how often grantees should  update their AIs or the specific elements that should be included in them.  HUD regulations also do not require grantees to submit their AIs to the  department for review and approval. Instead, CDBG and HOME grantees  are to annually certify to HUD that they are meeting AFFH requirements,  which include having prepared an AI, taking steps to address identified  impediments, and maintaining records of their actions. HUD generally  accepts grantees annual AFFH certifications, including that they have  prepared AIs, and will not initiate further reviews unless evidence to the  contrary emerges from complaints or through the department’s routine  monitoring activities.
While HUD has not issued regulations that specifically define when the  grantees’ must update their AIs, or what elements they must include, it has  issued recommended guidance on these subjects. As discussed in this  report, for example, HUD has issued guidance recommending that  grantees update their AIs every 3 to 5 years. In 1996, HUD also issued a fair  housing guide, which included a suggested format for AIs and other  important fair housing planning elements (see table 1). The format and  elements include an introduction and executive summary; jurisdictional  and background data, such as demographic data and analysis; and an  evaluation of the jurisdiction’s current fair housing legal status, such as a  listing and description of fair housing related complaints that have been  filed and their status or resolution. Further, the suggested format and  other elements include a listing of the impediments identified, proposed  actions and time frames to overcome them, and the signatures of top  elected officials.

		Grantees’ AFFH Activities May Also Be Addressed in Other Required Reports to HUD

Although HUD does not require grantees to submit their AIs to the  department for review and approval, it does require them to periodically  submit other reports on their overall use of CDBG and other grant  program funds, such as HOME, HOPWA, and ESG. In some cases, HUD  specifically requires that grantees include in these reports information  about their AFFH activities. These AFFH activity reports include the  following:    Consolidated Plan (ConPlan): The ConPlan, which grantees must file with  HUD for review and approval every 5 years, is a planning document that  identifies low- and moderate-income housing needs within a community  and specifies how grantees intend to use federal funds to address those  needs. According to HUD, the purpose of the ConPlan is to enable  grantees to shape the various housing and community development  programs into effective, coordinated neighborhood and community  development strategies. Within their ConPlans, grantees are to provide  their AFFH certifications annually, as described here.
Annual Action Plan: Grantees are required to submit an Annual Action  Plan. These annual plans lay out how the grantees plan to achieve the  overall objectives in their consolidated plans in the coming fiscal year.
Consolidated Annual Performance and Evaluation Report (CAPER):  Within 90 days at the end of the program year, grantees that have approved  ConPlans must file a CAPER with HUD, which reports on the progress  they have made in carrying out the activities described in their Annual  Action Plans. The CAPER must include, among other things, actions taken  to affirmatively further fair housing. HUD is responsible for reviewing the  accuracy of the CAPER. Because HUD does not require grantees to submit  AIs, the CAPER serves as the main document that department officials use  to learn about grantees’ fair housing activities and accomplishments.

		HUD’s AFFH Oversight Structure Involves Two Offices and Numerous Regional and Field Offices

Two HUD offices share responsibility for overseeing CDBG and HOME  grantees’ compliance with AFFH requirements, including those pertaining  to their AIs: the Office of Community Planning and Development (CPD)  and the Office of Fair Housing and Equal Opportunity (FHEO). CPD is  responsible for helping ensure that grantees are in overall compliance with  CDBG and other grant program requirements. For example, CPD is  responsible for ensuring that grantees spend federal funds on approved  activities, such as affordable housing creation and community  development. To carry out their oversight activities, CPD staff are to  review and approve grantees’ ConPlans, Annual Action Plans, and CAPERs  and conduct on-site monitoring reviews of a limited sample of high-risk  grantees each year to assess their compliance with various program  requirements, including those pertaining to AFFH. HUD has the authority  to disapprove a ConPlan if the grantee’s AFFH certification is inaccurate  or missing. Disapproval of a ConPlan may result in withholding CDBG and  other formula grant funds until the grantee submits an adequate AFFH  certification within an established time frame. While CPD serves as HUD’s  main liaison with grantees, FHEO maintains final authority to determine  and resolve matters involving fair housing compliance, including the AFFH  requirement. In carrying out their responsibilities, FHEO staff may use the  results of CPD’s oversight activities, such as its reviews of grantees’  reports and on-site monitoring reviews. FHEO staff also are to  independently review grantee reports, such as their CAPERs, and may  conduct on-site monitoring reviews of grantees on a limited basis.
HUD maintains 10 regional offices and 81 field offices. CPD and FHEO  staff are located in approximately 44 of the field offices, which have  primary responsibility for monitoring and enforcing AFFH requirements,  including those pertaining to AIs. Field and regional office staff generally  consult with CPD and FHEO officials in HUD’s headquarters offices on  key decisions and activities, including whether to disapprove a grantee’s  ConPlan or AI.

	Many Grantees’ AIs Are Outdated or Otherwise Out of Conformance with HUD Guidance and Thus There Is Limited Assurance They Serve as Effective Fair Housing Planning Tools

While we estimate that the majority of grantees have current AIs in  accordance with HUD guidance, many others may be outdated per the  guidance. Specifically, we estimate that 29 percent of all AIs were  prepared in 2004 or earlier, including 11 percent that date from the 1990s.  Because many grantees’ AIs are outdated, they may not provide a reliable  basis to identify and mitigate current impediments to fair housing that may  exist within their communities. We also (1) did not receive AIs from 25  grantees despite repeated requests that they provide them, which suggests  that, in some cases, grantees may not maintain the documents as is  required; and (2) several grantees provided documents with their status as  AIs not clear due to their brevity and lack of content. While the majority of  grantees may have current AIs, we question the usefulness of many such  AIs as fair housing planning documents. We reviewed a subset of current  AIs we received (those dating from 2005 through 2010) for a variety of  reasons, including to gain insights into the types of impediments they  identified and to determine whether they included the key elements  identified by HUD in its 1996 fair housing guidance.  The most commonly  cited impediments to fair housing choice were zoning restrictions,  inadequate public services in low-and moderate-income areas, lending  discrimination, and a lack of public awareness about fair housing rights.  Further, we found that current AIs generally contained several basic  elements suggested in HUD’s guidance, such as demographic data and  analysis, and recommendations to overcome identified impediments.  However, a significant majority of the current AIs did not identify time  frames for implementing the recommendations or contain the signatures  of top elected officials as is also suggested in HUD’s guidance. As a result,  these AIs may not provide a reliable basis for measuring the grantees’  progress in overcoming impediments or reasonable assurance that top  elected officials endorse the recommendations in the AI and are  accountable for implementing them. In sum, our review found limited  assurances that grantees are placing needed emphasis on preparing AIs as  effective planning tools to identify and address potential impediments to  fair housing as required by statutes governing the CDBG and HOME  programs and HUD regulations and guidance.

		An Estimated 29 Percent of AIs Are Outdated and Thus May Not Provide a Reliable Basis for Identifying and Mitigating Current Impediments to Fair Housing

We estimate that while 64 percent of all grantees have current AIs, 29  percent may be outdated having been prepared in 2004 or earlier  (including 11 percent from the 1990s), and the date for 6 percent could not  be determined (fig. 1). While HUD has not officially defined what  constitutes an outdated AI through regulation, it has issued guidance that  addresses how often an AI should be updated. Using HUD’s guidance and  interviews with department officials as criteria, we define an AI as  outdated if it was completed in 2004 or earlier. Specifically, HUD’s 1996  Fair Housing Planning Guide—the main reference document for grantees  in developing AIs—suggests that grantees conduct or update them at least  every 3 to 5 years, in part to be consistent with the consolidated planning  cycle. On February 14, 2000 and again on September 2, 2004, HUD issued  memorandums to all CPD and FHEO officials to remind grantees to update  their AIs annually when necessary, but especially at the beginning of a new  consolidated 5-year planning cycle. In addition, HUD’s 2009 study on  grantees’ AI conformance concluded that the grantees with AIs dating  from the 1990s may place a low priority to them and that such AIs should  be updated.
The incidence of outdated AIs was generally consistent across the country  and among both large and small grantees. Figure 2 shows the percentage  of grantees with outdated AIs in each of the geographic areas covered by  HUD’s 10 regional offices, which ranged from a low of 14 percent in  Region IV to a high of 45 percent in Region VII. Despite the variation, only  one region had a statistically significant difference between its percentage  of outdated AIs and the percentage at the national level.
HUD’s 2009 internal study on AI conformance also concluded that many  grantees’ AIs were outdated. Specifically, in examining the timeliness of  45 AIs in its sample, HUD found that about 18 percent (8) were produced  before 2000 and had not yet been updated. While the HUD study provides  some insights into the AIs, its findings cannot be generalized to the entire  population because of limitations in its sampling methodology.
Because many grantees’ AIs are outdated, they may not provide a reliable  basis for identifying and mitigating impediments to fair housing. For  example, HUD’s 1996 fair housing guidance suggests that grantees use  demographic data from the U.S. Census Bureau when preparing their AIs  and to update these planning documents as new census data becomes  available. Updated census data could indicate demographic trends within  a jurisdiction that might be useful in preparing an AI, such as whether  particular areas of a jurisdiction are becoming progressively more or less  segregated over time and the potential reasons thereof. Moreover,  according to one FHEO field office official, grantees should update their  AIs every 5 years per the guidance, because the impediments to fair  housing in a particular community evolve and change, and new issues can  occur on a continuing basis. Another FHEO field office official said that an  AI dated from the 1990s would not be considered current under any  circumstances. The official said that grantees should update their AIs  periodically to adjust to the development of potential impediments to fair  housing choice within their communities. For example, the official noted  that, subprime mortgage lending grew substantially during the 2000s, and  subprime mortgage lenders potentially disproportionately targeted  minority borrowers, which resulted in many foreclosures among such  groups.  Without taking steps to update their AIs, whether grantees that  receive federal funds through the CDBG, HOME, and other grant programs  are sufficiently focused on overcoming current impediments to fair  housing that may exist within their communities is unclear.

		We Did Not Receive AIs from 25 Grantees and the Brevity and Lack of Content of Others Raised Questions about Whether They Were AIs

We did not receive AIs from 25 grantees, despite intensive follow up  efforts that included multiple e-mails and phone calls to appropriate  officials. Representatives from some of these grantees offered several  reasons for not providing the requested AIs. For example, representatives  from two grantees said that they could not find their AIs, and a  representative from another said an AI had not been prepared. Further,  representatives from 8 grantees stated that they had already sent us their  AIs, although we have no record of receiving them. We cannot definitively  determine that all these grantees are out of compliance with statutes and  HUD regulations requiring grantees to maintain AIs. However, the failure  of these grantees to provide AIs, together with the results of HUD’s 2009  study that also found that some grantees did not provide AIs as requested,  raises questions about whether some jurisdictions may be receiving  federal funds without preparing the documents required to demonstrate  that they have taken steps to affirmatively further fair housing.
Our analysis of the 441 AIs we received from grantees also indicates that  the documents ranged in length from several hundred pages with  supporting graphs and other materials to a few pages of content. For  example, one grantee’s AI contained 64 tables illustrating a wide variety of  information, ranging from a breakdown of the grantee’s population by  race, ethnicity, and poverty status to the rates at which low-income  applicants in the grantee were denied conventional loans. While AIs may  consist of many pages, length does not necessarily indicate the quality of  these documents. For example, some lengthy AIs we reviewed had reports  attached, including their CAPERS, that grantees were required to submit  to HUD separately. On the other end of the spectrum, we identified five  documents whose status as AIs was unclear based on their brevity and  limited content. Specific examples are as follows:    One grantee provided a four-page survey of residents within the  community on fair housing issues.
One grantee provided a two-page document that largely discussed its  progress in implementing a local statute pertaining to community  preservation and that contained two sentences describing a fair housing  impediment.
One grantee provided a three-page document that contained descriptions  of activities designed to help the homeless and other special needs groups  and described the actions that the grantee took to address barriers to  affordable housing.
One grantee provided a four-page description of the community itself, and  it did not identify impediments to fair housing.
One grantee provided a two-page e-mail that identified one impediment to  fair housing choice, and in follow up conversations an official from this  grantee, confirmed that the document constituted its AI.
Given the brevity and lack of content in these documents, they may not  constitute AIs as required by the CDBG and HOME statutes and HUD  regulations.

		Analysis of Current AIs Indicates That Authorship and Types of Identified Impediments to Fair Housing Vary Widely

While many AIs are outdated or, in some cases, grantees may not maintain  the documents as required by HUD, we did estimate that 64 percent of  grantees have prepared current AIs. To gain insights into current AIs, we  reviewed a subset of 60 of the 281 such documents that we received for a  variety of reasons, including to determine their authorship. HUD’s 1996  guidance suggests that AIs may be authored by grantees, fair housing or  industry groups, universities or colleges, or any combination thereof. Our  analysis indicates that grantees, through their community development  and planning offices, for example, had prepared about half of the 60  current AIs we reviewed (table 2). In 9 of the 60 cases we reviewed, the  grantee had contracted with a fair housing organization; in 9 of the 60  cases with a private consulting firm; and in 4 cases with a university or  college. In about 6 of the cases, the AI did not identify the author, or the  author’s identity was not clear.
We also reviewed 30 of the 60 current AIs to identify the types of  impediments to fair housing choice that had been identified by the  grantees. While these grantees cited a variety of potential impediments in  their AIs, at least half identified four types of impediments (table 3): (1)  zoning and site selection, (2) neighborhood revitalization, (3) lending  policies and practices, and (4) fair housing informational programs.
We also identified specific examples of each of these four impediments  and the grantees’ planned actions to address them as described here.
Zoning and site selection. One AI we reviewed, which was prepared on  behalf of several grantees by a regional planning unit within a local  university, identified some of their established or planned land use policies  as potential impediments to fair housing. For example, the AI found that  some of the grantees had minimum lot-size requirements for building  single-family residences that could limit housing affordability. The AI  noted that a 1-acre minimum lot size, for example, would create land costs  that would make owning or renting homes on such lots unaffordable to  low-income families. Further, the AI noted that some of the grantees were  considering requiring that all new homes be constructed of brick, a  requirement that could substantially increase construction costs compared  with siding and make the homes unaffordable to low-income families. To  address these potential impediments, the AI recommended that the  grantees (1) ensure that a sufficient portion of their communities were  zoned for multifamily construction and that lot sizes for single-family  housing were small enough to keep single-family housing affordable and  (2) consider the potential impact on housing affordability, including on  minority families, before adopting building codes that require all-brick  construction.
Neighborhood revitalization, municipal and other services, employment- housing transportation linkage. One AI prepared by a private nonprofit  fair housing organization on behalf of several grantees noted that the  area’s transportation system was inadequate to service the needs of all  residents. The AI concluded that residents who wanted or needed to use  public transportation were obliged to limit their residences to the  jurisdictions in which their jobs were located even if they wanted to live  elsewhere. To address this impediment, the AI recommended that the  grantees support a regional transportation system that not only provided  services to low- and moderate-income households throughout the area but  also met the needs of employers in geographic areas that were not  currently served.
Lending policies and practices. An AI for a large county comprising  several grantees included a review of data required under the Home  Mortgage Disclosure Act (HMDA). The analysis found that mortgage  lenders in the jurisdiction denied the applications of upper-income black  applicants at a rate that was three times higher than the rate for equally  situated white applicants. Further, the AI found that the loan denial rate  for Hispanic mortgage applicants was twice as high as that of equally  situated white applicants. The AI recommended that the grantees contract  with a consultant to prepare and conduct training for mortgage lenders to  encourage their voluntary compliance with fair housing laws. Finally, the  AI recommended that the grantees continue to monitor HMDA data to  determine if the educational programs had a positive effect on loan denial  rates for minorities.
Fair housing informational programs. An AI for a county concluded that,  because the grantee received few complaints from residents about fair  housing, there might be a lack of public knowledge about fair housing  rights and responsibilities. The AI suggested that because residents might  not be aware of such issues, landlords and others involved in the real  estate business could feel that they had more leeway in dealing with  potential home buyers and renters. As a result, the AI recommended that  the grantee should promote fair housing education through public  workshops, presentations at schools and libraries, public service  announcements in English and Spanish, and the distribution of fair  housing literature at all county facilities and events.

		Lack of Time Frames for Implementing Recommendations and the Signatures of Top Elected Officials Raises Questions about the Usefulness of Many Current AIs as Planning Documents

While current AIs may identify a variety of potential impediments to fair  housing and strategies to overcome them, questions exist about the status  of many such AIs as local planning documents. As part of our review, we  found that the 60 current AIs generally included five of the seven key  elements in the suggested format for AIs contained in HUD’s 1996 fair  housing guidance (table 4). Specifically, four of these elements were  present in over 55 of the 60 grantees’ AIs: jurisdictional background data,  evaluation of fair housing legal status, identifications of impediments to  fair housing choice, and conclusions and recommendations. The  introduction and executive summary were present in 52 of the grantees’  AIs. However, we found that only 12 of the AIs included time frames for  implementing recommendations for overcoming impediments and that  only 8 AIs included the signatures of top elected officials.
The lack of time frames for implementing proposed actions among a  substantial majority—48 of the subset of 60 current AIs we reviewed—is  potentially significant. HUD’s guidance on including estimated time frames  for implementing recommendations is generally consistent with our view  that time frames are an important component of effective strategic and  other planning process. Recognizing the importance of specific time  frames, officials from one HUD field office we contacted routinely  provided technical advisory notices to aid grantees that were preparing or  updating their AIs. These notices recommend, among other things, that  grantees include benchmarks and timetables for implementing actions in  their AIs. In the absence of established time frames in AIs, determining  whether grantees are achieving progress in implementing  recommendations to overcome identified impediments is difficult.
Further, our finding that 52 of the 60 current AIs did not include the  signatures of top elected officials raises questions as to whether the  officials endorse the analyses and support suggested actions in the AIs and  are accountable for implementing them. These questions may be  particularly significant with respect to the 25 AIs identified in table 2 that  were prepared by an external party under contract, such as a fair housing  group or consultant, rather than by the grantee through one of its  agencies. Our review indicates that none of these 25 AIs had been signed  by the grantees’ top elected officials. While HUD field office officials we  contacted said the lack of these signatures did not necessarily mean that  the grantees did not plan to implement the actions described in the  documents, other HUD officials disagreed. For example, officials from two  field offices said that the lack of such signatures suggested that the  grantees may not endorse the analysis and recommendations in the AIs.  Officials from one of these field offices said that, in the absence of the  signature of a top elected official, an AI had little value as a planning  document. We note that HUD requires authorizing grantee officials to sign  documents that, among other things, certify that their ConPlans identify  community development and housing needs, contain specific short- and  long-term objectives to address such needs, and certify that the grantee is  following its department-approved plan. This is not an uncommon  accountability model for compliance-based regulatory structures.  Without the signatures of top elected officials, it is not clear that grantees  have established plans to identify and address impediments to fair housing  within their jurisdictions.
We identified an example of an AI that lacked time frames for addressing  impediments and had not been signed by a top elected official and that did  not appear to be functioning as an effective planning document. This AI,  which was prepared under contract by a fair housing group, had 15  specific recommendations, including conducting fair lending “testing” and  establishing an effective code enforcement program. We contacted the  CDBG representative for this grantee, who said that he believed that the AI  contained just two recommendations. The official also stated that, due to  other priorities, the grantee had not yet had time to implement either of  these two recommendations and did not have immediate plans to do so.
HUD’s 2009 study also raises questions about the usefulness of many AIs  as planning documents to identify and address potential impediments to  fair housing. As discussed previously, this study concluded that many of  the AIs in its sample dated from the 1990s, which HUD said indicated that  these grantees place a low priority on the documents. According to the  HUD study, moreover, many of the AIs reviewed did not conform to the  department’s guidance and appeared to have been prepared in a cursory  fashion. In sum, our findings that many AIs are outdated, may not be  prepared as required, or lack time frames and signatures, together with the  findings of HUD’s study, raise significant questions as to whether the AI is  effectively serving as a tool to help ensure that all grantees are committed  to identifying and overcoming potential impediments to fair housing  choice as required by statutes governing the CDBG and HOME programs  and HUD regulations.

	HUD’s Limited Regulatory Requirements and Oversight and Enforcement Approaches May Help Explain Why Many AIs Are Outdated or Contain Other Weaknesses

HUD’s AI requirements and oversight and enforcement approaches have  significant limitations that likely contribute to our findings that many such  documents are outdated or contain other weaknesses. In particular, HUD’s  regulations have not established standards for updating AIs or the format  that they must follow, and grantees are not required to submit their AIs to  the department for review. According to HUD’s 2009 internal report on AI  compliance, and CPD and FHEO officials, the limited regulatory  requirements pertaining to AIs and limited resources and competing  priorities adversely affect the department’s capacity to help ensure the  effectiveness of AIs as fair housing planning documents. Moreover, our  work involving 10 HUD field offices identified specific instances that  illustrate the limitations in the department’s AI oversight and enforcement  approaches and the need for corrective actions. For example, we found  that HUD officials rarely request grantees’ AIs during on-site monitoring  reviews or receive complaints from the public about such documents,  which means that the department often has minimal information about the  status of grantees’ AIs in terms of their timeliness and content. Conversely,  while we identified instances where certain field offices took proactive  steps to help ensure the integrity of the AI process, such as one office’s  efforts to better ensure that grantees update their AIs periodically, these  initiatives were not common. Recognizing the limitations in its AI  requirements and oversight and enforcement approaches, in 2009, HUD  initiated a process to update relevant regulations, but it is not clear what  issues any revised regulatory requirements will address or when they will  be completed. HUD has also developed plans to address limited staffing  resources that may have undermined its capacity to oversee grantees’ AIs  or implement any new regulatory initiatives, but it is unclear how effective  the initiatives will be. We note that some proposals that have been made,  such as a requirement that grantees submit their AIs to HUD for review,  would not necessarily involve a significant commitment of staff resources  and could have important benefits. In the absence of a department-wide  initiative to strengthen AI requirements and oversight and enforcement,  many grantees may place a low priority on ensuring that their AIs serve as  effective planning tools.

		HUD Regulations Do Not Establish Standards for the Timeliness of AIs or their Format, and Grantees Are Not Required to Submit Them for the Department’s Review

As discussed previously, HUD’s regulatory requirements pertaining to AIs  are limited. While HUD regulations require grantees to prepare AIs, they  do not specify when grantees must update them or the specific format they  must follow. Moreover, HUD’s regulations do not require grantees to  submit their AIs to the department on a routine basis for review to help  ensure their effectiveness as a tool to identify and address impediments to  fair housing. Instead, pursuant to statutes governing the CDBG and HOME  program, grantees are required to annually self-certify by attesting to HUD  that they are in compliance with the department’s AFFH requirements,  including those pertaining to the AI. Specifically, the self-certification,  which is generally a one-page document, attests that the grantee has  completed an AI, has taken steps to overcome the impediments identified  in the AI, and maintains records of its efforts. In general, HUD officials,  pursuant to department regulations, are to accept these self-certifications  as sufficient evidence that the grantee has an AI and is acting to implement  its recommendations.
While HUD does not require grantees to submit their AIs on a routine  basis, CPD and FHEO officials, who share AFFH oversight and  enforcement responsibilities, use several approaches to monitor their  overall compliance with AFFH requirements, including those requirements  that pertain to AIs. Specifically, these approaches, while limited, can  involve CPD or FHEO officials obtaining grantees’ AIs and following up as  may be deemed necessary. The following efforts describe how HUD  generally carries out these responsibilities:    Reviews of grantee reports and plans that, among other things, are to  address AFFH compliance. HUD CPD and FHEO officials are to regularly  review documents that grantees annually submit on their overall plans and  performance in complying with CDBG and other grant program  requirements. For example, at the end of the fiscal year, grantees are  required to submit their CAPER to HUD, which discusses their progress in  meeting their objectives for the use of CDBG and other grant funds. As  part of the CAPER, HUD requires grantees to include a description of  actions taken to AFFH. If determined necessary by a HUD reviewer of  either the Annual Action Plan or the CAPER, the department could request  that a grantee provide its AI for review and analysis.
On-site monitoring reviews to assess grantee compliance with HUD  requirements, which can include reviews of AFFH documentation, such  as AIs. Under HUD policy, CPD field officials are to conduct a limited  number of risk-based, on-site monitoring reviews each year to assess  grantees compliance with a variety of CDBG and other grant requirements.
In some cases, FHEO officials may join CPD officials on these monitoring  reviews or conduct independent monitoring reviews. HUD headquarters  establishes annual criteria for assessing risk each year and the percentage  of on-site monitoring reviews to be conducted. The criteria can include the  amount of the CDBG or HOME grant, the amount of time that has passed  since the last on-site review, and employee turnover in grantee offices  responsible for implementation of CDBG and other grant programs. CPD  officials generally were directed to visit at least 10 to 15 percent of the  grantees under their jurisdiction annually. As part of these reviews, CPD  may request that grantees provide copies of their most recent AIs. CPD  staff or FHEO staff may review these AIs and follow up with the grantees  where deemed warranted.
Reviews as part of a complaint. HUD may also receive complaints about  grantees’ AFFH compliance from a range of sources, including individuals,  fair housing groups, or federal, state, or local agencies. In conducting  investigations in response to such complaints, CPD or FHEO staff may  request that grantees provide their AIs as deemed appropriate.
If HUD officials identify concerns with grantees AIs through these  processes, they can take several different actions. These actions include  technical assistance, such as training workshops, to complete an AI;   a “Special Assurance” document, which HUD may draft in order to outline  a number of tasks that a grantee must do to fulfill requirements, including  describing actions to overcome the effects of identified impediments, and  creating a timetable for accomplishing these actions; these assurances  usually are signed by the grantee’s chief elected official to signify  cooperation; and    withholding CDBG and HOME funding by disapproving a grantee’s  ConPlan for failure to comply with requirements, including completion of  an AI.  According to HUD officials, this action is a last resort and rarely  used.

		HUD’s 2009 Study, CPD and FHEO Officials and Our Work at 10 Field Offices Have Identified Limitations in the Department’s Capacity to Help Ensure That AIs Serve as Effective Planning Tools

HUD’s 2009 internal study, CPD and FHEO officials in headquarters and  field offices, as well as our analysis involving 10 field offices have  identified significant limitations in the department’s long-standing AI  requirements and oversight and enforcement approaches. HUD officials  also cited staffing resource constraints as undermining their oversight  capacity and ability to implement corrective measures. Regarding HUD’s  2009 study, it concluded that the department’s limited AI regulatory  requirements and oversight processes contributed to the study’s findings  that many AIs were outdated or otherwise did not conform with the  department’ 1996 fair housing guidance. To better ensure that grantees  conform with HUD guidance, the report suggested requiring grantees to  submit their AIs for review and approval. The report noted that, because  grantees are not currently required to submit AIs to HUD, a possible first  step could simply be to implement a submission requirement. However,  the report also noted that HUD would have to dedicate sufficient  resources to conduct reviews of AIs and develop appropriate criteria for  assessing them. The study suggested that HUD consider both (1) requiring  grantees to post their AIs on the Internet and (2) compiling all submitted  AIs to be posted online at a single clearing house Web site to enhance  transparency and increase public awareness of the documents. Further,  the study suggested that HUD update its fair housing guidance and provide  additional technical assistance to grantees to help ensure they prepare  more effective AIs. For example, the study suggested that HUD assist  grantees in obtaining the data necessary to prepare AIs and provide  relevant training. However, HUD officials said the department has not yet  acted to implement the recommendations in the study.
While HUD has not yet acted on the recommendations in the 2009 internal  study, senior headquarters officials cited limited regulatory requirements  as adversely affecting oversight efforts. In the absence of specific  regulatory requirements, CPD officials said it is difficult for field offices to  ensure that grantees update their AIs within specified time frames or  conform to a specific format in preparing the documents, including the  signatures of top elected officials. In contrast, the CPD staff noted that  there are specific regulatory requirements pertaining to grantees  ConPlans, Annual Action Plans, and CAPERs, including when these  documents must be prepared and what must be included, which facilitates  their oversight efforts. Additionally, CPD and FHEO officials in HUD’s  headquarters cited limited resources and competing regulatory priorities  as limiting oversight of grantees’ AIs and AFFH compliance generally and  potentially posing challenges to any new regulatory initiatives. CPD  officials said that obtaining and reviewing grantees’ AIs is a low priority  for field office staff due to competing demands and limited resources, and  additional resources and technical expertise would be required for staff to  review and approve AIs as suggested in the department’s internal study.
CPD and FHEO officials from the 10 HUD field offices we contacted also  commented about limited AFFH regulatory requirements and oversight  approaches. For example, officials from 7 of the 10 field offices told us  that because grantees are not required to submit their AIs, verifying  whether grantees had AIs or had updated them was difficult. Some field  office staff officials also said that, because grantees are not required to  submit their AIs, their capacity to assess grantees’ overall compliance with  AFFH requirements is limited. For example, without requiring grantees to  submit their AIs, the officials said that they could not verify whether the  potential impediments to fair housing choice that may be cited in other  documents, such as the grantees’ 5-year ConPlan and CAPERs, were the  same impediments listed in their AIs. One field office officials suggested  that HUD require grantees to submit their AIs as part of their 5-year  consolidated plans to enable them to verify that the two documents were  consistent. Officials from several field offices also recommended that HUD  revise its regulations to require that AIs meet certain standards for  timeliness and completeness, which they said would enhance their  abilities to oversee and enforce the program.
Further, CPD and FHEO field office officials agreed with HUD  headquarters officials that declining resources and competing priorities  had limited their ability to assess grantees’ AIs or AFFH compliance  generally. Representatives from all of the 10 HUD offices we contacted  said that their staff levels had decreased recently while their workload had  increased, especially with the implementation of the American Recovery  and Reinvestment Act of 2009 (Recovery Act). For example, FHEO and  CPD officials in several field offices told us that they were losing staff due  to retirements and promotions. One FHEO Field Office Director said that  it had one official currently available to monitor 54 entitlement grantees’  compliance with all relevant statutes and regulations, including those  pertaining to AFFH, within the office’s jurisdiction. Additionally, CPD and  FHEO officials in one office commented that, at one time they had enough  staff to regularly send both a CPD and FHEO representative on on-site  monitoring reviews, but with staff reductions over the years, they are no  longer able to continue this practice. Field office officials also stated that  work priorities were often shifting, making it difficult for them to  consistently focus on one aspect of CDBG and other grant program  compliance.
We identified the following specific examples that illustrate how HUD’s  limited oversight and enforcement program on a nationwide basis may  have contributed to many AIs being outdated or not otherwise in full  conformance with department guidance, and further support the need for  corrective actions to address these limitations:    Our review of CAPERs for a group of grantees with outdated AIs raises  questions about the value of such reports as a means of assessing AFFH  compliance. As discussed previously, HUD’s annual reviews of CAPERs  and other required grantee reports are a key means by which department  officials assess AFFH compliance in the absence of a requirement that  grantees routinely submit their AIs for review. We selected a  nongeneralizable sample of 30 grantees with outdated AIs from the 441  grantees that sent us AIs. We requested that HUD provide the most  recently available CAPER report for each of these 30 grantees to help us  determine what information these reports contain about the grantees’ AIs,  and the department provided 27 CAPERs. In 17 of the 27 cases, the  grantees mentioned that they had an AI but did not specify the AI’s date. In  such cases, HUD field offices that rely on CAPER reviews to help assess  AFFH compliance may not be aware AIs are outdated unless they  specifically follow up with the grantee to find out the date of its AI. In 10  cases, the grantees’ CAPERs disclosed the date of their AI which, in some  cases, was from the 1990s. The extent to which HUD officials identify such  disclosures in CAPERs or follow up on them was not clear.
Field offices’ CPD on-site monitoring programs and complaint review  processes provide a limited basis for assessing grantees’ AIs and taking  follow up actions as may be required. We obtained data from 7 of the 10  field offices we contacted regarding the number of CPD on-site grantee  reviews they conducted in 2009 and the number of times they obtained or  reviewed AIs during such monitoring. As table 5 indicates, CPD field office  officials reported collecting or reviewing AIs in 17 of the 88 reviews.  Moreover, officials from these 7 field offices said they rarely if ever receive  public complaints about a grantee’s AI. Given the absence of public  complaints, which could be due to the fact that there may be a general  public unawareness that grantees are required to prepare AIs, the  complaint process does not appear to provide a systematic basis for HUD  to identify potential limitations in grantees’ AIs and follow up with them as  necessary.
Our visits to field offices located in the two HUD regions with the  highest incidence of outdated AIs illustrate some of the inherent  limitations in the department’s oversight and enforcement processes.  According to an FHEO official in one of these offices, historically, it has  generally been unaware of the current state of a grantee’s AIs, because the  grantees did not routinely submit them. In 2010, this official said the field  office requested that all of the grantees under its jurisdiction submit their  AIs, so that the office could gain a better perspective on the timeliness of  the AIs. In one case, the official said that the office learned that a grantee  that had been certifying its AFFH compliance for several years did not  have an AI. At the other field office, we identified instances where it  accepted AFFH certifications under questionable circumstances. For  example, in one case, representatives from a grantee told us that they  could not find its AI. When we asked field office officials about this  circumstance, they said that the grantee had provided a two-page  summary of an AI that it completed in 1996. Field office officials said that  they viewed the summary as sufficient evidence that the grantee had  completed an AI. Moreover, in distributing CDBG and other grant funds  each year, this field office sends routine communications which, among  other things, remind grantees to update their AIs periodically. While this is  a potentially positive step, the field office does not appear to take any  additional steps to ensure that AIs are not outdated. For example, we  identified at least one grantee subject to the field office’s jurisdiction that  has received such communications for four consecutive years, but its AI  was prepared in the 1990s.
While our analysis generally verified that there are limitations in HUD’s  overall AI oversight and enforcement approaches that require corrective  action, we identified practices in certain field offices that appear designed  to better ensure that AIs are effective planning documents and that  grantees fulfill overall AFFH requirements. As discussed previously, in  2010, one HUD field office we contacted independently requested that all  grantees within its jurisdiction provide their AIs for review, which allowed  FHEO officials to determine that many such AIs were outdated, and one  grantee did not have an AI. In another example, officials from one field  office said that they maintain ongoing communications with grantees to,  among other things, determine the date they completed their AIs. In cases  where an AI is determined to be outdated, officials told us that they work  closely with the grantee through technical assistance to bring the AI up to  date. We corroborated the field office’s assertion by reviewing the AIs we  received from grantees under its jurisdiction and found that all of the  grantees had sent us updated AIs. Another field office has established  procedures to use special assurance agreements, which were discussed  previously, to help ensure that grantees revise AIs that may have identified  deficiencies. However, these initiatives by individual field offices appear to  be isolated examples within HUD’s general approach to AI and AFFH  oversight, which provides limited assurances that AIs serve as effective  planning tools to identify and address impediments to fair housing.

		HUD Has Taken Steps to Begin to Address Regulatory, Oversight, and Resource Limitations, but These Efforts Are Ongoing

Recognizing the limitations in AI and AFFH requirements and its oversight  processes, in 2009, HUD initiated a process to review and revise its  existing regulations. In 2009, HUD officials held several “listening  sessions” with key stakeholders, such as grantees and fair housing groups,  to help identify approaches to enhance the AI and AFFH processes. In  January 2010, HUD’s Assistant Secretary for Fair Housing and Equal  Opportunity testified that the department was working on a proposed  regulation to enhance AFFH compliance. According to a senior HUD  attorney, revising the AFFH regulation is a priority for HUD, and the  proposed rule may cover a variety of topics, including enhancements to  the guidance provided to grantees on preparing AIs and improvements in  the department’s oversight and enforcement approaches. However, until  the rule is proposed, it is not clear what topics it will address. The HUD  attorney also said that the department’s tentative time frame for publishing  a proposed rule to revise AFFH requirements is in December of 2010.  However, the attorney also said that this proposed time frame had not  been finalized and was subject to change.
HUD has also established initiatives to help address staffing limitations  that, as discussed previously, may have affected its overall CDBG and  other grant program oversight and enforcement approaches, including  those pertaining to AIs and AFFH requirements, as well as its capacity to  implement any new regulatory initiatives. For example, on March 26, 2010,  the HUD Secretary sent out a memorandum on the agency’s Targeted  Recruitment Strategy for fiscal years 2010-2012. In this document, the  Secretary described a strategy for addressing HUD’s need to identify  qualified individuals for its talent pipeline over the next three fiscal years.  The Secretary stated that this strategy would incorporate the utilization of  various federal programs that are designed to recruit and retain students  to positions in the federal government, such as the Presidential  Management Fellows Program, the Student Career Experience Program;  and the Student Temporary Employment Program. During our review, a  CPD official said that the office recently announced a buyout for certain  officials and that CPD was “moving more aggressively to recruit and hire  approximately 50 new employees in the next 3 months with the skills to  provide grant oversight, assess grantee and community needs,” among  other activities.
While the effects of these plans and initiatives remain to be seen, we note  that some of the proposals to enhance HUD’s AI and AFFH oversight and  enforcement approaches would not necessarily involve a significant  commitment of additional staff resources. In particular, requiring grantees  to submit their AIs for review, without necessarily approving them, would  allow CPD and FHEO officials to perform a variety of basic tasks to better  ensure their quality. These tasks could include verifying whether AIs (1)  have been prepared as required, (2) updated in accordance with HUD  guidance, (3) include all elements suggested in the 1996 fair housing  guidance, and (4) are consistent with AFFH discussions in other key  documents, particularly CAPERs. If HUD officials identified any areas of  concern with grantees’ AIs through such analysis, they could follow up as  necessary, through technical assistance, enforcement actions, or other  activities as may be necessary, to better ensure that AI serve as effective  tools to identify and overcome impediments to fair housing. Moreover, the  resource demands could also be mitigated if grantees submitted their AIs  on a periodic basis over a period of time rather than all at once within a  specified period.

	Conclusions

While HUD regulations have required the preparation of AIs for many  years, whether they serve as an effective tool for grantees that receive  federal funds through the CDBG and other programs to identify and  address impediments to fair housing within their jurisdictions is unclear.  We estimate that 29 percent of all AIs are outdated, including 11 percent  that were prepared in the 1990s. Given that many AIs are outdated, they do  not likely serve as effective planning documents to identify and address  current potential impediments to fair housing choice. Moreover, some  grantees may not prepare AIs, and others sent us cursory documentation  as their AIs which, on the basis of their content, do not appear to be AIs.  While we estimate that 64 percent of grantees have prepared current AIs,  the usefulness of many such AIs as planning documents is uncertain. Our  review of a subset of 60 current AIs indicates that, while many of them  identify potential impediments to fair housing choice and contain  recommendations to overcome them, the vast majority also lack time  frames for implementing identified recommendations or the signatures of  top elected officials, both of which are necessary to establish clear  accountability to carrying out the AFFH intent. Without time frames,  judging a grantees’ progress in overcoming identified impediments is  difficult and, without the signatures of top elected officials, determining  whether responsible officials endorse the recommendations in the AIs and  are accountable for ensuring their implementation is unclear. Absent any  changes in the AI process, they will likely continue to add limited value  going forward in terms of eliminating potential impediments to fair  housing that may exist across the country.
HUD’s limited approach to establishing AI regulatory requirements, and its  limited oversight and enforcement approaches, may help explain the  various weaknesses in the documents that we have identified. Beyond  requiring grantees to prepare AIs, and certify annually that they have done  so and are addressing identified impediments, HUD requirements with  respect to AIs are minimal. Specifically, grantees are not required through  regulation to update their AIs periodically, include certain information,  follow a specific format in preparing AIs, or submit them to HUD for  review. These limitations are not new or unknown to HUD officials, yet  little progress has been made to address them. While HUD officials said  that the department is working on a regulation to enhance grantees’  compliance with AFFH requirements since 2009, what the regulation will  ultimately entail, or when it will be completed is unclear. In the meantime,  grantees will continue to have considerable flexibility in determining when  to update their AIs and what information to include in them, which could  lead to continued weaknesses in these fair housing planning documents.
We recognize that HUD faces resource challenges and competing priorities  in carrying out its overall CDBG and other grant program responsibilities,  including those pertaining to AFFH and AIs. However, depending on how  any changes are structured, resources could be better leveraged to provide  more coverage for overseeing grantees. For example, while HUD officials  expressed concerns about the resources and technical expertise necessary  to approve AIs, a grantee submission requirement itself could have several  significant benefits without necessarily involving a significant commitment  of staff resources. Specifically, a submission requirement could allow HUD  staff to verify basic items, such as whether grantees have prepared AIs as  required, and whether such AIs have been updated and conform to an  established format, and are consistent with other critical reports, such as  CAPERs. Moreover, a submission requirement would provide enhanced  incentives for grantees to better ensure that their AIs serve as effective  planning tools to identify potential impediments to fair housing and to  overcome them. Failure to require that grantees submit their AIs on a  regular basis will likely continue to result in many grantees not updating  the documents in a timely manner or adhering to any guidance or  requirements.

	Recommendations for Executive Action

To better ensure that grantees’ AIs serve as an effective tool for grantees  to identify and address impediments to fair housing, we recommend that  HUD expeditiously complete its new regulation pertaining to the AFFH  requirements. In so doing, we also recommend that HUD address three  existing limitations. First, we recommend that HUD establish standards  for grantees to follow in updating their AIs and the format that they should  follow in preparing the documents. Second, to facilitate efforts to measure  grantees’ progress in addressing identified impediments to fair housing  and to help ensure transparency and accountability, we recommend, as  part of the AI format, HUD require grantees to include time frames for  implementing recommendations and the signatures of responsible  officials. And finally, we recommend HUD require, at a minimum, that  grantees submit their AIs to the department on a routine basis and that  HUD staff verify the timeliness of the documents, determine whether they  adhere to established format requirements, assess the progress that  grantees are achieving in addressing identified impediments, and help  ensure the consistency between the AIs and other required grantee  reports, such as the CAPERs.

	Agency Comments and Our Evaluation

We provided a draft of this report to HUD for its review and comment. We  received written comments from HUD’s Assistant Secretary for Fair  Housing and Equal Opportunity, which are reprinted in appendix II. HUD  also provided technical comments, which we have incorporated as  appropriate.
In its written comments, HUD highlighted its recent actions to  affirmatively further fair housing. Among the recent initiatives to enhance  its AFFH compliance and oversight cited in HUD’s written comments were  the following:    HUD’s renewed commitment to AFFH. In fiscal year 2010, HUD said it had  strengthened and clarified the AFFH requirements for grantees that are  not specifically exempt in the FY 2010 Notice of Funding Availability and  General Section. According to HUD, to meet this requirement, applicants  for funding through these programs must now address how their proposed  activities will help overcome impediments to fair housing choice as  outlined in relevant AIs. HUD stated that by establishing AFFH as a policy  priority within HUD’s discretionary funding programs, will allow the  department to encourage grantees to undertake comprehensive and  innovative strategies to affirmatively further fair housing. For example,  HUD may take steps to reward grantees for participating in regional  efforts to promote integration or decreasing the concentration of poverty.
Increasing the level of AFFH review and technical assistance. According  to HUD, since the beginning of fiscal year 2010, FHEO regional and field  offices have increased the level review of grantee’s AIs within their  jurisdictions. The letter also stated that some offices have requested  grantees to submit their AIs whereas other offices are doing so on a risk  basis. Moreover, HUD stated that, since January 2010, it has increased its  training of grantees regarding their AFFH compliance requirement. This  training covers the AI and the importance of its completion, what  information should be included in the AI including race and ethnicity data,  who should complete the AI, the consequences of not completing the AI,  and how to report fair housing activities.
Improving HUD’s capacity for monitoring and enforcing AFFH  compliance. HUD stated that it is exploring ways to find greater  efficiencies and reduce staff time spent on routine administrative matters  and to dedicate more time to AFFH oversight. This is to include additional  training for HUD on AFFH oversight. Specifically, HUD said it is designing  training at its National Fair Housing Academy on reviewing submissions to  better ensure consistent and valid review criteria. HUD said it is also  developing uniform standards for its staff of review of grantees’ Annual  Action Plans and Consolidated Plans for compliance with AFFH  certifications.
While we commend HUD for recognizing the need to take steps to improve  its oversight of AFFH compliance, many of the key challenges we found in  our report do not appear to be addressed by its current plans. Specifically,  we note that HUD did not address the status of its planned AFFH  rulemaking efforts, including standards for grantees to follow in updating  their AIs and the format that they should follow in preparing the  documents, such as including the time frames for implementing  recommendations and the signature of responsible officials. Further, HUD  did not discuss any plans to require, at a minimum, that grantees submit  their AIs to the department on a routine basis to help ensure grantees  compliance with requirements and guidance pertaining to these  documents. In the absence of such regulatory requirements, the usefulness  of requiring AIs as a tool to affirmatively further fair housing is diminished.
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 the  appropriate congressional committees, to the Secretary of Housing and  Urban Development, and other interested parties. The report also will be  available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff members have any questions regarding this report,  please contact me at (202) 512-8678 or williamso@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

The objectives of our report are to (1) assesses both the conformance of  Community Development Block Grant (CDBG) and HOME Investment  Partnerships Program (HOME) grantees’ Analysis of Impediments (AI)  with Department of Housing and Urban Development (HUD) guidance  pertaining to their timeliness and content as well as the AIs’ potential  usefulness as fair housing planning tools and (2) identify factors that may  help explain any potential weaknesses in grantees AIs, particularly factors  related to HUD’s regulatory requirements and oversight and enforcement  approaches.
To address the first objective, we made a document request of a  representative sample of CDBG and HOME grantees asking that they  submit their most recent AI to us. Although there are four HUD formula  grant programs to which the AFFH documentation requirements apply,  our work focused on CDBG and HOME, the two largest of such programs  as measured by grant amount.
Prior to launching the AI document request, we obtained contact  information on CDBG and HOME grantees from HUD’s fiscal year 2009  CDBG program contacts Web site. We verified that the most up-to-date  contact information was the HUD’s Office of Community Planning and  Development (CPD) Community Connections, the clearinghouse of  information for CPD. From the total population of 1,209 fiscal year 2009  program participants on HUD’s Web site, which includes all 1,209 CDBG  grantees and 97 percent (634 of 650) of all HOME grantees, we selected a  random sample of 473 CDBG and HOME grantees. Using a two-way  stratification, we stratified the population by HUD’s 10 regions and  grantee’s grant size (less than $500,000 and $500,000 or more). We  independently selected a random sample of 48 grantees from each of 10  HUD regions (with the exception of Region VII where there were only 41  grantees in the population).
In January 2010, we sent out an initial e-mail to all 473 identified officials  and requested that grantees provide their most recent AIs to us. To ensure  a high response rate, we e-mailed follow-up requests to nonrespondents  approximately 2 and 4 weeks after the initial e-mail. As a result of this  follow-up, we learned that 7 grantees in our initial sample were out of the  scope of our study and subsequently excluded them, thereby reducing our  sample to 466 grantees. We then conducted intensive follow up with the  remaining nonrespondents, making repeated attempts to acquire the  requested AIs through multiple phone calls and e-mails conducted by  contractors hired specifically for this phase of the document request  effort. Despite repeated attempts to follow up with nonrespondents, 25  grantees did not submit an AI (see table 6 for rationales provided by  officials from these 25 grantees).
Upon conclusion of the document request effort, we received AIs from 441  grantees for a response rate of 95 percent. Following is a summary of  information from which we obtained the response rate:    Total population of AI: 1,209    Number of nonrespondents: 25    Estimated in-scope total population: 1,190    Response rate: 94.6 percent.
We conducted this AI request from January to March 2010.

	Analysis of Sample of 441 AIs from CDBG/HOME Grantees

To estimate the percentage of grantees with outdated and current AIs, the  sample data were weighted to make them representative of the population  of grantees from which the sample is drawn. Our sample is stratified by  region (10 HUD regions) and grant size (less than $500,000 and $500,000 or  more in fiscal year 2009), with equal numbers of grantees being selected  from each of 10 HUD regions. Since in our sample the probability of a  grantee being selected varied by stratum, we assigned different weights, or  sampling weights, to grantees in different strata when estimating  population statistics (percentages) for the combined groups. where, wh denotes the weight for the stratum (h=1, 2, …,20); Nh denotes the population for  the hth stratum; and nh denotes the total number of survey responses for the hth stratum.  We calculated the ratio estimate of the overall population as:  R = (Σw Σ yhi) / (Σw Σ xhi)  where, wh denotes the sample weight for the hth stratum; yhi represents the ith response  of the variable y response the in the hth stratum; xhi represents the ith response of the  variable x in the hth stratum; and R denotes a population estimate of the ratio.
To assess the precision of our estimates, we calculated 95 percent  confidence intervals for each measure. Calculated from sample data, a  confidence interval gives an estimated range of values that is likely to  include the true measure of the population. For the estimated percentage  of outdated AIs, we calculated a lower and upper bound at the 95 percent  confidence level (there is a 95 percent probability that the actual  percentage falls within the lower and upper bounds) of grantees by HUD  region and by grant size category using raw data and the appropriate  sampling weights. We used the standard errors of the estimates to  calculate whether any differences between the grantees by region and  grant size were statistically significant at the 95 percent confidence level.
To evaluate the timeliness of AIs, we relied on HUD criteria, including the  1996, 2000, and 2004 guidance that recommended that they be updated  every 3 to 5 years, and annually as necessary, and the findings of a 2009  internal HUD study on AI compliance, which concluded that AIs  completed in the 1990s are outdated. Specifically, using a data collection  instrument (DCI), we systematically noted the publication dates of all 441  AIs and also noted if no date was mentioned in the AI. We also collected  information on the author’s name, if available, and the number of pages.  Based on this, we categorized 64 percent AIs as current.

	Analysis of Sample of 60 Current AIs

Further, to gain more information on the contents of AIs categorized as  current (AIs completed from 2005 through 2010), we reviewed a  nonrepresentative subset of 60 current AIs to determine the extent to  which they contained sections that the HUD guidance suggests to include  in AIs: (1) executive summary/introduction, (2) grantee’s background data,  (3) current fair housing legal status, (4) identified impediments, (5)  recommendations, (6) time frames, and (7) signatures by chief elected  officials. We chose the subset on a weighted geographic basis to ensure  that it was reflective of the geographic distribution of the current AIs and  reflected grantees in terms of the distribution of fiscal year 2009 grant  sizes within region. We selected between five and seven grantees per HUD  region weighted slightly more toward grantees with larger grants because  they were more prevalent among the grantees with current AIs. As such,  per region, we selected between one and three grantees with grant sizes  less than $500,000 in fiscal year 2009 and between three and four grantees  with grant sizes of $500,000 or more. While we took steps to help ensure  that the 60 current AIs were reflective of the diversity in content in such  documents by basing the selection on such factors as the grantees’  geographic location and grant size, they are not representative of either all  current AIs in our sample or of all current AIs generally.

	Analysis of Sample of 30 Current AIs

Finally, we reviewed 30 of the nonrepresentative subset of 60 current AIs  to identify the types of potential impediments to fair housing choice that  are commonly identified in such documents and to provide specific  examples of such impediments. We selected a subset of 30 of the 60  current AIs and restricted our analysis to impediments summarized only in  one of three possible sections of the AI: introduction, executive summary,  or conclusion. To generate the sample of 30 current AIs from the larger  subset of 60, we selected 3 current AIs from each region, 1 from small  grantees (fiscal year 2009 grant amounts of less than $500,000), and 2 from  large grantees since this weighting is reflective both of the overall  distribution of grantees and of those with current AIs in which large  grantees are more prevalent. During the course of our analysis, 5 of the  original 30 were replaced with AIs from other similar grantees (based on  regions and grant size) from the subset of 60 AIs because they did not list  impediments in any of the three sections. While we took steps to ensure  that these 30 AIs were reflective of the diversity of the population of such  documents, they are not representative of current AIs in our sample or of  all AIs.
Qualitative analyses were conducted to identify and code impediments  listed in the 30 AIs. One GAO analyst identified the impediments described  in either the introduction, executive summary, or conclusion of the AI and  coded them from 1 to 13 using the types of possible impediments to fair  housing choice described in HUD’s 1996 Fair Housing Planning Guide. A  second analyst independently verified them by reviewing the codes  assigned by the first reviewer and then either indicating agreement with  the first reviewer’s codes or assigning a different code for later discussion  with the first reviewer. If disagreements occurred, the GAO analysts  discussed their differences and came to an agreement. Each AI contained  a list of multiple impediments that were usually coded into one category  each. Sometimes, however, individual impediments were coded into more  than one category or multiple impediments within one AI were coded into  the same category.
Then, we compared the findings of our analysis of AIs’ timeliness and  assessment of the contents of AIs categorized as current with the results  of HUD’s 2009 AI study. We interviewed HUD officials from both  headquarters and 10 field offices to gather their views on grantee’s  compliance to the affirmatively further fair housing (AFFH) requirement.
To address the second objective, we reviewed and analyzed HUD’s  policies, procedures, and guidance for overseeing and enforcing the AFFH  requirement, particularly pertaining to AIs, as well as gathering  information on staff resource levels for doing this. We gathered  information from select field offices on how they interpret and implement  existing AFFH regulations and guidance and conducted a limited review of  annual reports that are required by grantees for submission to HUD.  Additionally, we obtained and reviewed data from 7 of the 10 field offices  we contacted on the number of times CPD staff obtained and/or reviewed  AIs during on-site grantee monitoring reviews in 2009. The other 3 field  offices did not provide the data as requested.
To assess the extent to which HUD’s general processes are sufficient in  their design and implementation to help ensure grantees’ compliance with  AFFH documentation requirements, we reviewed the 2009 internal HUD  study on AI compliance and oversight, obtained a senior HUD official’s  public testimony on the issue, and interviewed HUD officials at the HUD  headquarters and officials in 3 of 10 regional offices and 7 of 81 field  offices. We selected offices in a way that emphasized geographic diversity  and the representation of jurisdictions with a large number of grantees or  at greater risk of noncompliance as measured by the estimated incidence  of grantees having submitted outdated or no AIs. During these site visits,  we conducted a file review of compliance documents for grantees that  were on file and met with several officials to discuss current enforcement  and oversight activities, as well as the potential limitations to enforcing  and overseeing AFFH activities.

	Analysis of Sample of 30 CAPERS from Grantees with Outdated AIs

To assess the usefulness of required AFFH documents for supervising  grantee compliance for objective 2, we reviewed other required AFFH  documents including 30 Consolidated Annual Performance and Evaluation  Reports (CAPER) that grantees are required to submit annually to lay out  grantees’ progress in meeting their objectives for the use of CDBG and  other funds. The purpose of the limited CAPER review was to determine  the extent to which the CAPER included information about the status of  the AI document, including the AI date, if any, the depth of discussion  regarding the AI in the CAPER, and other information related to the  timeliness of the AI. Specifically, we randomly drew a nongeneralizable  sample of 30 grantees from the subset of 71 outdated AIs completed prior  to 2003 in the original sample of 473 grantees and contacted HUD to obtain  the latest CAPER for these 30 grantees. The subset was chosen on a  weighted geographic basis to reflect the 10 HUD regions and size of  CDBG/HOME grants received in fiscal year 2009. Between 1 and 4 AIs  were selected from each region with slightly more from grantees with  large awards ($500,000 or more) since these were more prevalent in the  original sample and in the subset of outdated AIs. GAO has previously  reported on internal control standards, as well as HUD’s oversight of the  CDBG program and federal fair lending. We consulted these reports as  necessary to draw conclusions about HUD’s AFFH oversight program.
We conducted this performance audit from October 2009 to September  2010, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix II: Comments from the Department of Housing and Urban Development

Appendix III: GAO Contact and Staff Acknowledgments

	GAO Contact

	Staff Acknowledgments

In addition to the individual named above, Wesley Phillips, Assistant  Director; Farah B. Angersola; Emily Chalmers; William Chatlos; Jennifer  Cheung; Pamela Davidson; Laurie Ellington; Delores Hemsley; Simin Ho;  Fred Jimenez; Reginald Jones; John McGrail; Mark Molino; and Dae Park  made significant contributions to this report.

Summary:
Why GAO Did This Study

Pursuant to the Fair Housing Act, Department of Housing and Urban Development (HUD) regulations require grantees, such as cities, that receive federal funds through the Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) to further fair housing opportunities. In particular, grantees are required to prepare planning documents known as Analyses of Impediments (AI), which are to identify impediments to fair housing (such as restrictive zoning or segregated housing) and actions to overcome them. HUD has oversight responsibility for AIs. This report (1) assesses both the conformance of CDBG and HOME grantees AIs' with HUD guidance pertaining to their timeliness and content and their potential usefulness as planning tools and (2) identifies factors in HUD's requirements and oversight that may help explain any AI weaknesses. GAO requested AIs from a representative sample of the nearly 1,200 grantees, compared the 441 AIs received (95 percent response based on final sample of 466) with HUD guidance and conducted work at HUD headquarters and 10 offices nationwide.

What GAO Found

On the basis of the 441 AIs reviewed, GAO estimates that 29 percent of all CDBG and HOME grantees' AIs were prepared in 2004 or earlier, including 11 percent from the 1990s, and thus may be outdated. HUD guidance recommends that grantees update their AIs at least every 5 years. GAO also did not receive AIs from 25 grantees, suggesting that, in some cases, the required documents may not be maintained, and several grantees provided documents that did not appear to be AIs because of their brevity and lack of content. GAO reviewed 60 of the current AIs (those dating from 2005 through 2010) and found that most of these documents included several key elements in the format suggested in HUD's guidance, such as the identification of impediments to fair housing and recommendations to overcome them. (See table below for common impediments identified in 30 of these 60 current AIs.) However, the vast majority of these 60 AIs did not include time frames for implementing their recommendations or the signatures of top elected officials, as HUD guidance recommends, raising questions about the AI's usefulness as a planning document. As a result, it is unclear whether the AI is an effective tool for grantees that receive federal CDBG and HOME funds to identify and address impediments to fair housing. HUD's limited regulatory requirements and oversight may help explain why many AIs are outdated or have other weaknesses. Specifically, HUD regulations do not establish requirements for updating AIs or their format, and grantees are not required to submit AIs to the department for review. A 2009 HUD internal study on AIs, department officials, and GAO's work at 10 offices identified critical deficiencies in these requirements. For example, HUD officials rarely request grantees' AIs during on-site reviews to assess their compliance with overall CDBG and HOME program requirements, limiting the department's capacity to assess AIs' timeliness and content. While HUD initiated a process to revise its AI regulatory requirements in 2009, what the rule will entail or when it will be completed is not clear. In the absence of a department-wide initiative to enhance AI requirements and oversight, many grantees may place a low priority on ensuring that their AIs serve as effective fair housing planning tools.

What GAO Recommends

GAO recommends that, through regulation, HUD require grantees to update their AIs periodically, follow a specific format, and submit them for review. HUD neither agreed nor disagreed with the recommendations but noted recent efforts to improve compliance and oversight.