RECOVERY ACT 

Housing Programs 

Met Spending 

Milestones, but Asset 

Management 

Information Needs 

Evaluation 

Report to Congressional Committees

June 2012 

GAO-12-634 

United States Government Accountability Office

GAO 
United States Government Accountability Office

Highlights of GAO-12-634, a report to 

Congressional Committees 

June 2012 

RECOVERY ACT

Housing Programs Met Spending Milestones, but 

Asset Management Information Needs Evaluation

Why GAO Did This Study

The Recovery Act required HUD to 

distribute $4 billion to PHAs through its 

Public Housing Capital Fund. Congress

also created two programs to provide 

funds to HFAs to restart stalled projects. 

This report responds to two ongoing 

GAO mandates under the act: to 

examine states’ and localities’ use of 

Recovery Act funds and to report on the 

quarterly estimates of jobs funded. This 

report examines the progress PHAs and 

HFAs made in spending grant funds, 

the ways the funds were used, and the 

actions HUD and PHAs took to ensure 

that recipients spent grants on time and 

for the intended purposes. It also 

assesses the quality of job estimates 

reported by Recovery Act recipients and 

reports the status of GAO Recovery Act 

recommendations. GAO visited PHAand HFA-sponsored projects in 7 states 

and the District of Columbia, 

interviewed federal and local agency 

officials, evaluated HUD’s and 

Treasury’s monitoring strategies, 

surveyed 56 HFAs, and analyzed 

recipient-reported data. 

What GAO Recommends

GAO recommends that Treasury 

assess the extent to which HFAs are 

utilizing information provided to them 

by project owners to ensure the longterm viability of buildings during the 15-

year compliance period. In response to 

Treasury’s comment on the draft 

recommendation that it assess HFA 

capacity to conduct asset management 

after projects are built, GAO clarified 

the recommendation to specify that 

Treasury use available information for 

assessing how HFAs are ensuring 

long-term viability of buildings. 

Treasury’s views and GAO’s response 

are discussed more fully in the report. 

What GAO Found

Almost all public housing authorities (PHA) met their spending deadlines for the 

Public Housing Capital Fund formula and competitive grant programs. As 

mandated, all but one PHA spent 100 percent of their formula grants by March 

17, 2012. According to Department of Housing and Urban Development (HUD) 

officials, PHAs with competitive grants were on track to meet their September 

2012 spending deadlines. PHAs we interviewed cited various challenges to 

meeting the grant deadlines, such as the tight time frames and many attributed 

their ability to meet deadlines to good planning within their organizations and 

help from HUD. According to analyses of HUD data, about 3,100 PHAs planned 

to undertake improvements with their formula grants that affected about 495,000

housing units. Many used their grants to make improvements that enhanced 

energy efficiency, such as installing energy-efficient windows and appliances. 

GAO determined that HUD’s monitoring strategy for these programs incorporated 

key internal controls, such as developing and implementing measures that 

allowed HUD staff to compare actual with planned results. At specific sites that 

GAO visited, PHAs were able to demonstrate work was under way or had been 

completed. 

All housing finance agencies (HFA) met their December 2011 disbursement 

deadlines for funds they received under Section 1602 of the American Recovery 

and Reinvestment Act of 2009 (Recovery Act). Most HFAs also met their 

February 2012 deadline to spend Tax Credit Assistance Program (TCAP) funds. 

Almost all HFAs reported that the funds helped restart stalled affordable housing 

projects that otherwise could not have moved forward. Project owners primarily 

used the funds to construct new housing units. HFAs identified several factors 

that helped them meet the deadlines, particularly their experience and 

established practices and procedures. As GAO reported in September 2010, 

TCAP and Section 1602 programs require HFAs to do more project oversight 

than they typically would to ensure that project owners comply with long-term 

program requirements. The Recovery Act requires that HFAs perform “asset 

management,” which includes ensuring the long-term viability of projects. But

some HFAs may not have the necessary experience, as third-party investors 

have often supported HFAs with this additional oversight. HUD has begun 

gathering data to help determine which projects may need additional oversight, 

but Treasury has not. Treasury staff would benefit from collecting information that 

would allow them to assess how HFAs are implementing their asset 

management policies and procedures.

The accuracy of full-time equivalent (FTE) data reported by recipients of the 

Public Housing Capital Fund competitive and formula programs and TCAP has 

improved over time. HUD staff have continued to monitor the data for errors—for 

example, for over counts of FTEs—and have worked with recipients to make 

corrections. The number of FTEs reported per quarter for HUD programs peaked 

in 2010 and 2011 and gradually declined each quarter as funded activities were

completed. The Recovery Act does not require HFAs to report FTEs for 

Treasury’s Section 1602 program. 

View GAO-12-634. For more information, 

contact Mathew J. Sciré at (202) 512-8678 or 

Sciremj@gao.gov. 
Page i GAO-12-634 Recovery Act 

Letter 1 

Background 4

PHAs Met Spending Deadlines for Grants and HUD’s Monitoring 

Incorporated Key Internal Controls 9

Recipients Met Deadlines for Section 1602 and TCAP Expenditures, 

but Treasury Does Not Plan to Fully Evaluate Asset Management 

Activities 23

Conclusions 47

Recommendation for Executive Action 48

Agency Comments and Our Evaluation 48

Appendix I Scope and Methodology 55 

Appendix II Results from Survey of State Housing Finance Agencies 61 

Appendix III Recommendations from Prior GAO Recovery Act Reports with 

Sections on Housing 78 

Appendix IV Status of Prior Open Recovery Act Recommendations and Matters 

for Congressional Consideration 83 

Appendix V Comments from the Department of Housing and Urban Development 89 

Appendix VI Comments from the Department of the Treasury 90 

Appendix VII GAO Contact and Staff Acknowledgments 92

Contents 
Page ii GAO-12-634 Recovery Act 

Table 

Table 1: Status of Prior Open Recovery Act Recommendations and 

Matters for Congressional Consideration 83

Figures 

Figure 1: Energy-efficient Activities Most Frequently Undertaken 

by PHAs 11

Figure 2: Examples of Housing Projects Funded with Formula 

Grants 13

Figure 3: Examples of Housing Projects Funded with Competitive 

Grants 16

Figure 4: Total Number of Projects Awarded TCAP, Section 1602 or 

Both Fund Types 25

Figure 5: Examples of Projects Funded by the TCAP and Section 

1602 Programs 27

Figure 6: Range of Average Prices Paid Per Tax Credit at Project 

Closing, for 50 States and the District of Columbia, 2005-

2010 28

Figure 7: Number of Projects That Moved Forward with and 

without Section 1602 and TCAP Assistance, and Those 

That Did Not Move Forward, 2007-2010 30

Figure 8: FTEs That Recipients Reported for Recovery Act Housing 

Funds, October 2009 through December 2011 45
Page iii GAO-12-634 Recovery Act 

 

Abbreviations 

EPIC Energy and Performance Information Center 

FTE full-time equivalent 

HFA housing finance agency 

HUD Department of Housing and Urban Development 

IRC Internal Revenue Code 

LIHTC Low-Income Housing Tax Credit 

LOCCS Line of Credit Control System 

NEPA National Environmental Policy Act 

OFHEO Office of Fair Housing and Equal Opportunity 

OIG Office of Inspector General 

OMB Office of Management and Budget 

PHA public housing authority 

RAMPS Recovery Act Management and Performance System 

RATB Recovery Accountability and Transparency Board 

Recovery Act American Recovery and Reinvestment Act of 2009 

TCAP Tax Credit Assistance Program 

Treasury Department of the Treasury 

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Page 1 GAO-12-634 Recovery Act 

United States Government Accountability Office

Washington, DC 20548 

June 18, 2012 

Report to Congressional Committees 

In response to the economic crisis, Congress enacted the American 

Recovery and Reinvestment Act of 2009 (Recovery Act) to, among other 

things, preserve and create jobs and promote economic recovery.1

 Under 

the Recovery Act, the Department of the Treasury (Treasury) has paid out 

approximately $249.1 billion in funds for use by state and local 

governments to use for a variety of purposes, including the provision of 

affordable housing.2

 This report, which addresses housing programs that 

received Recovery Act funds, responds to two recurring mandates in the 

Recovery Act. The first requires that we review, every 60 days, the use of 

Recovery Act funds by recipients. The second requires us to comment 

and report quarterly on estimates of jobs funded and counted as full-time 

equivalents (FTE), as reported by recipients of Recovery Act funds.3

This report discusses how public housing authorities (PHA) used almost 

$4 billion in grants distributed by the Department of Housing and Urban 

Development (HUD) to fund a variety of capital and management 

activities.4

 It updates our September 2010 report and also provides 

information on two new programs that Congress created as part of the 

Recovery Act.5

 These programs addressed the lack of private investment 

in projects that would otherwise have used Low-Income Housing Tax 

Credits (LIHTC) when the market for these tax credits was disrupted in 

 

1

Pub. L. No. 111-5, § 3, 123 Stat. 116 (2009). 

2

For updates, see http://gao.gov/recovery. 

3

Pub. L. No. 111-5§, 1512(e), 123 Stat. 115, 288. FTE data provide insight into the use 

and impact of the Recovery Act funds, but recipient reports cover only direct jobs funded 

by the Recovery Act. These reports do not include the employment impact on suppliers 

(indirect jobs) or on the local community (induced jobs). Both data reported by recipients 

and other macroeconomic data and methods are necessary to understand the overall 

employment effects of the Recovery Act. 

4

PHAs are typically local agencies created under state law that own and manage public 

housing. 

5

GAO, Recovery Act: Opportunities to Improve Management and Strengthen 

Accountability over States’ and Localities’ Uses of Funds, GAO-10-999 (Washington, 

D.C.: Sept. 20, 2010). 

 
 

Page 2 GAO-12-634 Recovery Act 

2008. The two programs are the Tax Credit Assistance Program (TCAP), 

which is administered by HUD, and the Grants to States for Low-Income 

Housing Projects in Lieu of Low-income Housing Credits Program under 

Section 1602 of the Recovery Act (Section 1602 Program), which is 

administered by Treasury. State housing finance agencies (HFA) were to 

use the funding from these programs to provide gap financing for stalled 

“shovel-ready” projects and to offset the drop in the demand for—and 

subsequently the price of—LIHTCs.6

Specifically, our reporting objectives were to examine (1) the progress 

PHAs made in spending their grant funds, what is known about how funds 

were used, and the actions HUD and PHAs took to help ensure that 

recipients spent their grants on time and for intended purposes; (2) the 

progress state HFAs made in disbursing funds, what is known about how 

funds were used, and the actions Treasury and others took to ensure that 

recipients disbursed funds on time and for intended purposes; and (3) the 

quality of job estimates reported by Recovery Act recipients, including 

housing grant recipients. 

To address the first objective, we obtained data on program expenditures 

and summary information on the use of Recovery Act funds from HUD 

officials. To obtain more specific information about how funds were used 

at specific locations, we visited project sites funded by 19 PHAs in seven 

states and the District of Columbia.7

 While the results cannot be 

generalized within these states or to other states, we selected these 

states using several criteria, including the amount of Recovery Act funds 

each received, the types of projects funded, geographic diversity, and the 

availability of photographic evidence from earlier GAO visits, allowing us 

to make comparisons over time. In addition, we identified whether HUD’s 

plans for monitoring the use of Recovery Act funds contained key internal 

controls contained in GAO’s internal control standards, reviewed 

monitoring files to identify if agency officials took steps outlined in their 

monitoring plans, and reviewed reports issued by the HUD Inspector 

General. See appendix I for more information about our methodology. 

 

6

HFAs are state-chartered authorities established to help meet the affordable housing 

needs of the residents of their states. Although they vary widely in characteristics such as 

their relationship to state government, most HFAs are independent entities that operate 

under the direction of a board of directors appointed by each state’s governor. 

7

The seven states were California, Colorado, Georgia, Illinois, Massachusetts, Mississippi, 

and Pennsylvania. 
 

Page 3 GAO-12-634 Recovery Act 

For our second objective, we obtained data on program expenditures for 

the TCAP and Section 1602 programs, respectively, from HUD and 

Treasury. In addition, to collect information on HFA experiences with 

these programs, and how the funds were used, we also developed a 

Web-based survey for HFA managers in all 50 states, the District of 

Columbia, American Samoa, Guam, the Commonwealth of the Northern 

Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. We began our 

survey in December 2011 and received usable responses from all survey 

respondents (see app. II for the survey results). In addition, to obtain 

information about how funds were used at specific locations, we visited 

11 project sites in seven states. We also reviewed HUD and Treasury 

plans for monitoring HFA disbursement of Recovery Act funds, as well as 

actions they planned to take to provide assurance that HFAs had the 

capacity to perform asset management over the 15-year compliance 

period. In addition, we interviewed staff from the HUD and Treasury 

Offices of Inspector General, as applicable, to identify audit work they 

may have completed for the TCAP and Section 1602 programs. We 

requested similar information for these programs from the Recovery 

Accountability and Transparency Board (RATB) and state auditors. 

For our third objective, we assessed the 10 quarters of recipient reporting 

data that were publicly available at Recovery.gov as of January 31, 2012 

to understand the quality of jobs data reported by housing program 

recipients for the Public Housing Capital Fund and TCAP grants. We also 

analyzed the data for consistency and conducted other analyses on 

recipients’ reports for the Recovery Act.8

 The Recovery Act did not 

require recipients of Section 1602 grants to file such reports.9

Our oversight of programs funded by the Recovery Act has resulted in 

more than 100 related products with numerous recommendations since 

we began reporting on the Recovery Act.10 Appendix III contains a list of 

 

8

In addition to conducting our analyses of recipient report data for housing programs 

under the Recovery Act, we continued, as in prior rounds, to perform edit checks and 

analyses on all prime recipient reports to assess data logic and consistency and identify 

unusual or atypical data. 

9

The Recovery Act recipient reporting requirements apply only to programs under Division 

A of the Recovery Act, which includes TCAP. The Section 1602 Program is under Division 

B of the Recovery Act, and, therefore, not subject to recipient reporting requirements. 

10See http://www.gao.gov/recovery for related GAO products. 
 

Page 4 GAO-12-634 Recovery Act 

recommendations that we made for housing programs. This report also 

updates agency actions in response to recommendations from our 

previous Recovery Act reports that have not been fully implemented 

(referred to in this report as open recommendations) in appendix IV.11

We conducted this performance audit from June 2011 through June 2012 

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. See appendix I for more 

information about our methodology. 

PHAs, under contract with the federal government, own and manage 

approximately 1.2 million units of public housing at the local level, 

including housing that serves the elderly, persons living with disabilities, 

and families with and without children. PHAs vary in size, with 74 percent 

of all PHAs categorized as small (administering fewer than 250 units 

each) and responsible for about 17 percent of all public housing units 

nationally. In contrast, large PHAs (administering more than 1,250 units 

each) administer over half of all public housing units.12

Federal funding for public housing comes from two main formula grant 

programs—the Public Housing Capital Fund and the Public Housing 

Operating Fund—which are meant to supplement the rents collected by 

PHAs to meet the operation, maintenance, and capital needs of public 

housing. The Public Housing Capital Fund provides funds annually by 

formula to about 3,200 PHAs for the development, financing, and 

modernization of public housing developments and for management 

improvements. A federally created and funded program, this fund is 

 

11For updates, see http://gao.gov/recovery. 

12Congressional Research Service, Introduction to Public Housing, Maggie McCarty, 

Specialist in Housing Policy (Washington, D.C.: Jan. 6, 2012). 

Background 

Grants to Public Housing 

Authorities 
 

Page 5 GAO-12-634 Recovery Act 

administered by HUD’s Office of Capital Improvements, with the 

assistance of HUD field offices. 

The Recovery Act included a $4 billion appropriation for the Public 

Housing Capital Fund to be used by PHAs for capital and management 

activities for PHAs. The act required that PHAs give priority to capital 

projects, for contracts that could be awarded based on bids within 120 

days from the date the funds were made available to the PHAs and for 

projects that were already underway or included in their 5-year capital 

plans. The act required that the grants be awarded in two parts: 

 Formula Funds: The Recovery Act required HUD to allocate $3 billion 

through the Public Housing Capital Fund to PHAs using the same 

formula for amounts made available to PHAs in fiscal year 2008. HUD 

allocated Capital Fund formula dollars (formula grants) to 3,134 public 

housing agencies shortly after passage of the Recovery Act, and after 

entering into agreements with housing agencies.13

 Competitive Funds: As required by the Recovery Act, HUD also 

distributed nearly $1 billion to public housing agencies based on 

competition for priority investments, including investments that 

leveraged private-sector funding and financing for renovations and 

energy conservation retrofitting. In September 2009, HUD awarded 

396 competitive grants totaling $995 million to 212 PHAs. 

HFAs administer a wide range of affordable housing and community 

development programs. They support the LIHTC program, which is a 

federal program, by competitively awarding tax credits among housing 

development projects in their state that serve low-income households. 

In recent years, the LIHTC program has been regarded as the primary 

federal vehicle for affordable housing production and preservation. 

Congress established the LIHTC program in the Tax Reform Act of 1986 

(P.L. 99-514) (Internal Revenue Code Section 42) to provide an incentive 

for the development or rehabilitation of affordable rental housing. In return 

for contributing tax credit equity to the projects, private investors receive 

 

13GAO, Recovery Act: Opportunities to Improve Management and Strengthen 

Accountability over States’ and Localities’ Uses of Funds, GAO-10-999 (Washington, 

D.C.: Sept. 20, 2010). 

Recovery Act Tax Credit 

Programs 
 

Page 6 GAO-12-634 Recovery Act 

tax credits over a 10-year period. Projects must comply with LIHTC 

requirements for 15 years, including maintaining affordable housing units, 

to avoid recapture of the tax credits. State housing finance agencies 

award LIHTCs to owners of qualified rental properties (developers) who 

then reserve all or a portion of their units for low-income tenants. Once 

awarded LIHTCs, project owners typically attempt to obtain funding for 

their projects by doing what is referred to as selling the tax credits to thirdparty investors that are willing to contribute equity to the projects.14

Investors purchasing the tax credits can claim them over the next 10 

years once the property is “placed in service,” provided that the property 

continues to comply with program requirements.15

In 2008 and 2009, the LIHTC program was severely disrupted when tax 

credit markets collapsed and project owners could not obtain funding for 

projects that would have qualified for the credit. In February 2009, 

Congress created TCAP and the Section 1602 programs which operate 

differently but are both intended to address lack of private investment in 

LIHTC projects.16

 TCAP: HUD provided TCAP funds to HFAs in the form of grants for 

capital investment in LIHTC projects according to a predetermined 

 

14The arrangement of project owners providing LIHTCs to investors in return for an equity 

investment is generally referred to as “selling” the tax credits. The owners of the buildings 

are permitted to claim the credit from the building on their tax return. Technically what is 

being sold to third-party investors is not the credit, but an ownership interest in the building 

(through a partnership or other entity). For purposes of this report we refer to direct 

investors and syndicators generally as “third-party investors “or “investors.” 

15“Placed-in-service” is defined in IRS Notice 88-116 as being the date on which the first 

unit in the building is certified as being suitable for occupancy under state or local law. 

16Pursuant to the Recovery Act, GAO is to review the use of funds of programs included 

under the act’s Division A, Appropriations Provisions. TCAP is a Division A program, while 

the Section 1602 Program is included under Division B, Tax and Other Provisions. GAO 

chose to include the Section 1602 Program in its review because, like TCAP, it 

supplements the LIHTC program, and state housing finance agencies (HFA) are 

implementing the two programs simultaneously. 
 

Page 7 GAO-12-634 Recovery Act 

formula.17 The HFAs were to award the funds competitively according 

to their qualified allocation plans, which explain selection criteria and 

application requirements for housing tax credits as determined by the 

states and in accordance with Section 42 of the Internal Revenue 

Code (IRC). Projects that were awarded low-income housing tax 

credits in fiscal years 2007, 2008, or 2009 were eligible for TCAP 

funding, but HFAs had to give priority to projects that were “shovelready” and expected to be completed by February 2012. 

 Section 1602 Program: The Section 1602 Program allowed HFAs to 

exchange returned and unused tax credits for a payment from 

Treasury at the rate of 85 cents for every tax credit dollar. HFAs were 

permitted to exchange up to 100 percent of their unused 2008 tax 

credits and credits returned in 2009 and up to 40 percent of their 2009 

tax credit allocation and any amounts an HFA may have derived in 

2009 from a national pool of unused credits.18 HFAs were to award 

Section 1602 funds as a cash payment or noninterest bearing, 

nonrepayable loan program. HFAs were permitted to award Section 

1602 Program funds to project developers to finance the construction 

or acquisition and rehabilitation of qualified low-income buildings in 

accordance with the qualified allocation plans, which establishes 

selection criteria for LIHTC projects and application requirements (as 

determined by each state in accordance with Section 42 of the 

Internal Revenue Code). The last day for HFAs to commit funds to 

project owners was December 31, 2010, but funds could be disbursed 

through December 31, 2011, provided that the project owners paid or 

 

17HFAs in each state, the District of Columbia, the Puerto Rico, Guam, and the U.S. Virgin 

Islands receive LIHTC allocations. The Recovery Act directed HUD to distribute TCAP 

funds in accordance with the fiscal year 2008 HOME Investment Partnerships Program 

(HOME) formula allocations to state participating jurisdictions, thereby limiting the funds to 

states as defined by the HOME (HOME formula). Guam and the U.S Virgin Islands are 

defined as “insular areas” under HOME, rather than as “states,” and therefore, did not 

receive TCAP funds. While TCAP funds were distributed based on the HOME formula, 

HOME requirements generally do not apply to TCAP funds. 

18Forty-nine states, the District of Columbia, American Samoa, Guam, the Northern 

Mariana Islands, Puerto Rico, and the U.S. Virgin Islands participated in the Section 1602 

Program to date. New York is the only state that did not request Section 1602 Program 

funds. 
 

Page 8 GAO-12-634 Recovery Act 

incurred at least 30 percent of the total adjusted basis of the project 

by the end of 2010.19

The Recovery Act sought to increase transparency and accountability in a 

program’s use of funds. Section 1512 of the Recovery Act requires fund 

recipients, including PHAs that received Public Housing competitive and 

formula grant funds, and HFAs that received TCAP funds, to report 

certain information quarterly. Following Office of Management and Budget 

guidance, recipients reported on FTEs for which Recovery Act funding 

directly paid and not the employment impact on suppliers of materials 

(indirect jobs) or on the local communities (induced jobs). Recipients 

report, among other types of information, a description of their project or 

activity, the progress of their projects, and the number of resulting 

estimates of jobs funded and counted as full-time equivalents (FTE). The 

job calculations are based on the total hours worked divided by the 

number of hours in a full-time schedule, expressed as FTEs. The funding 

recipient is responsible for the reporting of all data required by section 

1512 of the Recovery Act each quarter for each of the grants it received 

under the act. Recipients provide the reports through 

FederalReporting.gov, and the data are then made available to the 

general public through the Recovery.gov website. 

HUD developed the Recovery Act Management and Performance System 

(RAMPS) to track information on the work funded by the Recovery Act.20

PHAs receiving formula and competitive grant funding were required to 

use RAMPS for quarterly reporting on Recovery Act work, including the 

total number of housing units they planned to and actually did rehabilitate 

or develop, as well as specific information about the number and type of 

energy-efficient improvements they undertook. For example, RAMPS 

contains information on the number of energy-efficient windows or the 

number of Energy-Star appliances installed by each PHA. However, while 

RAMPS contains a high-level narrative description of all Recovery Act 

funded improvements, it does not collect data on improvements not 

 

19Pursuant to Treasury regulations, project owners must have, by the close of 2010, paid 

or incurred at least 30 percent of the subawardee’s total adjusted basis in land and 

depreciable property that is reasonably expected to be part of the low-income housing 

project. 

20In addition, RAMPS contains information on PHA compliance with the National 

Environmental Policy Act (NEPA). 

Recipient Reporting 
 

Page 9 GAO-12-634 Recovery Act 

related to energy efficiency. For example, RAMPS does not contain 

information on the number of elevators a PHA may have replaced or the 

number of parking lots it may have repaved. 

All but 1 of 3,115 PHAs met their March 17, 2012, deadline for expending 

a total of $2.98 billion in obligated formula grant funds, with 3,101 of 

3,115 PHAs expending all but $45,000 of the total.21 However, 14 of the 

3,115 PHAs had unexpended balances and were in the process of 

returning funds or the funds were pending recapture by HUD. HUD 

officials attributed the success of most PHAs to the Recovery Act’s clear 

obligation and expenditure deadlines, PHAs’ previous documentation and 

planning for rehabilitation needs, processes PHAs had in place to 

implement their plans, and technical assistance from HUD field offices. 

HUD officials said HUD is planning to recapture the $45,000 that had not 

been expended by the deadline.22 In the previous year, 3,112 PHAs of 

3,116 PHAs met their March 17, 2011, deadline to expend 60 percent of 

their formula grant funds.23 At that time, 2,435 of these PHAs, or about 78 

 

21According to HUD, it had 14 grantees with unexpended balances by the 100 percent 

expenditure deadline. Of these they considered only 1 grantee as missing the 100 percent 

expenditure deadline. Of the other grantees with unexpended balances, 7 PHAs had the 

funds recaptured for violations. The remaining 6 PHAs were in the process of returning 

funds voluntarily because they knew they would not meet the deadline. In total, HUD 

anticipates recapturing a total of about $402,700, including the $45,000 unexpended 

balance for the PHA that missed the expenditure deadline. 

22HUD plans a total recapture of about $402,700 because of PHA final returns of 

unexpended funds, repayments to HUD, and HUD Office of Inspector General audits. 

23After the March 17, 2011, deadline, HUD recaptured about $892,000 in funds from 4 

PHAs. Since HUD recaptured all of one PHA’s formula grants funds, the total number of 

PHAs with obligated funds decreased from 3,116 to 3,115. 

PHAs Met Spending 

Deadlines for Grants 

and HUD’s Monitoring 

Incorporated Key 

Internal Controls 

Formula Grant Program 
 

Page 10 GAO-12-634 Recovery Act 

percent of PHAs that received formula grant funds, had already expended 

100 percent of their funds.24

HUD’s analyses of RAMPS data as of December 31, 2011 (the most 

recent quarter of data available at the time of this report), indicate that 

PHAs had planned to use formula grant funds to undertake rehabilitations 

that affected about 495,000 units and to develop about 5,743 units.25

HUD defines a developed unit as one that is newly constructed or 

acquired by the PHA. As of December 31, 2011, PHAs reported that they 

had collectively undertaken rehabilitations that affected about 462,000 

units and developed about 5,500 units. 

Based on our analysis of RAMPS data, with data current as of April 19, 

2012, out of the 3,115 PHAs that received formula grant funds, 2,766 

PHAs used formula funds for rehabilitation. Of these 2,766 PHAs, we 

found that 1,678 completed energy efficient improvements.26 Our 

analyses of HUD’s RAMPS data indicated that the types of rehabilitations 

that PHAs were most likely to undertake were installation of energy 

efficient windows, refrigerators, and toilets (see fig. 1). 

 

24See GAO-10-999. In addition, as we previously reported, all housing agencies met their 

March 2010 obligation deadline for formula grants by either obligating all of their funds or 

rejecting or returning a portion of the funds. 

25For the purpose of counting the number of units rehabilitated, HUD instructed PHAs to 

count the number of units that were affected by an activity. For instance, if a PHA installed 

an energy-efficient roof on one building that had five units, the PHA was to report that five 

units were rehabilitated. 

26RAMPS contained information on 2,766 of the 3,115 PHAs that received formula grant 

funding. Since our analyses focused solely on buildings that were rehabilitated and 

RAMPS only tracks information on activities that promote energy efficiency, our analyses 

excluded the other 349 PHAs. The data we analyzed includes data submitted as of 

December 31, 2011, the most recent quarter of completed and reviewed data available at 

the time of our review, and additional data submitted by some PHAs as of April 19, 2012. 
 

Page 11 GAO-12-634 Recovery Act 

Figure 1: Energy-efficient Activities Most Frequently Undertaken by PHAs 

Public Housing agency officials we interviewed reported that they used 

formula grant funds to undertake improvements that were important to 

maintaining and upgrading their housing projects. At the PHAs we visited, 

grants were used for a wide variety of purposes including the replacement 

of roofs, installation of energy-efficient windows with double-paned glass, 

renovations of kitchens and bathrooms, refurbishment of community 

rooms, and installation of new furnaces. More specifically, we observed 

completed work at each of the following sites. 

 Kenmore Apartments (Chicago, Illinois): The Chicago Housing 

Authority used $16.8 million for the complete gutting and renovation of 

these apartments. We have observed this property from the beginning 

of its rehabilitation work (see fig. 2). Renovations included energyefficient replacement windows, a high-efficiency heating plant, 

programmable thermostats, low-flow showerheads, and faucet 

aerators. 

 Waltersville Estates (Vicksburg, Mississippi): The Vicksburg Housing 

Authority used $889,000 for the rehabilitation of these buildings. As 
 

Page 12 GAO-12-634 Recovery Act 

part of this work, the buildings received new roofs, and deteriorated 

siding and fascia boards were replaced (see fig. 2). In addition, the 

exposed fascia boards were wrapped in aluminum, and chain link 

fencing was removed. 

 Cheshire Bridge High Rise (Atlanta, Georgia): The Atlanta Housing 

Authority used $2.4 million for the renovation of this high rise building. 

This funding was used to upgrade equipment in its common areas, 

including computers and laundry facilities. As a result of these 

upgrades, on December 13, 2011, we observed new computers, a 

new fitness room, and new laundry equipment at Cheshire Bridge 

(see fig. 2). 
 

Page 13 GAO-12-634 Recovery Act 

Figure 2: Examples of Housing Projects Funded with Formula Grants 
 

Page 14 GAO-12-634 Recovery Act 

According to our analyses of HUD data, all 210 PHAs with competitive 

grants met their September 29, 2011, deadline to disburse 60 percent of 

each competitive grant awarded.27 HUD officials credited PHA progress in 

expending the funds to the same factors that contributed to their success 

in meeting the formula grant deadlines, as well as HUD staff commitment 

to facilitating agreements that involved financing from other sources.28 In 

addition, as of September 29, 2011, PHAs had completely expended 

funds for 171 (43 percent) of the 400 competitive grants awarded.29 By 

March 18, 2012, the number of completely expended grants increased 

from 171 to 232 (58 percent). HUD officials expect that PHAs will meet 

their respective deadlines for spending 100 percent of each type of 

competitive grant in September 2012. 

As required by the Recovery Act, in September 2009 HUD awarded 

nearly $1 billion in competitive grant funds to PHAs for “priority” 

investments, including those that leveraged private sector funding or 

financing for renovations and energy conservation retrofitting. While many 

PHAs received one competitive grant, others received more than one. As 

of September 29, 2011, PHAs were using the funding as follows: 

 To increase the energy efficiency and environmental performance at 

housing properties, HUD awarded 269 grants totaling $606.6 million 

to 170 PHAs, including 35 grants totaling $290.2 million to 34 PHAs 

for increasing energy efficiency and 234 grants totaling $316.4 million 

to 136 PHAs for retrofitting buildings with energy-conserving 

technology. For example, HUD awarded $10 million to the Denver 

Housing Authority for new construction of a high-rise building with 100 

public housing units and community facilities to serve seniors and 

persons with disabilities. The high rise was to include many green 

 

27According to HUD, 12 PHAs received funding reallocated from other PHAs. Nine of 

these 12 PHAs did not meet the 60 percent expenditure deadline but were not required to 

do so because they received their grants by way of reallocations. In addition, they are not 

required to spend 60 percent of their grants until September 2012. 

28The Recovery Act required that HUD, when awarding competitive grants, consider 

whether the grant applicant would be able to leverage private sector funding. So, for 

example, PHAs we interviewed also obtained financing obtained through tax credits, other 

federal programs, and private financing. 

29GAO-10-999. In September 2009, HUD awarded 396 competitive grants in the amount 

of $995 million to 212 PHAs. Afterwards, 3 PHAs returned competitive grants totaling 

approximately $14 million to HUD. 

Competitive Grant 

Program 
 

Page 15 GAO-12-634 Recovery Act 

features, including solar photovoltaic panels, Energy Star appliances, 

and double- or even triple-paned windows (see fig. 3.) 

 For gap financing for projects stalled due to financial issues, HUD 

awarded 36 grants totaling $177.9 million to 32 PHAs. For example, 

HUD awarded $9.6 million to the District of Columbia Housing 

Authority to support construction of infrastructure improvement for the 

Capper Carrollsburg Townhomes Phase II’s 163 total units, of which 

47 are public housing units. The PHA reported that the competitive 

funds were needed because they were unable to raise capital in the 

municipal bond markets or raise sufficient private capital by offering 

LIHTCs. As described in the PHA’s grant application, the competitive 

funding would be primarily used to fund the replacement or repair of 

underground water lines, install waste management systems, improve 

curbs and gutters, and improve public landscaping (see fig. 3). 

 For public housing transformation, HUD awarded 14 grants totaling 

$93.4 million to 13 PHAs. For example, HUD awarded $10 million to 

the City of Sacramento Housing Authority for the renovation of 

Riverview Apartments. The PHA reported that the distressed building 

with 108 units was creating blight in the surrounding neighborhood 

and that as a result the units could not be occupied. For example, the 

plumbing fixtures, plumbing, the pipes and HVAC systems had all 

deteriorated and needed to be replaced and the roof was damaged 

and leaking (see fig. 3). 

 For improvements addressing the needs of the elderly or persons with 

disabilities, HUD awarded 81 grants totaling $94.8 million to 45 PHAs. 

As an example, HUD awarded $2.8 million to the San Francisco 

Housing Authority for the Robert B. Pitts Project in San Francisco, in 

which 198 units (or more than 60 percent of the units) are set aside 

for residents who are elderly or have a disability. At the time of the 

award, nine units needed to be made more accessible (with roll-in 

showers for wheel chairs) to be in compliance with federal 

accessibility standards. During our site visit, we observed examples of 

these showers and other accessibility improvements, including 

upgraded elevator cars with Braille added to the button panel and 

additional outdoor ramps and bathroom handrails (see fig. 3). 
 

Page 16 GAO-12-634 Recovery Act 

Figure 3: Examples of Housing Projects Funded with Competitive Grants 

As of December 31, 2011, RAMPs data indicated that PHAs with 

competitive grants planned to undertake rehabilitation work affecting 

46,065 units and develop 4,206 units and that they had completed 

rehabilitation work affecting about 31,500 units and development of about 
 

Page 17 GAO-12-634 Recovery Act 

2,600 units. According to HUD, for competitive grant funding, 

development meant new construction of units. 

Officials from most of the PHAs we interviewed, 8 of the 12 PHAs in the 

four primary states in which we conducted our work, noted that the tight 

time frame was the primary challenge they faced in using their grants but 

that they had been able to overcome it. PHA officials we interviewed 

attributed their success in meeting the Recovery Act deadlines to several 

things, particularly planning. Most of the PHA officials we interviewed said 

that their previous planning efforts meant that they knew how they wanted 

to use their Recovery Act funds. For example, officials for one PHA in 

California said that it already had up-to-date information on the capital 

needs for all of its properties, which enabled its staff to quickly prioritize 

work that could be done with the Recovery Act funding. Another PHA in 

Massachusetts had just completed a 5-year planning process that its 

officials said helped in identifying appropriate Recovery Act projects, 

while another PHA in Illinois said that focusing on “shovel-ready” projects 

was key to meeting the deadlines. 

Many of the PHAs whose officials we interviewed also cited HUD’s 

helpfulness, noting that coordination with HUD was important in helping to 

meet Recovery Act deadlines, although a few said that HUD guidance 

could have been clearer. Officials from a PHA in Illinois noted that HUD 

was very responsive to requests and provided anything that was needed. 

And officials from a PHA in Colorado remarked that the HUD field office 

had not been “overly intrusive” and that the agency had developed a good 

working relationship with HUD. Among the actions that PHA officials cited 

as particularly helpful were assisting with permits and closing, sending out 

meeting reminders, and remaining involved throughout the obligation and 

expenditure stages. 

Officials from about half of the PHAs also cited the experience of their 

project teams and the usefulness of processes they had in place. Officials 

from several PHAs noted that their staff had experience in administering 

projects and one noted that it had been considered high- performing 

before they received the Recovery Act funds. A representative of a PHA 

in Illinois said that the PHA created a special group to focus on spending 

the Recovery Act funds, which facilitated communication across its 

departments and created a collaborative working environment. Officials 

from a PHA in Massachusetts noted that prior to the Recovery Act it had 

already determined how to reduce energy consumption in a building, 

allowing it to qualify for competitive grant funding. 

PHAs Reported Few 

Challenges Meeting 

Recovery Act Milestones 
 

Page 18 GAO-12-634 Recovery Act 

When PHA officials identified challenges to complying with Recovery Act 

formula grant deadlines, most noted that meeting the obligation deadlines 

had presented more challenges than meeting the expenditure deadlines. 

Eight of the 12 PHAs we interviewed indicated that the tight timeframes 

for meeting the obligation deadlines as an explanatory factor. As part of 

the obligation challenge, a few PHAs cited the procurement process, for 

example, the time needed to advertise the bidding process to contractors 

and do it correctly to avoid errors. In addition, as we previously cited as a 

challenge in our May 2010 report, officials from several PHAs pointed 

specifically to the “Buy American” requirement, as presenting various 

challenges, such as getting all the contracts executed by the one year 

deadline and being sure the Buy American requirements were met.30

Officials at one PHA in Massachusetts noted that requirements for the 

Buy American were especially challenging when coupled with 

requirements to buy “green” products. A few PHAs noted that HUD 

guidance could have been clearer—including on how to comply with the 

Buy American requirement—and on how to submit data to RAMPs. 

Officials from another PHA noted that the FederalReporting.gov website 

could have been clearer, while another described this website as “not 

user-friendly.” 

HUD developed a monitoring strategy for each of the 3 years that 

awarded Recovery Act formula and competitive grants would be in use. 

The purpose of this monitoring was to ensure that grant recipients—

PHAs—spent their grant funds on time, in conformance with program 

requirements, and for the intended purposes. 

We determined that HUD’s monitoring of PHAs’ use of formula grant 

funds incorporated and addressed key internal control activities intended 

to provide reasonable assurance that Recovery Act funds were spent as 

planned. We also found that HUD implemented the monitoring strategies 

it developed for the first 2 years of the Recovery Act.31 The four key 

 

30GAO-10-604

31For this report, we primarily focused on HUD’s implementation of its year two strategy 

(March 2010 to March 2011), since all parts of it were completed at the time of our audit. 

We examined completed monitoring reviews for 21 of 24 projects we visited for which 

HUD completed a year two monitoring review in seven states and the District of Columbia. 

HUD did not complete a monitoring review for 3 of the 24 sites. We also verified that work 

was underway or had been completed at each of the 24 sites. 

HUD Used Key Internal 

Controls in Monitoring 

Grant Recipients 
 

Page 19 GAO-12-634 Recovery Act 

internal control activities we reviewed for our assessment were (1) 

establishing policies and procedures, (2) establishing measures and 

indicators, (3) implementing policies and procedures, and (4) comparing 

planned to actual results.32

 Establishing policies and procedures: HUD’s strategies for the second 

year (from March 2010 to March 2011) and third year (from March 

2011 to March 2012 or grant close-out) of the Recovery Act identified 

specific procedures for assessing PHAs’ progress in meeting 

milestones, complying with reporting requirements, and spending 

funds on approved work items. The strategies identified risk-based 

criteria for determining which PHAs would receive which type of 

review—for example, remote or on-site—and established time frames 

for completing the reviews. For example, the year two strategy for the 

formula grant program stated that PHAs designated as “troubled 

performers” under HUD’s Public Housing Assessment System 

(PHAS) would receive a minimum of one on-site review between 

March 2010 and March 2011 and that other PHAs would be subject to 

additional remote or on-site reviews only if, for example, they had 

failed to expend funds on time or had procurement-related 

deficiencies.33 In addition, the strategies outlined quality control 

reviews, performed by HUD’s Office of Field Operations, to help 

ensure uniformity in monitoring across HUD’s field offices. HUD’s 

strategies also called for an outside contractor to perform independent 

reviews of PHAs receiving the largest amounts of formula funding. 

 Establishing measures and indicators: The checklists HUD staff used 

to implement the department’s monitoring strategies in years two and 

three contained measures and indicators to determine whether PHAs 

were using grant funds in a timely manner and spending the funds on 

approved items. For example, the quick-look checklist for the formula 

program asked HUD reviewers to assess whether PHAs had 

executed contracts before the deadline for obligating funds and had 

the necessary approvals in place for work items. Similarly, HUD’s on-

 

32GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington, 

D.C.: August 2001). 

33HUD developed PHAS to evaluate the overall condition of PHAs and measure their 

performance in areas such as financial condition, management operations, and physical 

condition of the housing stock. PHAs that are deficient in one or more of these areas are 

designated as troubled performers by HUD and are statutorily subject to increased 

monitoring. 
 

Page 20 GAO-12-634 Recovery Act 

site monitoring checklist asks reviewers to describe the results of their 

visual inspection and upload any photographs taken onto a HUD 

tracking site. Finally, for year three, HUD developed indicators for 

helping ensure that all field offices close out grants consistently and in 

accordance with HUD requirements. For example, HUD reviewers are 

to determine whether all significant Recovery Act monitoring 

deficiencies have been closed out by reviewing all prior grant 

monitoring checklists and monitoring notes regarding the particular 

PHA under final review. 

 Implementing policies and procedures: The steps that HUD took 

during the time of our review indicated that the agency had 

implemented its monitoring strategies for the first two years of the 

Recovery Act. As we previously reported, HUD implemented and 

completed its monitoring strategy for the formula grants for year one 

(2009)—a strategy that included identifying PHAs to be considered 

“troubled” for the purpose of the Recovery Act monitoring, as well as 

conducting remote and on-site reviews and providing technical 

assistance.34 In year two (from March 2010 to March 2011) HUD 

completed 520 on-site reviews and 916 remote reviews, including 546 

quick-look reviews. According to HUD officials, the department has 

continuously reviewed the findings from all Recovery Act monitoring to 

help inform and direct future monitoring and technical assistance 

targets. In general, HUD’s analyses of monitoring results have 

uncovered two broad themes: first, that many PHAs, particularly 

smaller ones, require ongoing oversight and technical assistance 

regarding procurement and grant administration requirements; and 

second, that the quality of the monitoring can vary from office to office 

and reviewer to reviewer. In light of this, in year two, HUD completed 

one consolidated quality assurance and quality control review for the 

purpose of assessing the quality of monitoring conducted by HUD 

field offices. HUD also commissioned an outside contractor to conduct 

independent reviews as an additional assessment of PHA operations. 

As of December 2011, the independent contractor had reviewed 109 

of the largest grants. As a result of its year two quality assurance and 

quality control review, HUD identified 11 field offices that were in need 

of additional training and technical assistance to maintain the quality 

of reviews. The independent reviews performed by the contractor 

 

34GAO, Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to 

Address Implementation Challenges and Bolster Accountability, GAO-10-604 

(Washington, D.C.: May 26, 2010). 
 

Page 21 GAO-12-634 Recovery Act 

HUD hired also identified areas for improvement at PHAs that HUD 

considered in its subsequent monitoring. Finally, for its year three 

monitoring (from March 2011 to March 2012 or grant close-out), as of 

April 2012, HUD reported completing 232 competitive grant reviews 

and 2,415 formula grant reviews. 

 Comparing planned to actual results: HUD said that one of its primary 

methods of determining whether each PHA spent grant funds as 

planned was the grant close-out certification process. As part of this 

review, HUD staff have identified if any outstanding deficiencies 

remained from prior reviews and evaluate PHAs’ overall performance 

in planning, procurement, and contract administration. As of April 

2012, over 2,600 PHAs had sent certifications to HUD verifying that 

they were complete with all grant activities and accounting, HUD staff 

had completed 2,155 closeout reviews, and 455 grants had been 

reviewed by a third-party auditor (if required) and certified by HUD 

staff as fully closed out.35 According to HUD officials, as of April 2012, 

based on their monitoring to date, PHAs generally have completed the 

improvements and renovations they planned to make with their 

Recovery Act formula funds. The officials noted that projects funded 

with the competitive grants largely remained ongoing as of April 2012. 

As a result, officials said they could not yet assess the final use of the 

competitive funds. 

HUD’s approach to monitoring competitive grants was similar to its 

approach to monitoring formula grants. As a result, we were able to 

determine that HUD’s monitoring of PHA competitive fund grants also 

largely addressed key internal control activities that would provide 

reasonable assurance that Recovery Act competitive funds were spent as 

planned. For example, during the year two time frame, HUD conducted 

52 on-site reviews and 387 remote reviews, including 289 quick-look 

reviews and 98 quality assurance and quality control reviews. As was the 

case with the formula grant program, the quality assurance and quality 

control reviews for the competitive grant program allowed HUD to target 

particular field offices for additional training and technical assistance. 

In addition to the steps HUD took to help ensure that Recovery Act 

funding was spent on time and as intended, PHA officials we interviewed 

 

35Only those PHAs with total expenditures over $500,000 from federal funding in a fiscal 

year cycle are required to obtain a third-party audit under the Single Audit Act. 
 

Page 22 GAO-12-634 Recovery Act 

also described other internal controls they implemented to help ensure 

the proper use of grant funds. These included performing site inspections 

to assess the progress of work, preparing written logs of construction 

activities, and withholding final payment until determining that all work 

had been satisfactorily completed. HUD’s monitoring review checklists 

contained measures and indicators to help assess whether PHAs had 

internal controls such as these in place. 

HUD field offices implemented the monitoring strategies developed by 

HUD’s Office of Field Operations. Staff from the HUD field offices we 

interviewed stated that the guidance and direction the Office of Field 

Operations provided were helpful in executing monitoring activities in the 

field. For example, staff from one field office said that the automation of 

certain policies and procedures, such as monitoring checklists, supported 

greater uniformity and reduced the amount of reporting errors. Officials 

from HUD’s Office of Field Operations stated that they had learned a 

significant amount from the years of monitoring Recovery Act funds and 

planned to institute key practices, such as more extensive use of 

automation, in other monitoring efforts. 

Several PHA officials we interviewed perceived HUD staff as helpful in 

assisting them in meeting various Recovery Act requirements, some of 

which were new because they had been created specifically for the act 

(for example, RAMPS) and some of which PHAs may not have been 

accustomed to but applied because of Recovery Act provisions (for 

example, the Buy American requirements). However, PHA officials’ views 

differed on the need for and appropriateness of the oversight HUD 

applied to Recovery Act funds. Some PHA officials stated that there was 

more oversight for the Recovery Act than for normal Public Housing 

Capital Fund grants. Others noted that the increased oversight was 

appropriate, given the shortened time frames for obligating and 

expending funds. 

PHA officials we interviewed were sometimes reviewed by other entities 

besides the HUD field offices, including the HUD Office of Inspector 

General (OIG), GAO, and independent financial auditors. As of April 

2012, HUD’s OIG had issued 9 department-wide audits related to the 

Recovery Act and 84 audits related specifically to the Public Housing 

Capital Fund, including performance audits of individual PHAs. According 

to HUD OIG staff, the performance audits found that many PHAs 

generally administered the Recovery Act grants according to 

requirements, but the OIG reported issues at some of the PHAs reviewed, 

including improper obligation of funds. 
 

Page 23 GAO-12-634 Recovery Act 

The Recovery Accountability and Transparency Board a non-partisan, nonpolitical agency created by the Recovery Act to provide transparency in the 

use of Recovery Act funds and detect and prevent waste, fraud, and 

mismanagement, has also been involved in monitoring efforts. As of April 

2012, the board reported receiving 10 complaints related to HUD’s Public 

Housing Capital Fund formula and competitive grant programs and had 

forwarded those complaints on to the HUD OIG. Representatives from the 

board did not consider any of the complaints to be highly unusual or more 

significant than other complaints involving Recovery Act funds. 

All HFAs completed their disbursements of Section 1602 funds by the 

December 31, 2011, deadline. According to Treasury data, as of December 

31, 2011, 55 HFAs had disbursed $5.65 billion in Section 1602 awards to 

1,496 project developers. However, 15 HFAs did not disburse about $6.69 

million in funds which they had requested but had not sub-awarded to 

project developers.36 Grant sub-awardees were required to spend Section 

1602 funds within 3 days of the HFA providing them. Based on December 

2010 data in HFAs’ last required quarterly reports, Treasury estimated that 

about 89,000 units would be completed with Section 1602 funding, of which 

about 86,000 would be for low-income residents. Treasury will gather 

additional information about the number of units placed in service as part of 

annual reports submitted to them by HFAs. 

 

36According to Treasury, HFAs reported that these remaining funds were either never subawarded or were not needed in projects. 

Recipients Met 

Deadlines for Section 

1602 and TCAP 

Expenditures, but 

Treasury Does Not 

Plan to Fully Evaluate 

Asset Management 

Activities 

HFAs Met Disbursement 

Deadlines for Section 1602 

Program and TCAP 
 

Page 24 GAO-12-634 Recovery Act 

Most TCAP grantees met their February 16, 2012, deadline to expend 100 

percent of their TCAP funds. As of February 16, 2012, the 52 HFAs that 

received TCAP grants disbursed almost all of the $2.24 billion in TCAP 

funds they committed to 861 projects.37 According to a HUD official, since 

project owners incur costs before requesting TCAP funds from HFAs for 

reimbursement of eligible activity expenses, HUD considers the HFAs as 

having expended the funds, after the HFA draws down funds from 

LOCCS.38 HUD officials reported that they had recaptured the remaining 

$10.9 million in undisbursed funds. HUD is required to return these funds to 

the U.S. Treasury. As of February 16, 2012, HUD reported about 27,500 of 

about 62,400 planned units to be funded with TCAP funds had been 

completed. However, other projects that received TCAP funding may not 

have been completed, because developers may be using funds from 

multiple sources and work on those projects is continuing.39

We conducted a web-based survey of all 50 states, the District of 

Columbia, and 5 territorial HFAs—all of which received Section 1602 or 

TCAP funds or both to collect information on HFA experiences with these 

programs, how the funds were used, and to assess the role of these 

funds in temporarily filling the gap left by diminished investor demand for 

LIHTCs. All HFAs responded. This survey followed up on our survey of 

HFAs, distributed in November and early December 2009, which provided 

information on the status of program delivery, expected results, and 

challenges to implementation.40 In addition to the survey, we also 

 

37Because the Recovery Act directed HUD to distribute TCAP funds in accordance with 

HOME formula allocations to state participating jurisdictions, TCAP participation was 

limited to the 50 states, the District of Columbia, and Puerto Rico. In contrast, Section 

1602 was also made available to 5 U.S. territories. New York State did not participate. 

38As required by HUD Notice: CPD-09-03-REV (May 4, 2009), federal funds cannot be 

drawn from the U.S. Treasury in advance of the need to pay an eligible cost. 

Consequently, TCAP funds cannot be drawn from the U.S. Treasury and placed in escrow 

or advanced in lump sums to project owners. Once funds are drawn from the grantee’s 

U.S. Treasury account, they must be expended for an eligible TCAP cost within 3 days. 

39See appendix II, question 20 for more information about other sources of funding used 

to fund Section 1602 and TCAP projects. 

40See GAO, Survey of State Housing Finance Agencies’ Use of the Low-Income Housing 

Tax Credit Assistance Program (TCAP) and the Section 1602 Program, GAO-10-1022R 

(Washington, D.C.: Sept. 20, 2010) for more information about the survey of HFAs that we 

administered in November and early December 2009. 

Use of Section 1602 and 

TCAP Funds 
 

Page 25 GAO-12-634 Recovery Act 

conducted structured interviews with HFAs in four states—California, 

Illinois, Massachusetts, and Mississippi. 

In response to our survey, HFAs reported that project developers planned 

to use Section 1602 funds, TCAP funds, or a combination of these and 

other funding sources to develop 2,373 projects and 126,058 tax credit 

units. Figure 4 shows the number of projects and tax credit units (housing 

units where resident income may not exceed a maximum allowable 

income) that HFAs awarded Section 1602 or TCAP funds or both as of 

our December 2011 survey. 

Figure 4: Total Number of Projects Awarded TCAP, Section 1602 or Both Fund Types 

Note: The percentages for the tax credit units do not add up to 100 percent do to the rounding of the 

individual percentages. 

In response to our 2011 survey question about how funds would be used, 

HFAs generally indicated that most Section 1602 funds would be used to 

construct new units. On average, HFAs reported that 63 percent of their 

subawards were for new construction, 33 percent for rehabilitation, and 4 

percent for a combination of new construction and rehabilitation. 
 

Page 26 GAO-12-634 Recovery Act 

We observed 11 project sites that were funded with Section 1602 and/or 

TCAP funds in seven states—California, Colorado, Georgia, Illinois, 

Massachusetts, Mississippi, and Pennsylvania. Of these 11 projects, 5 

involved new construction, 5 involved rehabilitations of existing buildings, 

and 1 project site used funds for both new construction and rehabilitation. 

Figure 5 includes examples of TCAP and Section 1602 funded projects. 

Examples of TCAP and Section 1602 projects include the following: 

 The Kasanof Bakery project (Boston, Massachusetts): The 

Massachusetts Department of Housing and Community Development 

awarded this development, $3.8 million in TCAP funds. TCAP funds 

were used to construct 48 new units (see fig. 5). 

 Hopewell Courtyard (Stewartstown, Pennsylvania): The Pennsylvania 

Housing Finance Agency award this development $5.6 million in 

TCAP funds for construction of 96 units. These units are intended for 

residents ages 55 years and older (see fig. 5). 

 Bayside Village (Pascagoula, Mississippi): The Mississippi Home 

Corporation awarded this development $5 million in Section 1602 

funds for the rehabilitation of a high school built in 1937 into 57 

apartment units that will offer independent living for seniors. The 

project preserved the exterior windows and many of the blackboards 

and lockers because it also used tax credits designated to preserve 

historic structures (see fig. 5). 
 

Page 27 GAO-12-634 Recovery Act 

Figure 5: Examples of Projects Funded by the TCAP and Section 1602 Programs 
 

Page 28 GAO-12-634 Recovery Act 

As we previously reported, both the demand for tax credits and the price 

investors were willing to pay for them declined from 2007 to 2009.41

Across all the HFAs collectively, the average prices paid per dollar of tax 

credit in their states declined, creating funding gaps in projects that had 

received tax allocations in 2007 and 2008. As a result, many planned 

construction and rehabilitation projects were stalled. Figure 6 summarizes 

the range of average tax credit prices in the 50 states and the District of 

Columbia in 2005 through 2010. HFAs reported state average tax credit 

prices in 2007 that ranged from a high of 97 cents to a low of 80 cents. By 

2009, the range of average prices had dropped to a high of 82 cents and 

to a low of 50 cents. 

Figure 6: Range of Average Prices Paid Per Tax Credit at Project Closing, for 50 

States and the District of Columbia, 2005-2010 

Note: The median is the value, in this case, the average price, which falls in the middle of a set of 

values arranged from smallest to largest; there are an equal number of values above and below the 

median value. 

 

41GAO-10-604. 

Demand for Tax Credits 

Has Decreased but TCAP 

and Section 1602 Funds 

Helped Restart Stalled 

Projects 
 

Page 29 GAO-12-634 Recovery Act 

As shown in figure 6, average tax credit prices generally increased in 

2010. HFA representatives we interviewed also said that tax credit prices 

continued to increase in 2011. For example, HFA officials in one state 

said that in 2011, some investors had been making commitments of 90 

cents and said that they believed these higher prices reflected the support 

that the Recovery Act had provided to the market. Similarly, in another 

state, HFA officials reported that prices were also up significantly and that 

the price in their state was approaching $1.00 for some development 

projects but more often was in the $0.90 range. However, prices within a 

state may vary, for example differing between rural and urban areas. 

According to state HFA officials in California, the price in 2005 and 2006 

was generally in the $0.90 range, with prices ranging from a high of $0.70 

for projects in rural areas to $1.04 or $1.05 in urban areas. 

Almost all HFAs that received TCAP and/or Section 1602 funds reported 

that these funds temporarily filled the gap left by diminished investor 

demand for low-income housing credits and allowed projects that had 

stalled because of a lack of investors to continue. Of the 56 HFAs that 

received TCAP and/or Section 1602 funds, 50 reported that these 

programs mostly or completely filled the gap in investor demand. As part 

of the survey, we asked HFAs to report on the number of projects that 

ultimately moved forward to close on financing with and without the use of 

Recovery Act funds for the years 2007, 2008, 2009, and 2010. We also 

collected data on the number of projects that did not move forward at all. 

As shown in figure 7, HFAs reported collectively that 2009 saw the 

highest number of projects move forward with the use of TCAP Section 

1602, or both types of assistance. In that year, 865 of 1,258 projects (69 

percent) moved forward with Recovery Act assistance. 
 

Page 30 GAO-12-634 Recovery Act 

Figure 7: Number of Projects That Moved Forward with and without Section 1602 

and TCAP Assistance, and Those That Did Not Move Forward, 2007-2010 

From one-third to nearly one-half of the 56 HFAs that we surveyed 

reported facing challenges in meeting deadlines for TCAP and Section 

1602 expenditures. Just over one-third (19 HFAs) viewed meeting TCAP 

expenditure deadlines as moderately or very challenging, and close to 

one-half (25 HFAs) reported the same level of challenges for Section 

1602 expenditure deadlines. The information we obtained from our survey 

does not explain why a somewhat higher number of HFAs generally 

viewed meeting the Section 1602 expenditure deadlines as more difficult 

than meeting TCAP deadlines. However, in September 2010, we reported 

that according to some HFA officials, some project owners could face 

challenges in meeting the requirement that they pay or incur at least 30 

percent of the adjusted cost basis of the project by December 31, 2010, 

HFAs Reported Challenges 

in Implementing TCAP and 

Section 1602 
 

Page 31 GAO-12-634 Recovery Act 

citing delays stemming from the time needed to assemble or disburse 

funding by HFAs, litigation, and routine construction delays.42

When it came to identifying reasons for why their agency’s Recovery Act 

projects or expenditures were successful, many HFAs responded by 

describing how they used established practices and procedures and 

relied on experienced staff. They also cited monitoring of construction 

sites and good communication and collaboration as important factors. For 

example, one HFA official recorded that the agency had experienced 

team members in place with expertise in accounting, LIHTC allocation, 

construction, legal matters, and compliance. In terms of what HFAs would 

consider good practices for the future, many HFAs cited the importance of 

efficient processes. For example, one HFA official recorded that by 

modifying existing procedures and practices with which its network of 

developers were familiar, the HFA could award the Recovery Act funds 

quickly and efficiently. Other HFA officials mentioned the importance of 

program oversight—for example, one HFA recorded that it implemented a 

pay-based payroll reporting system to aid it in tracking and monitoring 

contractor compliance with the Davis-Bacon Act wage requirements and 

required all general contractors and subcontractors working on a project 

to register and use the system for electronic submission of payroll reports. 

Some HFAs mentioned what they could have done differently, such as by 

better monitoring of grant subawardees and construction. 

In terms of what HUD and Treasury did well and could be considered 

good practices for the future, many surveyed HFAs indicated that HUD 

and Treasury were responsive. One HFA said that they greatly 

appreciated the responsiveness of agency staff in responding to their 

questions. For example, a representative of one HFA said that it 

appreciated the speed and clarity with which HUD and Treasury staff 

responded to questions and thought that the monitoring and oversight 

was also very timely. A representative of another HFA said that it liked the 

way in which Treasury repeatedly updated a frequently-asked-questions 

document whenever a new question was asked. 

However, some HFAs we surveyed reported that implementing TCAP 

challenged the agencies in several ways. As we reported in May 2010, 

TCAP funds are subject to certain federal requirements, such as the 

 

42GAO-10-999. 
 

Page 32 GAO-12-634 Recovery Act 

Davis-Bacon Act and the National Environmental Policy Act (NEPA) 

requirements. In addition, several HFAs said that both Treasury and HUD 

could have provided clearer, more consistent guidance, especially up 

front, and one HFA said that they had a hard time keeping up with 

program rules for both programs. However, as described in our May 2010 

report, because TCAP and the Section 1602 programs were new 

programs for HUD and Treasury, respectively, the agencies needed to 

develop guidance that covered all aspects of the program, and the 

guidance had to be carefully crafted to be consistent with the existing 

LIHTC program. In addition, HUD had to develop additional guidance to 

address the federal requirements that applied to TCAP, and received no 

additional administrative resources to implement the program.43

As we reported in September 2010, TCAP and the Section 1602 Program 

require HFAs to assume a greater project oversight role than in the 

standard LIHTC program.44 The Recovery Act requires that housing credit 

agencies perform asset management functions, or contract for the 

performance of such services, at the owner’s expense, to not only help 

ensure compliance with Section 42 of the Internal Revenue Code of 1986 

(Section 42) but also to ensure the long-term viability of buildings. 

While HFAs have typically performed limited annual compliance 

monitoring for their traditional LIHTC projects, they do not necessarily 

also perform asset management activities to help ensure the long-term 

physical and financial viability of the projects. Investors who have 

purchased tax credits under Section 42 of the Internal Revenue Code 

(IRC) program carry out asset management during the fifteen years after 

 

43GAO-10-604. 

44GAO-10-999. 

Agencies Have Taken 

Steps to Assess AssetManagement Capabilities 

but Treasury Does Not 

Plan to Fully Evaluate 

Asset Management 

Implementation 

Recovery Act and Asset 

Management 
 

Page 33 GAO-12-634 Recovery Act 

a project is placed in service. The primary focus of LIHTC annual 

compliance monitoring is to help ensure that LIHTC goals for affordable 

rental housing are met. Once LIHTC projects have been placed in 

service, state agencies are responsible for monitoring the projects for 

compliance with Section 42 requirements concerning household income 

and rents and project habitability. However, while asset managers also 

take steps to ensure properties remain in compliance with Section 42, 

they also undertake an additional set of activities, commonly referred to 

as “asset management” that focus on the long-term financial and physical 

health and viability of project. An important objective of asset 

management is to preserve and protect the investor’s benefit stream. 

Typically, investors do not expect the project to produce income. Instead, 

investors look to the credits, which will be used to offset their income tax 

liabilities, as their return on investment.45 Third-party investors are highly 

motivated to perform asset management because of the risk of tax credits 

being recaptured if the property is found to be out of compliance during 

the 15-year compliance period. For example, an LIHTC tax credit could 

be subject to recapture should a household residing in a residence 

funded by tax credits not have qualifying incomes. 

In traditional LIHTC projects, third-party investors play an important role in 

helping ensure compliance with tax credit program requirements through 

asset management. Asset management includes the many activities that 

relate to monitoring and planning for the long-term financial and physical 

health and viability of a project. In addition to monitoring compliance with 

LIHTC requirements, asset management activities also examine longterm issues related to plans for addressing a project’s capital needs, 

changes in market conditions, and recommendations and implementation 

of plans to correct troubled projects. For example, asset managers are 

likely to take a much closer look at a project’s finances than what HFAs 

would do for long-term compliance monitoring. As explained by one HFA 

representative, while its staff might review a high-level financial report to 

see if a project has a negative cash flow, an asset manager would look 

more thoroughly at the property’s financial health by looking at unit 

vacancy rates, tenant income, and the project’s ability to pay its bills. In 

addition, asset managers are likely to make more frequent physical 

inspections at properties than state agencies that monitor LIHTC projects 

 

45Congressional Research Service, An introduction to the Design of the Low-Income 

Housing Tax Credit, 7-5700 (Washington, D.C.: Sept. 17, 2010) 
 

Page 34 GAO-12-634 Recovery Act 

for compliance. Under LIHTC regulations, state agencies are only 

required to make onsite visits once every 3 years.46 Nearly all HFAs we 

interviewed for our September 2010 report noted that a third-party 

investor provided additional oversight and monitoring or financial interest 

in a project, and some said that they would coordinate with and rely on 

reviews and audits that investors and private construction lenders perform 

to satisfy their asset management obligations under TCAP. In addition, 

HFAs noted a range of challenges associated with asset management, 

with some HFAs and investors noting challenges as projects aged. They 

said that between the 5th and 12th year of a project’s life, projects may 

begin to show signs of physical and financial stress.47

By program design, many Section 1602 projects have no LIHTC investor 

equity, and do not benefit from the additional level of oversight these 

investors provide.48 In effect, the HFA becomes a primary “investor” with 

its award of the Section 1602 funds. HFAs we surveyed collectively 

reported that 592 of at least 1,511 projects (39 percent) had LIHTC 

investor equity.49 The numbers of Section 1602 projects with and without 

LIHTC investor equity varied widely by state. For example, HFAs in states 

with some of the larger awards, such as Texas ($594 million) and North 

Carolina ($135 million), reported that none of their Section 1602 projects 

had any LIHTC investor equity in any of their Section 1602 projects. In 

contrast, other states, with larger awards, such as Florida ($579 million) 

and Ohio ($118 million) had a higher proportion of projects with LIHTC 

investor equity. The Florida HFA reported having LIHTC investor equity in 

41 of its 56 Section 1602 projects, and Ohio reported having LIHTC 

investor equity in 64 of its 71 Section 1602 projects. As we indicated in 

September 2010, some HFAs have required third-party investor 

 

46Treas. Reg. §1.42-5(c)(2)(ii)(B). 

47GAO-10-999. 

48The Section 1602 Program, by design, does not require that Section 1602 projects have 

LIHTC funding. The Section 1602 Program allowed HFAs to exchange returned and 

unused tax credits for a payment from Treasury at the rate of 85 cents for every tax credit 

dollar. Thus, there are always other sources of funding in Section 1602 projects and the 

funding source need not be LIHTC investors. 

49HFAs may have responded to this question in two different ways. Assuming that they 

also included their TCAP projects, the total number of projects with Section 1602 funding 

would be 1710, in which case 613 of 1710 (36 percent) of projects would have had LIHTC 

funds. We did not collect information on the dollar amount of LIHTC investor equity in 

each project. 
 

Page 35 GAO-12-634 Recovery Act 

participation in all or the majority of their Section 1602 program projects, 

and they plan to work in coordination with investors on asset 

management activities. 

As we previously reported, HFAs’ approach to long-term asset 

management and the amount of prior experience varied. HFAs we 

interviewed reported that they had strengthened their procedures for longterm monitoring to meet the program requirements, mitigate risks, and 

help ensure projects’ long-term physical and financial viability.50 For 

example, of the nine HFAs we interviewed for our September 2010 report, 

four HFAs said that instead of inspecting projects every 3 years as 

required by the LIHTC program, they would inspect projects annually or 

more often, and seven said that they would require reports from projects 

owners on a monthly, quarterly, or as-requested basis, possibly including 

information such as project income statements. In response to our 

December 2011 survey, 23 HFAs reported that they would outsource their 

asset management responsibilities for the Section 1602 program and 19 

HFAs reported that they would do so for the TCAP program. However, we 

also noted that approaches to long-term asset management varied 

depending on resources, workload, and asset management experience. 

For example, 5 of the 12 HFAs we interviewed for both our September 

2010 and our current report indicated that they had no or minimal asset 

management experience, although they were taking steps to assume the 

responsibilities. 

As discussed in our September 2010 report, HUD officials reported that 

they had been primarily relying on existing monitoring systems to 

determine whether TCAP funds were spent properly and to identify 

projects that were not in compliance with the terms and conditions of 

TCAP agreements. These monitoring systems consist of HUD Office of 

Inspector General (OIG) audits, HUD Office of Fair Housing and Equal 

Opportunity (OFHEO) reviews in 10 states, and HOME reviews done by 

HUD field offices when projects include both TCAP and HOME funds.51

Because the Recovery Act required that all TCAP projects have some 

 

50GAO-10-966. We interviewed nine HFAs for this report and three additional HFAs for 

our current report. 

51HOME, administered by HUD, provides formula grants to states and localities that 

communities use—often in partnership with local nonprofit groups—to fund a wide range 

of activities that build, buy, or rehabilitate affordable housing for rent or homeownership or 

provide direct rental assistance to low-income people. 

TCAP 
 

Page 36 GAO-12-634 Recovery Act 

amount of LIHTC equity, HUD officials stated that they also expected 

third-party investors to monitor TCAP projects for compliance, just as they 

monitored traditional LIHTC projects. 

However, as we reported in September 2010, some TCAP projects had 

received only a nominal amount of tax credits that the project owners 

chose not to sell thereby limiting or precluding third-party oversight over 

these projects.52 Because the absence of third-party investors reduces 

the amount of overall scrutiny TCAP projects could receive, and because 

HUD did not know how many projects lacked third-party investors at the 

time of our review, our September 2010 report recommended that HUD 

develop a risk-based plan for its role in overseeing TCAP projects that 

recognizes the level of oversight provided by others.53

In March 2012, HUD took steps to address this recommendation. 

Specifically, HUD staff developed a risk-based plan for monitoring TCAP 

projects with little third-party investment. To develop this risk-based plan, 

HUD requested that HFAs report certain data about their projects to HUD, 

including the dollar value of LIHTC equity and federal, state, and local 

funds, private funds and loans, and the project owner’s cash contribution, 

which represents the amount of money that the developer has invested in 

the project. According to HUD, HFAs report this data after the units are 

completed. As part of its plan, HUD states that it will review these data on 

a quarterly basis to identify those that may be at a higher risk of 

noncompliance with the TCAP program. HUD identified higher-risk TCAP 

projects as those that have less than $10,000 in LIHTC investment and 

no other federal funds, such as HOME funds. For grantees with projects 

meeting these criteria—according to HUD, there were two such projects 

as of March 2012—HUD will review the HFA’s monitoring plans and 

contact them to discuss specific oversight and safeguards to help ensure 

that their projects maintain their compliance with TCAP requirements. 

HUD’s plan also states that it will require the grantees to submit any 

documentation or plans of continued oversight of these projects. As 

additional TCAP projects become complete in the coming years, 

 

52GAO-10-999. Also, the Recovery Act requires that TCAP projects to have some amount 

of LIHTC, but if the amount is too small, third-party investors might not have sufficient 

incentive to ensure that a project comply with long-term requirements. 

53See appendix III for the status of recommendations that GAO has made with respect to 

Recovery Act spending for housing programs. 
 

Page 37 GAO-12-634 Recovery Act 

consistently executing this specialized monitoring approach will be 

important for HUD.54

Since our September 2010 report, HUD OIG has also made 

recommendations to improve HUD’s monitoring of TCAP grantees and 

HUD has agreed to make changes. In November 2011, the HUD OIG 

reported that HUD was not adequately monitoring TCAP grantees or 

documenting their compliance with Office of Management and Budget 

(OMB) regulations related to single audit reports.55 In particular, the OIG 

noted that HUD lacked staff, expertise, and funding to perform on-site 

monitoring reviews; was not ensuring that outside entities’ controls were 

operating effectively; and did not have documented procedures for 

reviewing and resolving open audit findings. HUD’s OIG made 

recommendations to address these findings. HUD program staff have 

submitted a response to the OIG’s findings and recommendations, stating 

that as of March 31, 2012, the agency will develop a procedure requiring 

each TCAP grantee to submit its on-site monitoring procedures and a 

summary of its on-site monitoring of TCAP projects to its office. In 

addition, HUD states that by June 29, 2012, it will update its procedures 

for the review and resolution of single audit findings. Finally, on a 

quarterly basis beginning on March 31, 2012, HUD stated that it will 

review single audits of TCAP grantees and take immediate action, as 

appropriate, to act on any findings, with the goal of resolving findings 

within 3 months of an initial review. 

The OIG has also issued eight other reports related to the TCAP 

program, including seven performance reviews of individual HFAs. HUD 

OIG officials did not consider any issues from the audits to be open and 

were planning no further audits. 

 

54For more information about this and other prior open Recovery Act recommendations 

and matters for Congressional consideration, see appendix IV. 

55U.S. Department of Housing and Urban Development, Office of Inspector General, 

Additional Details To Supplement Our Report on HUD’s Fiscal Years 2011 and 2010 

Financial Statements, 2012-FO-0003 (Washington, D.C.: Nov.15, 2011), 36-37. The 

Single Audit Act of 1984, as amended, Pub. L. No. 98-502, 98 Stat.2327, codified at 31 

U.S.C. § 7501-7507, requires state and local governments and nonprofit organizations 

that expend $500,000 or more in federal awards in a fiscal year to have either a single 

audit or a program-specific audit. 
 

Page 38 GAO-12-634 Recovery Act 

As stated previously, the Recovery Accountability and Transparency 

Board has also been involved in monitoring efforts. As of April 2012, the 

board reported receiving two complaints related to the TCAP program. As 

was the case with HUD’s public housing programs, representatives from 

the board did not consider these complaints to be more significant than 

other complaints involving Recovery Act funds. 

As we reported in September 2010, Treasury developed a system to 

conduct compliance reviews to help ensure that the HFAs were following 

the terms and conditions of the Section 1602 Program agreement and are 

providing oversight of project owners. Treasury officials said at that time 

that they designed a risk-based system for conducting on-site and remote 

monitoring by the end of calendar year 2010. 

Treasury used two general approaches for its initial monitoring of Section 

1602 awards. First, it required HFAs to submit quarterly reports from 2009 

through December 2010, the month by which HFAs were required to 

commit all of their subawards and by which subawardees were to pay or 

incur at least 30 percent of their funds on an adjusted cost basis Second, 

in February 2010, Treasury developed a written monitoring plan for 

reviewing HFAs’ implementation of the Section 1602 Program to help 

ensure that they followed the terms and conditions of their grant 

agreements and were accountable for the funds awarded, and to mitigate 

any identified risk. This plan also included assessing whether the HFAs 

were equipped to perform asset management and monitor long-term 

compliance. In addition, consistent with Recovery Act requirements, 

Treasury established Section 1602 reporting requirements for postsubaward compliance, beginning in July 2011 and continuing until all 

projects completed their 15-year compliance period. 

We determined that Treasury’s initial monitoring of HFAs, as outlined in 

its compliance monitoring handbook, largely incorporated key internal 

controls that would provide reasonable assurance that Section 1602 

funds were spent as planned. However, we found that during the annual 

compliance period, Treasury was not planning on taking steps that would 

provide it with a better understanding of how HFAs were implementing 

the plans they had developed to undertake asset management. 

As was the case with HUD’s monitoring strategies for the Public Housing 

Capital Fund formula and competitive grant programs, we examined four 

key internal control activities in assessing Treasury’s monitoring plan: (1) 

establishing policies, (2) establishing measures and indicators, (3) 

Section 1602 Program 
 

Page 39 GAO-12-634 Recovery Act 

implementing policies and procedures, and (4) comparing actual with 

planned results. 

 Establishing policies and procedures: Treasury outlined its policies 

and procedures for its compliance review in a compliance monitoring 

handbook.56 Treasury’s monitoring plan is divided into two parts: initial 

monitoring of HFAs’ compliance with the terms and conditions of their 

grant agreements and monitoring of HFAs’ annual compliance with 

program requirements over a 15-year period beginning in July 2011. 

As part of its initial monitoring, Treasury’s procedures include 

conducting on-site and remote reviews to examine supporting 

documentation. According to Treasury’s handbook, whether 

monitoring is conducted on-site or remotely depended on several 

factors, including identified risks, size of the grants, costs, timing, and 

availability of Treasury staff. As part of its long-term monitoring, 

Treasury established two basic reporting requirements for HFAs. First, 

beginning in 2011 and continuing until all projects are reported on, 

HFAs must submit a report regarding the project’s placed in service 

date and eligible basis. Second, beginning in July 2011 and 

continuing until all projects have completed their 15 year compliance 

period, a state agency must submit an annual report of compliance. 

As part of its monitoring procedures, for each HFA, Treasury officials 

stated that they will review one or more projects for each HFA based 

principally on where Section 1602 funds represent close to 85 percent 

of eligible basis.57 However, Treasury was not planning on obtaining 

additional information, such as the amount of LIHTC equity in the 

project, in order to select projects for review. 

 Establish measures and indicators: Treasury’s handbook contains a 

checklist of measures and indicators for its reviewers to consider in 

determining whether awardees were meeting the terms and 

 

56U.S. Treasury Department, Office of the Fiscal Assistant Secretary, Compliance 

Monitoring Handbook, Section 1602: Cash Assistance to States for Low-Income Housing 

Projects in Lieu of Low-Income Housing Credit Allocations for 2009 under the American 

Recovery and Reinvestment Act of 2009, Revised November 2011 

57 Eligible basis” refers to a project’s development costs that are chargeable to a capital 

account for determining depreciation expenses for tax purposes (i.e., “adjusted basis”), 

with certain modifications as defined in section 42 of the Internal Revenue Code. It is 

generally equal to the adjusted basis of the building, excluding land but including 

amenities and common areas. 
 

Page 40 GAO-12-634 Recovery Act 

conditions of their grant agreements with Treasury. These measures 

and indicators include examining HFA processes for selecting 

subawardees; whether the state agency has established policies for 

asset management; and policies for addressing indications of fraud, 

waste, abuse, and potential criminal activity. With respect to 

compliance monitoring and asset management, as required by section 

42, Treasury officials stated that an HFA’s asset management 

responsibilities were to be undertaken during application reviews, at 

the time of the written agreement, and when the building is placed in 

service. The officials noted that HFAs assess the long-term viability of 

Section 1602 project during this time period, including an analysis and 

approval of the financial aspects of the project, operating budgets, 

market viability, and reserves for replacement, from the time before an 

HFA makes an award until projection completion. In addition, 

Treasury’s handbook requires that HFAs, for their annual compliance 

reports, report the date on which each project was placed in service, 

whether the HFA had received the project owner’s certificate of 

compliance, if the HFA conducted an on-site visit, and if 

noncompliance was found. However, the annual compliance report, 

as outlined in Treasury’s handbook, does not require additional 

information that would allow Treasury to further assess how HFAs are 

satisfying their asset management responsibilities, for example, if they 

analyzed financial statements, monitored use of reserve accounts, 

ensured that real estate taxes are paid, and ensured that proper 

insurance coverage remains in place after units are completed. During 

the fifteen year compliance period, Treasury monitors HFAs for 

compliance with Section 42 but not for these other asset management 

responsibilities that help ensure the long-term viability of the building. 

 Implement policies and procedures: Treasury officials told us that, as 

planned, that they conducted 18 on-site and 36 remote reviews 

between May 5, 2010, and November 14, 2011, with one additional 

on-site review remaining to be done as of April 4, 2012. To verify that 

Treasury had actually implemented its procedures, we reviewed the 

monitoring documentation for reviews performed of seven state 

HFAs—California, Colorado, Georgia, Illinois, Massachusetts, 

Mississippi, and Pennsylvania—and identified the extent to which 

Treasury staff had completed a monitoring checklist for each state 

agency. With respect to asset management and Section 42 

compliance, Treasury staff reported that they evaluated HFA’s policies 

and procedures, interviewed staff to understand their skills and 

experience, and reviewed related documentation. Treasury staff said 

that their on-site and desk reviews included an analysis of asset 

management policies and procedures, as required in section 42, and 
 

Page 41 GAO-12-634 Recovery Act 

that for a sample of projects at each HFA, they examined asset 

management documentation available at the time of application and 

written agreement. While subawardee files were not available for 

Treasury staff review at the time of their on-site and desk reviews, 

Treasury officials indicated that they would assess a project’s asset 

management documentation, for a sample of projects, at each state 

HFA, at the time the project is placed in service.58 It also plans to 

assess, for a sample of projects, at each HFA, for the annual 

compliance reporting. 

 Compare planned with actual results: For this internal control, we 

primarily focused on Treasury’s assessment of HFAs’ commitment 

and disbursement of Section 1602 funds because HFAs would be 

responsible for asset management and annual compliance monitoring 

in the future. We found that Treasury monitored the amount of funds 

committed and disbursed, completed the relevant parts of its 

monitoring checklist, and collected specific information about projects 

funded by Section 1602. In addition, Treasury established a quarterly 

reporting requirement, whose primary purpose was to show HFA 

progress in sub-awarding Section 1602 funds. For this purpose, 

Treasury also collected information including the names and locations 

of projects, brief narrative descriptions of projects, and the numbers of 

total housing units constructed and rehabilitated, and the number of 

units for low-income families and individuals.59

We determined that Treasury had taken steps to help ensure that HFAs 

were in compliance with Section 1602 program requirements for activities 

prior to the annual compliance period. However, we did not find that 

Treasury had developed plans to assess HFA asset management 

activities to help ensure the long-term viability of the buildings after 

projects have been placed in service. Further, we did not find that 

Treasury had developed risk-based criteria that would provide reasonable 

assurance that they would be selecting projects least likely to benefit from 

the oversight of others, particularly LIHTC investors. Treasury did not 

collect information, such as whether any LIHTC was in the project, or 

other federal grant money was involved, that might help it determine the 

 

58Treasury’s compliance handbook originally indicated that subawardee (project owner) 

files should be reviewed at the time of the onsite or remote review. 

59HFAs are required to report to Treasury on the final numbers of projects completed or 

dates of completion when they file their annual compliance reports. 
 

Page 42 GAO-12-634 Recovery Act 

extent of project oversight that entities other than HFAs or their 

contractors might provide. Further, collectively, HFAs are responsible for 

almost 1,500 projects and Treasury indicated that it generally planned to 

include one project for each HFA as part of its sample. However, while 

some states may have just a few funded projects, some states have a 

higher numbers of projects, for example, from 10 to 96 projects, and one 

state has 372 projects. Internal control standards state that federal 

agencies should have adequate mechanisms in place to identify program 

risks, including assessing the likelihood that the risk will occur and 

deciding how to manage it, including the actions that should be taken.60

Without additional risk-based selection criteria, especially for states with 

higher numbers of projects, Treasury could overlook projects with minimal 

or no third-party oversight. 

Further, Treasury reported that all but two HFAs (located in the U.S. 

territories) had asset management experience, but information we 

gathered from HFA officials suggests that additional ones do not.61 This 

difference can probably be attributed to Treasury’s understanding of HFA 

Section 1602 asset management responsibilities, as opposed to what the 

industry, as well as HUD, consider these responsibilities to be. Treasury 

requires state HFAs to perform asset management duties similar to those 

performed by state HFAs under the LIHTC program prior to the project 

being placed in service. However, our work indicates that while the 

housing credit industry and HUD guidance would agree that asset 

management includes the activities identified by Treasury, they would 

also view HFA Section 1602 asset management responsibilities as 

extending beyond the time units are placed in service. These activities 

would include analyzing financial statements, monitoring use of reserve 

accounts, ensuring that real estate taxes are paid, and ensuring that 

proper insurance coverage remains in place. In LIHTC projects, these 

functions would typically be performed by investors. 

For Section 1602, the Recovery Act requires that HFAs recapture and 

return it to the U.S. Treasury funding for projects that fall out of 

compliance and HFAs are responsible for imposing recapture conditions 

 

60GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999) 

61Treasury officials reported that they planned to follow-up with a second stage of 

monitoring for these two HFAs. 
 

Page 43 GAO-12-634 Recovery Act 

and restrictions on project owners. If the state agency takes all 

appropriate steps to recapture the funding but is unable to collect the 

amount from a liable party, Treasury does not require it to return the 

money.62 In contrast, under the conventional LIHTC program, HFAs are 

not liable for recapturing funds if a project owner fails to comply with 

LIHTC requirements. Rather, their obligation is to report any 

noncompliance to the IRS, and IRS takes any further action with respect 

to recapture. 

To meet our mandate to comment on reports made by direct recipients of 

Recovery Act funding, we continued to monitor data that recipients 

reported from February 2009 through December 31, 2011. For this report, 

we focused our review on the quality of FTE data reported on 

FederalReporting.gov by PHAs, which were the prime recipients of the 

Public Housing Capital Fund formula and competitive grant programs, 

and HFAs, which were the prime recipients of TCAP. Following Office of 

Management and Budget guidance, recipients reported on FTEs directly 

paid for with Recovery Act funding and not the employment impact on 

suppliers of materials (indirect jobs) or on the local communities (induced 

jobs). In those circumstances where Recovery Act dollars are blended 

with funds from other sources, Office of Management and Budget also 

provided instructions on how to calculate FTEs. Recipients are generally 

required to file reports after each quarter until they complete expenditure 

of Recovery Act funds, are no longer counting FTEs, and have met all of 

HUD’s requirements. 

According to information provided by HUD officials, the quality of jobs 

data submitted by HUD for the Public Housing Capital fund formula and 

competitive grants and TCAP has improved over time. Each quarter, HUD 

officials continue to perform quality assurance steps on the data that 

recipients submit to FederalReporting.gov to identify potential reporting 

errors, such as overcounts of FTEs, before the data are publicly posted 

on Recovery.gov. Officials also told us that their data quality reviews of 

recipient reports continued to include automated data checks to flag 

values in specific fields that were incorrect or that fell outside of 

parameters that HUD had defined as reasonable and to generate 

 

62In response to our May 2010 recommendation, Treasury provided additional guidance to 

state HFAs to clarify what constitutes appropriate actions by HFAs to recapture funds in 

order to avoid liability in the event of project owner noncompliance. 

HUD Continues to Monitor 

Quality of Data on Jobs 

Funded 
 

Page 44 GAO-12-634 Recovery Act 

comments notifying housing agencies of the potential errors and work 

with them to make corrections. The HUD staff member responsible for 

assessing TCAP data quality did note that for TCAP recipient reporting 

differs from that for the Public Housing Capital Fund formula and 

competitive programs because the grant recipients (the HFAs) rely on 

information submitted to them by the grant subawardees (i.e., the project 

developers). According to the HUD TCAP reviewer, these grant recipients 

have to gather data and payroll information from each subawardee, and 

calculate the total number of FTEs. Assessment of TCAP data quality 

includes quarterly reviews of over 800 subawardee reports, each of which 

has a varying number of projects. According to HUD staff, the time period 

available for agency review before the data are posted on Recovery.gov 

was too short to fully review the sub-awardee reporting and some errors 

in reporting may not have been detected in time for correction. 

Based on our analyses and interviews with agency officials, we 

determined that the recipient reported data appeared to be sufficiently 

reliable for the purpose of providing summary, descriptive information 

about FTEs and other information submitted on grantees’ recipient 

reports. HUD officials for the Recovery Act Public Housing Capital Fund 

grants also noted that their reporting rate for the tenth reporting period 

(from October 1, 2011, to December 31, 2011) was high and there have 

been no significant changes in data quality. 

As shown by figure 8, the FTEs funded by the formula grant program and 

TCAP peaked in 2010. The number of funded FTEs by competitive grants 

peaked later, in 2011 because the Recovery Act required that nearly $1 

billion in funds be awarded to PHAs based on a competitive basis for 

priority investments. Accordingly, HUD obligated the formula grants in 

March 2009 and the competitive grants in September 2009. Also, HUD 

was able to award the formula grants quickly using the formula that it 

typically uses to award Public Housing Capital Funds and PHAs generally 

selected projects that were already in their planning documents. 
 

Page 45 GAO-12-634 Recovery Act 

Figure 8: FTEs That Recipients Reported for Recovery Act Housing Funds, October 2009 through December 2011 

Note: We did not include FTE data for the quarter ending September 2009 because of concerns 

about comparability with subsequent quarters of FTE reporting. 

All of the PHAs responding to our question on quality procedures said 

that they were able to describe procedures and controls that they had in 

place to help ensure the timely reporting, accuracy, and completeness of 

FTEs.63 For example, several PHAs reported that they had processes in 

place to help ensure that contractors and subcontractors were in 

compliance with reporting requirements in submitting data on hours 

worked. In addition, 6 of the 11 PHAs we interviewed specifically said that 

they used HUD’s “job calculator” to help calculate FTEs. HUD made this 

calculator available to PHAs during the first round of Recovery Act 

reporting and later updated it to conform with OMB guidance. To help 

ensure that housing agencies used the revised jobs calculator, we 

 

63Of the 11 PHAs, we interviewed, 10 responded to this question. In addition, while we 

visited the site of another PHA, we did not interview its staff because staff familiar with the 

Recovery Act funded were no longer employed by the PHA. 
 

Page 46 GAO-12-634 Recovery Act 

recommended that HUD tell housing agencies to discontinue using the 

outdated jobs calculator for subsequent rounds of reporting.64

According to HUD officials, they were not aware of any plans that the 

agency has to use recipient-reported data internally. However, HUD 

converted a system it developed to track Recovery Act 

accomplishments—RAMPS—into a permanent system known as the 

Energy and Performance Information Center (EPIC) that it deployed in 

March 2012. This system would allow HUD to collect, aggregate, and 

report results of its capital investments made through the Public Housing 

Capital fund program and its two largest Native American programs. 

According to a HUD official, EPIC essentially replicates the key RAMPS 

function of collecting high-level information about Public Housing Capital 

Fund activity (for example, the numbers of units rehabilitated or 

developed with capital funds) and specific data about the installation of 

certain energy conservation measures. In addition, to leverage HUD’s 

investment in RAMPS, EPIC also carries over RAMPS infrastructure, 

such as login identification number and password, and system 

administration. 

HUD officials recommended that any system similar to that implemented 

at federalreporting.gov that is required in the future should be 

prepopulated with existing data from agency databases to reduce errors 

caused when recipients enter data. A HUD official estimated that HUD 

already collected much of the information that recipients entered into 

FederalReporting.gov. For example, HUD already tracks grant 

identification numbers and amounts of money awarded and disbursed in 

its Line of Credit Control System (LOCCS). He said that asking recipients 

to reenter data already tracked in HUD data systems resulted in many 

typographical errors that HUD then had to track and correct. Early on in 

the program, for instance, many PHAs entered incorrect grant 

identification numbers, putting in a “dash” before the last two numbers of 

the grant that signified the grant year. HUD officials made a great effort to 

correct these errors because, for the first several quarters, RATB could 

not cross check the recipient reported data with master lists of Recovery 

Act awards provided by the agencies. HUD officials said that the system 

 

64See GAO, One Year Later, States’ and Localities’ Uses of Funds and Opportunities to 

Strengthen Accountability,GAO-10-437 (Washington, D.C.: Mar. 3, 2010). 
 

Page 47 GAO-12-634 Recovery Act 

would have been more manageable if the fields had been prepopulated 

with data they had already collected.65

HUD has developed and implemented a strategy for monitoring the 

distribution and use of Public Housing Capital Fund formula and 

competitive grants that draws on an approach already in use at the 

agency and that includes monitoring by field offices. This approach 

appears to have served HUD well. Most PHAs met their deadlines to 

expend Recovery Act formula grants, and PHAs with competitive grants 

appear to be on schedule to meet their deadlines. 

HUD and Treasury also developed new programs—TCAP and Section 

1602, respectively—that were designed to provide capital investment to 

LIHTC projects hit hard by the economic crisis. HUD and Treasury each 

developed a strategy for monitoring the distribution and use of funding for 

their respective programs. In addition, to better understand the monitoring 

that TCAP-funded properties would receive over the 15-year compliance 

period, HUD staff collected data on the involvement of other stakeholders 

in these projects, including LIHTC investors and the HOME program. As a 

result, HUD has developed useful information about monitoring that other 

stakeholders will conduct, allowing it to increase its own oversight efforts 

for TCAP-funded projects with more limited amounts of stakeholder 

involvement. 

While Treasury has developed and largely implemented a monitoring 

approach with performance measures to assess HFAs’ use of Section 

1602 funds, some long-term monitoring issues remain. We determined 

that Treasury’s initial monitoring, as outlined in its compliance handbook, 

largely incorporated key internal controls that would provide reasonable 

assurance that Section 1602 funds were spent as planned. But we also 

found that Treasury had not developed a systematic approach for 

evaluating HFAs’ implementation of their asset management 

responsibilities after units had been placed in service. Treasury plans to 

 

65According to HUD officials, prior to implementation of FederalReporting.gov, HUD raised 

concerns with the Office of Management and Budget about its approach for collecting 

information on projects, and proposed populating the information needed to satisfy the 

Recovery Act’s reporting requirements. The Office of Management and Budget opted to 

collect information directly from recipients of Recovery funds. See GAO, Recovery Act: 

Opportunities Exist to Increase the Public’s Understanding of Recipient Reporting on HUD 

Programs, GAO-10-966 (Washington, D.C.: Sept. 30, 2010). 

Conclusions 
 

Page 48 GAO-12-634 Recovery Act 

review the supporting documentation for at least one project for each HFA 

in the 15-year compliance period for the purpose of ensuring that Section 

42 compliance requirements have been met. However, it does not plan to 

collect information that would allow its staff to assess how HFAs are 

implementing their asset management responsibilities with respect to 

helping to ensure the long-term viability of the project’s buildings. 

Further, Treasury has not obtained information that would allow it to 

determine which projects may be benefiting from the involvement of other 

interested parties, such as third-party investors with LIHTC equity and the 

federal government. Such information is particularly important because 

LIHTC investors typically provide additional scrutiny to ensure compliance 

with Section 42 and ensure projects’ long-term viability. Many Section 

1602 projects have no LIHTC equity at all, and some HFAs have very 

limited or no asset management experience. Treasury could take 

additional steps to collect information that would allow it to better prioritize 

its efforts to help ensure compliance with Section 42 and ensure that lowincome residents continue to benefit from affordable housing units 

throughout the 15-year compliance period. Treasury has already reported 

that it intends to choose a sample of projects for additional review at the 

time of HFAs’ annual compliance reviews. Obtaining data that illustrate 

the interests of other stakeholders would increase Treasury’s ability to 

identify projects that could be at a relatively high risk of noncompliance 

with Section 42 because of a lack of stakeholder involvement and to 

focus its compliance reviews on those projects. 

To help meet the requirements of the Recovery Act’s Section 1602 

provisions to help ensure the long-term viability of the buildings, we 

recommend that the Secretary of the Treasury assess the extent to which 

HFAs are utilizing information provided to them by project owners during 

the 15-year compliance period, taking into account the level of investor 

equity in projects. 

We provided a draft of this report to the Secretary of Housing and Urban 

Development (HUD) and the Secretary of the Treasury. We received 

comments from HUD and Treasury that are reproduced in appendixes V 

and VI respectively. HUD largely expressed its satisfaction with our 

review. Each agency also provided technical comments, which we 

incorporated as appropriate. 

Recommendation for 

Executive Action 

Agency Comments 

and Our Evaluation 
 

Page 49 GAO-12-634 Recovery Act 

In its response, Treasury noted that it strongly supported GAO’s emphasis 

on promoting the success of the Section 1602 Program while limiting 

exposure for taxpayer funds. However, Treasury questioned the need to 

take additional steps to assess HFAs’ capacity to undertake asset 

management, as we originally recommended. In technical comments 

accompanying the letter Treasury stated that, in accordance with Section 

42 of the Internal Revenue Code (IRC), an HFA’s asset management 

responsibilities were undertaken (1) during application reviews, (2) at the 

time of the written agreement, and (3) when the building was placed in 

service. Treasury noted that it already has reviewed or plans to review 

each HFA’s asset management at each of these junctures. We clarified the 

draft report language to reflect the requirement that HFAs assess the longterm viability of Section 1602 projects and that Treasury’s assessments of 

HFAs’ capacity to ensure long-term viability ended when a project was 

placed in service. 

In addition, in subsequent discussion, Treasury stated that the Recovery 

Act limits its authority to impose requirements on HFAs beyond the scope 

of sections 42 and 1602 but acknowledged that HFAs may choose to 

impose more stringent standards. However, based on our analysis we 

believe that a broader interpretation of the Recovery Act’s asset 

management provisions is feasible and that Treasury can do more to 

better ensure that Section 1602-funded projects meet the Recovery Act’s 

requirement that HFAs ensure the long-term viability of buildings funded 

with Section 1602 through its conduct of asset management after projects 

are placed in service. While asset management is not defined by Section 

1602, the term is commonly understood by participants in both the LIHTC 

(sections 42) and 1602 programs to be a process that strives to assure 

that a project remains suitable for occupancy and continues throughout a 

project’s useful life. Section 1602(c)(3) uses the term “asset 

management” to describe the functions state HFAs are to perform for 

Section 1602 projects. On the other hand, the purpose of the provision in 

Section 42 that Treasury relies on for what it describes as its asset 

management program under Section 1602—section 42(m)(2) of the 

IRC—is to ensure that a project has not been awarded too many tax 

credits. While that process involves an agency determination that the 

housing dollar credit amount does not exceed that necessary for the 

project to be financially feasible and viable as a qualified project, it stops 

when the project is placed in service since, at that point, the tax credits 

(or in the case of the Section 1602 program, the award) have been 

committed. The compliance period for both the LIHTC (section 42) and 

Section 1602 projects lasts for 15 years beyond that point. For standard 

LIHTC projects, private investors see the need to continue to provide 
 

Page 50 GAO-12-634 Recovery Act 

asset management during the 15-year compliance period. Our position is 

that Section 1602(c)(2), with its reference to section 42 of the IRC, must 

be read in conjunction with Section 1602(c)(3) which explicitly assigned 

state HFAs asset management responsibilities. Based on our analysis, 

we also believe Treasury, while ensuring state HFAs’ compliance with 

section 42 of the IRC pursuant to Section 1602(c)(2), was also given the 

authority, pursuant to Section 1602(c)(3), to require the HFAs to perform 

asset management during the compliance period and to assess those 

HFAs’ efforts. 

Our interpretation—that Congress’s use of the term “asset management” 

in the Recovery Act means more than the duties imposed upon state 

HFAs under IRC Section 42—is supported by the plain language of 

Section 1602(c)(3). This provision states that a state HFA “shall perform 

asset management functions to ensure compliance with section 42 of the 

Internal Revenue Code of 1986 and the long-term viability of buildings 

funded by any subaward under this section.” As this provision indicates, 

under Section 1602, state HFAs’ asset management responsibility has 

two functions: ensuring compliance with section 42, the purpose that 

Treasury focuses on, as well as ensuring the long-term viability of the 

funded projects. Thus, state HFAs are to perform asset management 

duties beyond what they perform under section 42 of the IRC in order to 

assure projects’ long-term viability. We believe this additional function of 

asset management under Section 1602 is further evidence that the 

statute authorizes Treasury to direct state HFAs to perform asset 

management during the compliance period and to assess the HFAs’ 

efforts. 

We also realize that HFAs entered into binding written agreements with 

project owners at the time that Section 1602 awards were made. It would 

be difficult at this point for state HFAs to unilaterally perform asset 

management over subawardees if such oversight is not authorized by the 

written agreements. Nevertheless, we found that many state HFAs, 

recognizing the absence of third-party investors, have taken on asset 

management during the compliance period, although some have reported 

that they had no or minimal experience with this duty. All nine of the HFAs 

we interviewed for our September 2010 report, reported that they had 

strengthened their procedures for long-term monitoring to meet the 

program requirements, mitigate risks, and help ensure projects’ long-term 

physical and financial viability. These procedures include increasing the 

number of inspection visits over the 15-year tax credit compliance period 

and the frequency of reporting, as well as enhancing financial monitoring 

of projects receiving TCAP and Section 1602 program funds beyond what 
 

Page 51 GAO-12-634 Recovery Act 

is typically done for standard LIHTC projects. In addition, 23 of the 56 

respondents to our December 2011 survey question on asset 

management indicated that they planned to outsource these 

responsibilities, and another 6 reported that they planned to hire new 

staff. 

Recognizing there may be some limits to the information available to 

HFAs under the binding written agreements, but noting that the HFAs 

have a responsibility for ensuring the long-term viability of projects after 

they are placed in service, we modified our draft recommendation that 

Treasury assess HFA capacity to conduct asset management. We 

recommend instead that Treasury assess the extent to which HFAs are 

utilizing information provided to them by project owners for the purpose of 

ensuring the long-term viability of the buildings during the 15-year 

compliance period. We also modified the title of the report to better 

reflect the focus of the revised recommendation. 

Treasury also commented that project owners’ interest in maintaining the 

financial viability of their investments is a factor in long-term success and 

statutory compliance. We recognize that project owners with significant 

equity investments have strong incentives to maintain their properties. 

However, Treasury has not collected data that show how much equity 

project owners have in Section 1602 projects. Data that HUD has 

collected for TCAP projects show that some owners have no ownership 

equity at all. Further, third-party investors in LIHTC projects often perform 

asset management activities that go beyond what project owners provide. 

For this reason, it is especially important for HFAs to provide oversight of 

Section 1602 projects with no LIHTC equity, and therefore we do not 

change our recommendation that Treasury oversight consider the level of 

third-party investment. 
 

Page 52 GAO-12-634 Recovery Act 

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Housing and Urban Development, the 

Secretary of the Treasury, the Director of the Office of Management and 

Budget, and other interested parties. The report is available at no charge 

on the GAO website at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8678 or sciremj@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 VII. 

Mathew J. Sciré 

Director 

Financial Markets 

 and Community Investment 
 

Page 53 GAO-12-634 Recovery Act 

List of Congressional Committees 

The Honorable Darrell Issa 

Chairman 

Committee on Oversight 

 and Government Reform 

House of Representatives 

The Honorable Elijah Cummings 

Ranking Member 

Committee on Oversight 

 and Government Reform 

House of Representatives 

The Honorable Judy Biggert 

Chairman 

Subcommittee on Insurance, Housing 

 and Community Opportunity 

Committee on Financial Services 

House of Representatives 

The Honorable Luis V. Gutierrez 

Ranking Member 

Subcommittee on Insurance, Housing 

 and Community Opportunity 

Committee on Financial Services 

House of Representatives 

The Honorable Joseph Lieberman 

Chairman 

Committee on Homeland Security 

 and Governmental Affairs 

United States Senate 

The Honorable Susan Collins 

Ranking Member 

Committee on Homeland Security 

 and Governmental Affairs 

United States Senate 
 

Page 54 GAO-12-634 Recovery Act 

The Honorable Tim Johnson 

Chairman 

Committee on Banking, Housing, 

 and Urban Affairs 

United States Senate 

The Honorable Richard C. Shelby 

Ranking Member 

Committee on Banking, Housing, 

 and Urban Affairs 

United States Senate 
Appendix I: Scope and Methodology 

Page 55 GAO-12-634 Recovery Act 

The scope of our audit included four housing programs that received 

American Recovery and Reinvestment Act of 2009 (Recovery Act) funding: 

the Public Housing Capital Fund formula and competitive grant programs; 

the Tax Credit Assistance Program (TCAP), administered by the 

Department of Housing and Urban Development (HUD); and the Section 

1602 program administered by the Department of the Treasury. For each 

program, our objectives were to examine (1) the progress public housing 

authorities (PHA) made in spending their grant funds, what is known about 

how funds were used, and the actions HUD and PHAs took to ensure that 

recipients spent their grants on time and for intended purposes; (2) the 

progress state housing finance agencies (HFA) made in disbursing funds, 

what is known about how funds were used, and the actions Treasury and 

others took to ensure that recipients disbursed funds on time and for 

intended purposes; and (3) the quality of job estimates reported by 

Recovery Act recipients, including housing grant recipients. 

As part of our approach to addressing all objectives, while the results 

cannot be generalized within states or to other states, we selected states 

within which to conduct PHA and HFA visits that allowed us to capture a 

range of funding recipient experiences with each program. We selected 

four “primary” states—California, Illinois, Massachusetts, and 

Mississippi—within which to conduct PHA and HFA visits. The selection 

of these states provided geographic diversity and also allowed us to 

obtain information for PHAs with formula and competitive grants and 

PHAs that HUD initially designated as troubled for the purpose of 

monitoring fund use. We also selected these states because they 

received a range of funding levels. For example, California received a 

higher total amount of funds (about $118 million in formula grants and 

$478 million in Section 1602 funds), while Mississippi received a total 

lower amount of funds (about $32 million in formula funds and $29 million 

in Section 1602 funds). We selected several additional states and a 

locality to visit on the basis that we had visited these states as part of 

earlier Recovery Act work. These states were Colorado, Georgia, 

Pennsylvania, and the District of Columbia. Visiting PHA and HFAsponsored projects in each of these states allowed us to identify how 

projects have progressed since the time of our previous visit. In addition, 

we contacted representatives of HUD and Treasury’s Office of Inspector 

General, respectively, as well as representatives of state auditors to 

obtain information that these organizations may have issued on the use of 

Recovery Act funding by PHAs or HFAs. We incorporated their comments 

as appropriate. 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 56 GAO-12-634 Recovery Act 

To identify progress PHAs have made in expending public housing 

formula and competitive grants, we obtained expenditure data from 

HUD’s Electronic Line of Credit Control System on the amount of 

Recovery Act funds that PHAs had drawn down for the program’s 

respective deadlines. In addition to getting summary information from 

HUD on the number of PHA units planned and completed, we also 

obtained and analyzed available data in HUD’s Recovery Act 

Management Performance System (RAMPS) to identify the types of 

rehabilitations (for example, installation of windows or roofs) that PHAs 

receiving formula funds had performed as of April 19, 2012.1

 Our 

objective was to determine the number of PHAs that had completed each 

type of energy-efficiency work activity tracked by RAMPS and to account 

for the number of PHAs that had undertaken other types of work activities 

or no activity at all. RAMPS data is entered as the number of units to be 

affected by a planned or actual work activity. Our data reliability 

assessment of RAMPS data focused on whether a PHA completed an 

activity rather than on the accuracy of the number of units affected by the 

work activity. As part of this assessment, we interviewed HUD officials, 

reviewed guidance manuals, and during our site visits verified that the 

work was actually completed. We determined that RAMPS was 

sufficiently reliable for our purpose of providing a high-level description of 

the ways in which PHAs used their funds to promote energy-efficiency. 

We excluded a very small percentage of projects funded by formula 

grants from our analyses—those involving development of new units and 

non-dwelling improvements (for example, sidewalk improvements). In 

addition, we also excluded all competitive grant projects from the RAMPS 

data we analyzed because the deadline for complete expenditure of these 

funds is not until September 2012. In addition, to verify progress that 

PHAs have made in spending these funds and to better understand their 

use, we visited 25 projects sponsored by 19 housing agencies in our 

seven selected states and the District of Columbia. We asked 

representatives from each of these agencies for information on their 

interactions with HUD officials and what lessons they may have learned in 

meeting Recovery Act requirements. In addition, in our four primary 

states—California, Illinois, Massachusetts, and Mississippi—we 

conducted extensive structured interviews with PHA staff on their 

 

1

HUD staff reported that our analyses could result in a slight overstatement of PHA work 

activities performed as of April 19, 2012, since any data entered by PHAs after December 

31, 2011, would not have yet gone through a “cleaning” process to address possibilities 

such as the double-counting of work activities completed. 

Public Housing Capital 

Fund Formula and 

Competitive Grant 

Program 
Appendix I: Scope and Methodology 

Page 57 GAO-12-634 Recovery Act 

Recovery Act experiences and interviewed HUD field office staff on their 

role in monitoring public housing agency obligations and their 

observations on PHA experiences with meeting Recovery Act funding 

milestones. 

To determine whether HUD’s three annual monitoring strategies for 

oversight of the public housing capital fund grants was likely to help 

ensure that Recovery Act funds were spent on time and for the intended 

purposes, we identified whether HUD’s strategy addressed four key 

internal control activities that we identified as important for this type of 

funding.2

 In addition, to confirm that HUD took the actions that it planned 

to take for each component of its year two (March 2010 to March 2011) 

monitoring strategy, we obtained and reviewed supporting documentation 

for monitoring performed during year two. We specifically reviewed 

completed monitoring reviews of the 24 PHA sites we visited. We 

reviewed 13 monitoring review files for the formula grant program and 11 

such files for the competitive grant program. These monitoring files 

reflected HUD staff assessment of documentation supplied to them by the 

PHAs. We performed this review primarily for HUD’s year two strategy 

because the steps were completed during the time of our review. 

To identify progress HFAs have made in disbursing Section 1602 and 

TCAP funds, we obtained financial data from their respective federal 

oversight agencies. For Section 1602, we obtained data on the amount of 

funds disbursed by HFAs to project developers (the subawardees) from a 

tracking system—an excel spreadsheet—maintained by agency staff. For 

TCAP, we obtained data on the amount of funds disbursed by HFAs to 

project developers from HUD’s Integrated Disbursement and Information 

System (IDIS), a system that HUD uses to track other housing programs. 

To verify progress that a limited number of project developers have made 

in using Section 1602 and TCAP funds and to better understand their 

use, we visited 11 projects in the seven states we selected. In each of the 

primary selected states, we visited one project that was rehabilitated and 

one that was new construction and in each of the additional states, we 

selected projects that we had visited before. In addition, in our four 

primary states, we conducted structured interviews with HFA officials to 

 

2

The four key internal control activities we selected were establishing and implementing 

policies and procedures, establishing measures and indicators, implementing policies and 

procedures, and comparing planned with actual results. 

TCAP and Section 1602 

Program 
Appendix I: Scope and Methodology 

Page 58 GAO-12-634 Recovery Act 

obtain specific information about experiences meeting Recovery Act 

requirements and fund use. 

To further assess state implementation of the TCAP and Section 1602 

programs, we asked managers of state HFAs in all 50 states, the District 

of Columbia, American Samoa, Guam, Commonwealth of the Northern 

Mariana Islands, Puerto Rico, and the U.S. Virgin Islands to complete a 

web survey. Our survey asked about how the funds were used, items that 

provided information that allowed us to assess how many projects moved 

forward with these funds, assistance received from federal agencies, the 

level of challenge associated with meeting Recovery Act deadlines, asset 

management, and lessons learned. Data collection took place from 

December 2011 through February 2012. We received usable responses 

from all 56 agencies. In addition, when reporting on approximate average 

tax credit price for 2007, 2008, and 2009, we used information gathered 

from HFAs in response to our 2009 questionnaire.3

 See appendix II for 

the wording of our survey questions and a summary of the results. 

While all state agencies returned questionnaires, and thus our results are 

not subject to sampling or overall questionnaire nonresponse error, the 

practical difficulties of conducting any survey may introduce other errors 

in our findings. We took steps to minimize errors of measurement, 

question-specific nonresponse, and data processing. We obtained 

comments on a draft of our self-administered questionnaire from the 

National Council of State Housing Agencies, Treasury, and pretested 

draft questionnaires with two housing finance agencies. During the 

survey, we made follow-up contacts with nonrespondents to encourage 

participation, and to clarify answers respondents made, as necessary. In 

addition, GAO analysts resolved respondent difficulties in answering one 

question during the survey. Finally, analysis programs and other data 

analyses were independently verified. 

To determine whether Treasury’s plan for oversight of Section 1602 funds 

was likely to ensure that funds were spent on time and for intended 

purposes, we identified whether Treasury’s monitoring plans for oversight 

addressed four internal control standards that we identified as important 

 

3

GAO, Recovery Act: Results of GAO’s Survey of State Housing Finance Agencies’ Use 

of the Low-Income Housing Tax Credit Assistance Program (TCAP) and the Section 1602 

Program, GAO-10-1023SP (Washington, D.C.: Sept. 20, 2010), an e-supplement to 

GAO-10-1022R. 
Appendix I: Scope and Methodology 

Page 59 GAO-12-634 Recovery Act 

for each program. We also reviewed completed monitoring reviews of 

seven state HFAs to verify that Treasury staff took the actions that they 

planned to take as part of their plan. These monitoring files reflected 

Treasury’s assessment of documentation supplied to them by the HFAs. 

However, we did not review the underlying documentation provided by 

the HFAs. To better understand the implications of Treasury’s future 

plans for the oversight of HFA and project developer compliance with 

long-term program requirements, we considered findings from our 

previous report on the capacity of HFAs to conduct asset management 

and information obtained from our questionnaire on HFA plan’s for asset 

management. We did not undertake a similar review for HUD oversight of 

the TCAP program because HUD did not have a monitoring plan in place 

at the time of our review and was in the process of responding to a 

recommendation that we made in an earlier report concerning asset 

management.4

The recipient reporting section of this report responds to the Recovery 

Act’s mandate that GAO comment on the estimates of jobs created or 

retained by direct recipients of Recovery Act funds.5

 For our review of the 

tenth submission of recipient reports (which covers the period from) 

October 1, 2011, through December 31, 2011, we built on findings from 

our nine prior reviews of these reports, which covered the period from 

February 2009 through September 31, 2011. To understand the quality of 

jobs data reported by housing program recipients, we compared the 10 

quarters of recipient reporting data that were publicly available at 

Recovery.gov as of January 31, 2012; performed edit checks; and 

conducted other analyses on housing recipients’ reports for the Recovery 

Act.6

 Our reliability assessment included interviewing HUD program 

officials and funding recipients and conducting logic tests for key 

variables. Our matches showed a high degree of agreement between 

HUD’s assessments of full-time equivalent (FTE) positions reported and 

 

4

GAO-10-999. 

5

Pub. L. No. 111-5, § 1512(e), 123 Stat. 288. 

6

As with our previous reviews, we conducted these checks and analyses on all prime 

recipient reports to assess data logic and consistency and identify unusual or atypical 

data. For this 10th round of reporting, we continued to see only minor variations in the 

number or percentage of reports appearing atypical or showing some form of data 

discrepancy. 

Recipient Reporting 
Appendix I: Scope and Methodology 

Page 60 GAO-12-634 Recovery Act 

our analyses of information recipients reported directly to 

FederalReporting.gov. In general, the recipient data used in this report 

appears to be sufficiently reliable for the purposes of providing summary 

descriptive information about FTEs or other information submitted on 

grantees’ recipient reports for the three housing programs—Public 

Housing Capital Fund formula and competitive grants, and TCAP. 

We conducted this performance audit from June 2011 to June 2012 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: Results from Survey of State 

Housing Finance Agencies 

Page 61 GAO-12-634 Recovery Act 

Survey of State Housing Finance Agencies on Recovery Act Funding 

Background on Your State's LIHTC Market 

1. Compared to 2009, considering both urban and rural areas, is your state's market for low income housing tax credits: Click one 

button. 

(Data intentionally not reported. This material will be published in a forthcoming report.) 

2. Compared to 2009, how would you characterize the current housing tax credit market in urban versus rural areas (however you may 

define them) in your state? Is it: 

(Data intentionally not reported.). 

Tax Credit Pricing 

3. In our previous survey we asked for the approximate average tax credit price set at closing with investors in your state for 2007, 2008 

and 2009. What were the approximate prices for the following years? Enter cents using numeric digits and decimal points, if needed, in 

the boxes below

2005 – cents paid per dollar tax credit 

Mean Median Minimum Maximum

Number

of 

respondents

89.2 90 75 100 48

2006 – cents paid per dollar tax credit 

Mean Median Minimum Maximum

Number

of 

respondents

92.4 93 80 103 48

2007 - your previous report was: _____ cents paid per dollar tax credit 

2008 - your previous report was: _____ cents paid per dollar tax credit 

2009 - your previous report was: _____ cents paid per dollar tax credit 

Appendix II: Results from Survey of State 

Housing Finance Agencies 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 62 GAO-12-634 Recovery Act 

2010 – cents paid per dollar tax credit 

Mean Median Minimum Maximum

Number

of 

respondents

74.4 73 47 96 53

4. If you have any additional comments or would like to explain any of your answers on tax credit pricing, please provide them below. 

Box will scroll to accomodate text as necessary.

(Data intentionally not reported.) 

Impact of CRA on Tax Credit Pricing 

5. In your opinion, does the Community Reinvestment Act (CRA) tend to increase, decrease, or have no effect on the pricing of lowincome housing tax credits in your state? 

(Data intentionally not reported. This material will be published in a forthcoming report.)

6. Are there specific geographic location(s) within your state where CRA is more influential than others? 

(Data intentionally not reported. This material will be published in a forthcoming report.) 

7. IF YES: In what geographic locations is CRA more influential? 

(Data intentionally not reported. This material will be published in a forthcoming report.) 

8. In your opinion, do each of the following project or market characteristics generally tend to increase, decrease, or have no effect on 

the pricing of low-income housing tax credits in your state? Click one button in each row.

(Data intentionally not reported. This material will be published in a forthcoming report.) 

9. Are there any other factors that generally tend to increase or decrease pricing of low-income housing tax credits in your state? If so, 

describe them in the box below.

(Data intentionally not reported.) 

10. If you have any additional comments or would like to explain any of your answers on the impact of CRA on tax credit pricing, please 

provide them below. 

(Data intentionally not reported.) 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 63 GAO-12-634 Recovery Act 

Type of Recovery Act Funding Used 

11. Of all projects receiving either TCAP or Section 1602 funds, to how many projects and tax credit housing units have you awarded 

only TCAP? 

Enter whole numbers of projects and units in the boxes below. Enter zero if none.

Projects: 

Mean Median Minimum Maximum

Number

of 

respondents

11.3 9 0 59 56

Units: 

Mean Median Minimum Maximum

Number

of 

respondents

886.1 582 0 8,346 55

12. Of all projects receiving either TCAP or Section 1602 funds, to how many projects and tax credit housing units have you awarded 

only Section 1602 funds? 

Projects: 

Mean Median Minimum Maximum

Number

of 

respondents

27.5 12 0 372 55

Units: 

Mean Median Minimum Maximum

Number

of 

respondents

1,156.2 461 0 7,854 55

13. And of all projects receiving either TCAP or Section 1602 funds, to how many projects and tax credit housing units have you

awarded both TCAP and Section 1602 funds? 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 64 GAO-12-634 Recovery Act 

Projects: 

Mean Median Minimum Maximum

Number

of 

respondents

4.1 1 0 31 56

Units: 

Mean Median Minimum Maximum

Number

of 

respondents

249.7 49 0 1,648 55

14. How many Section 1602 projects used Low Income Housing Tax Credits (LIHTC) as part of their financing? 

Not applicable: my agency did not receive Section 1602 funds 

Not checked Checked 

Number of 

respondents 

0 1 1 

Projects: 

Mean Median Minimum Maximum

Number

of 

respondents

11.2 5 0 64 53

Units: 

Mean Median Minimum Maximum

Number

of 

respondents

785.8 239 0 5,092 52
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 65 GAO-12-634 Recovery Act 

Restarting Stalled Projects 

15. How many LIHTC-eligible projects did your agency award tax credits to in 2007 through 2010? (For each year, please count only 

projects receiving initial awards made in that year. To avoid double-counting, do not include projects that had returned allocations made 

in previous years to receive new allocations.) 

Total projects receiving initial awards 

2007 

Mean Median Minimum Maximum

Number

of 

respondents

27.7 18 0 189 55

2008 

Mean Median Minimum Maximum

Number

of 

respondents

26.7 18 0 194 55

2009 

Mean Median Minimum Maximum

Number

of 

respondents

22.9 16 0 144 55

2010 

Mean Median Minimum Maximum

Number

of 

respondents

19.0 15 0 126 54
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 66 GAO-12-634 Recovery Act 

16. And of these total projects identified in Question 15, how many ultimately moved forward to close on financing with an investor with 

and without the use of TCAP and/or Section 1602 assistance (Recovery Act funds)? 

Moved forward with Recovery Act funds 2007 

Mean Median Minimum Maximum

Number

of 

respondents

3.9 1 0 45 51

Moved forward WITHOUT Recovery Act funds 2007 

Mean Median Minimum Maximum

Number

of 

respondents

23.0 15 0 179 53

Moved forward with Recovery Act funds 2008 

Mean Median Minimum Maximum

Number

of 

respondents

11.2 6 0 52 54

Moved forward WITHOUT Recovery Act funds 2008 

Mean Median Minimum Maximum

Number

of 

respondents

14.5 7 0 134 52

Moved forward with Recovery Act funds 2009 

Mean Median Minimum Maximum

Number

of 

respondents

16.0 11 0 80 54
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 67 GAO-12-634 Recovery Act 

Moved forward WITHOUT Recovery Act funds 2009 

Mean Median Minimum Maximum

Number

of 

respondents

6.9 2 0 62 52

Moved forward with Recovery Act funds 2010 

Mean Median Minimum Maximum

Number

of 

respondents

3.8 1 0 40 53

Moved forward WITHOUT Recovery Act funds 2010 

Mean Median Minimum Maximum

Number

of 

respondents

15.3 9 0 124 53

17. And of these total projects identified in Question 15, how many ultimately did not move forward to close on financing with an 

investor? 

Did NOT move forward 

2007 

Mean Median Minimum Maximum

Number

of 

respondents

2.0 0 0 17 53

2008 

Mean Median Minimum Maximum

Number

of 

respondents

2.4 1 0 14 53
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 68 GAO-12-634 Recovery Act 

2009 

Mean Median Minimum Maximum

Number

of 

respondents

1.2 0 0 13 54

2010 

Mean Median Minimum Maximum

Number

of 

respondents

0.5 0 0 6 51

18. Of those projects identified as moving forward in Question 16, what differentiated projects that were able to move forward without 

Recovery Act assistance from projects that required Recovery Act assistance? 

(Data intentionally not reported) 

Project Type and Other Funding 

19. Across all the 2007-2010 projects receiving any TCAP and/or Section 1602 assistance, approximately what percentage of your 

agency's subawards were for: 

New construction percent 

Mean Median Minimum Maximum

Number

of 

respondents

63.1 66 0 100 55

Rehabilitation percent 

Mean Median Minimum Maximum

Number

of 

respondents

33.1 31 0 100 55
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 69 GAO-12-634 Recovery Act 

Combination of new construction and rehabilitation percent 

Mean Median Minimum Maximum

Number

of 

respondents

3.8 0 0 45 55

20. In approximately how many of your agency's TCAP and Section 1602 projects were each of the following sources of federal, state, 

or private funds combined with TCAP and/or Section 1602 funds in project financing? 

Click the one button in each row that most closely approximates how many projects included that source of funds.

Recovery Act Public Housing Capital Fund Formula Grants 

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

0 0 0 8 40 6 54

Recovery Act Public Housing Capital Fund Competitive Grants 

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

0 0 0 6 39 8 53

Funds from other federal programs - list in box below this table

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

3 8 13 23 5 2 54

State or local funds 

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

4 13 5 23 9 0 54
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 70 GAO-12-634 Recovery Act 

Conventional loans 

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

5 21 12 14 1 1 54

Bond financing 

Included in all 

projects 

Included in 

most 

projects 

Included in 

about 

half the 

projects 

Included in 

only

some projects

Included in 

none

of the projects Don't know 

Number of 

respondents

1 1 2 28 22 1 55

IF OTHER FEDERAL PROGRAMS: What were those programs? 

(Data intentionally not reported) 

Assistance with Recovery Act Requirements 

21. Did your agency receive assistance from HUD with meeting any of the TCAP requirements? 

Yes No Not applicable 

Number of 

respondents

36 17 3 56

22. IF YES: What type of assistance did your agency receive? 

(Data intentionally not reported) 

23. How satisfied or dissatisfied are you with the assistance that you have received from HUD regarding the TCAP program? 

Very satisfied 

Somewhat 

satisfied Neither 

Somewhat 

dissatisfied

Very 

dissatisfied Don't know 

Number of 

respondents

18 9 4 3 1 0 35
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 71 GAO-12-634 Recovery Act 

24. Did your agency receive assistance from Treasury with meeting any of the Section 1602 requirements? 

Yes No Not applicable 

Number of 

respondents

43 11 1 55

25. IF YES: What type of assistance did your agency receive? 

(Data intentionally not reported) 

26. How satisfied or dissatisfied are you with the assistance that you have received from Treasury regarding the Section 1602 

program? 

Very satisfied 

Somewhat 

satisfied Neither 

Somewhat 

dissatisfied

Very 

dissatisfied Don't know 

Number of 

respondents

38 4 1 0 0 0 43

27. If you have any additional comments or would like to explain any of your answers on the assistance you received with Recovery Act 

requirements, please provide them below. 

(Data intentionally not reported) 

Recovery Act Deadlines 

28. All things considered, how challenging, if at all, was meeting TCAP obligation deadlines for your agency? 

Very 

challenging 

Moderately 

challenging 

Slightly 

challenging 

Not at all 

challenging Don't know Not applicable 

Number of 

respondents

6 21 17 7 0 4 55

29. And how challenging, if at all, was meeting the TCAP expenditure deadlines? 

Very 

challenging 

Moderately 

challenging 

Slightly 

challenging 

Not at all 

challenging Don't know 

Number of 

respondents 

2 17 21 11 0 51 

30. All things considered, how challenging, if at all, was meeting Section 1602 obligation deadlines for your agency? 

Very 

challenging 

Moderately 

challenging 

Slightly 

challenging 

Not at all 

challenging Don't know Not applicable 

Number of 

respondents

4 16 18 16 0 1 55
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 72 GAO-12-634 Recovery Act 

31. And how challenging, if at all, was meeting the Section 1602 expenditure deadlines? 

Very 

challenging 

Moderately 

challenging 

Slightly 

challenging 

Not at all 

challenging Don't know 

Number of 

respondents 

9 16 18 11 0 54 

32. If you have any additional comments or would like to explain any of your answers on meeting Recovery Act deadlines, please 

provide them below. 

(Data intentionally not reported) 

Audit and Oversight 

33. Have any of the following organizations audited (or are they in the process of auditing) your agency's expenditure of TCAP and/or 

Section 1602 funds grants? 

HUD Inspector General 

Yes No Don't know 

Number of 

respondents

12 41 1 54

Treasury Inspector General 

Yes No Don't know 

Number of 

respondents

25 30 0 55

Federal organizations other than HUD or Treasury - list in box below this table

Yes No Don't know 

Number of 

respondents

4 49 1 54

State or local organizations - list in box below this table

Yes No Don't know 

Number of 

respondents

19 36 0 55

IF OTHER FEDERAL OR STATE ORGANIZATIONS: What were the names of those organizations? 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 73 GAO-12-634 Recovery Act 

(Data intentionally not reported) 

Asset Management 

34. For TCAP, in which of the following ways do you plan to (or have already) address asset management requirements? 

Not applicable: no TCAP funding - Skip to question 35

Not checked Checked 

Number of 

respondents 

0 4 4 

Use existing staff 

Yes No Don't know 

Number of 

respondents

45 3 0 48

Hire new staff 

Yes No Don't know 

Number of 

respondents

5 29 3 37

Outsource 

Yes No Don't know 

Number of 

respondents

19 22 1 42

Take other measures - Describe in box below this table

Yes No Don't know 

Number of 

respondents

5 25 4 34

IF OTHER MEASURES: What are those other measures? 

(Data intentionally not reported) 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 74 GAO-12-634 Recovery Act 

35. For Section 1602, in which of the following ways do you plan to (or have already) address asset management requirements? 

Not applicable: no 1602 funding - Skip to question 36

Not checked Checked 

Number of 

respondents 

0 1 1 

Use existing staff 

Yes No Don't know 

Number of 

respondents

46 3 0 49

Hire new staff 

Yes No Don't know 

Number of 

respondents

6 29 5 40

Outsource 

Yes No Don't know 

Number of 

respondents

23 20 1 44

Take other measures - Describe in box below this table

Yes No Don't know 

Number of 

respondents

3 28 5 36

IF OTHER MEASURES: What are those other measures? 

(Data intentionally not reported) 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 75 GAO-12-634 Recovery Act 

Impacts and Outcomes 

36. In your opinion, what level of positive impact, if any, do you think the TCAP and/or Section 1602 programs will have on the following 

in your state? 

Health of affordable housing market 

Great Impact 

Moderate 

Impact Slight impact No impact Don't know 

Number of 

respondents 

33 19 2 0 1 55 

Job creation and preservation 

Great Impact 

Moderate 

Impact Slight impact No impact Don't know 

Number of 

respondents 

20 27 8 0 0 55 

Assistance to those most impacted by the recession 

Great Impact 

Moderate 

Impact Slight impact No impact Don't know 

Number of 

respondents 

19 21 12 0 3 55 

Infrastructure investment 

Great Impact 

Moderate 

Impact Slight impact No impact Don't know 

Number of 

respondents 

13 10 15 7 10 55 

Stabilization of state and local government budgets 

Great Impact 

Moderate 

Impact Slight impact No impact Don't know 

Number of 

respondents 

4 9 14 15 12 54 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 76 GAO-12-634 Recovery Act 

37. To what extent did your agency's use of the TCAP and/or Section 1602 funds temporarily fill the gap left by a diminished investor 

demand for low-income housing tax credits and allow projects to continue where developers were unable to proceed due to a lack of 

investors? 

Completely Mostly Somewhat Not at all Don't know

Number of 

respondents 

27 23 4 0 1 55 

Lessons Learned 

38. To improve future grants programs, we would like to hear what lessons learned, if any, can be identified from your agency's

experiences with the Recovery Act grants. 

What made your agency's projects or expenditures successful? 

(Data intentionally not reported) 

39. What things did your agency do well that might be considered good practices for the future? 

(Data intentionally not reported) 

40. And what could have been done better by your agency? 

(Data intentionally not reported) 

41. What things did HUD, Treasury, or others do well that might be considered good practices for the future? Specify entity name(s) 

when describing practices.

(Data intentionally not reported) 

42. And what could have been done better by HUD, Treasury, or others (e.g., state government or other organizations)? Specify entity 

name(s) when describing practices.

(Data intentionally not reported) 
Appendix II: Results from Survey of State 

Housing Finance Agencies 

Page 77 GAO-12-634 Recovery Act 

Complete your questionnaire 

43. If you have any final comments on any of the issues in this questionnaire, please provide them below. 

(Data intentionally not reported) 

44. Who is the person primarily responsible for completing this questionnaire whom we can contact if we need to clarify a response? 

Name: (Data intentionally not reported) 

Title: (Data intentionally not reported) 

Agency/Organization: (Data intentionally not reported) 

Email: (Data intentionally not reported) 

Phone: (Data intentionally not reported) 

45. Are you done with this questionnaire? 

Clicking "Yes" below tells GAO that your answers are final. We will not use your answers unless the "Yes" button is checked when you 

last exit the questionnaire. 

Yes No 

Number of 

respondents 

56 0 56 

46. Would you like a record of your answers to this questionnaire? If so, click here to view and print a summary of your responses. 

Click on the Save & Exit Questionnaire button below to exit the survey. 

Thank you for completing this questionnaire 
Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 

Page 78 GAO-12-634 Recovery Act 

States’ and Localities’ Current and Planned Uses of Funds While 

Facing Fiscal Stresses, GAO-09-829, July 8, 2009 

No recommendations to the Department of Housing and Urban 

Development (HUD) or the Department of the Treasury (Treasury). All 

recommendations, such as leveraging Single Audits as an effective 

oversight tool for Recovery Act programs, were addressed to the Office of 

Management and Budget or other agencies such as the Department of 

Transportation. 

Funds Continue to Provide Fiscal Relief to States and Localities, 

While Accountability and Reporting Challenges Need to Be Fully 

Addressed, GAO-09-1016, September 23, 2009 

Recommendation: To enhance HUD’s ability to prevent, detect, and 

correct noncompliance with the use of Recovery Act funds, the Secretary 

of the Department of Housing and Urban Development should expand the 

criteria for selecting housing agencies for on-site reviews to include 

housing agencies with open Single Audit findings that may affect the use 

of and reporting on Recovery Act funds. 

Agency Affected: Department of Housing and Urban Development 

Status: Closed—Implemented 

Comments: HUD implemented our recommendation. In a letter dated 

November 20, 2009, HUD told us it had expanded its criteria for selecting 

housing agencies for on-site reviews to include all housing agencies with 

open 2007 and 2008 Single Audit findings as of July 7, 2009, relevant to 

the administration of Recovery Act funds. HUD identified 27 such housing 

agencies and planned to complete these on-site reviews by February 15, 

2010. 

One Year Later, States’ and Localities’ Uses of Funds and 

Opportunities to Strengthen Accountability, GAO-10-437, March 3, 

2010 

Recommendation: The Secretary of Housing and Urban Development 

should instruct housing agencies to discontinue use of the jobs calculator 

provided by HUD in the first round of recipient reporting for subsequent 

rounds of reporting to ensure the correct job calculation is used. 

Agency Affected: Department of Housing and Urban Development 

Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 
Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 

Page 79 GAO-12-634 Recovery Act 

Status: Closed—Implemented 

Comments: HUD implemented our recommendation. HUD provided us 

with an e-mail dated March 26, 2010, that it had sent to public housing 

agencies instructing them not to use the jobs-counting calculator originally 

posted on HUD’s Recovery Act website in October 2009. The email also 

provided a link to the revised jobs-counting calculator on HUD’s Web site. 

HUD provided us with subsequent emails to housing agencies that 

reminded them of the new jobs-counting calculator. 

Recommendation: To help HUD achieve Recovery Act objectives and 

address challenges with its continued administration of Recovery Act 

funds, the Secretary of Housing and Urban Development should develop 

a management plan to determine the adequate level of agency staff 

needed to administer both the Recovery Act funds and the existing 

Capital Fund program going forward, including identifying future resource 

needs and determining whether current resources could be better utilized 

to administer these funds. 

Agency Affected: Department of Housing and Urban Development 

Status: Closed—Implemented 

Comments: In response to our recommendation, HUD developed a 

management plan for administration of Recovery Act funds, including the 

need for an additional 11 FTEs to carry out Recovery Act responsibilities. 

In July 2010, HUD also provided us with its management plan for the 

Public Housing Capital Fund program. The plan summarized the key 

activities HUD undertakes to monitor and facilitate the use of these funds 

by program area, including rule and policy development, planning, 

program awards, program management, technical assistance, and 

reporting. The plan also included the specific activities, tasks, and 

resources used for each of these existing program areas, identifying 

approximately 91 existing FTEs in its headquarters and field offices to 

support these activities. According to HUD’s management plan, HUD’s 

current staffing level is sufficient to manage its existing Capital Fund 

program, but the agency could more efficiently utilize its current 

resources. As a result, HUD plans to realign current staff to focus on its 

core missions including Recovery Act responsibilities. 

States’ and Localities’ Uses of Funds and Actions Needed to 

Address Implementation Challenges and Bolster Accountability,

GAO-10-604, May 26, 2010 
Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 

Page 80 GAO-12-634 Recovery Act 

Recommendation: To ensure housing agencies use the correct job 

calculation, the Secretary of HUD should clearly emphasize to housing 

agencies that they discontinue use of the outdated jobs calculator 

provided by HUD in the first round of recipient reporting. 

Agency Affected: Department of Housing and Urban Development 

Status: Closed—Implemented 

Comments: In response to our recommendation, HUD sent an e-mail to 

housing agencies on June 30, 2010, that explicitly instructed them not to 

use the outdated jobs-counting calculator, as it was not correctly 

computing the FTE calculation per updated OMB guidance. This e-mail 

also included a link to HUD’s new online jobs-counting calculator and 

instructed housing agencies to use this calculator for the July and all 

future reporting periods. 

Recommendation: In order to increase the likelihood that housing 

finance agencies (HFA) will comply with Treasury’s requirements for 

recapturing funds, the Secretary of the Treasury should define what it 

considers appropriate actions by HFAs to recapture funds in order to 

avoid liability when they are unable to collect funds from project owners 

that do not comply. 

Agency Affected: Department of the Treasury 

Status: Closed—Implemented 

Comments: Treasury agreed with our recommendation and in response 

to our recommendation, Treasury provided additional guidance to state 

HFAs to clarify what constitutes appropriate actions by HFAs to recapture 

funds in order to avoid liability in the event of project owner 

noncompliance. Specifically, in August 2010, the agency developed and 

issued a Recapture Guidance for Recovery Act projects that receive 

Section 1602 Program funds that defines a recapture event, specifies the 

amount of funds owed in the event of recapture, describes a housing 

finance agency’s obligation and responsibilities in avoiding project owner 

noncompliance, sets forth the kinds of recapture actions an HFA may 

take in the event of noncompliance, and directs HFAs on how to report 

noncompliance. 

Matter for Congressional Consideration: To provide HFAs with greater 

tools for enforcing program compliance, in the event the Section 1602 
Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 

Page 81 GAO-12-634 Recovery Act 

Program is extended for another year, Congress may want to consider 

directing Treasury to permit HFAs the flexibility to disburse Section 1602 

Program funds as interest-bearing loans that allow for repayment. 

Agency Affected: Department of the Treasury 

Status: Open 

Comments: We continue to believe that Congress should consider 

directing Treasury to permit HFAs the flexibility to disburse Section 1602 

Program funds as interest-bearing loans that allow for repayment. 

Recommendation: Treasury should expeditiously provide HFAs with 

guidance on monitoring project spending and develop plans for dealing 

with the possibility that projects could miss the spending deadline and 

face further project interruptions. 

Agency Affected: Department of the Treasury 

Status: Closed—Implemented 

Comments: Treasury officials told us that after they provided additional 

guidance, every state HFA and the respective property owners complied 

with the 30 percent spending rule by the end of calendar year 2010. We 

concluded that Treasury and the state HFAs have addressed the intent of 

this recommendation. 

Opportunities Exist to Increase the Public’s Understanding of 

Recipient Reporting on HUD Programs, GAO-10-966, September 30, 

2010 

Recommendation: To increase public understanding of how Recovery 

Act funds are used and concerns over the cost of reporting, the Secretary 

of the Department of Housing and Urban Development, in consultation 

with OMB, should provide clarification of Office of Management and 

Budget (OMB) FederalReporting.gov guidance (1) so that it better 

conveys the Recovery Act requirement for recipients to report key 

information for the specific projects and activities funded, and (2) so that, 

for each program, it defines key terms (project, primary place of 

performance, and subrecipient primary place of performance). 

Agency Affected: Department of Housing and Urban Development 
Appendix III: Recommendations from Prior 

GAO Recovery Act Reports with Sections on 

Housing 

Page 82 GAO-12-634 Recovery Act 

Status: Open 

Comments: When we confirm what actions the agency has taken in 

response to this recommendation, we will provide updated information. 

Recommendation: To increase public understanding of how Recovery 

Act funds are used and concerns over the cost of reporting, the Secretary 

of the Department of Housing and Urban Development, in consultation 

with OMB, should consider options for more effectively reviewing the 

content of narrative descriptions submitted by recipients into 

FederalReporting.gov in a targeted and cost-effective manner to help 

ensure that recipients have entered clear and complete information about 

the funded projects and activities. 

Agency Affected: Department of Housing and Urban Development 

Status: Open 

Comments: When we confirm what actions the agency has taken in 

response to this recommendation, we will provide updated information. 

Recommendation: To increase public understanding of how Recovery 

Act funds are used and concerns over the cost of reporting, the Secretary 

of the Department of Housing and Urban Development, in consultation 

with OMB, should encourage recipients to leverage other sources of 

existing information, such as by providing links to agency or recipient 

websites, to further enhance the transparency of the information they 

enter in FederalReporting.gov. 

Agency Affected: Department of Housing and Urban Development 

Status: Open 

Comments: When we confirm what actions the agency has taken in 

response to this recommendation, we will provide updated information. 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 83 GAO-12-634 Recovery Act 

In this appendix, we update the status of agencies’ efforts to implement 

the seven recommendations that remain open and are not implemented, 

five newly implemented recommendations, and four newly closed 

recommendations that resulted from our Recovery Act mandate reports.1

Recommendations that were listed as implemented or closed in a prior 

report are not repeated here. We also address the status of our matters 

for congressional consideration. 

Table 1: Status of Prior Open Recovery Act Recommendations and Matters for Congressional Consideration 

Department of Energy – Weatherization Assistance Program 

Newly implemented recommendation Agency action 

1. Given the concerns we have raised about whether 

weatherization program requirements were being met, we 

recommended that the Department of Energy (DOE), in 

conjunction with both state and local weatherization agencies, 

develop and clarify weatherization program guidance that sets 

time frames for development and implementation of state 

monitoring programs.a

1. DOE generally concurred with this recommendation. On 

December 1, 2011, DOE issued guidance that establishes DOE’s 

monitoring expectations for state and local weatherization 

agencies. This guidance requires states to submit a description of 

their monitoring plan in their annual State Plan for the program. 

The guidance also sets time frames for implementation such as 

monitoring visits and reporting requirements. 

Newly closed recommendations Agency actions 

1. Given the concerns we have raised about whether 

weatherization program requirements were being met, we 

recommended that Department of Energy (DOE), in conjunction 

with both state and local weatherization agencies, develop and 

clarify weatherization program guidance that accelerates current 

DOE efforts to develop national standards for weatherization 

training, certification, and accreditation, efforts that are currently 

expected to take 2 years to complete.a

1. Although DOE generally concurred with this recommendation, 

DOE does not appear to have accelerated its efforts to complete 

national standards, which had been expected to take about 2 

years and are just now being completed, about two years later. 

DOE reports that it has completed certain milestones toward 

developing national standards for weatherization, training, 

certification, and accreditation. For example, DOE reports that it 

has completed analysis of the knowledge, skills and abilities 

required to perform four specific weatherization jobs (residential 

energy auditor, retrofit installer, crew leader, and quality control 

inspector). Based on this analysis, DOE states that its 

accreditation of energy efficiency training programs is now 

operational. Other components of this effort, such as the 

finalization of the national certification program, are not expected 

to be finalized until September 2012, according to DOE officials. 

Completion of other components of this program is not expected 

until 2013. We are closing this recommendation as not 

implemented because DOE’s actions have not fully addressed our 

concerns. 

 

1

For a list of our Recovery Act-related products, see http://www.gao.gov/recovery. . 

Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 84 GAO-12-634 Recovery Act 

2. Given that state and local agencies have felt pressure to meet a 

large increase in production targets while effectively meeting 

program requirements and have experienced some confusion 

over production targets, funding obligations, and associated 

consequences for not meeting production and funding goals, we 

recommended that DOE clarify its production targets, funding 

deadlines, and associated consequences while providing a 

balanced emphasis on the importance of meeting program 

requirements.a

2. Although DOE generally concurred with this recommendation, 

DOE did not provide evidence that it had clarified its production 

targets, funding deadlines, and associated consequences while 

providing a balanced emphasis on the importance of meeting 

weatherization program objectives. In January 2012, however, 

DOE allowed states the opportunity to extend their performance 

period deadline, which was originally set for March 31, 2012. We 

are closing this recommendation as not implemented because (1) 

a majority of grantees must spend their Recovery Act funds by fall 

2012, (2) DOE’s actions have not fully addressed our concerns, 

and (3) DOE officials did not indicate that they would take any 

additional actions to address the recommendation. 

Open recommendation Agency action 

1. Given the concerns we have raised about whether 

weatherization program requirements were being met, we 

recommended that the DOE, in conjunction with both state and 

local weatherization agencies, develop and clarify weatherization 

program guidance that revisits the various methodologies used in 

determining the weatherization work that should be performed 

based on the consideration of cost-effectiveness and develops 

standard methodologies that ensure that priority is given to the 

most cost-effective weatherization work. To validate any 

methodologies created, this effort should include the development 

of standards for accurately measuring the long-term energy 

savings resulting from weatherization work conducted.a 

1. DOE generally concurred with this recommendation and states that 

it will update guidance and standard methodologies weatherization 

work based on findings from the national evaluation of the 

Weatherization Program under the Recovery Act, currently being 

conducted by Oak Ridge National Laboratory. They expect some 

results from this study to be available in September 2012. According 

to DOE officials, the Oak Ridge National Laboratory report will 

summarize the cost effectiveness and long-term energy savings 

resulting from weatherization work by housing type and DOE will use 

this report to update guidance and promote methodologies that 

ensure that all installed weatherization measures are prioritized 

based on their long-term cost effectiveness. 

Department of Energy – Energy Efficiency and Conservation Block Grant Program 

Newly closed recommendation Agency action 

1. To better ensure that Energy Efficiency and Conservation Block 

Grant (EECBG) funds are used to meet Recovery Act and 

program goals, we recommended that DOE explore a means to 

capture information on the monitoring processes of all recipients 

to make certain that recipients have effective monitoring 

practices.b

1. DOE generally concurred with this recommendation and added 

additional questions to the on-site monitoring checklists related to 

subrecipient monitoring to help ensure that subrecipients are in 

compliance with the terms and conditions of the award. These 

changes will help improve DOE’s oversight of recipients, 

especially larger recipients, which are more likely to be visited by 

DOE project officers. However, not all recipients receive on-site 

visits. As noted previously, we continue to believe that the 

program could be more effectively monitored if DOE captured 

information on the monitoring practices of all recipients. We are 

closing the recommendation as not implemented because (1) a 

majority of grantees’ must spend their Recovery Act funds by fall 

2012, (2) DOE’s actions have not fully addressed our concerns, 

and (3) DOE officials did not indicate that they would take any 

additional actions to address the recommendation. 

Department of Health and Human Services: Office of Head 

Start 

Open recommendation Agency action 

1. To help ensure that grantees report consistent enrollment 

figures, we recommended that the Director of the Department of 

Health and Human Services’s (HHS) Office of Head Start (OHS) 

better communicate a consistent definition of “enrollment” to 

grantees for monthly and yearly reporting and begin verifying 

grantees’ definition of “enrollment” during triennial reviews.c

1. OHS issued informal guidance on its website clarifying monthly 

reporting requirements to make them more consistent with annual 

enrollment reporting. This guidance directs grantees to include in 

enrollment counts all children and pregnant mothers who are enrolled 

and have received a specified minimum of services. According to 

officials, OHS is considering further regulatory clarification. 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 85 GAO-12-634 Recovery Act 

Department of Housing and Urban Development 

Newly implemented recommendation Agency action 

1. Because the absence of third-party investors reduces the 

amount of overall scrutiny Tax Credit Assistance Program (TCAP) 

projects would receive and the Department of Housing and Urban 

Development (HUD) is currently not aware of how many projects 

lacked third-party investors, we recommended that HUD develop 

a risk-based plan for its role in overseeing TCAP projects that 

recognizes the level of oversight provided by others.d

 

1. In March 2012, HUD took steps to address this 

recommendation. Specifically, HUD staff developed a risk-based 

plan for monitoring TCAP projects with little third-party investment. 

To develop this risk-based plan, HUD requested that housing 

finance agencies (HFA) report certain data about their projects to 

HUD, including the dollar value of Low Income Housing Tax Credit 

(LIHTC) equity and funds provided by public and private sources. 

According to HUD, HFAs report this data after the units are 

completed. As part of its plan, HUD states that it will review these 

data on completed projects on a quarterly basis and review these 

data to identify TCAP projects that have less than $10,000 in 

LIHTC investment and no other federal funds. For grantees with 

projects meeting these criteria—according to HUD, two HFAs had 

such projects as of March 2012—HUD will review the HFA’s 

monitoring plans and contact them to discuss specific oversight 

and safeguards to ensure that their projects maintain their 

compliance with Section 42 of the Internal Revenue Code and 

TCAP requirements. HUD’s plan states that it also will require the 

grantees to submit any documentation or plans of continued 

oversight of these projects. As additional TCAP projects become 

complete in the coming years, consistently executing this 

specialized monitoring approach will be important for HUD. 

Office of Management and Budget (OMB) 

Newly implemented recommendation Agency action 

1. We recommended that OMB provide timelier reporting on 

internal controls for Recovery Act programs for 2010 and beyond.e 1. To address this recommendation, OMB commenced two voluntary 

Single Audit Internal Control Projects (projects) in August 2010 and 

August 2011 for states that received Recovery Act funds in fiscal year 

2010 and 2011, respectively. The projects’ goals were to achieve 

more timely communication of internal control deficiencies for higherrisk Recovery Act programs so that corrective action could be taken 

more quickly. Specifically, the projects encouraged participating 

auditors of states that received Recovery Act funds to identify and 

communicate deficiencies in internal control to management 3 

months sooner than the 9-month time frame required under the 

Single Audit Act so that corrective action could be taken sooner. OMB 

initiated the projects because it lacked the authority to require that 

state auditors issue Single Audit reports earlier than the 9 months 

required under statute since the Single Audit Act would need to be 

amended to require state auditors to report earlier than the 9 months 

presently required. Given the legal constraints, OMB initiated 

voluntary projects to encourage earlier reporting of internal control 

deficiencies identified in Single Audits. 

Each project had participation from 10 or more states. Auditors 

identified hundreds of internal control deficiencies and issued audit 

reports at least 3 months earlier than required under statute. The 

internal control reports provided program managers with more timely 

reporting on internal control deficiencies identified in the Single Audit 

so that they could develop corrective actions. As of March 9, 2012, 

the Department of the Treasury has paid out $247.4 billion, 

approximately 86.5 percent of Recovery Act funds for use in states 

and localities. Thus, most of the Recovery Act funds have been 

expended. 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 86 GAO-12-634 Recovery Act 

Open recommendation Agency action 

1. We recommended that OMB issue Single Audit guidance in a 

timely manner so that auditors can efficiently plan their audit 

work;e and 

2. We recommended that OMB issue the OMB Circular No. A-133 

Compliance Supplement no later than March 31 of each year.f

1. 2. With regard to issuing Single Audit Guidance in a timely 

manner, and specifically the OMB Circular A-133 Compliance 

Supplement, OMB officials have stated that they intended to issue 

the fiscal year 2012 compliance supplement by March 31, 2012. 

The team of federal officials who assisted in the development of 

the OMB Circular A-133 Compliance Supplement met in August 

2011, developed a timeline for issuing the 2012 Circular A-133 

Compliance Supplement by March 31, 2012, and began working 

with the federal agencies and others involved in drafting the 

supplement. In January 2012, OMB provided to the American 

Institute of Certified Public Accountants (AICPA) a draft of the 

2012 Compliance Supplement which the AICPA published on its 

website. However, OMB did not issue the 2012 Compliance 

Supplement by the scheduled due date of March 31, 2012, and as 

of May 30, 2012, it had yet to be issued. We will continue to 

monitor OMB’s efforts in this area. 

3. We recommended that OMB shorten the timeframes required 

for issuing management decisions by federal agencies to grant 

recipients.f

3. OMB officials previously acknowledged that providing timely 

management decisions has been a challenge. We previously 

reported that while OMB officials have identified alternatives for 

helping to ensure that federal awarding agencies provide their 

management decisions on the corrective action plans in a timely 

manner, including possibly shortening the time frames required for 

federal agencies to provide their management decisions, they 

have yet to decide on the course of action that they will pursue to 

implement this recommendation. In 2011, most of the federal 

awarding agencies that had grantees with audit deficiencies, 

identified as a result of the Single Audit Internal Control Project, 

did not submit all of their management decisions for corrective 

actions by the specified due date. We will continue to monitor 

OMB’s efforts in this area 

In fiscal year 2011, most of the federal awarding agencies that 

had grantees with audit deficiencies, identified as a result of the 

Single Audit Internal Control Project, did not submit all of their 

management decisions for corrective actions by the specified due 

date. We will continue to monitor OMB’s efforts in this area. 

4. We recommended that OMB evaluate options for providing 

relief related to audit requirements for low-risk programs to 

balance new audit responsibilities associated with the Recovery 

Act.g

On February 28, 2012, OMB published an advance notice of 

proposed guidance, which proposed for public comment a number 

of reforms relating to concentrating audit resolution and oversight 

resources on higher dollar, higher risk grant awards.h

 These 

reforms, if implemented, would be integrated into the Single Audit 

Act’s implementing guidance, OMB Circular No. A-133 on Audits 

of States, Local Governments, and Non-Profit Organizations and 

the guidance in OMB Circular A-50 on Single Audit Act follow-up. 

The reforms are intended to revise the requirements of the Single 

Audit framework such that larger expenditures of federally funded 

grants would be required to undergo increased levels of audit 

oversight as compared with smaller expenditures of federally 

funded grants. The proposed guidance is a result of various OMB 

working groups, at least one of which was initiated as a result of 

the President’s February 28, 2011, memorandum entitled 

Administrative Flexibility, Lower Costs, and Better Results for 

State, Local, and Tribal Governments. To develop their 

suggestions for improving Single Audit requirements, the working 

groups obtained input from federal, state, local, and Native 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 87 GAO-12-634 Recovery Act 

American tribal officials involved in varying capacities with federal 

grants and provide a report of their findings to OMB. OMB 

considered the report of the working groups and incorporated 

information from the working groups into their proposed reforms. 

OMB officials stated that they estimate that the reforms will be 

finalized by the end of fiscal year 2013. We will continue to 

monitor OMB’s efforts towards implementing this 

recommendation. 

5. We recommended that OMB explore alternatives to help ensure 

that federal awarding agencies provide management decisions in 

a timely manner.i

In OMB’s Advance Notice of Proposed Guidance, OMB provided 

reforms for strengthening the guidance on audit follow-up for 

federal awarding agencies. We have previously reported that an 

essential aspect of audit follow-up entails federal awarding 

agencies issuing timely management decisions about the 

corrective actions that grantees plan to take to correct deficiencies 

identified in the Single Audit. OMB’s working group, initiated as a 

result of the President’s February 28, 2011, memorandum entitled 

Administrative Flexibility, Lower Costs, and Better Results for 

State, Local, and Tribal Governments, considered and reported on 

various measures relating to improvements in audit follow-up. 

After considering the working group’s report, OMB included some 

of these measures in the proposed reforms, which among other 

things, would require agencies to designate a senior accountable 

agency official to oversee the audit resolution process, encourage 

agencies to engage in cooperative audit resolution with recipients, 

take a proactive approach to resolving weaknesses and 

deficiencies, and digitize Single Audit reports into a searchable 

database to support the analysis of audit results by federal 

agencies. We believe that if implemented, these reforms could 

assist agency officials in providing timelier management 

decisions. We will continue to monitor OMB’s efforts towards 

implementing this recommendation. 

Department of Transportation 

Newly implemented recommendation Agency action 

1. To ensure that Congress and the public have accurate 

information on the extent to which the goals of the Recovery Act 

are being met, we recommended that the Secretary of 

Transportation direct the Department of Transportation’s (DOT) 

Federal Highway Administration (FHWA) to develop additional 

rules and data checks in the Recovery Act Data System, so that 

these data will accurately identify contract milestones such as 

award dates and amounts, and provide guidance to states to 

revise existing contract data.j

1. DOT implemented measures to improve the data in the 

Recovery Act Data System, including incorporating additional data 

checks and enhancing the system by taking steps to minimize 

redundant data fields and requiring monthly updates by funding 

recipients. In addition, DOT also issued guidance to improve the 

quality of data entered into the system. 

2. We recommended that the Secretary of Transportation direct 

FHWA to make publicly available—within 60 days after the 

September 30, 2010, obligation deadline—an accurate accounting 

and analysis of the extent to which states directed funds to 

economically distressed areas, including corrections to the data 

initially provided to Congress in December 2009.j

2. DOT completed a comprehensive review of projects in 

economically distressed areas, and it posted an accounting of the 

extent to which states directed Recovery Act transportation funds 

to projects located in economically distressed areas on its 

website. We requested documentation of the underlying data from 

DOT to verify this accounting, which DOT provided. This 

underlying data showed that around 52 percent of Recovery Act 

transportation funding was directed to economically distressed 

areas—a decrease of about 5 percent over the 57 percent figure 

that DOT provided to Congress in December 2009. 

 
Appendix IV: Status of Prior Open Recovery 

Act Recommendations and Matters for 

Congressional Consideration 

Page 88 GAO-12-634 Recovery Act 

Newly closed recommendation Agency action 

1. To better understand the impact of Recovery Act investments in 

transportation, we believe that the Secretary of Transportation 

should ensure that the results of these projects are assessed and 

a determination is made about whether these investments 

produced long-term benefits. Specifically, in the near term, we 

recommended that the Secretary direct FHWA and Federal 

Transit Authority to determine the types of data and performance 

measures they would need to assess the impact of the Recovery 

Act and the specific authority they may need to collect data and 

report on these measures.k

1. In its response, DOT concurred in part and noted that it 

expected to be able to report on Recovery Act outputs, such as 

the miles of road paved, bridges repaired, and transit vehicles 

purchased, but not on outcomes, such as reductions in travel 

time, nor did it commit to assessing whether transportation 

investments produced long-term benefits. DOT further explained 

that limitations in its data systems, coupled with separating 

Recovery Act funds from overall federal spending in 

transportation, would make assessing the benefits of Recovery 

Act funds difficult. DOT officials noted that, to prepare for possible 

Congressional action establishing a more performance-based 

approach to the transportation program as a whole, DOT has 

initiated activities such as training staff, promoting best practices, 

and partnering with states. However, DOT has not determined the 

types of data and performance measures needed to assess 

impacts, nor has it committed to assessing the long-term benefits 

of Recovery Act investments in transportation infrastructure. We 

are therefore closing this recommendation as not implemented. 

Matters for Congressional Consideration – Office of Management of Budget 

Matter Status 

1. To the extent that appropriate adjustments to the Single Audit 

process are not accomplished under the current Single Audit 

structure, Congress should consider amending the Single Audit 

Act or enacting new legislation that provides for more timely 

internal control reporting, as well as audit coverage for smaller 

Recovery Act programs with high risk.l

1. Congress has not enacted any such legislation. 

2. To the extent that additional coverage is needed to achieve 

accountability over Recovery Act programs, Congress should 

consider mechanisms to provide additional resources to support 

those charged with carrying out the Single Audit Act and related 

audits.l

2. Congress has not enacted any such legislation. 

Source: GAO analysis. 

a

Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to Address Implementation 

Challenges and Bolster Accountability, GAO-10-604 (Washington, D.C.: May 26, 2010), 246. b

Recovery Act: Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting 

Legislative and Program Goals and Requirements, GAO-11-379 (Washington, D.C.: Apr. 7, 2011), 

36. 

c

Recovery Act: Head Start Grantees Expand Services, but More Consistent Communication Could 

Improve Accountability and Decisions about Spending, GAO-11-166 (Washington, D.C.: Dec. 15, 

2010), 39. 

dRecovery Act: Opportunities to Improve Management and Strengthen Accountability over States’ 

and Localities’ Uses of Funds, GAO-10-999 (Washington, D.C.: Sept. 20, 2010), 189. e

GAO-10-604, 247. f

GAO-10-999, 194. 

gRecovery Act: States’ and Localities’ Current and Planned Uses of Funds While Facing Fiscal 

Stresses, GAO-09-829 (Washington, D.C.: July 8, 2009), 127. h

77 Fed. Reg. 11778 (Feb, 28, 2012). 

i

GAO-10-604, 247-248. 

j

GAO-10-999, 187-188. k

GAO-10-604, 241-242. 

l

GAO-09-829, 128. 
Appendix V: Comments from the Department 

of Housing and Urban Development 

Page 89 GAO-12-634 Recovery Act 

Appendix V: Comments from the Department 

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

of the Treasury 

Page 90 GAO-12-634 Recovery Act 

Appendix VI: Comments from the 

Department of the Treasury 
Appendix VI: Comments from the Department 

of the Treasury 

Page 91 GAO-12-634 Recovery Act 
Appendix VII: GAO Contact and Staff 

Acknowledgments 

Page 92 GAO-12-634 Recovery Act 

Mathew J. Sciré, (202) 512-8678 or sciremj@gao.gov 

In addition to the individual named above, other key contributors to this 

report were Paul J. Schmidt, Assistant Director; Sonja J. Bensen; Richard 

D. Brown; Emily R. Chalmers; William R. Chatlos; Andrew E. Finkel; 

Ronald Y. Ito; Yvonne D. Jones; Camille A. Keith; Kimberly A. McGatlin; 

John T. McGrail; Marc W. Molino; Carol L. Patey; Carl M. Ramirez; 

Marylynn Sergent; Jonathan R. Stehle; and James J. Ungvarsky. 

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(250589)
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