Public Housing: HUD and Public Housing Agencies' Experiences with Fiscal Year 2000 Plan Requirements
Released: 2002-05-31T00:00:00

Letter

Background

Under the United States Housing Act of 1937, as amended, Congress created the federal public housing program to assist communities in providing decent, safe, and sanitary dwellings for low-income families. Today, more than 4,100 public housing agencies provide housing for low- income households. Over 3,100 agencies operate low-rent or a combination of low-rent and tenant-based Section 8 units, and about 1,000 provide housing through tenant-based Section 8 units only. Public housing agencies are typically municipal, county, or state agencies created under state law to develop and manage public housing units for low-income families. Housing agencies that participate in the low-rent program contract with HUD to provide housing in exchange for federal grants and subsidies. HUD provides funding to agencies to operate and repair low- rent units through the Operating Fund and the Capital Fund. The Operating Fund provides annual subsidies to housing agencies to make up the difference between the amount they collect in rent and the cost of operating the units. The Capital Fund provides grants to public housing agencies for the major repair and modernization of the units.

Under the tenant-based Section 8 program, eligible households select their own units in the private housing market and receive subsidies to cover part of the rent. Public housing agencies that participate in the tenant-based Section 8 program enter into contracts with HUD and receive HUD funds to provide rent subsidies to the owners of private housing on behalf of the assisted households.

Fiscal year 2000 was the first year that public housing agencies were required to submit a five-year plan and an annual plan. This requirement only applies to public housing agencies that receive HUD funds to provide housing under the low-rent or tenant-based Section 8 programs. The five- year plan describes the agency’s mission and its long-range goals and objectives for achieving its mission over the subsequent 5 years. The annual plan details the agency’s immediate objectives and strategies for achieving these goals, as well as the agency’s policies and procedures. For agencies that manage low-rent units, the annual plan also serves as the application for the capital fund and public housing drug elimination grant programs. HUD distributes these grants on a formula basis.

The Public Housing Reform Act sets forth requirements governing the submission, review, and approval of agency plans. Plans must be submitted to HUD 75 days before the start of the agency’s fiscal year. In addition, the plans are to be developed by the public housing agency in consultation with a resident advisory board and be consistent with other HUD-required community planning documents. Public housing agencies are also required to hold a public hearing on the plans and to address comments received during the hearing before submitting the plans to HUD. HUD, in turn, must review submitted plans to determine that they contain the information required by the act, agree with information from other data sources available to HUD such as community planning documents, and comply with other applicable laws. HUD must issue a written notice either approving or disapproving the plans within 75 days of its receipt of the plans. If HUD does not meet this deadline, plans are considered approved.

Most Public Housing Agencies Have Approved Fiscal Year 2000 Plans, and HUD Is Considering Sanctions against Those That Do Not

For fiscal year 2000, 4,055 required plans had been submitted to and approved by HUD, and 89 required plans had not been approved. The 89 unapproved plans were in varying stages: 53 plans had not been submitted; 34 plans had been submitted, disapproved due to cited deficiencies, and not yet resubmitted with the deficiencies corrected; and 2 plans were in the process of being reviewed by HUD. Of the housing agencies that should have had approved plans but did not, 76 provide housing through tenant- based Section 8 units only. The remaining 13 manage low-rent units only or a combination of low-rent and tenant-based Section 8 units.

HUD is considering sanctions against all public housing agencies that do not have approved fiscal year 2000 agency plans. Since agencies that manage low-rent units use the annual plan as the application for their capital fund and public housing drug elimination formula grants, HUD does not plan to release the fiscal year 2000 formula grants to agencies without approved plans. Although these grant funds have been committed to the agencies based on the formula allocation, the funds have not been released to agencies without approved fiscal year 2000 plans and are not available for those agencies’ use. According to a HUD official, any agency that manages low-rent units and did not submit its annual plan to HUD by September 30, 2001, may lose its capital fund and public housing drug elimination program formula grants for fiscal year 2000. Fourteen public housing agencies may lose about $2.6 million in fiscal year 2000 capital fund grants and one of these agencies may also lose a $39,426 public housing drug elimination program grant.

HUD is considering a similar sanction for those public housing agencies that administer only tenant-based Section 8 units and do not have approved fiscal year 2000 plans. While tenant-based Section 8-only agencies make up 24 percent of all housing agencies, they represent 85 percent of agencies without approved plans. For these agencies, HUD could withhold a portion of the administrative fees these public housing agencies receive for managing the tenant-based Section 8 program. In addition, HUD requires these public housing agencies to have approved fiscal year 2000 plans to be eligible for additional Section 8 vouchers in fiscal year 2002.

HUD Field Locations Had Mixed Views Regarding the Fiscal Year 2000 Review Process but Believe Plans Have Value and Are Generally Being Implemented

The majority of HUD field locations reported that they experienced some problems with the fiscal year 2000 plan review process but were able to complete almost all reviews. Some of these problems were addressed in the fiscal year 2001 process. A majority of respondents reported that the fiscal year 2000 plans were useful in helping HUD field locations identify certain housing agency needs but believed the plans were more important to housing agencies with low-rent units than to housing agencies that administer only tenant-based Section-8 units. Most respondents also believed that agencies are implementing their fiscal year 2000 plans, but many also believed that agencies are having difficulty implementing some portions of the plans.

HUD Field Locations Experienced Problems with Fiscal Year 2000 Plan Review but Approved Almost All Plans

Seventy-four percent of field locations that responded to our survey reported problems or difficulties with the fiscal year 2000 plan review and approval process. For example, over 50 percent of respondents said that the electronic transmission of plans from housing agencies to HUD and the conversion of plans into a readable format once received at HUD had a negative or very negative effect on their ability to review and approve plans. Respondents also reported that HUD-provided guidance on the plan process was less than adequate. One respondent reported that headquarters guidance at the beginning of the process was not very good and was delayed in getting to the field locations, while another reported that changing rules made it difficult to know what the housing agencies should do and what the field locations should look for in reviewing plans.

Changes that have been made for the 2001 plan process suggest that lessons learned and experience gained during the first year resulted in some improvements, but it is too early to determine whether these changes have fully resolved the problems. For example, several respondents reported that technical data transmission and conversion problems were less frequent for fiscal year 2001. They also reported that HUD headquarters had streamlined guidance and provided it in a timelier manner. HUD headquarters officials also cited several initiatives undertaken as a result of lessons learned during the first year, including developing a database to better track agency plan information, hiring a new contractor to manage the database, and providing consolidated guidance in the form of a desk guide to assist housing agencies and field locations.

Respondents reported that, for fiscal year 2000, almost half of the plans reviewed had to be resubmitted by the housing agencies because of deficiencies. The majority of field locations said that deficiencies requiring correction and resubmission commonly occurred in the plans’ sections documenting capital improvement needs, the housing needs of the community, and the fulfillment of resident participation requirements. Among the problems with capital improvement sections were the omission or incompleteness of required documentation, such as plans for the use of the agency’s capital funds. Regarding the sections on determining housing needs, some agencies submitted data sources on housing availability that were unclear or conflicted with other local planning documents. Regarding the sections describing resident participation, one field location that has a large number of small housing agencies in its jurisdiction reported that its agencies had trouble finding residents willing to participate in the planning process and that this was reflected in their plans.

HUD Field Locations Generally View Plans as Valuable but Less Important to Section 8-only Agencies

Between 60 and 72 percent of survey respondents indicated they found the plans helpful in identifying public housing agency needs relative to setting operational priorities, developing resident participation, and planning strategically. Some also reported that the planning process helped field locations provide technical assistance to housing agencies on identified problem areas. For example, one respondent reported that the plan review process enabled the field locations to provide technical assistance to public housing agencies in the areas of setting priorities and effective strategic planning.

Responses to our survey suggested that field locations think that the plans are more important for agencies with low-rent units than for agencies with only tenant-based Section 8 units. Specifically, about 70 percent of respondents thought the plans were important in setting operational priorities for agencies that maintain low-rent units, while only 40 percent thought they were important in setting operational priorities for agencies with tenant-based Section 8 units only. One respondent commented that operating a tenant-based Section 8 program has substantially different planning needs than operating a low-rent housing program. According to this respondent, because tenant-based Section 8 units are located in privately-owned housing, there is no “physical asset” for the tenant-based Section 8 agency to maintain, and other problems with being a landlord or owner are not present. The fact that the plan serves as a grant application for agencies that operate the low-rent program, but not for agencies that operate the tenant-based Section 8 program only, may also contribute to the respondents’ opinion that plans are less important to these agencies.

Field Locations Believe Agencies Can Implement Their Plans but Are Having Some Problems

About 72 percent of respondents believed that, for the most part, housing agencies can implement the plans they developed, submitted, and had approved. At the same time, about 54 percent of respondents said housing agencies are having difficulty implementing the resident participation requirement. A recurring theme from several respondents was that housing agencies had difficulty getting residents interested in forming or participating on resident advisory boards. Several respondents emphasized that getting participation in small and tenant-based Section 8 only housing agencies was especially difficult. In addition, some respondents said that it is difficult to get residents appointed to the housing agencies’ board of directors in some areas, as is required.

Public Housing Agencies We Visited Had Differing Experiences with the Fiscal Year 2000 Plan Process

Staff at the eight public housing agencies we visited described varying experiences with the fiscal year 2000 plan process. For example, some found the process useful, while others did not; some found HUD guidance helpful, while others did not. Generally, larger agencies had more positive responses than did smaller agencies. While the information collected on our visits cannot be generalized to the universe of public housing agencies, it provides insight into individual public housing agencies’ concerns.

The public housing agencies we visited held varying views on the usefulness of the fiscal year 2000 process. Four had positive experiences, two did not, and two had no comment. One of the larger agencies told us that the first year of the plan process was useful because it forced the agency to review and update its policies. This agency also uses the plan as a training aid for newly hired staff and believes the plan is useful as a vehicle for obtaining resident input. The other larger agency said that the plan is useful in the agency’s strategic planning. In contrast, the two small agencies we visited reported that they did not find the process useful: One said that it took time away from the staff’s essential day-to-day operational duties. The other said it perceived no value in the plan process.

Although the amount and type of resources that agencies devoted to the plan process for fiscal year 2000 varied, seven of the eight public housing agencies we visited told us they used additional staff or resources in developing their fiscal year 2000 plans. Three of the eight used consultants to develop their plans. One extra-large agency hired an additional staff person specifically to coordinate development of its fiscal year 2000 plans. In contrast to the other seven public housing agencies we visited, a medium-sized agency told us that it did not spend significantly more staff time or additional resources preparing the plans because most of the required updating of operational policies had been completed earlier.

All eight housing agencies we visited expressed some frustration with the quantity or quality of HUD guidance for the first year, particularly regarding the agency plan template that HUD provided electronically to serve as a guide to developing and formatting the agency plans. Although each of the eight agencies had some negative feelings about the template, some balanced their comments with positive remarks. For example, one extra- large agency told us that the template provided guidance for formatting the plan submission. A large agency we visited told us that the template was sufficiently easy to use and added that, in its opinion, HUD had improved the template for fiscal year 2001. On the other hand, one of the small agencies told us that the template does not give individual housing agencies the flexibility to describe unusual situations relating to local needs. In addition, one of the medium-sized agencies told us that the template was not user friendly.

Agencies also had mixed experiences with the resident participation requirement for the fiscal year 2000 plan. For example, one extra-large public housing agency, with a widely dispersed housing inventory and several different types of resident populations, had a positive experience. Staff at this agency said that the resident participation requirement brought together a cross-section of residents that would otherwise not have met and provided these residents with an appreciation of the competing needs of resident populations and the commensurate difficulty the housing agency faced in meeting those needs. The other extra-large agency told us that its experience with this requirement was positive because the planning process generally encouraged resident participation. In contrast, one of the small agencies told us that resident apathy made it difficult to meet this requirement.

Observations

Our work raised questions about the relative value and burden of the planning process for two groups of public housing agencies. Survey responses highlighted questions about the value of the plans to those agencies that administer only tenant-based Section 8 units, while comments received during our visits to eight agencies suggested that small agencies may find less value in the planning process and that the process puts a greater burden on their resources. As we did not visit a representative sample of small public housing agencies, further examination of these agencies’ experiences, including those that provide housing only through the tenant-based Section 8 program, would be needed to determine the value of annual plans to these agencies. As agreed with your offices, we are planning to further investigate the challenges facing small housing agencies, especially the impact and benefits of regulatory and administrative requirements. As many of the smaller agencies provide housing only through the tenant-based Section 8 program, this work might also provide some insights into the usefulness and applicability of the plans for this type of public housing agency.

Scope and Methodology

The mandate in Section 511 of the Quality Housing and Work Responsibility Act of 1998 required that we review and audit a representative sample of the nation’s housing agencies that are required to submit agency plans. This is a universe of over 4,000 housing agencies. When we met with you and your office to clarify our reporting requirements under the mandate, we agreed that available resources and reporting deadlines would not permit us to review and audit a representative sample of these housing agencies and their plans. We also agreed that a survey of HUD field locations to assess HUD’s management of the fiscal year 2000 agency plan process would serve as a proxy to auditing the universe of housing agencies, as each HUD field location has direct knowledge of all housing agencies within its respective jurisdiction and was responsible for reviewing and approving those agencies’ plans. We agreed to supplement this survey by collecting data on the status of all required plans and by visiting a nonrepresentative sample of public housing agencies to gain insight into particular agencies’ experiences.

To determine the status of plans submitted to and approved by HUD for fiscal year 2000, we interviewed HUD Public and Indian Housing policy development, Grants Management Center, and program officials. We also obtained data from several Public and Indian Housing databases on public housing agencies and fiscal year 2000 approved plans. We analyzed the data, discussed it with HUD staff, and resolved any discrepancies in the data with HUD staff.

To assess HUD’s management of the fiscal year 2000 agency plan review process, we developed an automated survey instrument that we posted on our Web site. We requested that all 43 HUD Public and Indian Housing field offices and both troubled agency recovery centers complete the survey. These HUD field locations are responsible for reviewing and approving agency plans. We sent E-mail messages asking officials at these field offices and recovery centers to fill out the questionnaire. We received responses from 41 field offices and both troubled agency recovery centers, which is a 96 percent response rate. Field locations responding to our survey were responsible for reviewing 4,033 or about 97 percent of the plans required to be submitted in fiscal year 2000. Our survey results reflect the information provided by the HUD officials. We did not independently verify the field locations’ responses to our questions.

During the design of the questionnaire, we pretested our questionnaire with officials from two field offices and modified it on the basis of the feedback and comments we received during the pretests. In addition, we obtained comments on the questionnaire from HUD’s Office of Public and Indian Housing.

To assess selected public housing agencies’ experiences with the fiscal year 2000 agency plan process, we visited eight geographically dispersed agencies with low-rent and tenant-based Section 8 units. We selected the eight housing agencies based on criteria such as size and performance designation, which determines the type of plans each agency is required to submit. We interviewed the executive director or other staff responsible for preparing the agency plans, residents, and resident board members. We also reviewed documents supporting the agencies’ fiscal year 2000 plans. In addition, we contacted public housing industry groups to obtain their constituents’ perspectives on the first year of the required planning process.

We conducted our review from January 2001 through March 2002 in accordance with generally accepted government auditing standards.

Agency Comments

We provided a draft of this report to HUD to obtain comments. On May 2, 2002, the deputy assistant secretary for policy, programs, and legislative initiatives, Office of Public and Indian Housing, provided oral comments. HUD generally agreed with the draft and provided editorial and clarifying comments that were incorporated in the report, as appropriate.

We are sending copies of this report to interested congressional committees and members of Congress; the secretary of HUD; and other interested parties. We also will make copies available to others upon request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you have further questions, please call me at (202) 512-7631. The key contact and other contributors to this report are listed in appendix II.

Briefing Slides to Congressional Staff on HUD and Public Housing Agencies’ Experiences with Fiscal Year 2000 Plan Requirements

A HUD official stated that field offices have contacted all

PHAs without approved plans in an effort to obtain fiscal year 2000 plans. The official added that 14 Low- Rent/Combined PHAs that did not submit fiscal year 2000 plans by September 30, 2001, may forfeit their fiscal year 2000 formula grant funds.

Fourteen PHAs may forfeit about $2.6 million in capital fund program grants.

One PHA also may forfeit a $39,426 public housing drug elimination program grant.

A HUD official noted that, as tenant-based Section 8-only PHAs do

not receive formula funds, HUD could not take the same action against the 76 tenant-based Section 8-only PHAs that do not have approved fiscal year 2000 plans. To address this issue, HUD could withhold a portion of the administrative fees tenant- based Section 8-only PHAs receive for managing the program, pending submission and approval of the required plans, and requires PHAs to have an approved fiscal year 2000 plan in order to apply for additional Section 8 vouchers for fiscal year 2002.

Seventy-four percent of HUD field offices that responded to our survey reported they experienced problems with the fiscal year 2000 review process. Specific problems included data transmission delays. Technical problems occurred during the following steps: PHAs’ transmission of plans to HUD headquarters. HUD headquarters’ transmission of plans to HUD field offices.

HUD headquarters’ posting of plan approval notification. a general lack of guidance from HUD headquarters, including delayed guidance on how to review plans. changing guidance on how to help PHAs complete plans.

HUD took action to address reported problems for fiscal year 2001 plan submissions. Specific changes included developing a new database to track plan approval and hiring a contractor to manage it, and providing more timely guidance, such as a field office desk guide for reviewing the plans.

Survey respondents reported that 49 percent of the fiscal year 2000

agency plans had to be resubmitted. The most common deficiencies for which plans had to be resubmitted related to PHAs’ completion of the following plan components: capital improvement needs. statement of housing needs. resident participation requirement.

A majority of HUD field offices that responded to our survey said

plans were useful in helping the field office identify a number of PHA needs.

Plans Moderately to Extremely Useful in Identifying Specific PHA Needs (percentage of field offices)

A higher percentage of field offices responded to our survey that the plan was important in helping PHAs set management priorities for low-rent units than for Section 8 units because many components of the plan do not apply to the Section 8 program.

Plan Is Important for Setting Management Priorities for Types of Units (percent of field offices)

A majority of field offices responded to our survey that PHAs are

implementing their fiscal year 2000 plans. The most commonly cited problem areas concerned the following plan components.

Plan Components PHAs Reported Difficulty In Implementing (percentage of field offices)

Field offices reported the following reasons for PHAs’ problems

implementing particular plan components: Resident participation: Resident apathy made it difficult for some PHAs, especially small and Section 8-only PHAs, to fulfill this requirement.

Capital improvement plans: PHAs were affected by funding constraints or shortages.

Statement of housing needs: Small and rural PHAs with limited resources had difficulty gathering the relevant information, such as local demographics.

Groups representing PHAs generally agreed that their members

found the plan process quite difficult for fiscal year 2000, the first year. Problems cited included the following: PHAs were unable to obtain meaningful information from HUD on reasons plans were disapproved.

Some PHAs found it hard to establish resident advisory boards.

Small PHAs lacked the resources and staff to complete the plans.

PHAs’ assessment of the usefulness of the plans varied at the eight PHAs we visited. Larger PHAs generally had more positive assessments than smaller PHAs.

Positive remarks: The process and plans helped the PHA get other local funding, forced the PHA to review and update policies, gave PHA residents a vehicle for input, and are used for strategic planning, as a training aid, and as an information source for HUD field offices.

Negative remarks: The process and plans took time away from other duties, and are not used.

On the other hand, one PHA said it did not spend significantly more

staff time or resources preparing the plans because most of the required updating of policies had already been completed before HUD provided guidance for plans.

The PHAs’ we visited assessment of the helpfulness of HUD’s

template also varied.

Positive remarks: The template provided guidance for formatting, was sufficiently easy to use, and was improved for fiscal year 2001.

Negative remarks: The template lacked flexibility, did not sufficiently define terms such as “affordability” and “quality”, and was not user friendly, as PHAs had to go to several HUD sources to complete it.

PHAs’ we visited assessment of the resident participation requirement also varied.

Positive remarks: The resident participation requirement brought a cross-section of residents together, and encouraged resident participation.

Negative remark: The resident participation requirement was difficult to sustain because of resident apathy.

At PHAs and HUD offices we visited, we observed that the burden

and value of the plans varied.

Smaller PHAs we visited viewed the process and plans as consuming a larger portion of their resources, and as having limited value.

Most HUD field offices and some larger PHAs we visited as a valuable tool to help PHAs define their strategic vision and monitor their progress toward management goals, and as having limited value to tenant-based Section 8-only PHAs.

HUD made changes for fiscal year 2001 plans, including simplified plans for small PHAs, and modified requirements for tenant-based Section 8-only PHAs.

While the vast majority of PHAs have submitted and had their fiscal

year 2000 plans approved, tenant-based Section 8-only PHAs have a higher rate of noncompliance. Tenant-based Section 8- only PHAs are 24 percent of all PHAs, and 85 percent of PHAs without approved plans.

HUD has recently determined that it can sanction tenant-based Section 8-only PHAs that fail to submit plans. HUD could withhold a portion of the administrative fee, and requires an approved fiscal year 2000 plan for PHAs to be eligible for additional vouchers for fiscal year 2002.

Contact and Staff Acknowledgments

GAO Contact

Acknowledgments

In addition to the individual named above, Johnnie Barnes, Sherrill Dunbar, Gloria Hernandez-Saunders, Miko Johnson, John McGrail, Luann Moy, Don Watson, and Alwynne Wilbur made key contributions to this report.

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