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. 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. 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. 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. 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. About 72 percent of respondents believed that, for the most part, housing agencies can implement the plans they developed, submitted, and had approved.