The program awards grants to public housing  authorities (PHA). Public funding can come from federal, state, and local  sources. They approve changes to the  revitalization plan and coordinate the review of the community and  supportive services plan that each grantee submits. In 2003, Congress reauthorized the HOPE VI program and required us to  report on the extent to which public housing for the elderly and non- elderly persons with disabilities was severely distressed. Grantees Had Projected A General Increase in Leveraged Funds, Primarily From Federal Sources

According to our analysis of HUD data for our November 2002 report,  housing authorities expected to leverage an additional $1.85 in funds from  other sources for every dollar received in HOPE VI revitalization grants  awarded since the program’s inception through fiscal year 2001. Finally, our analysis showed that although the majority of funds  budgeted overall for supportive services were HOPE VI funds, the amount  of non-HOPE VI funds budgeted for supportive services increased  dramatically since the program’s inception. We recommended that the Secretary of Housing and  Urban Development provide these annual reports to Congress and include  in these annual reports, among other things, information on the amounts  and sources of funding used at HOPE VI sites, including equity raised from  low-income housing tax credits, and the total cost of developing public  housing units at HOPE VI sites, including the costs of items subject to  HUD’s development cost limits and those not subject. In response to this recommendation, HUD issued annual reports to  Congress for fiscal years 2002 through 2006 that include information on  the amounts and sources of funding used at HOPE VI sites. Based on data  reported in the 2006 annual report, since the program’s inception HOPE VI  grantees have cumulatively leveraged $1.28 per HOPE VI grant dollar  expended. HUD’s Oversight of Projects and Enforcement of Program Requirements Had Been Inconsistent

Our May 2003 report found that a variety of factors diminished HUD’s  ability to oversee HOPE VI grants. In particular, the limited numbers of  grant managers, a shortage of field office staff, and confusion about the  role of field offices had diminished the agency’s ability to oversee HOPE VI  grants. HUD agreed with this  recommendation, and in December, 2003 notified several grantees that  they were nearing deadlines and that failure to meet these deadlines could  result in HUD placing the grant in default. About Half of Public Housing Residents Were Expected to Return to Revitalized Sites, while Evidence Suggested That Communities Surrounding Some HOPE VI Sites Had Improved

In our November 2003 report, we found that most residents at HOPE VI  sites had been relocated to other public housing, or other subsidized  housing, and that grantees expected that about half of the original  residents would return to the revitalized sites. Further, HUD data and  information obtained during our site visits suggested that the supportive  services provided public housing residents yielded at least some positive  outcomes. Most Original Residents Were Relocated to Other Public Housing, and About Half Were Expected to Return to Revitalized HOPE VI Sites

According to HUD data, approximately 50 percent of the almost 49,000  residents that had been relocated as of June 30, 2003, had been relocated  to other public housing; about 31 percent had used vouchers to rent  housing in the private market; approximately 6 percent had been evicted;  and about 14 percent had moved without giving notice or vacated for other  reasons. 1996 HOPE VI Communities Experienced Positive Changes

According to our analysis of census and other data, the neighborhoods in  which 1996 HOPE VI sites are located generally have experienced  improvements in a number of indicators used to measure neighborhood  change, such as educational attainment levels, average housing values, and  percentage of people in poverty.
Why GAO Did This Study

Since fiscal year 1992, the Department of Housing and Urban Development (HUD) has awarded more than $6 billion in HOPE VI program grants to public housing authorities to revitalize severely distressed public housing and provide supportive services to residents. HUD has encouraged housing authorities to use their HOPE VI grants to attract, or leverage, funding from other sources, including other federal, state, local, and private-sector sources. Projects funded with public and private funds are known as mixed-finance projects. This testimony is based primarily on three reports that GAO issued between November 2002 and November 2003, focusing on (1) the financing of HOPE VI projects, including the amounts of funds leveraged from non-HOPE VI sources; (2) HUD's oversight and administration of the program; and (3) the program's effects on public housing residents and neighborhoods surrounding HOPE VI sites. As requested, the statement summarizes the key findings from these reports, the recommendations GAO made to HUD for improving HOPE VI program management, and HUD's actions in response to the recommendations.

What GAO Found

In its November 2002 report, GAO found that housing authorities expected to leverage--for each HOPE VI dollar received--$1.85 in funds from other sources, and that the authorities projected generally increasing amounts of leveraged funds. GAO also found that even with the general increase in projected leveraging, 79 percent of the budgeted funds in mixed-finance projects that HUD had approved through fiscal year 2001 came from federal sources. GAO recommended that HUD provide the Congress with annual reports on the HOPE VI program, as required by statute, and provide data on the amounts and sources of funding used at HOPE VI sites. HUD has submitted these reports to Congress since fiscal year 2002. According to the 2006 report, HOPE VI grantees have cumulatively leveraged, from the program's inception through the second quarter of fiscal year 2006, $1.28 for every HOPE VI grant dollar expended. In its May 2003 report, GAO found that HUD's oversight of the HOPE VI program had been inconsistent for several reasons, including a shortage of grant managers and field office staff and confusion about the role of field offices. A lack of enforcement policies also hampered oversight; for example, HUD had no policy regarding when to declare a grantee in default of the grant agreement or apply sanctions. GAO made several recommendations designed to improve HUD's management of the program. HUD concurred with these recommendations and has taken actions in response, including publishing guidance outlining the oversight responsibility of field offices and notifying grantees that they would be in default of their grant agreement if they fail to meet key deadlines. In its November 2003 report, GAO found that most of the almost 49,000 residents that had been relocated as of June 2003 had moved to other public or subsidized housing; small percentages had been evicted, moved without giving notice, or vacated for other reasons. Grantees expected that about half of the original residents would return to the revitalized sites. Limited HUD data and information obtained during GAO's site visits suggested that the grantee-provided community and supportive services had yielded some positive outcomes, such as job training and homeownership. Finally, GAO's analysis of Census and other data showed that neighborhoods surrounding 20 HOPE VI sites (awarded grants in 1996) experienced improvements in several indicators used by researchers to measure neighborhood change, such as educational attainment levels, average household income, and percentage of people in poverty. However, for a number of reasons, GAO could not determine the extent to which the HOPE VI program was responsible for the changes.