Although HUD Generally Uses the Same Core Factors to Assess Applications, Applicants Must Now Meet More Stringent Requirements

HUD has generally evaluated applications for HOPE VI revitalization grants  on the basis of four core rating factors. Until Fiscal Year 2002, HUD Did Not Declare Applicants Ineligible because of Past Performance

Although HUD’s annual selection process had considered the performance  of applicants who had received HOPE VI grants in prior years, it was not  until the fiscal year 2002 NOFA that past program performance became a  mandatory threshold requirement for an applicant to be eligible for a HOPE  VI revitalization grant. Status of Work Varies Greatly, and Most Grantees Have Not Met Grant Agreement Deadlines

The status of work at HOPE VI sites varies, with construction completed at  15 of the 165 sites that received revitalization grants through fiscal year  2001. Many factors affect the status of work at HOPE VI  sites, including the development approach, housing authority management,  and relationships with residents and the surrounding community. Overall, 27 percent of the total planned units were  complete as of December 31, 2002. Overall, grantees have expended about $2.1 of the $4.5 billion (47 percent)  in HOPE VI revitalization funds awarded. Additionally,  grantees completed construction within the deadline on only 3 of the 42  grants for which the time allowed for construction—54 months from grant  execution for grants awarded since fiscal year 1996—had expired. Additionally, despite grantees’ inability to meet key deadlines, HUD has not  developed a formal enforcement policy, which is an important part of  oversight. While Grant Managers Oversee Grants, Field Office Staff Share HOPE VI Oversight Responsibilities

Both HUD headquarters and field office staff are responsible for overseeing  HOPE VI revitalization grants. Instead, the agency determines if  action should be taken against a grantee on a case-by-case basis. As of March 2003, HUD had declared nine grants to be  in default and issued warning notices regarding three other grants. Recommendations for Executive Action

To improve its selection and oversight of HOPE VI grants, we recommend  that the Secretary of Housing and Urban Development  continue to include past performance as an eligibility requirement in  each year’s notice of funding availability;  clarify the role of HUD field offices in HOPE VI oversight and ensure  that the offices conduct required annual reviews of HOPE VI grants; and  develop a formal, written enforcement policy to hold public housing  authorities accountable for the status of their grants. Objectives, Scope, and Methodology

Our objectives were to examine (1) the Department of Housing and Urban  Development’s (HUD) process for assessing HOPE VI revitalization grant  applications and for selecting grantees, (2) the status of work at sites for  which grants have been awarded and compliance with grant agreement  deadlines, (3) HUD’s oversight of HOPE VI grants, and (4) the amount of  program funds that HUD has budgeted for technical assistance and the  types of technical assistance it has provided.
Why GAO Did This Study

Congress established the HOPE VI program to revitalize severely distressed public housing. In fiscal years 1993 to 2001, the Department of Housing and Urban Development (HUD) awarded approximately $4.5 billion in HOPE VI revitalization grants. The Ranking Minority Member, Subcommittee on Housing and Transportation, Senate Committee on Banking, Housing, and Urban\ Affairs, asked GAO to examine HUD's process for assessing grant applications, the status of work at sites for which grants have been awarded, and HUD's oversight of HOPE VI grants.

What GAO Found

HUD has generally used the same core rating factors to assess HOPE VI grant applications--need, capacity, quality, and leveraging. However, HUD has, over time, increased the requirements that housing authorities must meet for each of these factors in order to make better selection decisions. Although authorities' historical program performance had been considered under various rating factors, it was not until fiscal year 2002 that past performance became a threshold requirement that an applicant must meet to be eligible for a grant. The status of work at HOPE VI sites varies greatly, with construction complete at 15 of the 165 sites. As of December 31, 2002, grantees had completed 27 percent of the total planned units and spent approximately $2.1 of the $4.5 billion in HOPE VI revitalization funds awarded. However, the majority of grantees have not met their grant agreement deadlines. For example, the time allowed for construction has expired for 42 grants, yet grantees completed construction within the deadline on only 3 grants. Several factors affect the status of work at HOPE VI sites, including the development approach used and changes made to revitalization plans. HUD's oversight of HOPE VI grants has been inconsistent, due partly to staffing limitations and confusion about the role of field offices. Both headquarters and field office staff are responsible for overseeing HOPE VI grants. However, HUD field offices have not systematically performed required annual reviews. Additionally, despite grantees' inability to meet key deadlines, HUD has no formal enforcement policies. Instead, the agency determines if action should be taken against a grantee on a case-by-case basis. Although HUD has declared 9 grants to be in default and issued warnings regarding 3 grants, it has not done so for other grants in a similar situation.