HANO currently has nearly $200 million in unexpended funds. In addition, even as the OIG’s 1994 report called for specific corrective actions by HANO and close monitoring of HANO by HUD, the OIG concluded that this “course of action had failed in the past.” This judgment suggests to us that HUD’s field office in New Orleans has not provided for the necessary and effective oversight of HANO. Actions to Improve Operations at HANO Have Not Been Effective

To deal with the problems identified by the numerous audit reports and the poor performance results as measured by HUD’s Public Housing Management Assessment Program, HUD has unsuccessfully attempted on several occasions to improve HANO’s management, including a September 1994 partnership between the Secretary of HUD and the then-Mayor of New Orleans. The partnership’s purposes were to avoid a federal takeover of HANO, hold the Mayor and the New Orleans City Council accountable for progress, and ultimately solve New Orleans’ public housing crisis and improve the residents’ housing conditions. In 1991, HUD attempted to prevent HANO’s board of commissioners from interfering with the private manager’s activities by issuing a “limited denial of participation” against HANO’s board of commissioners. On February 8, 1996, the Secretary of HUD declared HANO to be in breach of its contract and entered into a cooperative endeavor agreement with the Mayor of New Orleans for improving HANO’s performance. HUD and HANO enter into a memorandum of understanding requiring HANO to contract with a private firm to manage the housing authority’s day-to-day operations. HUD’s Secretary agrees to declare HANO in breach of its contract and take control of the housing authority and its properties. Comments From the Department of Housing and Urban Development

Major Contributors to This Report

	Resources, Community, and Economic Development Division

Eric A.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Housing Authority of New Orleans (HANO), focusing on: (1) its major operational difficulties; (2) the causes of those problems; and (3) the Department of Housing and Urban Development's (HUD) corrective actions and the effects of those actions.

What GAO Found

GAO found that: (1) HANO has been unable to implement and maintain effective maintenance, modernization, and rehabilitation programs; (2) in 1994, none of the 150 HANO housing units that HUD sampled met HUD housing quality standards; (3) although HANO has over $200 million in unspent modernization grants that have accumulated over the past decade, its housing units continue to deteriorate and unit vacancies remain at over 25 percent; (4) the HANO board of commissioners has not effectively governed HANO and has interfered with its day-to-day operations, hiring, and contracting; (5) this interference has slowed HANO management improvements, prevented its staff from performing effectively, and resulted in the cancellation of modernization contracts; (6) HUD and its New Orleans Field Office have not helped to improve HANO operations; (7) unsuccessful HUD attempts to correct HANO mismanagement have included punitive actions, imposing private management, and limiting the board of commissioners' authority; (8) in 1994, HUD entered into a partnership with New Orleans to avoid a federal takeover of HANO, hold local officials responsible for HANO performance, and improve management and housing conditions; and (9) in February 1996, HUD declared HANO in breach of its contract and entered into a new partnership with New Orleans.