oversight

Public Housing: HUD's Oversight of HOPE VI Sites Needs to Be More Consistent

Published by the Government Accountability Office on 2003-05-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Ranking Minority Member,
             Subcommittee on Housing and
             Transportation, Committee on Banking,
             Housing, and Urban Affairs, U.S. Senate

May 2003
             PUBLIC HOUSING
             HUD’s Oversight of
             HOPE VI Sites Needs
             to Be More Consistent




GAO-03-555
             a
                                               May 2003


                                               PUBLIC HOUSING

                                               HUD's Oversight of HOPE VI Sites Needs
Highlights of GAO-03-555, a report to the      to Be More Consistent
Ranking Minority Member, Subcommittee
on Housing and Transportation,
Committee on Banking, Housing, and
Urban Affairs, U.S. Senate




Congress established the HOPE VI               HUD has generally used the same core rating factors to assess HOPE VI
program to revitalize severely                 grant applications—need, capacity, quality, and leveraging. However, HUD
distressed public housing. In fiscal           has, over time, increased the requirements that housing authorities must
years 1993 to 2001, the Department             meet for each of these factors in order to make better selection decisions.
of Housing and Urban                           Although authorities’ historical program performance had been considered
Development (HUD) awarded
approximately $4.5 billion in HOPE
                                               under various rating factors, it was not until fiscal year 2002 that past
VI revitalization grants. The                  performance became a threshold requirement that an applicant must meet to
Ranking Minority Member,                       be eligible for a grant.
Subcommittee on Housing and
Transportation, Senate Committee               The status of work at HOPE VI sites varies greatly, with construction
on Banking, Housing, and Urban                 complete at 15 of the 165 sites. As of December 31, 2002, grantees had
Affairs, asked GAO to examine                  completed 27 percent of the total planned units and spent approximately
HUD’s process for assessing grant              $2.1 of the $4.5 billion in HOPE VI revitalization funds awarded. However,
applications, the status of work at            the majority of grantees have not met their grant agreement deadlines. For
sites for which grants have been               example, the time allowed for construction has expired for 42 grants, yet
awarded, and HUD’s oversight of                grantees completed construction within the deadline on only 3 grants.
HOPE VI 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
To improve its selection and                   staffing limitations and confusion about the role of field offices. Both
oversight of HOPE VI grants, GAO               headquarters and field office staff are responsible for overseeing HOPE VI
recommends that HUD (1)                        grants. However, HUD field offices have not systematically performed
continue to include past                       required annual reviews. Additionally, despite grantees’ inability to meet key
performance as an eligibility                  deadlines, HUD has no formal enforcement policies. Instead, the agency
requirement in each year’s notice              determines if action should be taken against a grantee on a case-by-case
of funding availability; (2) clarify           basis. Although HUD has declared 9 grants to be in default and issued
the role of HUD field offices in
HOPE VI oversight and ensure that
                                               warnings regarding 3 grants, it has not done so for other grants in a similar
the offices conduct required annual            situation.
reviews of HOPE VI grants; and (3)
develop a formal, written                      Percentage of Construction Completed at 165 HOPE VI Sites
enforcement policy to hold public
housing authorities accountable for
the status of their grants.

HUD found this report to be fair
and accurate, and it agreed with
the three GAO recommendations.




www.gao.gov/cgi-bin/getrpt?GAO-03-555.
                                               Note: This figure is based on GAO analysis of data from HUD’s HOPE VI reporting system as of
To view the full report, including the scope
                                               December 31, 2002.
and methodology, click on the link above.
For more information, contact David G. Wood
at (202) 512-8678.
Contents



Letter                                                                                                   1
                             Results in Brief                                                            3
                             Background                                                                  5
                             HUD Uses Core Factors to Assess Applications but Has Not
                               Consistently Followed Its Selection Procedures                            8
                             Status of Work Varies Greatly, and Most Grantees Have Not Met
                               Grant Agreement Deadlines                                                16
                             HUD’s Oversight of HOPE VI Grants Has Been Inconsistent                    25
                             HUD Has Obligated the Majority of Funds Budgeted for Technical
                               Assistance for Support to Grantees and HOPE VI Program
                               Reporting                                                                31
                             Conclusions                                                                33
                             Recommendations for Executive Action                                       34
                             Agency Comments                                                            35


Appendixes
              Appendix I:    Objectives, Scope, and Methodology                                         36
             Appendix II:    HOPE VI Revitalization Grants                                              38
             Appendix III:   Fiscal Year 2002 Application Screening and Scoring
                             Process                                                                    46
             Appendix IV:    Site Visit Summaries                                                       49
                             ABLA Homes—Brooks Extension, Chicago, Illinois                             50
                             Arverne/Edgemere Houses, Queens, New York                                  55
                             Bedford Additions, Pittsburgh, Pennsylvania                                60
                             Connie Chambers, Tucson, Arizona                                           64
                             Cotter and Lang Homes, Louisville, Kentucky                                68
                             Dalton Village, Charlotte, North Carolina                                  72
                             Durkeeville, Jacksonville, Florida                                         76
                             Heman E. Perry Homes, Atlanta, Georgia                                     80
                             Henry Horner Homes, Chicago, Illinois                                      85
                             Herman Gardens, Detroit, Michigan                                          89
                             Hollander Ridge, Baltimore, Maryland                                       93
                             Jackson Parkway, Holyoke, Massachusetts                                    97
                             Lamokin Village, Chester, Pennsylvania                                    100
                             North Beach, San Francisco, California                                    103
                             Riverview and Lakeview Terraces, Cleveland, Ohio                          107
                             Robert S. Jervay Place, Wilmington, North Carolina                        110
                             Robert Taylor Homes B, Chicago, Illinois                                  114
                             St. Thomas, New Orleans, Louisiana                                        119



                             Page i                      GAO-03-555 HUD's Management of the HOPE VI Program
                          Contents




                          Theron B. Watkins Homes, Kansas City, Missouri                            124
                          Tobe Hartwell Courts and Tobe Hartwell Extension, Spartanburg,
                            South Carolina                                                          128
           Appendix V:    Comments from the Department of Housing and Urban
                          Development                                                               131
           Appendix VI:   GAO Contacts and Staff Acknowledgments                                    133
                          GAO Contacts                                                              133
                          Staff Acknowledgments                                                     133


Glossary                                                                                            134


Tables                    Table 1: Average Number of Days to Complete Key Program
                                   Activities                                                        22
                          Table 2: 165 Revitalization Grants Awarded, Fiscal Years
                                   1993-2001                                                         38
                          Table 3: Fiscal Year 2002 Rating Factors                                   47


Figures                   Figure 1: Changes to the HOPE VI Program Over Time                         10
                          Figure 2: Percentage of Planned Revitalization Activities That
                                     Grantees Completed, by Fiscal Year Awarded                      17
                          Figure 3: Percentage of Construction Completed at 165 HOPE VI
                                     Sites                                                           18
                          Figure 4: Status of HOPE VI Funds Budgeted and Expended for
                                     Revitalization Activities                                       20
                          Figure 5: Grant Manager Workload, by Fiscal Year                           27
                          Figure 6: Technical Assistance Funding, by Fiscal Year                     31
                          Figure 7: Total Obligations for Technical Assistance, by Funding
                                     Category                                                        32
                          Figure 8: Obligations for Technical Assistance, by Fiscal Year             33
                          Figure 9: Time Line for ABLA Homes                                         51
                          Figure 10: Time Line for Arverne/Edgemere Houses                           56
                          Figure 11: Time Line for Bedford Additions                                 61
                          Figure 12: Time Line for Connie Chambers                                   65
                          Figure 13: Time Line for Cotter and Lang Homes                             68
                          Figure 14: Time Line for Dalton Village                                    72
                          Figure 15: Time Line for Durkeeville                                       76
                          Figure 16: Time Line for Heman E. Perry Homes                              81
                          Figure 17: Time Line for Henry Horner Homes                                86
                          Figure 18: Time Line for Herman Gardens                                    89
                          Figure 19: Time Line for Hollander Ridge                                   94



                          Page ii                     GAO-03-555 HUD's Management of the HOPE VI Program
Contents




Figure 20: Time Line for Jackson Parkway                                                97
Figure 21: Time Line for Lamokin Village                                               100
Figure 22: Time Line for North Beach                                                   103
Figure 23: Time Line for Riverview and Lakeview                                        107
Figure 24: Time Line for Robert S. Jervay Place                                        110
Figure 25: Time Line for Robert Taylor Homes B                                         115
Figure 26: Time Line for St. Thomas                                                    120
Figure 27: Time Line for Theron B. Watkins Homes                                       125
Figure 28: Time Line for Tobe Hartwell Courts and Tobe Hartwell
           Extension                                                                   128




Abbreviations

ACLU         American Civil Liberties Union
CSS          community and supportive services
HUD          Department of Housing and Urban Development
NOFA         notice of funding availability
REAP         Resource Estimation Allocation Process
TIF          tax increment financing
HOPE VI      Urban Revitalization Demonstration Program

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Page iii                           GAO-03-555 HUD's Management of the HOPE VI Program
A
United States General Accounting Office
Washington, D.C. 20548



                                    May 30, 2003                                                                                    Lert




                                    The Honorable Jack Reed
                                    Ranking Minority Member
                                    Subcommittee on Housing
                                     and Transportation
                                    Committee on Banking, Housing,
                                     and Urban Affairs
                                    United States Senate

                                    Dear Senator Reed:

                                    For decades, some of the nation’s public housing sites have exemplified
                                    urban decay. In 1992, the National Commission on Severely Distressed
                                    Public Housing reported that approximately 86,000, or 6 percent, of the
                                    nation’s public housing units were severely distressed—characterized by
                                    physical deterioration and uninhabitable living conditions, high levels of
                                    poverty, inadequate and fragmented services, institutional abandonment,
                                    and location in neighborhoods often as blighted as the sites themselves. In
                                    an effort to address these long-standing problems in a new way, Congress,
                                    in October 1992, established the Urban Revitalization Demonstration
                                    Program, commonly known as HOPE VI, which is administered by the
                                    Department of Housing and Urban Development (HUD). The program
                                    provides grants to public housing authorities to rehabilitate or rebuild
                                    severely distressed public housing and improve the lives of public housing
                                    residents through supportive services, such as child care and job training.
                                    In fiscal years 1993 to 2001, HUD awarded approximately $4.5 billion in
                                    HOPE VI revitalization grants to 98 public housing authorities (grantees)
                                    for 165 sites.1

                                    While each HOPE VI project is unique, all projects generally involve (1) the
                                    preparation of a comprehensive revitalization plan; (2) relocation of the
                                    original residents; (3) demolition of the distressed public housing units; (4)
                                    construction of new public housing units, often intermingled with other
                                    types of housing, or rehabilitation of existing public housing units; (5)
                                    “reoccupancy,” or the movement of some original residents to completed


                                    1
                                     HUD did not award the 28 fiscal year 2002 revitalization grants until March 2003; therefore,
                                    they are not covered in this report. HUD also has awarded about $15 million in HOPE VI
                                    planning grants and approximately $293 million in HOPE VI demolition grants, but they are
                                    not the focus of this report.




                                    Page 1                              GAO-03-555 HUD's Management of the HOPE VI Program
units; and (6) occupancy, or the filling of all of the completed housing units.
To select housing authorities for participation in HOPE VI, HUD publishes
an annual notice of funding availability (NOFA) setting forth the program’s
current requirements and available funds. Housing authorities then prepare
applications from which HUD selects those that best satisfy the NOFA
requirements and signs grant agreements that serve as contracts with the
housing authorities. Grant agreements specify the activities and
documentation, such as revitalization plans, that grantees must complete
as well as key deadlines that they must meet. Grantees that HUD
determines are in default of grant agreement terms are subject to various
sanctions, including having their remaining HOPE VI funds rescinded.

You requested that we comprehensively review the HOPE VI program.
Because of the scope of the request, we agreed with your office to provide
the information in a series of reports. The first report, issued in November
2002, discussed the financing of HOPE VI sites.2 This second report
focuses on HUD’s management of the HOPE VI program. Specifically, as
agreed with your office, this report examines (1) HUD’s process for
assessing HOPE VI revitalization grant applications and 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.

To address these objectives, we first obtained and analyzed information
from HUD’s HOPE VI reporting system on the 165 revitalization grants
awarded through fiscal year 2001, including production data and key
milestones. We assessed the reliability of these data by reviewing
information about the system and performing electronic testing to detect
obvious errors in completeness and reasonableness. We determined that
the data were sufficiently reliable for the purposes of this report. Second,
we visited the 18 housing authorities that were awarded revitalization
grants in fiscal year 1996. We selected 1996 because it was the first year
that grants were subject to a standard construction deadline, and the
deadline had passed for the majority of the grants by the time we began our
site visits. In addition, we interviewed the HUD headquarters officials
responsible for administering the program.


2
 U.S. General Accounting Office, Public Housing: HOPE VI Leveraging Has Increased, but
HUD Has Not Met Annual Reporting Requirement, GAO-03-91 (Washington, D.C.: Nov. 15,
2002).




Page 2                           GAO-03-555 HUD's Management of the HOPE VI Program
                   We performed our work from November 2001 to April 2003 in accordance
                   with generally accepted government auditing standards. Appendix I
                   provides additional details on our scope and methodology.



Results in Brief   To assess HOPE VI revitalization grant applications, HUD has consistently
                   used four core factors—that is, the demonstrated need for revitalization
                   assistance, the capacity of applicants to use grants effectively, the quality of
                   proposed revitalization plans, and the potential for applicants to use grants
                   to leverage funds from other sources. However, the agency has imposed
                   more stringent requirements over the years to facilitate and improve its
                   decision-making process. For example, to demonstrate need, HUD has
                   required applicants since fiscal year 1993 to provide basic statistics, such
                   as crime and vacancy rates; but, in fiscal year 1999, it began requiring
                   applicants to also submit an independent engineer’s certification that
                   public housing units targeted for revitalization are “severely distressed.”
                   Further, in fiscal year 2002, HUD imposed an additional eligibility criterion
                   to eliminate applicants that had made little progress with revitalization
                   grants received in prior years. Previously, such applicants were not
                   excluded, and some were awarded multiple grants. Although the core
                   assessment factors have been consistent over the years, the HUD Inspector
                   General—in annual reviews of the grant award process—found that the
                   agency has not consistently followed the HOPE VI grant selection
                   procedures that it establishes each year; for example, the Inspector
                   General reported that the staff making selection decisions did not always
                   document their justifications for scoring and rating individual applications.
                   HUD has taken steps to improve the process in response to the Inspector
                   General’s findings.

                   As of December 31, 2002, construction was complete at 15 of the 165 HOPE
                   VI sites, and the majority of grantees had not met deadlines established in
                   their grant agreements with HUD. Relocation was complete at 101 sites,
                   demolition was complete at 87 sites, and at least some units were built at 99
                   of the 165 sites. 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 had missed
                   at least one of the deadlines in their grant agreements. For example,
                   grantees did not submit the revitalization plan to HUD within the time
                   frame specified in the grant agreement for 75 percent of the grants awarded
                   through fiscal year 1999 (for grants awarded after 1999, the deadline had
                   not yet passed at the time of our study). Similarly, grantees did not
                   complete construction within the deadline on 39 of the 42 grants for which



                   Page 3                         GAO-03-555 HUD's Management of the HOPE VI Program
the standard time allowed for construction (54 months) had expired at the
time of our study. Several factors affect the status of work at HOPE VI sites,
including the development approach used, changes to revitalization plans,
and relationships with residents. For example, sites funded with a mix of
public and private financing tend to take longer because housing
authorities must hire additional staff or outside consultants proficient in
private-sector real estate construction, financing, and lending practices in
order to put together financing and retain developers.

HUD’s oversight of HOPE VI grants has been inconsistent due to staffing
limitations, confusion about the role of field offices, and a lack of formal
enforcement policies. Both grant managers who report directly to HUD
headquarters and staff in HUD field offices are responsible for overseeing
HOPE VI grants. The workload assigned to HUD grant managers, who have
primary responsibility for HOPE VI grants, has been increasing since HUD
last hired a large group of grant managers in 1998, and HUD has reported
that one reason for project delays has been the limited number of grant
managers. Staff in HUD’s field offices are required to monitor grants by
conducting annual reviews. However, by the end of 2002, HUD had not
conducted any annual reviews for 8 out of the 20 grants awarded in fiscal
year 1996. According to field office managers, the reviews were not
performed either because of a lack of staff or because the offices did not
understand their role in HOPE VI oversight. In a 1998 report, the HUD
Inspector General noted that HUD had not been performing even the
minimal monitoring required for the HOPE VI program, in part due to
understaffing in both headquarters and the field offices. HOPE VI oversight
also is hampered by a lack of enforcement policies. While HUD’s grant
agreements describe conditions that the agency may consider a default,
HUD lacks specific policies on when it will declare a grantee to be in
default or apply sanctions. Although HUD has issued nine default notices to
grantees that have not demonstrated significant progress, it has not done
so for other grantees showing a similar lack of progress.

Since the HOPE VI program began in fiscal year 1993, about $63 million in
HOPE VI funding has been budgeted for technical assistance, and HUD has
obligated the majority of its technical assistance funding for services
provided directly to grantees. Of the $51 million that HUD estimates it has
obligated to date, 55 percent has been obligated for services provided
directly to grantees. This included, in fiscal years 1996 to 2000, providing
each new grantee with an expediter—a private-sector expert in finance,
real estate development, and community revitalization—to assist with the
implementation of its HOPE VI grant. HUD obligated the remaining funds



Page 4                        GAO-03-555 HUD's Management of the HOPE VI Program
             for services that help it to manage the program. For example, it obligated
             21 percent of the funding to develop and implement the HOPE VI reporting
             system. In recent years, HUD has eliminated some services previously
             provided to grantees. In fiscal year 2001, for example, HUD stopped
             providing expediters because, according to program officials, the practice
             had become too expensive. Currently, only at-risk grantees—grantees that
             are experiencing problems with their grants or that do not have adequate
             capacity to manage their grants—are considered for technical assistance.

             This report contains recommendations designed to improve HUD’s
             management of the HOPE VI program. HUD agreed with each of our
             recommendations.



Background   Under the Housing Act of 1937, as amended, Congress created the federal
             public housing program to help communities provide housing for low-
             income families. Congress annually appropriates funds for the program,
             and HUD allocates these funds to the approximately 3,400 public housing
             authorities nationwide. Housing authorities are typically created under
             state law, and a locally appointed board of commissioners approves their
             decisions. HUD and the housing authorities have an annual contributions
             contract—a written contract under which HUD agrees to make payments
             to the housing authority and the housing authority agrees to administer the
             housing program in accordance with HUD regulations and requirements. In
             addition to competitively awarded HOPE VI grants, HUD provides housing
             authorities with several types of assistance, including operating subsidies
             to cover the difference between rent payments and operating expenses and
             capital funds to improve the physical condition of properties and upgrade
             the management and operation of existing public housing sites.

             HOPE VI is one of the few active federal housing production programs. By
             providing funds for a combination of capital improvements and community
             and supportive services, HOPE VI seeks to (1) improve the living
             environment for public housing residents of severely distressed public
             housing through the demolition, rehabilitation, reconfiguration, or
             replacement of obsolete public housing; (2) revitalize sites on which such
             public housing is located and contribute to the improvement of the
             surrounding neighborhood; (3) provide housing that will avoid or decrease
             the concentration of very low-income families; and (4) build sustainable




             Page 5                       GAO-03-555 HUD's Management of the HOPE VI Program
communities.3 With the 165 grants awarded through fiscal year 2001,
grantees planned, as of December 31, 2002, to demolish 78,265 public
housing units and construct or rehabilitate 85,327 units, including 44,757
public housing units.

HUD’s requirements for HOPE VI revitalization grants are laid out in each
fiscal year’s NOFA and grant agreement.4 NOFAs announce the availability
of funds and contain application requirements, threshold requirements,
rating factors, and the application selection process.5 Grant agreements,
which change each fiscal year, are executed between each grantee and
HUD and specify the activities, key deadlines, and documentation that
grantees must meet or complete. For example, the fiscal year 2001 grant
agreement specified that the grantee must complete construction within 54
months of the date on which the grant agreement was executed.

From fiscal years 1993 to 2001, HUD received 609 revitalization grant
applications.6 HUD uses the same basic procedures each year to screen,
review, and rank grant applications. When grant applications are received,
they are screened to determine whether they meet the eligibility and
threshold requirements in the NOFA. Next, reviewers rate the grant


3
 Until fiscal year 1999, the HOPE VI program operated from year to year as a demonstration
program in accordance with authorization provided each year in appropriations acts. The
Quality Housing and Work Responsibility Act of 1998 authorized HOPE VI through the end
of fiscal year 2002. As defined in the act, severely distressed public housing (1) requires
major redesign, reconstruction, or redevelopment or partial or total demolition; (2) is a
significant contributing factor to the physical decline of and disinvestments by public and
private entities; (3) is occupied predominantly by families that are very low-income, whose
members are unemployed, and that are dependent on various forms of public assistance or
has high rates of vandalism and criminal activity; and (4) cannot be revitalized through
assistance under other programs.
4
 HUD had planned to develop regulations for the HOPE VI program but, as of May 2002, had
withdrawn its plans to do so.
5
 A threshold requirement is a requirement that an applicant must meet to be eligible for a
HOPE VI revitalization grant. For example, the fiscal year 2002 NOFA states that an
applicant is eligible only if it provides a certification either that it has procured a developer
for the first phase or that it will act as its own developer. A rating factor is a category that is
used to evaluate specific aspects of the application, such as the need for funding. For each
factor, HUD can award anywhere from zero to the maximum amount of points.
6
 Some of the 609 applications were submitted for the same public housing site. For example,
of the 66 fiscal year 2001 applicants, 43 had submitted previous applications for the same
public housing site. Of the 43 repeat applicants, 25 had applied twice, 11 had applied three
times, 3 had applied four times, and 4 had applied five times.




Page 6                                GAO-03-555 HUD's Management of the HOPE VI Program
applications on the basis of the rating factors described in the NOFA and
rank them in score order. Generally, a group of applications representing
twice the amount of funds available is sent to a final review panel, which
may include the Deputy Assistant Secretary for Public Housing
Investments, the Assistant Secretary for Public and Indian Housing, and
other senior HUD staff. The final review panel assigns a final score and
recommends for selection the most highly rated competitive applications,
subject to the amount of available funding. For a list of the 165 grants
awarded through fiscal year 2001, see appendix II.

Public housing authorities with revitalization grants can use a variety of
other public and private funds to develop their HOPE VI sites. Public
funding can come from federal, state, and local sources. For example,
housing authorities can use funds raised through federal low-income
housing tax credits. Under this program, states are authorized to allocate
federal tax credits as an incentive to the private sector to develop rental
housing for low-income households.7 Private sources can include
mortgage financing and financial or in-kind contributions from nonprofit
organizations. Developing public housing with a combination of public and
private financing sources is known as mixed-finance development.

HUD’s Office of Public Housing Investments, housed within the Office of
Public and Indian Housing, manages the HOPE VI program. Grant
managers within the Office of Public Housing Investments are primarily
responsible for overseeing HOPE VI grants. They approve changes to the
revitalization plan and coordinate the review of the community and
supportive services plan that each grantee submits.8 In addition, grant
managers track the status of grants by analyzing data on the following key
activities: relocation of original residents, demolition of distressed units,


7
 After the state allocates tax credits to developers, the developers typically offer the credits
to private investors. The private investors use the tax credits to offset taxes otherwise owed
on their tax returns. The money that private investors pay for the credits is paid into the
projects as equity financing.
8
 The revitalization plan includes, among other things, the grantee’s HOPE VI application,
budgets, a community and supportive services plan, a relocation plan, and any supplemental
submissions that HUD requests following its review of the HOPE VI application or as a
result of a visit to the site. The community and supportive services plan contains a
description of the supportive services that will be provided to residents, proposed steps and
schedules for establishing arrangements with service providers, plans for actively involving
residents in planning and implementing supportive services, and a system for monitoring
and tracking the performance of the supportive services programs as well as resident
progress.




Page 7                               GAO-03-555 HUD's Management of the HOPE VI Program
                             new construction or rehabilitation, reoccupancy by some original
                             residents, and occupancy of completed units. Public and Indian Housing
                             staff located in HUD field offices also play a role in overseeing HOPE VI
                             grants, including coordinating and reviewing construction inspections.



HUD Uses Core                According to our analysis, HUD has generally used a core of four rating
                             factors as the basis for assessing HOPE VI revitalization grant applications.
Factors to Assess            Although HUD’s fundamental factors have remained the same, the
Applications but Has         requirements that housing authorities must fulfill under each factor have
                             become more stringent from year to year. Additionally, until the most
Not Consistently             recent NOFA, HUD had not eliminated applicants on the basis of poor
Followed Its Selection       performance on previously awarded grants. HUD’s Inspector General also
Procedures                   has reported that HUD has not consistently followed its selection
                             procedures that are established for each annual assessment.



Although HUD Generally       HUD has generally evaluated applications for HOPE VI revitalization grants
Uses the Same Core Factors   on the basis of four core rating factors. Although other factors have been
                             added and removed over time and the names of the factors have varied
to Assess Applications,
                             somewhat throughout the years, four key concepts—need, capacity,
Applicants Must Now Meet     quality, and leveraging—have been used consistently to assess
More Stringent               applications.9 As defined in the most recent NOFA, need should indicate
Requirements                 the severity of distress at the targeted public housing site. Information
                             provided under capacity is used to assess the experience of the applicant’s
                             team in planning, implementing, and managing comparable physical
                             development, financing, leveraging, and partnership activities.10 HUD
                             determines quality by evaluating the overall quality of the plan, the
                             likelihood of success, project readiness, and design. Finally, information
                             provided under leveraging is used to assess the extent to which funds will
                             be leveraged for physical development and community and supportive
                             services, what other revitalization activities have been carried out in the
                             targeted area in anticipation of the HOPE VI grant, and if there are physical

                             9
                              For example, the need factor has also been called “Extent of Need for Revitalization” and
                             “Need for Funding.” The capacity factor was also called “Capability” and “Capability and
                             Readiness.” Since 1996, HUD has evaluated the quality of the revitalization plan using terms
                             such as “Program Quality, Feasibility, and Sustainability” and “Soundness of Approach.”
                             10
                              The applicant’s “team” can include housing authority staff, developer partners, program
                             managers, property managers, subcontractors, consultants, attorneys, financial consultants,
                             and other entities proposed to carry out program activities.




                             Page 8                             GAO-03-555 HUD's Management of the HOPE VI Program
development activities under way that will enhance the new HOPE VI site.
For more information on the most recent NOFA, see appendix III.

Although the core factors have remained the same, the information that
housing authorities must submit and the requirements that they must fulfill
under each factor have generally increased over time (see fig. 1). For
example, although housing authorities have been required to provide basic
statistics, such as crime and vacancy rates, to document severe distress or
need since fiscal year 1993, housing authorities also were required,
beginning in fiscal year 1999, to submit a certification from an independent
engineer that the public housing targeted for revitalization met HUD
criteria for severe distress. Since fiscal year 1993, applicants also were
required to provide information on their own capacity to implement their
plans. But, beginning in fiscal year 1997, housing authorities also were
required to document the ability of their proposed partners to develop,
construct, and manage the proposed activities. To receive the maximum
amount of points for the quality rating factor in fiscal year 1996, applicants
were required to submit several pieces of information, including budgets, a
certification that the proposed activities could not be completed without
HOPE VI funding, and a description of how the housing authority planned
to maintain the proposed programs and policies over the long term. By
fiscal year 2002, housing authorities additionally had to submit
documentation that the revitalization plan would result in outside
investment in the surrounding community and evidence that, if funded,
work could commence immediately. To indicate that they could leverage
funds, housing authorities were encouraged to submit evidence of outreach
and support for the project in fiscal year 1995. However, by fiscal year 2000,
applicants had to show that they would obtain at least $4 in leveraged funds
for every HOPE VI dollar requested for development in order to receive the
maximum amount of points under leveraging.




Page 9                        GAO-03-555 HUD's Management of the HOPE VI Program
Figure 1: Changes to the HOPE VI Program Over Time

 Legislation

  October 1992:                                     September 1994:                                        April 1996:
  FY 1993 appropriations act creates                FY 1995 appropriations act                             FY 1996 appropriations act
  HOPE VI Urban Revitalization                      requires funding for housing                           expands program eligibility to all
  Demonstration Program                             authorities that received planning                     housing authorities with
  ·Targets 40 most populous cities                  grants in prior years                                  distressed housing and adds
   and troubled housing authorities                 · Removed 500 units per city limit                     demolition to the funding criteria
  ·Limits funding to
   500 units in each city
  ·Requires using at least 80
   percent of funds for capital costs

                     October 1993:                                                                                             September 1996:
                     FY 1994 appropriations act requires                                                                       FY 1997 appropriations act
                     funding to be provided to qualified                                                                       prohibits granting competitive
                     housing authorities that applied                                                                          advantage in awards to settle
                     in FY 1993 but were not funded                                                                            litigation or pay judgments




  1992                   1993                              1994                                1995                              1996                                 1997




                                                                  February 1995:
                                                                  HUD issues special funding
                                                                  request letter to the 40 most       July 1996:                                April 1997:
                                                                  populous cities and troubled        HUD publishes 1996                        HUD publishes 1997
                                                                  housing authorities                 HOPE VI NOFA                              HOPE VI NOFA
                                                                  · Requires applicants to complete   · Requires applicants to demolish         ·Removes demolition
                                                                    a worksheet documenting             at least one obsolete building;          requirement
                                                                    severe distress                     strongly encourages them to             ·Requires documentation of
                                                                  · Evaluates applicants on the         establish a self-sufficiency             the developer's experience
                                                                    extent to which any previous        program for residents and               ·Eliminates the
  January 1993:                                                     HOPE VI grants have                 mixed-income sites                       categorization of
  HUD publishes 1993 HOPE VI NOFA                                   progressed                        · Sets funding on the basis of             applicants by size
  · Requires applicants to submit                                 · Requires description of             size, with a maximum award              ·Caps funding at $35
    evidence of their capacity, including                           support from potential              of $40 million                           million per application
    their Public Housing Management                                 leveraging partners               · Requires one public meeting             ·Establishes $5,000 limit
    Assessment Program scores                                     · Caps funding at $50                 with residents and community             per unit for community
  · Caps funding at $50 million per city                            million per application             members                                  and supportive services


 HUD

Source: GAO.




                                                           Page 10                                    GAO-03-555 HUD's Management of the HOPE VI Program
                                                                                                                                                            Legislation

October 1997:           October 1998:                           October 1999:                                                    November 2001:
FY 1998                 FY 1999 appropriations act              FY 2000 appropriations act                                       FY 2002 appropriations act
appropriations act      authorizes $625 million for             specifies that $1.2 million should                               authorizes $574 million for the
creates new $26         the HOPE VI program                     be contracted to the Urban                                       HOPE VI program
million set aside for                                           Institute to conduct an
senior sites            The Quality Housing and Work            independent study on the
                        Responsibility Act of 1998              long-term effects of the HOPE VI
                        authorizes the HOPE VI program          program on former residents
                        through September 30, 2002
                        ·  Provides a definition of severely
                           distressed public housing
                                                                                           October 2000:
                                                                                           FY 2001 appropriations act
                                                                                           authorizes $575 million for the
                                                                                           HOPE VI program




                        1998                                1999                                2000                               2001                              2002




                            February 1999:
March 1998:                 HUD publishes 1999 HOPE VI NOFA
HUD publishes 1998          · Requires grantees to provide matching
HOPE VI NOFA                  funds (at least 5 percent of the
·Requires                     revitalization grant amount)
 description of             · Disqualifies troubled housing authorities
 resident                     unless HUD determines this designation is
 involvement                  not due to reasons that affect its capacity                                                                         July 2002:
·Eliminates the               to carry out the proposed activities                                                                                HUD publishes
 requirement to             · Requires applicants to conduct at least                                                                             2002 HOPE VI NOFA
 submit Public                one training session for residents and        February 2000:                      February 2001:                    · Emphasizes grant
 Housing                      at least three public meetings with           HUD publishes                       HUD publishes                       timeliness and
 Management                   residents and community members               2000 HOPE VI NOFA                   2001 HOPE VI NOFA                   capacity of applicants
 Assessment                 · Limits the amount of the grant that can       · Fully implements the Quality      · Gives priority to Section 202
                                                                                                                                       a
                                                                                                                                                  · Sets 28 threshold
 Program scores               be spent on community and supportive            Housing and Work                    and other large sites             requirements that
·Establishes $5,000           services to 15 percent                          Responsibility Act of 1998        · Evaluates applicants on the       applicants must meet
 limit per household        · Requires applicants to submit a               · Evaluates applicants on the         ratio of HOPE VI funds to         to be eligible
 for community and            certification by an engineer that units         ratio of HOPE VI funds to           community and supportive        · Places a $20 million
 supportive services          are severely distressed                         committed leveraged funds           service funds leveraged           cap on award amounts

                                                                                                                                                                    HUD



                                                         Note: This figure is based on GAO analysis of HUD’s legislative appropriations and NOFAs.




                                                         Page 11                                       GAO-03-555 HUD's Management of the HOPE VI Program
                              a
                               Section 202 sites are distressed public housing sites with more than 300 units that HUD has
                              determined to be subject to conversion to rental assistance under Section 202 of the Omnibus
                              Consolidated Rescissions and Appropriations Act of 1996.


                              According to HOPE VI officials, HUD has increased the types and quantity
                              of information required each year in an effort to obtain information that
                              makes it easier to rate and rank applications and allows the agency to make
                              improved selection decisions. In addition, the agency has made some
                              changes in an effort to make the application process easier for housing
                              authorities. Finally, HOPE VI officials noted that the program’s annual
                              appropriation legislation can change the requirements each year and that
                              the NOFAs must be revised to reflect these changes.

                              Although the changes have given HUD better information upon which to
                              base selection decisions, some of the housing authority and public housing
                              industry group officials that we interviewed expressed concerns about the
                              changes in the application requirements that housing authorities must
                              meet. According to these officials, such changes make it difficult for
                              housing authorities to anticipate what HUD intends to emphasize and to
                              make detailed revitalization plans until each NOFA is published. The
                              officials also noted that it is challenging for previously denied applicants to
                              determine how to revise their applications. Housing authorities and
                              interest groups report that it generally costs $75,000 to $250,000 to prepare
                              a HOPE VI grant application. The fiscal year 2002 NOFA was of particular
                              concern to some of the housing authority officials and industry group
                              representatives that we interviewed. According to these officials, the NOFA
                              required housing authorities to conduct impractical up-front planning and
                              to obtain commitments at an unrealistically early date. For example, an
                              applicant had to certify that it had procured a developer for the first phase
                              of construction by the application due date. Officials we interviewed stated
                              that this requirement would be costly to the applicant, who at that point
                              would have no guarantee of funding.



Until Fiscal Year 2002, HUD   Although HUD’s annual selection process had considered the performance
Did Not Declare Applicants    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
Ineligible because of Past
                              mandatory threshold requirement for an applicant to be eligible for a HOPE
Performance                   VI revitalization grant. Incorporating past performance—specifically, the
                              demonstrated ability to efficiently manage projects—can help direct HOPE
                              VI funds to where they can most effectively produce results.




                              Page 12                               GAO-03-555 HUD's Management of the HOPE VI Program
Starting in fiscal year 1995, an applicant’s score for capacity was partially
based on the extent to which any previously awarded HOPE VI grants had
progressed. In fiscal years 1993, 1996, and 1997, applicants were also
required, under the capacity factor, to submit Public Housing Management
Assessment Program scores, which were a measure of a housing
authority’s performance in all major areas of management operations. HUD
stopped requiring this information in fiscal year 1998, after the Public
Housing Management Assessment Program was discontinued.11 The fiscal
year 2002 NOFA was the first that stated that an applicant with one or more
existing HOPE VI revitalization grants would be disqualified if one or more
of those grants failed to meet certain performance requirements as
required in the applicable HOPE VI revitalization grant agreement.

During the years that past performance was a rating factor—rather than a
threshold eligibility requirement—multiple HOPE VI revitalization grants
were awarded to housing authorities that had made little progress in
constructing new units under previous grants. For example, the Chicago
Housing Authority was awarded grants in fiscal years 1998, 2000, and 2001,
although construction, as of December 31, 2002, was 21 percent complete
at the Cabrini-Green site (fiscal year 1994 grant); 26 percent complete at
the Robert Taylor B site (fiscal year 1996 grant); 27 percent complete at the
ABLA Brooks Extension site (fiscal year 1996 grant); and 0 percent
complete at the Henry Horner site (fiscal year 1996 grant). Similarly, the
Detroit Housing Commission has received three grants and constructed 25
percent of the units planned.




11
 In 1997, HUD instituted a new system—the Public Housing Assessment System—to
measure overall housing authority performance. Because this system is still undergoing
changes, applicants have not been asked to submit their scores as part of their application.




Page 13                             GAO-03-555 HUD's Management of the HOPE VI Program
                           In a June 2002 report to Congress, HUD acknowledged that it has done
                           little to rectify the problems among low performers and has often awarded
                           poorly performing housing authorities multiple grants despite low or no
                           unit production, inadequate oversight, and capacity issues.12 HUD also
                           acknowledged that awarding multiple grants to poor performers further
                           strains the institutional and staff capacity of these public housing
                           authorities, intensifying existing problems. Finally, HUD noted that it had
                           initially awarded grants to large housing authorities for large-scale
                           developments, without fully recognizing that most of the grantees included
                           at-risk and troubled public housing authorities.13 Some of these large
                           housing authorities were awarded multiple revitalization grants, and the
                           burden of managing the grants resulted in slow planning, redevelopment,
                           and construction.

                           According to HUD, it elevated the importance of past performance in the
                           fiscal year 2002 NOFA because it wanted to emphasize accountability and
                           readiness. It determined that applicants that already had one or more
                           HOPE VI revitalization grants should demonstrate the capability to manage
                           them before HUD awarded them more funds. It also concluded that poor
                           performers should not be rewarded with additional funding when other
                           housing authorities possibly could implement the grants better.



HUD Has Not Consistently   In annual reviews of the HOPE VI grant selection process, HUD’s Inspector
Followed Its Grant         General has found that the agency has not consistently followed its grant
                           selection procedures for each year. For example, in an audit of the fiscal
Selection Procedures       year 1996 grant award process, the Inspector General found that HUD
                           revised its screening procedures to allow applicants to comply with only
                           one of the two eligibility criteria in the NOFA.14 Under the revised
                           screening procedures, HUD awarded $269 million to applicants that should
                           have been ineligible for funding because they did not demonstrate
                           compliance with the two criteria as specified in the NOFA. Similarly, when

                           12
                            U.S. Department of Housing and Urban Development, HOPE VI: Best Practices and
                           Lessons Learned 1992-2002 (Washington, D.C.: June 14, 2002).
                           13
                            Under the Public Housing Management Assessment Program, housing authorities that
                           received an overall score of less than 60 percent were designated as troubled (overall). An
                           at-risk housing authority is one that is close to being designated as troubled.
                           14
                            U.S. Department of Housing and Urban Development, Office of Inspector General, Audit of
                           the Fiscal Year 1996 HOPE VI Grant Award Process, 98-FO-101-0001 (Washington, D.C.:
                           Oct. 20, 1997).




                           Page 14                            GAO-03-555 HUD's Management of the HOPE VI Program
HUD encountered a defect in a fiscal year 1996 application, often the
reviewers resolved the defect in a manner that improved the applicant’s
application but did not always comply with the NOFA procedures for
resolving application defects. The Inspector General concluded that, as a
result, some applications that should have been ineligible for funding were
inappropriately funded.

Similarly, the Inspector General also has found that in both fiscal years
1998 and 1999 HUD did not fully or consistently implement key application
review procedures.15 Specifically, the final review panel, and to a lesser
degree the initial reviewers, did not always document their justifications
for scoring and rating individual applications. For example, in its fiscal year
1998 audit, the Inspector General reviewed 24 applications and identified 6
on which the final review panel changed preliminary scores without
providing adequate documentation or justification to support all the
changes. The scoring changes resulted in 5 of the applicants obtaining
funding and 1 losing funding. In its fiscal year 1999 audit, the Inspector
General reviewed 25 applications and found that HUD’s final review panel
had changed scores for 6 applications without providing adequate
documentation or justification. The scoring changes resulted in 5 of the
applicants obtaining funding.

In response to these and other Inspector General criticisms of the HOPE VI
grant selection process, HOPE VI officials told us that they follow their
review procedures to the best of their ability, given the time constraints of
the annual competition. Although the Inspector General generally has
about 4 months to review the previous year’s applications, HOPE VI
officials noted that they have shorter time frames—generally, 6 weeks.
HUD officials also stated that they have made efforts to address the
Inspector General’s concerns, including efforts to better screen
applications. In its report on the fiscal year 1999 HOPE VI competition, the
Inspector General determined that HUD had addressed issues in its fiscal
year 1998 review, relating to the need to ensure that (1) each rejected
applicant would be provided specific written notification as to why the
application was not successful and (2) all evaluations were based on the
facts presented in the applications.




15
 The results of the Inspector General’s reviews of the fiscal years 1998 and 1999 award
processes were captured in management letters related to annual financial statement audits.




Page 15                            GAO-03-555 HUD's Management of the HOPE VI Program
Status of Work Varies     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
Greatly, and Most         2001. Overall, at least some units have been constructed at 99 of the 165
Grantees Have Not Met     sites, and 47 percent of all HOPE VI funds have been expended. In general,
                          more recently awarded grants are progressing more quickly than earlier
Grant Agreement           grants. Nevertheless, the majority of grantees missed at least one of the
Deadlines                 deadlines in their grant agreements. For example, grantees did not submit
                          the revitalization plan to HUD on time for 75 percent of the grants awarded
                          through fiscal year 1999. 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.



Status of Work Varies     Our analysis of data from HUD’s HOPE VI reporting system shows that
Widely at HOPE VI Sites   work status varies at HOPE VI sites. As of December 31, 2002, relocation
                          was complete at 101 of the 165 sites, demolition at 87 sites, and
                          construction at 15 sites.16 Reoccupancy—the return of some original
                          residents to revitalized units—was complete at 37 sites, while occupancy
                          was complete at 14 of the 165 sites. Grantees had demolished 57,772 units
                          of severely distressed public housing and constructed or rehabilitated
                          23,109 units. Figure 2 shows the percentage of planned revitalization
                          activities completed by each fiscal year’s grantees.




                          16
                            The following 15 sites are complete: Bernal/Plaza, San Francisco, California (fiscal year
                          1993 grant); Earle Village, Charlotte, North Carolina (fiscal year 1993 grant); Outhwaite
                          Homes/King Kennedy, Cleveland, Ohio (fiscal year 1993 grant); Allen Parkway Village,
                          Houston, Texas (fiscal year 1993 grant); Hillside Terrace, Milwaukee, Wisconsin (fiscal year
                          1993 grant); Quigg Newton Homes, Denver, Colorado (fiscal year 1994 grant); Lafayette
                          Courts, Baltimore, Maryland (fiscal year 1994 grant); McGuire Gardens, Camden, New
                          Jersey (fiscal year 1994 grant); Hayes Valley, San Francisco, California (fiscal year 1995
                          grant); Lexington Terrace, Baltimore, Maryland (fiscal year 1995 grant); Valley Green/Sky
                          Tower, Washington, D.C. (fiscal year 1997 grant); Enterprise Drive, Helena, Montana (fiscal
                          year 1997 grant); Vine Hill Homes, Nashville, Tennessee (fiscal year 1997 grant); Caroline
                          Street Apartments, New Bedford, Connecticut (fiscal year 1998 grant); and Heritage House
                          II, Kansas City, Missouri (fiscal year 1998 grant).




                          Page 16                            GAO-03-555 HUD's Management of the HOPE VI Program
Figure 2: Percentage of Planned Revitalization Activities That Grantees Completed, by Fiscal Year Awarded
Percentage

100




 80




 60




 40




 20




  0
          1993      1994          1995          1996            1997            1998            1999            2000            2001
      Fiscal year


                                                 Relocation

                                                 Demolition

                                                 Construction

                                                 Reoccupancy

                                                 Occupancy

Source: GAO.


                                          Note: This figure is based on GAO analysis of data from HUD’s HOPE VI reporting system (as of Dec.
                                          31, 2002).


                                          Although construction was complete at only 15 sites as of December 31,
                                          2002, construction was nearing completion at additional sites. As shown in
                                          figure 3, at least some units had been constructed at 99 of the 165 sites.
                                          Where construction was still ongoing, it was 50 percent or more complete
                                          at 40 sites and 75 percent or more complete at 25 sites. No units had been
                                          completed at 66 sites. Overall, 27 percent of the total planned units were
                                          complete as of December 31, 2002.




                                          Page 17                               GAO-03-555 HUD's Management of the HOPE VI Program
Figure 3: Percentage of Construction Completed at 165 HOPE VI Sites
Number of sites
80


70     66


60


50


40


30
                          25                   25

                  19
20
                                    15                 15

10


 0
        0       >0 to    25 to     50 to      75 to   100
                 <25      <50       <75       <100
     Percentage range of construction completed
Source: GAO.


Note: This figure is based on GAO analysis of data from HUD’s HOPE VI reporting system (as of Dec.
31, 2002).




Page 18                                    GAO-03-555 HUD's Management of the HOPE VI Program
In general, grantees with more recently awarded grants are completing
activities more quickly than those with the earlier grants. The fiscal year
1993 grantees took an average of 31 months after execution of grant
agreements to start construction. The fiscal year 1994 grantees took an
average of 41 months.17 However, the 14 grantees awarded grants in fiscal
year 1999 that have started construction did so an average of 16 months
after grant agreement execution. Furthermore, the 9 fiscal year 2000
grantees that have started construction did so, on average, 10 months after
grant agreement execution.18 According to HUD, there are several possible
reasons for this improvement, which include that the later grantees may
have more capacity than the earlier grantees, the applications submitted in
later years were more fully developed to satisfy NOFA criteria, and HUD
has placed greater emphasis on reporting and accountability.

Overall, grantees have expended about $2.1 of the $4.5 billion (47 percent)
in HOPE VI revitalization funds awarded.19 As expected, a greater
percentage of the funds budgeted for planning and demolition has been
expended than of the funds budgeted for construction and community and
supportive services (see fig. 4). For example, 67 percent of all HOPE VI
funds budgeted for demolition have been expended, while 42 percent of all
HOPE VI funds budgeted for construction have been expended.




17
 One fiscal year 1994 grant was not included in the calculation because the grantee plans to
use the grant funds to acquire, rather than construct, homeownership units.
18
 As of December 31, 2002, 7 of the fiscal year 1999 grantees and 9 of the fiscal year 2000
grantees had not started construction. Until these grantees start construction, we cannot be
sure that the fiscal years 1999 and 2000 grantees, as a whole, have moved faster than earlier
grantees.
19
 The percentage of HOPE VI dollars expended can be impacted by the fact that, in some
cases, other money is spent first, reserving the HOPE VI dollars to be expended later in the
project.




Page 19                             GAO-03-555 HUD's Management of the HOPE VI Program
                           Figure 4: Status of HOPE VI Funds Budgeted and Expended for Revitalization
                           Activities
                           Dollars in millions
                           3,000



                           2,500



                           2,000



                           1,500


                                                                   42%
                           1,000



                            500

                                       64%                                   49%
                                                       67%                          43%
                                 0
                                                                                 pa n/



                                                                            se ortiv y/
                                  se sion g/




                                                      on



                                                                   on




                                                                                       y



                                                                                   ce e
                                     rvi al




                                                                              pp unit
                                                                             cu tio
                                           in




                                                                                    nc




                                                                                     s
                                                     liti



                                                                  cti
                                           s
                                  ofe n

                                        ce




                                                                           oc ca
                                Pr Plan




                                                mo



                                                             tru




                                                                              mm

                                                                               rvi
                                                                         Re Relo
                                     s




                                                             ns
                                                De




                                                                           Co
                                                                           Su
                                                            Co




                                     Fund uses


                                                HOPE VI funds budgeted

                                                HOPE VI funds expended

                           Source: GAO.


                           Note: This figure is based on GAO analysis of data from HUD’s HOPE VI reporting system (as of Dec.
                           31, 2002).




Majority of Grant          The majority of grantees missed at least one of the deadlines established in
Agreement Deadlines Have   their grant agreements.20 Grantees must meet three major deadlines
                           according to their grant agreements: the submission of a revitalization plan
Not Been Met
                           to HUD, the submission of a community and supportive services plan to
                           HUD, and completion of construction. Overall, for 75 percent of the grants


                           20
                            All grants are not subject to the same time frames because the deadlines in each year’s
                           grant agreements tend to be different.




                           Page 20                                            GAO-03-555 HUD's Management of the HOPE VI Program
awarded through fiscal year 1999, the grantees did not submit the
revitalization plan to HUD on time.21 For 70 percent of the grants subject to
a standard deadline for the submission of a community and supportive
services plan, the grantees did not meet the deadline.22 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. For 9 of
the 39 grants that missed their construction deadline, the grantees had not
constructed any units as of December 31, 2002.

HUD data show that the time it has taken grantees to submit key
documents has shortened over the life of the program. For example, as
shown in table 1, grantees have been taking less time to submit
revitalization plans to HUD. On average, the fiscal year 1994 grantees took
about 790 days after the execution of their grant agreements to submit a
revitalization plan. By fiscal year 2000, the grantees took an average of 185
days after the execution of their grant agreements to submit a revitalization
plan. Similarly, although there is no specific grant agreement deadline
related to submitting mixed-finance proposals—documents that HUD must
approve before mixed-finance construction can begin—the recent grantees
have done so in less time than did earlier grantees. The average number of
days between grant execution and submission of a mixed-finance proposal
fell from 2,255 days for the fiscal year 1994 grantees to 508 days for the
fiscal year 2000 grantees.




21
 We omitted from our analysis 5 fiscal year 1995 grants that were awarded during a second
round of funding because each grantee signed a grant agreement with HUD that contained
unique deadlines specific to that grant. The revitalization plan deadlines for the fiscal years
2000 and 2001 grants have not yet passed.
22
 We could not assess compliance for grants awarded in fiscal years 1995-99 using the data in
HUD’s HOPE VI reporting system because the grant agreements stated that the activity
should be completed in accordance with the schedule in each grantee’s revitalization plan,
rather than in accordance with a standard deadline.




Page 21                              GAO-03-555 HUD's Management of the HOPE VI Program
                           Table 1: Average Number of Days to Complete Key Program Activities

                                                   Average number of days from              Average number of days from
                           Fiscal year           grant execution to revitalization         grant execution to submission
                           awarded                              plan submission                of mixed-finance proposal
                           1993                                                    137                                    2,047
                           1994                                                    790                                    2,255
                           1995                                                    287                                    1,276
                           1996                                                    400                                    1,421
                           1997                                                    290                                      983
                           1998                                                    317                                    1,005
                           1999                                                    259                                      912
                           2000                                                    185                                      508
                           2001                                                      93                                     296
                           Source: HUD.
                           Note: Not all of the grantees have submitted a revitalization plan. For example, 1 of the fiscal year
                           2000 grantees and 4 of the fiscal year 2001 grantees have not submitted a revitalization plan. Until
                           these grantees have submitted a plan, we cannot determine the average number of days for the fiscal
                           year 1999 and 2000 grantees, as a whole.


                           HUD has taken steps to encourage adherence to deadlines. For instance,
                           the agency notified grantees in March 2002 that, as part of HUD’s increased
                           focus on readiness, 10 dates could no longer be revised in the HOPE VI
                           reporting system as of June 30, 2002. The dates included planned
                           completion of the revitalization plan, planned completion of a mixed-
                           finance proposal, planned start of construction, and planned completion of
                           construction. Prior to this decision, grantees had been allowed to adjust
                           their planned dates when delays occurred, making it difficult for HUD to
                           determine the extent of delays. In its fiscal year 2002 NOFA, HUD also
                           stressed project readiness. For example, the NOFA required applicants to
                           provide a certification stating either that they had procured a developer for
                           the first phase of development by the application due date or that they
                           would act as their own developer. Similarly, applicants that proposed off-
                           site replacement housing were required to submit evidence of control of
                           the proposed off-site locations.



Many Factors Affect Work   Our visits to the sites that were awarded revitalization grants in 1996 show
Status                     that many factors—including the development approach, housing authority
                           management, and relationships with residents and the community—can
                           affect the status of work at a site. In its June 2002 report to Congress, HUD



                           Page 22                                GAO-03-555 HUD's Management of the HOPE VI Program
stated that a mixed-finance development approach might cause delays
because housing authorities often lack staff with expertise in development
and complex financing approaches. They must hire additional staff or
outside consultants proficient in private-sector real estate construction,
financing, and lending practices to put together financing and retain
developers. For example, the redevelopment of Dalton Village in Charlotte,
North Carolina, was delayed about 1 year due to the denial of its initial
application for low-income housing tax credits. In addition, the Housing
Authority of New Orleans decided to use tax increment financing to raise
additional funds for its St. Thomas site.23 It took more than 2 years for the
housing authority to get all of the approvals necessary. In contrast, the
Chester Housing Authority was able to complete construction at Lamokin
Village within 5 years of grant execution because it used only public
housing funds, which did not require them to acquire additional expertise.

Other aspects of the development approach, such as the type and location
of planned revitalization efforts, also can affect status. For example,
rehabilitation of existing buildings tends to take less time than construction
of new ones. As of December 31, 2002, over half of the HOPE VI units
scheduled for rehabilitation had been completed, while less than a quarter
of the new planned units had been constructed. The Cuyahoga
Metropolitan Housing Authority’s fiscal year 1996 grant involves both
rehabilitation of existing units and construction of new units. As of April
2003, rehabilitation of 56 units was under way, whereas the construction of
new units was not scheduled to begin until October 2004. Also, on-site
construction tends to occur faster than off-site construction. As of
December 31, 2002, 29 percent of on-site construction was complete, while
19 percent of off-site construction was complete. Grantees planning for off-
site construction sometimes have to purchase the property or properties on
which the units will be built. For example, the Housing Authority of the
City of Pittsburgh plans to acquire numerous parcels of land in the
community surrounding the Bedford Additions site and construct new off-
site units prior to beginning construction on-site. Because acquiring the
sites is taking longer than anticipated, the housing authority has yet to
relocate residents and demolish the original site. For more examples of
how development approaches can affect work status, see appendix IV.




23
 Tax increment financing allows a municipality to provide financial incentives to stimulate
private investment in a designated area, known as a tax increment financing district.




Page 23                            GAO-03-555 HUD's Management of the HOPE VI Program
The extent to which revitalization plans were changed during the course of
redevelopment also affects work status. The Housing Authority of the City
of Atlanta’s original application for a fiscal year 1996 HOPE VI grant
outlined a plan for 100 percent public housing at the Perry Homes site. Two
years after the grant award, HUD conducted a site visit and determined that
the site should include a wide range of units, including market-rate units.
Due to these changes, a revitalization plan was not approved until October
2002. The Cuyahoga Metropolitan Housing Authority changed the plans for
its Riverview site due to environmental problems. In contrast, the Housing
Authority of Louisville, another fiscal year 1996 grantee, has not had to
make any significant modifications to its revitalization plan for Cotter and
Lang Homes, and over 60 percent of the 1,213 planned units were complete
as of December 31, 2002.

Several grantees we visited stated that the performance of housing
authority management staff affected the status of their revitalization plans.
For example, residents in Jacksonville and housing authority staff in
Spartanburg stated that their fiscal year 1996 grants had progressed
significantly, in part, because the executive director communicated well
with residents, the housing authority board, and local community leaders.
In contrast, the Cuyahoga Metropolitan Housing Authority was
experiencing internal problems at the time its fiscal year 1996 grant was
awarded. Its executive director was ultimately convicted for theft of public
funds, mail fraud, and lying about a loan. A new executive director was
hired in late 1998, and the housing authority was finally able to focus on the
fiscal year 1996 HOPE VI grant in 1999, according to housing authority
officials. In Detroit, the revitalization plans for Herman Gardens changed
multiple times because there were several changes in executive leadership
and each executive director had a different plan for the site. Because the
Detroit Housing Commission had not submitted a formal revitalization plan
for Herman Gardens, HUD notified the commission in March 2000 and
March 2002 that it was in default of its grant agreement.

The extent of support from residents and the local community also can
affect the timing of progress at HOPE VI sites. For example, the Tucson
Community Services Department, which serves as the city’s public housing
authority, worked closely with its residents and the local community during
the planning process for its fiscal year 1996 grant. Tucson did not submit its
revitalization plan until a majority of the residents had approved it. In
contrast, resident or community opposition delayed progress at several of
the sites we visited. For instance, the Chicago Housing Authority’s plans for
Henry Horner Homes were delayed 4 years by legal actions related to a



Page 24                       GAO-03-555 HUD's Management of the HOPE VI Program
                               resident lawsuit. Residents at San Francisco’s North Beach site did not
                               want to relocate from the site during the redevelopment, which caused the
                               redevelopment to take longer than it would have otherwise. Because the
                               Housing Authority of New Orleans’s St. Thomas site is located in a historic
                               district, local preservationists opposed the construction of a retail store at
                               the site. In July 2002, a nonprofit organization filed a lawsuit against the
                               housing authority for failing to comply with environmental and historic
                               preservation laws. The case was dismissed in April 2003. See appendix IV
                               for more information on each of the 20 sites we visited.

                               HUD’s approval process can also affect the status of work at HOPE VI sites.
                               Officials responsible for managing 12 of the 20 grants awarded in fiscal year
                               1996 told us that HUD’s approval process for key documents, such as the
                               revitalization plan and mixed-finance proposals, was too slow. However,
                               according to a HUD report, the agency’s approval process has been
                               improving. For instance, HUD’s data show the average number of days
                               from the submission of a mixed-finance proposal to approval was 185 days
                               for the fiscal year 1996 grantees. For the fiscal year 1999 grantees, the
                               average number of days between submission and approval of a mixed-
                               finance proposal was 126 days.



HUD’s Oversight of             HUD grant managers located at HUD headquarters and in the field are
                               primarily responsible for overseeing HOPE VI grants, but staff in HUD’s
HOPE VI Grants Has             field offices also assist grant managers in monitoring grants. In particular,
Been Inconsistent              field office staff are to perform annual on-site monitoring reviews.
                               However, by the end of 2002, HUD had not conducted any annual reviews
                               for 8 out of the 20 grants awarded in fiscal year 1996. According to HUD,
                               staffing limitations have constrained its ability to oversee grants.
                               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           Both HUD headquarters and field office staff are responsible for overseeing
Oversee Grants, Field Office   HOPE VI revitalization grants. HUD has 30 grant managers that report
                               directly to the Office of Public Housing Investments—17 located at HUD
Staff Share HOPE VI
                               headquarters and 13 located in field offices. Grant managers are primarily
Oversight Responsibilities     responsible for overseeing HOPE VI grants and perform a number of
                               duties, including tracking the overall status of the grant, reviewing and
                               approving mixed-finance proposals, reviewing and approving all proposed



                               Page 25                       GAO-03-555 HUD's Management of the HOPE VI Program
                              changes to program schedules, and reviewing and approving procurement
                              documents. According to HOPE VI officials, the main tool that grant
                              managers use to oversee grants is the HOPE VI reporting system, which
                              since 1998 has provided information on the status of each grant. (Grantee
                              reporting existed before 1998, but not in the form of the quarterly reporting
                              system currently used.) Grantees enter data into the Web-based system at
                              the end of each quarter.24 According to the grant managers, the reports
                              from the system enable them to track grant activity and deadline
                              compliance.

                              Office of Public and Indian Housing staff in HUD’s field offices also play a
                              role in overseeing HOPE VI grants, but their responsibilities vary. Three
                              field offices that contain grant managers—located in New York, New York;
                              Miami, Florida; and Cleveland, Ohio—have signature authority, meaning
                              that the office’s local Director of Public Housing can approve documents
                              without approval from headquarters. Other field offices contain grant
                              managers but do not have signature authority. However, most field offices
                              do not have a grant manager, but rather have a HOPE VI coordinator,
                              whose responsibilities include assisting grantees with preparing demolition
                              applications, reviewing environmental assessments, and coordinating and
                              reviewing inspections of HOPE VI construction sites performed by the U.S.
                              Army Corps of Engineers. The field offices also are responsible for
                              performing an annual on-site monitoring visit to each HOPE VI grant.
                              Following this visit, the field office is to prepare a report for both the
                              housing authority staff and the grant manager detailing grantee systems
                              and controls in place and compliance with HOPE VI program requirements.
                              The site visit reports also provide an assessment of the overall status of
                              grant activities.



Staffing Limitations and      According to various reports and HUD field staff, the limited number of
Confusion about the Role of   grant managers, a shortage of field office staff, and confusion about the
                              role of field offices have diminished the agency’s ability to oversee HOPE
Field Offices Constrain
                              VI grants. As shown in figure 5, grant manager workload has been
HUD’s Ability to Oversee      increasing since HUD last hired a large group of grant managers in 1998,
Grants

                              24
                                Data include current and projected production data (e.g., the number of households
                              relocated and the number of units demolished, constructed, and occupied); financial
                              information (e.g., HOPE VI funds budgeted and expended); and key milestones (e.g., the
                              grant award date, the dates the revitalization and community and supportive services plans
                              were submitted and approved by HUD, and dates related to each phase of construction).




                              Page 26                            GAO-03-555 HUD's Management of the HOPE VI Program
but the workload remains below the previous level. As of fiscal year 2001,
each grant manager was responsible for an average of about 6 grants
totaling about $157 million in HOPE VI funding. In its June 2002 report to
Congress, HUD stated that one factor contributing to delays at HOPE VI
sites was limited HUD grant managers. Similarly, some of the grantees we
visited stated that they believe grant manager workload contributed to the
slow approval process previously discussed in this report.



Figure 5: Grant Manager Workload, by Fiscal Year
Grants per grant manager
15




12




 9




 6




 3




 0
     1993          1994    1995    1996      1997       1998      1999   2000   2001
     Fiscal year
Source: GAO.


Note: This figure is based on GAO analysis of data provided by HUD.


HUD reports that HOPE VI oversight also has been affected by a shortage
of field office staff and confusion about the role of field offices. Our site
visits showed that HUD field staff are not systematically performing the
required annual reviews. Of the 20 revitalization grants awarded in fiscal
year 1996, 8 had never had an annual review performed as of the end of
2002, and no grant had had an annual review performed each year since the
grant award. Overall, only one in five of the required annual reviews were
performed. However, the annual reviews that were performed did contain
important findings. For example, several of the annual reviews performed
for the fiscal year 1996 grantees noted that housing authorities were not



Page 27                              GAO-03-555 HUD's Management of the HOPE VI Program
following procurement policies and lacked proper documentation of
resident relocations.

From our interviews with field office managers, we determined that there
are two reasons why annual reviews were not performed. First, many of the
field office managers we interviewed stated that they simply did not have
enough staff to get more involved in overseeing HOPE VI grants. For
example, one field office manager told us that, because of staffing
constraints, his office did not perform any HOPE VI oversight. Second,
some field offices did not seem to understand their role in HOPE VI
oversight. For instance, one office thought that the annual reviews were
primarily the responsibility of the grant managers. Others stated that they
had not performed the reviews because construction had not yet started at
the sites in their jurisdiction or because they did not think they had the
authority to monitor grants.

The HUD Inspector General and the agency itself have reported that
staffing shortages, particularly in the field, have resulted in a lack of
program oversight. In a 1998 review of the HOPE VI program, the Inspector
General stated that HUD had not been performing even the minimal
monitoring requirements for the HOPE VI program in part due to
understaffing in both headquarters and the field offices.25 As noted in that
report, lack of monitoring led to grant implementation problems remaining
unresolved. In addition, HUD’s most significant workforce planning activity
to date—its Resource Estimation Allocation Process (REAP)—cited
staffing shortages related to the HOPE VI program. Under REAP, HUD
systematically estimated the number of employees needed to do its work,
on the basis of current workload and operations. The final resource
estimation report, which was issued in April 2001, noted that the Office of
Public and Indian Housing needed to add approximately 38 full-time
employees in the field to conduct tasks such as monitoring and providing
assistance to HOPE VI grantees.26 The report also concluded that the
Office of Public Housing Investments should more clearly articulate its
own role and the role of field offices in the oversight of HOPE VI grants.



25
 U.S. Department of Housing and Urban Development, Office of Inspector General,
Nationwide Audit of HOPE VI Urban Revitalization Program, 99-FW-101-0001
(Washington, D.C.: Dec. 17, 1998).
26
 Arthur Andersen LLP, HUD Workforce Measurement Final Report – Phase I (Washington,
D.C.: Apr. 17, 2001).




Page 28                          GAO-03-555 HUD's Management of the HOPE VI Program
HUD Lacks Clear             Although the majority of grantees have missed key deadlines, HUD has not
Enforcement Policies and    developed and provided to grantees an official HOPE VI enforcement
                            policy, according to program officials. Instead, the agency determines if
Has Not Always Enforced     action should be taken against a grantee on a case-by-case basis. A clear
Grant Agreement Deadlines   enforcement policy could provide grantees with more certainty regarding
                            the consequences of not meeting grant agreement deadlines. In a
                            December 1999 memorandum, HUD’s Office of General Counsel noted that
                            no statutory or program provisions required grantees to expend HOPE VI
                            funds within a set period of time. Therefore, it concluded that HUD may
                            grant extensions to time frames established in the grant agreements, thus
                            avoiding the need to declare grantees that have missed deadlines to be in
                            default of their grant agreements.27

                            In the absence of a formal enforcement policy, HUD has outlined in general
                            terms its default policy in grant agreements. In each grant agreement, HUD
                            describes several occurrences that might constitute a default by the
                            grantee under the grant agreement, including a grantee’s failure to comply
                            with the conditions and terms of its grant agreement. HUD provides written
                            notice of all defaults and gives the grantee 30 days to remedy the default or
                            to submit evidence to HUD that it is not in default. If the default cannot be
                            remedied within 30 days, grantees have an additional 60 days to rectify the
                            default situation. At that time, if the condition(s) noted in HUD’s initial
                            letter to the grantee has not been resolved, HUD may require the grantee to
                            revise its program schedule, management plan, or program budget. HUD
                            also may restrict the grantee’s authority to draw down grant funds or
                            require reimbursement by the grantee. HUD also reserves the right to
                            appoint a receiver to carry out HOPE VI activities, reduce the amount of
                            the grant award, or terminate the grant.

                            According to HOPE VI officials, all grantees would have been considered in
                            default of their grant agreements at some point in their grant process if
                            HUD had not been flexible regarding time frames. For example, virtually all
                            of the fiscal year 1996 grantees were allowed an extension to the date
                            construction was to be completed, and some were allowed multiple


                            27
                              Prior to fiscal year 2002, HOPE VI appropriations were available until expended. Starting
                            in fiscal year 2002, HOPE VI appropriations must be obligated within 2 fiscal years.
                            Specifically, the fiscal year 2002 HOPE VI appropriations must be obligated by September
                            30, 2003, while the fiscal year 2003 HOPE VI appropriations must be obligated by September
                            30, 2004. For fiscal years 2002 and 2003, appropriations must be expended within 5 years
                            after the period of availability of obligation.




                            Page 29                            GAO-03-555 HUD's Management of the HOPE VI Program
extensions. The Chicago Housing Authority’s Henry Horner grant and the
Housing Authority of the City of Atlanta’s Perry Homes grant received
extensions for the execution of a general contractor’s agreement and for
the date construction was to be completed. In 2000, the Housing Authority
of the City of Pittsburgh’s grant for Bedford Additions received an
extension until early 2003 to complete construction; in 2002, the authority
received an additional extension to complete construction by July 2007.

Although HUD has not developed a formal enforcement policy, it has issued
default notices to grantees. It has generally issued these notices when there
is no evidence of a formal and comprehensive approach to the grantee’s
revitalization effort. As of March 2003, HUD had declared nine grants to be
in default and issued warning notices regarding three other grants.
According to program officials, HUD expects to increase the use of the
default tool because a default letter tends to garner enough attention with
the local media and political leaders to prompt action. However, HUD has
never rescinded any HOPE VI funds, even when it has issued default letters.

Because HUD does not have a formal enforcement policy, its issuance of
default notices can be viewed as arbitrary. For example, in July 2000, HUD
declared the Housing Authority of Baltimore City’s fiscal year 1996 grant
for Hollander Ridge to be in default of its grant agreement on the basis of
“failure to comply with the HOPE VI requirements or any other Federal,
State or local laws, regulations or requirements applicable in implementing
the Revitalization Plan.” The default letter also noted that, because the
housing authority’s revitalization plan was no longer consistent with the
requirements of a consent decree, the grant was deemed to be in default. In
March 2000 and March 2002, HUD declared the Detroit Housing
Commission’s fiscal year 1996 grant for Herman Gardens to be in default
because the housing authority had not submitted a revitalization plan as
required in its grant agreement. However, HUD has not issued default
letters to other grantees who have not met grant agreement deadlines for
completing construction. For example, even though no units have been
completed at St. Thomas in New Orleans or Bedford Additions in
Pittsburgh and, according to grant agreement deadlines, construction was
to be completed by early 2002, neither fiscal year 1996 grant has been
declared in default.




Page 30                      GAO-03-555 HUD's Management of the HOPE VI Program
HUD Has Obligated the    HUD estimates that it has obligated about $51 million of the $63 million in
                         HOPE VI funds that have been set aside for technical assistance, with the
Majority of Funds        majority of this obligation funding services provided directly to grantees
Budgeted for Technical   and program reporting. As shown in figure 6, the funding budgeted for
                         technical assistance has fluctuated. Over the first 4 years of the program,
Assistance for Support   funding ranged between $2.5 and $3.2 million, annually. In fiscal year 1998,
to Grantees and HOPE     funding increased to $10 million and consistently remained at or above that
VI Program Reporting     level until fiscal year 2002, when it decreased to $6.2 million.



                         Figure 6: Technical Assistance Funding, by Fiscal Year
                         Dollars in millions
                         20




                         15




                         10




                          5




                          0
                               1994         1995   1996   1997      1998    1999     2000      2001   2002
                              Fiscal year
                         Source: GAO.


                         Note: This figure is based on GAO analysis of data provided by HUD.


                         As shown in figure 7, HUD has obligated the majority of its technical
                         assistance funding for services provided directly to grantees and program
                         reporting. Of the $51 million that HUD estimates it has obligated to date, 55
                         percent has been obligated for technical assistance provided to grantees.
                         For example, HUD assigns each grant an outside technical assistance
                         provider to help the grantee develop its community and supportive services
                         plan. In fiscal years 1996 to 2000, HUD assigned each new grant an
                         expediter to assist the grantee with its HOPE VI plans. These expediters



                         Page 31                                 GAO-03-555 HUD's Management of the HOPE VI Program
were private-sector experts in finance, real estate development, and
community revitalization. Another major category of technical assistance
has been program reporting. According to HOPE VI officials, HUD spends
about $2.5 million annually on the HOPE VI reporting system. A contractor
maintains the reporting system and staffs a help desk to respond to
questions from grantees. The remaining technical assistance funding has
been obligated for headquarters management assistance, such as
consultants; site inspections performed by the U.S. Army Corps of
Engineers; and staff training and travel.



Figure 7: Total Obligations for Technical Assistance, by Funding Category
                                               Staff training and travel

                     4%                        Site inspections
                          7%

                                13%            Headquarters management assistance


          55%
                              21%              HOPE VI program reporting




                                               Technical assistance to grantees
Source: GAO.


Note: This figure is based on GAO analysis of estimates provided by HUD.


In recent years, HUD has eliminated some services previously provided to
grantees. For example, in fiscal year 2001, HUD stopped providing
expediters because, according to program officials, the practice had
become too expensive. Currently, only at-risk grantees—grantees that are
experiencing problems with their grants or do not have adequate capacity
to manage their grants—are considered for technical assistance. According
to HUD officials, HUD has decreased the amount of technical assistance it
provides because the agency believes that grantees should be responsible
for retaining and funding their own technical assistance. Figure 8 shows




Page 32                              GAO-03-555 HUD's Management of the HOPE VI Program
              the percentage of technical assistance funds provided directly to grantees
              over the life of the program.



              Figure 8: Obligations for Technical Assistance, by Fiscal Year
              Obligations in millions
              25




              20
                     59%



              15


                                 59%


              10
                                            50%

                     41%

               5                                      29%
                                 41%
                                            50%
                                                      71%

                                                                         67%
                                                                         33%
               0
                   Through       1999      2000       2001       2002
                    1998
                   Fiscal year


                             Technical assistance to grantees

                             All other technical assistance

              Source: GAO.


              Note: This figure is based on GAO analysis of estimates provided by HUD.




Conclusions   HOPE VI is one of the few active federal housing production programs and
              is supposed to deliver almost 45,000 units of rehabilitated or new public
              housing. During these tight budgetary times, when Congress faces difficult
              choices in deciding how to provide affordable housing, it is increasingly
              important that federal housing programs produce results. After 10 years of
              the HOPE VI program, construction has been completed at 15 of 165 sites.



              Page 33                                         GAO-03-555 HUD's Management of the HOPE VI Program
                      However, work is proceeding more quickly at sites financed by more
                      recently awarded grants. The HOPE VI program has incorporated measures
                      to increase efficiency—in part attributable to HUD’s requesting more
                      information from grant applicants and a renewed emphasis on meeting
                      deadlines. In addition, the emphasis on performance measures, such as
                      HUD’s incorporation of past performance as an eligibility requirement in
                      the fiscal year 2002 NOFA, should help direct HOPE VI funds to where they
                      can most effectively produce results.

                      However, the HOPE VI program could be improved further. By emphasizing
                      the need for regular grant oversight and review and improving and
                      clarifying the lines of communication between headquarters and the field
                      offices, HUD can eliminate existing confusion about staff roles, build a
                      consistent record of site reviews and oversight, and improve
                      communications with grantees to facilitate progress on grants. Since the
                      HOPE VI grant process involves both HUD and public housing authorities,
                      HUD can further improve the efficiency of the grant program and help
                      achieve its goal of revitalizing public housing by holding grantees
                      accountable for performance, particularly in the areas of meeting deadlines
                      and producing deliverables. The HOPE VI program, as it is currently set up,
                      does not have a clear and consistent system for determining if grantees are
                      not in compliance with grant requirements, nor does it offer clear
                      incentives for grantees to change behavior or correct undesirable
                      conditions.



Recommendations for   To improve its selection and oversight of HOPE VI grants, we recommend
                      that the Secretary of Housing and Urban Development
Executive Action
                      • 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.




                      Page 34                      GAO-03-555 HUD's Management of the HOPE VI Program
Agency Comments   We provided a draft of this report to HUD for its review and comment. In a
                  letter from the Assistant Secretary for Public and Indian Housing (see
                  app. V), HUD stated that it found the report to be fair and accurate in its
                  assessment of the management of the program. HUD also agreed with our
                  three recommendations. Specifically, it stated that it would take action to
                  incorporate past performance as an eligibility criterion in the fiscal year
                  2003 HOPE VI Revitalization NOFA. Regarding the recommendation to
                  develop a formal enforcement policy, HUD stated that it regards the
                  development of management tools such as the locked checkpoint system
                  described in this report to be a key step in the establishment of a
                  formalized enforcement policy and will endeavor to institute other
                  responsive measures. Additionally, HUD provided clarifications on several
                  technical points, which have been included in this report as appropriate.


                  As agreed with your office, unless you publicly announce its contents
                  earlier, we plan no further distribution of this report until 10 days after the
                  date of this report. At that time, we will send copies of this report to the
                  Chairman, Subcommittee on Housing and Transportation, Senate
                  Committee on Banking, Housing, and Urban Affairs; the Chairman and
                  Ranking Minority Member, Senate Committee on Banking, Housing, and
                  Urban Affairs; the Chairman and Ranking Minority Member, Subcommittee
                  on Housing and Community Opportunity, House Committee on Financial
                  Services; and the Chairman and Ranking Minority Member, House
                  Committee on Financial Services. We will also send copies to the Secretary
                  of Housing and Urban Development and the Director of the Office of
                  Management and Budget. We will make copies available to others upon
                  request. This report will also be available at no charge on GAO’s Web site at
                  http://www.gao.gov.

                  Please call me at (202) 512-8678 if you or your staff have any questions
                  about this report. Key contributors to this report are listed in appendix VI.

                  Sincerely yours,




                  David G. Wood
                  Director, Financial Markets and
                   Community Investment




                  Page 35                       GAO-03-555 HUD's Management of the HOPE VI Program
Appendix I

Objectives, Scope, and Methodology                                                                  A
                                                                                                    A
                                                                                                    ppep
                                                                                                       nen
                                                                                                         d
                                                                                                         xIeis




              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.

              To accomplish these objectives, we analyzed the data contained in HUD’s
              HOPE VI reporting system on the 165 sites that received revitalization
              grants in fiscal years 1993 through 2001 and visited 20 sites in 18 cities. We
              selected these 20 sites because they received HOPE VI revitalization grants
              in fiscal year 1996, which was the first year that grants were subject to a
              standard construction deadline. Using the 1996 grants also allowed us to
              assess whether grantees had met their deadlines, which had passed for the
              majority of the grantees by the time we began our site visits. In addition, we
              interviewed the HUD headquarters officials responsible for administering
              the HOPE VI program.

              To determine the criteria that HUD uses to assess HOPE VI revitalization
              grant applications, we analyzed each year’s notice of funding availability
              (NOFA). Specifically, we examined the rating factors used each year to
              determine if there were any similarities between the different NOFAs. We
              also analyzed the information that housing authorities were required to
              submit for selected rating factors and identified changes in these
              requirements over time. To determine how HUD has followed its grant
              selection procedures, we obtained and reviewed HUD Office of Inspector
              General reports on the HOPE VI grant selection process for fiscal years
              1996 and 1998 to 2001.1 Finally, we interviewed public housing industry
              groups—the Council of Large Public Housing Authorities, the Public
              Housing Authorities Directors Association, and the National Association of
              Housing and Redevelopment Officials—regarding the grant selection
              process.

              To determine the status of work at sites for which grants have been
              awarded, we obtained and analyzed information from HUD’s HOPE VI
              reporting system. Specifically, we obtained data as of December 31, 2002,
              for the 165 revitalization grants awarded through fiscal year 2001. We used


              1
               The HUD Inspector General did not publish a review of the fiscal year 1997 HOPE VI
              selection process.




              Page 36                           GAO-03-555 HUD's Management of the HOPE VI Program
Appendix I
Objectives, Scope, and Methodology




these data to determine the status of relocation, demolition, construction,
reoccupancy, and occupancy and the amount of expended HOPE VI funds.
For each of the 1996 grants, we interviewed housing authority and HUD
officials to determine the status of each grant and the factors affecting that
status. To determine the extent to which grantees have met grant
agreement deadlines, we obtained and analyzed each year’s grant
agreement. We then used milestone data from HUD’s HOPE VI reporting
system to determine the extent to which grantees had met the deadlines in
their grant agreements. To assess the reliability of the data in HUD’s HOPE
VI reporting system, we interviewed the officials that manage the system;
reviewed information about the system, including the user guide, data
dictionary, and steps taken to ensure the quality of these data; and
performed electronic testing to detect obvious errors in completeness and
reasonableness. We determined that these data were sufficiently reliable
for the purposes of this report.

To identify how HUD oversees HOPE VI grants, we obtained and analyzed
HUD’s HOPE VI monitoring guidance and interviewed program officials.
We obtained and analyzed information on the number of grants and grant
managers at the end of each fiscal year to determine grant manager
workload. During each of our site visits, we interviewed housing authority
staff regarding HUD’s oversight of their grants. We also obtained and
analyzed copies of the annual reviews performed for the 1996 grants and
interviewed HUD field office staff regarding their role in HOPE VI
oversight. Finally, we reviewed HUD Inspector General reports on the
HOPE VI program and HUD’s final report on its Resource Estimation and
Allocation Process.

To determine how much HUD has budgeted for technical assistance, we
reviewed information provided by HUD on the total amount budgeted each
fiscal year for technical assistance. To determine the types of technical
assistance HUD has provided, we obtained and analyzed data on the major
types of technical assistance provided with each fiscal year’s budget. The
data HUD provided were estimates of the amounts it had obligated for
technical assistance over the life of the program. We also interviewed
program officials regarding the types of technical assistance provided and
1996 grantees regarding the types of technical assistance they received
from HUD.

We performed our work from November 2001 through April 2003 in
accordance with generally accepted government auditing standards.




Page 37                          GAO-03-555 HUD's Management of the HOPE VI Program
Appendix II

HOPE VI Revitalization Grants                                                                                                            AppenIx
                                                                                                                                               di




                                                  In fiscal years 1993 to 2001, HUD awarded 165 revitalization grants to 98
                                                  public housing authorities (see table 2). Nearly half of all of the HOPE VI
                                                  revitalization grant funds awarded have been granted to 20 housing
                                                  authorities. Within this group of housing authorities, 8 have received 4 or
                                                  more revitalization grants: the Housing Authority of the City of Atlanta, the
                                                  Housing Authority of Baltimore City, the Chicago Housing Authority, the
                                                  Housing Authority of the City of Oakland, the District of Columbia Housing
                                                  Authority, the Philadelphia Housing Authority, the Seattle Housing
                                                  Authority, and the City and County of San Francisco Housing Authority.
                                                  The Chicago Housing Authority has been awarded 8 HOPE VI revitalization
                                                  grants, more than any other housing authority. The Housing Authority of
                                                  Baltimore City follows with 6 revitalization grants.1



Table 2: 165 Revitalization Grants Awarded, Fiscal Years 1993-2001

Public housing authority                   Site                                            Fiscal year awarded           Amount awarded
Albany Housing Authority                   Edwin Corning Homes                                              1998              $28,852,200
Albany, New York
Alexandria Redevelopment and               Samuel Madden Homes                                              1998                 6,716,250
Housing Authority
Alexandria, Virginia
Allegheny County Housing Authority         McKees Rocks Terrace                                             1997                15,847,160
Pittsburgh, Pennsylvania
                                           Homestead Apartments                                          1998Ea                  2,549,392
Housing Authority of the City of Atlanta   Techwood/Clark Howell/Centennial Place                           1993                42,562,635
Atlanta, Georgia
                                           Perry Homes                                                      1996                20,000,000
                                           Carver Homes                                                     1998                34,669,400
                                           Joel Chandler Harris Homes                                       1999                35,000,000
                                           Capitol Homes                                                    2001                35,000,000
Atlantic City Housing Authority and        Shore Park                                                       1999                35,000,000
Urban Redevelopment Agency                 Shore Terrace
Atlantic City, New Jersey
Housing Authority of Baltimore City        Lafayette Courts                                                 1994                49,663,600
Baltimore, Maryland
                                           Lexington Terrace                                            1995(2)b                22,702,000
                                           Hollander Ridge                                                  1996                20,000,000



                                                  1
                                                   Although the Housing Authority of Baltimore City was awarded 6 grants, 1 grant was
                                                  subsequently split into 2 grants, for a total of 7 grants.




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                                                 Appendix II
                                                 HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                  Site                                         Fiscal year awarded        Amount awarded
                                          Murphy Homes                                                1997              31,325,395
                                          Julian Gardens
                                          Flag House Courts                                           1998              21,500,000
                                          Broadway Homes                                              1999              21,362,223
Housing Authority of the City of Biloxi   Bayview Homes                                               2000              35,000,000
Biloxi, Mississippi                       Bayou Auguste
Housing Authority of the Birmingham       Metropolitan Gardens                                        1999              34,957,850
District
Birmingham, Alabama
Boston Housing Authority                  Mission Main                                                1993              49,992,350
Boston, Massachusetts
                                          Orchard Park                                            1995(2) b             30,000,000
                                          Maverick Gardens                                            2001              35,000,000
Housing Authority of the City of          GD Rogers and Addition                                      1999              21,483,332
Bradenton
Bradenton, Florida
Housing Authority of the City of          Cohansey View                                               2001              10,945,944
Bridgeton
Bridgeton, New Jersey
Buffalo Housing Authority                 Lakeview Homes                                              1997              28,015,038
Buffalo, New York                         Lower West Side
Cambridge Housing Authority               John F. Kennedy Apartments                                1998Ea               5,000,000
Cambridge, Massachusetts
Camden Housing Authority                  McGuire Gardens                                             1994              42,177,229
Camden, New Jersey
                                          Westfield Acres                                             2000              35,000,000
Housing Authority of the City of          Earle Village                                               1993              41,740,155
Charlotte
Charlotte, North Carolina
                                          Dalton Village                                              1996              24,501,684
                                          Fairview                                                    1998              34,724,570
Chattanooga Housing Authority             McCallie Homes                                              2000              35,000,000
Chattanooga, Tennessee
Housing Authority of Chester City         Lamokin Village                                             1996              14,949,544
Chester, Pennsylvania
                                          McCafferey Village                                          1998               9,751,178
Chester County Housing Authority          Oak Street                                                  1997              16,434,200
West Chester, Pennsylvania
Chicago Housing Authority                 Cabrini-Green                                               1994              50,000,000
Chicago, Illinois
                                          ABLA Brooks Extension                                       1996              24,483,250
                                          Henry Horner                                                1996              18,435,300




                                                 Page 39                         GAO-03-555 HUD's Management of the HOPE VI Program
                                                Appendix II
                                                HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                 Site                                         Fiscal year awarded        Amount awarded
                                         Robert Taylor                                               1996              25,000,000
                                         ABLA                                                        1998              35,000,000
                                         Madden/Wells/Darrow                                         2000              35,000,000
                                         Robert Taylor                                               2001              35,000,000
                                         Rockwell Gardens                                            2001              35,000,000
Cincinnati Housing Authority             Lincoln Court                                               1998              31,093,590
Cincinnati, Ohio
                                         Laurel Homes                                                1999              35,000,000
Housing Authority of the City of         Saxon Homes                                                 1999              25,843,793
Columbia, South Carolina
Columbia, South Carolina
Columbus Metropolitan Housing            Windsor Terrace (Rosewind)                                  1994              42,053,408
Authority
Columbus, Ohio
Cuyahoga Metropolitan Housing            Outhwaite Homes                                             1993              50,000,000
Authority                                King Kennedy Estate South
Cleveland, Ohio
                                         Carver Park                                             1995(2) b             21,000,000
                                         Riverview                                                   1996              29,733,334
Dallas Housing Authority                 Lakewest                                                    1994              26,600,000
Dallas, Texas
                                         Roseland                                                    1998              34,907,186
Danville Redevelopment and Housing       Liberty View                                                2000              20,647,784
Authority
Danville, Virginia
Dayton Metropolitan Housing Authority    Edgewood Court                                              1999              18,311,270
Dayton, Ohio                             Metro Gardens
                                         Metro Annex
Decatur Housing Authority                Longview Place                                              1999              34,863,615
Decatur, Illinois
Housing Authority of the City and        Quigg Newton Homes                                          1994              26,489,288
County of Denver
Denver, Colorado
                                         Curtis Park                                                 1998              25,753,220
                                         Arapahoe Courts
Detroit Housing Commission               Jeffries Homes                                              1994              39,807,342
Detroit, Michigan
                                         Parkside Homes                                           1995(1) b            47,620,227
                                         Herman Gardens                                              1996              24,224,160
District of Columbia Housing Authority   Ellen Wilson Homes                                          1993              25,075,956
Washington, D.C.
                                         Valley Green, Skytower                                      1997              20,300,000




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                                                 Appendix II
                                                 HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                  Site                                         Fiscal year awarded        Amount awarded
                                          Frederick Douglass Homes                                    1999              29,972,431
                                          Stanton Dwellings
                                          East Capitol Dwellings                                      2000              30,867,337
                                          Capitol View Plaza
                                          Arthur Capper                                               2001              34,937,590
                                          Carrollsburg
Housing Authority of the City of Durham Few Gardens                                                   2000              35,000,000
Durham, North Carolina
Housing Authority of the City of El Paso Kennedy Brothers                                         1995(1) b             36,224,644
El Paso, Texas
Housing Authority of the City of          Pioneer Homes                                               1997              28,903,755
Elizabeth                                 Migliore Manor
Elizabeth, New Jersey
Housing Authority of the City of Gary     Duneland Village                                            1999              19,847,454
Gary, Indiana
Greensboro, North Carolina Housing        Morningside Homes                                           1998              22,987,722
Authority
Greensboro, North Carolina
Housing Authority of the City of          Woodland Homes                                              1999              21,075,322
Greenville, South Carolina                Pearce Homes
Greenville, South Carolina
Housing Authority of the City of          Westview Homes                                              2001              27,357,875
Hagerstown
Hagerstown, Maryland
Helena Housing Authority                  Enterprise Drive                                            1997                 939,700
Helena, Montana
Housing Authority of the City of High     Springfield Townhouses                                      1999              20,180,647
Point, North Carolina
High Point, North Carolina
Holyoke Housing Authority                 Jackson Parkway                                             1996              15,000,000
Holyoke, Massachusetts
Houston Housing Authority                 Allen Parkway Village                                       1993              36,602,761
Houston, Texas
                                                                                                      1997              21,286,470
                                                                                                            b
Indianapolis Housing Authority            Concord Village                                         1995(1)               29,999,010
Indianapolis, Indiana                     Eagle Creek
Jacksonville Housing Authority            Durkeeville                                                 1996              21,552,000
Jacksonville, Florida
Housing Authority of the City of Jersey   Curries Woods                                               1997              31,624,658
City
Jersey City, New Jersey
                                          Lafayette Gardens                                           2001              34,140,000
Housing Authority of Kansas City          Guinotte Manor                                              1993              47,579,800
Kansas City, Missouri




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                                              Appendix II
                                              HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority               Site                                         Fiscal year awarded        Amount awarded
                                       Theron B. Watkins Homes                                     1996              13,000,000
                                       Heritage House                                              1997               6,570,500
                                                                                                        a
                                                                                                 1998E                3,429,500
King County Housing Authority          Park Lake Homes                                             2001              35,000,000
Tukwila, Washington
Knoxville's Community Development      College Homes                                               1997              22,064,125
Corporation
Knoxville, Tennessee
Housing Authority of the City of       Washington Ridge                                            1999              21,842,801
Lakeland, Florida
Lakeland, Florida
Lexington-Fayette Urban County         Charlotte Court                                             1998              19,331,116
Housing Authority
Lexington, Kentucky
Housing Authority of the City of Los   Pico Gardens                                                1993              50,000,000
Angeles
Los Angeles, California
                                       Aliso Village                                               1998              23,045,297
Housing Authority of Louisville        Cotter and Lang Homes                                       1996              20,000,000
Louisville, Kentucky
Macon Housing Authority                Oglethorpe Homes                                            2001              19,282,336
Macon, Georgia
Memphis Housing Authority              LeMoyne Gardens                                          1995(1) b            47,281,182
Memphis, Tennessee
                                       Hurt Village                                                2000              35,000,000
Mercer County Housing Authority        Steel City Terrace Extension                                2000               9,012,288
Sharon, Pennsylvania
Miami-Dade Housing Agency              Ward Towers                                               1998Ea               4,697,750
Miami, Florida
                                       Scott Homes                                                 1999              35,000,000
                                       Carver Homes
Housing Authority of the City of       Hillside Terrace                                            1993              45,689,446
Milwaukee
Milwaukee, Wisconsin
                                       Parklawn                                                    1998              35,000,000
                                       Lapham Park                                                 2000              11,300,000
Mobile Housing Board                   Central Plaza Towers                                      1998Ea               4,741,800
Mobile, Alabama
Metropolitan Development and Housing Vine Hill Homes                                               1997              13,563,876
Agency - Nashville
Nashville, Tennessee
                                       Preston Taylor Homes                                        1999              35,000,000




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                                               Appendix II
                                               HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                Site                                         Fiscal year awarded        Amount awarded
                                                                                                        a
New Bedford Housing Authority           Caroline Street Apartments                                1998E                4,146,780
New Bedford, Massachusetts
Housing Authority of the City of New    New Brunswick Homes                                         1998               7,491,656
Brunswick
New Brunswick, New Jersey
Housing Authority of the City of New    Elm Haven Terrace                                           1993              45,331,593
Haven
New Haven, Connecticut
Housing Authority of New Orleans        Desire                                                      1994              44,255,908
New Orleans, Louisiana
                                        St. Thomas                                                  1996              25,000,000
New York City Housing Authority         Arverne Homes                                           1995(1) b             47,700,952
New York, New York                      Edgemere Homes
                                                                                                    1996              20,000,000
                                        Prospect Plaza                                              1998              21,405,213
Housing Authority of the City of Newark Archbishop Walsh Homes                                      1994              49,996,000
Newark, New Jersey
                                        Stella Wright Homes                                         1999              35,000,000
Newport, Kentucky Housing Authority     Peter G. Noll                                               2000              28,415,290
Newport, Kentucky                       Booker T. Washington
                                        McDermott-McLane
Norfolk Redevelopment and Housing       Roberts Village                                             2000              35,000,000
Authority                               Bowling Green
Norfolk, Virginia
North Charleston Housing Authority      North Park Village                                          2001              30,347,921
North Charleston, South Carolina
Housing Authority of the City of Oakland Lockwood Gardens                                           1994              26,510,020
Oakland, California                      Lower Fruitvale
                                        Chestnut Court                                              1998              12,705,010
                                        Westwood Gardens                                            1999              10,053,254
                                        Coliseum Gardens                                            2000              34,486,116
Housing Authority of the City of Orlando Colonial Park                                              1997               6,800,000
Orlando, Florida
Housing Authority of the City of        Christopher Columbus                                        1997              21,662,344
Paterson
Paterson, New Jersey
Peoria Housing Authority                Colonel John Warner Homes                                   1997              16,190,907
Peoria, Illinois
Philadelphia Housing Authority          Richard Allen Homes                                         1993              50,000,000
Philadelphia, Pennsylvania
                                        Schuylkill Falls                                            1997              26,400,951
                                        Martin Luther King Plaza                                    1998              25,229,950
                                        Mill Creek                                                  2001              34,825,000



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                                                Appendix II
                                                HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                 Site                                         Fiscal year awarded        Amount awarded
City of Phoenix Housing Department       Matthew Henson Homes                                        2001              35,000,000
Phoenix, Arizona
Pittsburgh Housing Authority             Allequippa Terrace                                          1993              31,564,190
Pittsburgh, Pennsylvania
                                         Manchester                                              1995(2) b              7,500,000
                                         Bedford Additions                                           1996              26,592,764
Housing Authority of Portland            Columbia Villa,                                             2001              35,000,000
Portland, Oregon                         Columbia Villa Additions
Portsmouth Redevelopment and             Ida Barbour                                                 1997              24,810,883
Housing Authority
Portsmouth, Virginia
Puerto Rico Housing Administration       Cristantemos y Manuel A. Perez                              1994              50,000,000
San Juan, Puerto Rico
Housing Authority of the City of Raleigh Halifax Court                                               1999              29,368,114
Raleigh, North Carolina
Housing Authority of the City of         Easter Hill                                                 2000              35,000,000
Richmond, California
Richmond, California
Richmond Redevelopment and Housing Blackwell                                                         1997              26,964,118
Authority
Richmond, Virginia
City of Roanoke Redevelopment and        Lincoln Terrace                                             1998              15,124,712
Housing Authority
Roanoke, Virginia
St. Louis Housing Authority              Darst-Webbe                                             1995(1) b             46,771,000
St. Louis, Missouri
                                         Blumeyer Homes                                              2001              35,000,000
Housing Authority of the City of St.     Jordan Park                                                 1997              27,000,000
Petersburg
St. Petersburg, Florida
San Antonio Housing Authority            Springview                                                  1994              48,810,294
San Antonio, Texas
                                         Mirasol                                                 1995(1) b             48,285,500
City and County of San Francisco         Bernal                                                      1993              49,992,377
Housing Authority                        Plaza East
San Francisco, California
                                         Hayes Valley North and South                            1995(2) b             22,055,000
                                         North Beach                                                 1996              20,000,000
                                         Valencia Gardens                                            1997              23,230,641
Housing Authority of Savannah            Garden Homes                                                2000              16,328,649
Savannah, Georgia
Seattle Housing Authority                Holly Park                                              1995(1) b             48,116,503
Seattle, Washington




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                                                Appendix II
                                                HOPE VI Revitalization Grants




(Continued From Previous Page)
Public housing authority                 Site                                                   Fiscal year awarded      Amount awarded
                                         Roxbury                                                              1998             17,020,880
                                         Rainier Vista Garden                                                 1999             35,000,000
                                         High Point Garden                                                    2000             35,000,000
Housing Authority of the City of         Tobe Hartwell                                                        1996             14,620,369
Spartanburg                              Tobe Hartwell Extension
Spartanburg, South Carolina
Springfield Housing Authority            John Hay Homes                                                       1994             19,775,000
Springfield, Illinois
Housing Authority of the City of         Southfield Village                                                   1997             26,446,063
Stamford
Stamford, Connecticut
Housing Authority of the City of Tacoma Salishan                                                              2000             35,000,000
Tacoma, Washington
Housing Authority of the City of Tampa   Ponce de Leon                                                        1997             32,500,000
Tampa, Florida                           College Hill
                                         Riverview Terrace                                                    2001             19,937,572
                                         Tom Dyer
Tucson Public Housing Authority          Connie Chambers                                                      1996             14,600,000
Tucson, Arizona
                                         Robert F. Kennedy Homes                                              2000             12,748,000
Housing Authority of the City of Tulsa   Osage Hills                                                          1998             28,640,000
Tulsa, Oklahoma
Housing Authority of the City of         Grandview Manor                                                      1999             17,124,895
Wheeling, West Virginia                  Lincoln Homes
Wheeling, West Virginia
Wilmington, Delaware Housing             Eastlake                                                             1998             16,820,350
Authority
Wilmington, Delaware
Housing Authority of the City of         Robert S. Jervay Place                                               1996             11,620,655
Wilmington, North Carolina
Wilmington, North Carolina
Housing Authority of the City of         Kimberly Park Terrace                                                1997             27,740,850
Winston-Salem
Winston-Salem, North Carolina
Source: HUD.
                                                a
                                                1998E indicates a special grant for elderly projects.
                                                b
                                                There were two funding rounds in fiscal year 1995.




                                                Page 45                                 GAO-03-555 HUD's Management of the HOPE VI Program
Appendix III

Fiscal Year 2002 Application Screening and
Scoring Process                                                                                                  Appen
                                                                                                                     Ix
                                                                                                                      di




               The fiscal year 2002 NOFA for the HOPE VI program explained the process
               that HUD would use to screen and score applications. It stated that HUD
               would first screen applications to determine if they met threshold
               requirements—requirements that must be met in order for a HOPE VI
               revitalization grant application to be considered for funding. The NOFA
               also stated that if the application failed to meet any one of these thresholds,
               HUD would not rate or rank the application.1 The NOFA contained 28
               threshold requirements, for which applicants had to attest or document
               compliance, including certification signed by an engineer or architect that
               the targeted public housing project meets the definition of severe physical
               distress and certification either that the applicant had procured a developer
               for the first phase by the application deadline or that it would act as its own
               developer. Additionally, an applicant that had one or more existing HOPE
               VI revitalization grants would be disqualified if one or more of those grants
               failed to meet the performance requirements described in the NOFA;
               applications that included a proposal to develop market-rate housing had
               to include a preliminary market assessment letter.2

               If an application met all of the threshold requirements, HUD would rate it
               using the rating factors outlined in the NOFA. As shown in table 3, the 2002
               NOFA listed nine rating factors, some of which comprised various
               subfactors. An application could receive a maximum of 114 points.




               1
                Some of the threshold items were “curable,” meaning that HUD would give the applicant an
               opportunity to correct a technical deficiency. Examples of curable technical deficiencies
               included the failure of an applicant to include a required certification or sign a document. If
               HUD identified a technical deficiency, the applicant would be notified by fax and be
               required to submit information to cure the deficiency to HUD within 14 calendar days from
               the date of HUD notification.
               2
                A market assessment letter should (1) provide an assessment of the demand and associated
               pricing structure for the proposed residential units and any community facilities, economic
               development, and retail structures and (2) be based on the market and economic conditions
               of the project area.




               Page 46                             GAO-03-555 HUD's Management of the HOPE VI Program
                                                  Appendix III
                                                  Fiscal Year 2002 Application Screening and
                                                  Scoring Process




Table 3: Fiscal Year 2002 Rating Factors

                                                                              Maximum possible points
Factor                         Subfactor                                                per subfactor        Maximum points available
Capacity                                                                                                                            21
                               Capacity of developer                                                  6
                               Development capacity of                                                6
                               applicant
                               Capacity of prior granteesa                                           -10
                               Community and supportive                                               3
                               services program capacity
                               Property management capacity                                           4
                               Public housing authority planb                                         2
Need                                                                                                                                26
                               Severe physical distress                                              10
                               Impact of the severely distressed                                      5
                               site on the surrounding
                               neighborhood
                               Obligation of capital fundsc                                           8
                               Need for affordable housing in                                         3
                               the community
Leveraging                                                                                                                          17
                               Development leveraging                                                 7
                               Community and supportive                                               5
                               services leveraging
                               Variety of community and                                               1
                               supportive services resources
                               Anticipatory resourcesd                                                2
                               Collateral resourcese                                                  2
Resident and community involvement                                                                                                   3
Community and supportive services                                                                                                    6
Relocation                                                                                                                           5
Fair Housing and Equal Opportunity                                                                                                   7
                                                  f
                               Accessibility                                                          2
                               Adaptabilityg                                                          1
                                              h
                               Visitability                                                           1
                               Fair housing                                                           3
Mixed-income communities                                                                                                             6
                               On-site unit mix                                                       3
                               Off-site housing                                                       1




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                                                              Appendix III
                                                              Fiscal Year 2002 Application Screening and
                                                              Scoring Process




(Continued From Previous Page)
                                                                                                Maximum possible points
Factor                                          Subfactor                                                 per subfactor                 Maximum points available
                                                Homeownership housing                                                          2
Overall quality of plan                                                                                                                                               23
                                                Overall quality of the application                                             5
                                                Likelihood of success                                                          5
                                                Project readiness                                                              7
                                                Design                                                                         3
                                                Evaluationi                                                                    3
Maximum points that
could be awarded                                                                                                                                                     114
Source: GAO analysis of the fiscal year 2002 NOFA.
                                                              a
                                                               Although points could not be earned under this subfactor, points would be deducted if certain
                                                              activities, such as submission of the community and supportive services plan, had not been carried out
                                                              within the initial time frames established. Points also would be deducted on the basis of the percentage
                                                              of the grant funds obligated. For example, if a housing authority received a HOPE VI revitalization grant
                                                              in fiscal year 1996 or prior and had obligated less than 60 percent of its grant funds, 5 points would be
                                                              deducted.
                                                              b
                                                               Two points would be awarded if the revitalization plan described in the application had been
                                                              incorporated into the applicant’s public housing authority plan, and if the public housing authority’s plan
                                                              had been approved by its local HUD field office.
                                                              c
                                                                HUD would evaluate the extent to which the applicant could undertake the proposed revitalization
                                                              activities without a HOPE VI grant. Large amounts of available capital funds may indicate that the
                                                              revitalization could be carried out without a HOPE VI grant.
                                                              d
                                                               In many cases, public housing authorities, cities, or other entities may have carried out revitalization
                                                              activities in previous years in anticipation of the applicant’s receipt of a HOPE VI revitalization grant.
                                                              These expenditures, if documented, may be counted as leveraged anticipatory resources.
                                                              e
                                                               Collateral investment includes physical redevelopment activities under way or projected to be
                                                              completed before October 2007 that would enhance the new HOPE VI community, but would occur
                                                              whether or not the public housing project was revitalized. This includes economic or other kinds of
                                                              development activities that would have occurred with or without the anticipation of HOPE VI funds.
                                                              f
                                                              Points are awarded if the applicant describes a plan to provide housing and services for persons with
                                                              disabilities, such as accessibility in homeownership units or accessibility modifications.
                                                              g
                                                               Adaptability means that certain elements of a dwelling unit, such as kitchen counters, sinks, and grab
                                                              bars, can be added to, raised, lowered, or otherwise altered to accommodate the needs of persons
                                                              with or without disabilities.
                                                              h
                                                               Visitability standards allow a person with mobility impairments access into the home but do not
                                                              require that all features be made accessible.
                                                              i
                                                                Applicants are encouraged to work with their local university(ies), other institutions of learning,
                                                              foundations, or others to evaluate the performance and impact of their HOPE VI revitalization plan over
                                                              the life of the grant. The proposed methodology must measure success against goals set at the outset
                                                              of the revitalization activities. Evaluators must establish baselines and provide ongoing interim reports
                                                              that will allow the applicant to make changes as necessary as the project proceeds.




                                                              Page 48                                  GAO-03-555 HUD's Management of the HOPE VI Program
Appendix IV

Site Visit Summaries                                                                            Appen
                                                                                                    V
                                                                                                    Id
                                                                                                     xi




               Between January and October 2002, we visited the 18 housing authorities
               that were awarded HOPE VI revitalization grants in fiscal year 1996. For
               each of the 20 sites that were awarded grants that year, we describe below
               background information on the conditions at the original site for which the
               grant was awarded, the housing authority’s revitalization and community
               and supportive services (CSS) plans for the site, the status of those plans as
               of March 2003, and the factors that affected the status. We also include a
               time line and photographs for each site. Because the site summaries
               incorporate a number of program-specific and technical terms, we have
               included a glossary at the end of this report.




               Page 49                       GAO-03-555 HUD's Management of the HOPE VI Program
                      Appendix IV
                      Site Visit Summaries




ABLA Homes—Brooks     As figure 9 shows, the Chicago Housing Authority was awarded a $24.5
                      million HOPE VI revitalization grant for the Brooks Extension portion of
Extension, Chicago,   ABLA Homes in October 1996.1 Relocation and demolition have been
Illinois              completed at the ABLA Brooks Extension site, but the new construction
                      has not yet begun. The Chicago Housing Authority’s scattered site program,
                      which includes the development of any nonelderly public housing, has
                      been under judicial receivership since 1987. The housing authority is in the
                      midst of implementing a 10-year transformation plan, which is a $1.5 billion
                      blueprint for rebuilding or rehabilitating 25,000 units of public housing—
                      enough for every leaseholder as of October 1999—and transforming
                      isolated public housing sites into mixed-income communities. The housing
                      authority was awarded another HOPE VI revitalization grant for ABLA in
                      fiscal year 1998 and also has received revitalization grants for the following
                      sites: Cabrini-Green (fiscal year 1994), Henry Horner (fiscal year 1996),
                      Robert Taylor (fiscal years 1996 and 2001), Madden/Wells/Darrow (fiscal
                      year 2000), and Rockwell Gardens (fiscal year 2001).




                      1
                       ABLA Homes consists of five contiguous sites: Jane Addams Homes, Grace Abbott Homes,
                      Robert Brooks Homes, Brooks Extension, and Loomis Courts.




                      Page 50                          GAO-03-555 HUD's Management of the HOPE VI Program
                                                                      Appendix IV
                                                                      Site Visit Summaries




Figure 9: Time Line for ABLA Homes




Demolition of Brooks Extension.                                                                                    Vacant Brooks Extension site.


'96      1997                1998           1999              2000             2001             2002            2003        2004           2005    2006     2007         2008




             July:                  November:                                               January:                       March:                                        July:
             Initial grant          Second                                                  CSS plan approved by HUD       Projected start                Projected completion
             agreement              revitalization                                        December:                        of new construction             of new construction
             executed               grant awarded                                         Revitalization plan
October:                                                                                  approved by HUD
Initial                                                                             August:
revitalization                                                                      Demolition completed
grant awarded
                                                                                   July:
                                                                                   Revitalization and
                                                                                   CSS plans submitted
                                                                          January:
                                                                          Relocation completed
                                                                       November:
                                                                       Completion of Brooks
                                                                       Homes rehabilitation
                                                                      October:
                                                                      Second grant
                                                                      agreement executed
Sources: GAO (except the left photo, which is printed with the permission of the Chicago Housing Authority).


                                                                      Note: This time line is based on GAO analysis of data provided by the Chicago Housing Authority.




Background                                                            The five sites that comprise ABLA Homes had more than 3,500 original
                                                                      units. Three of the five ABLA sites were included in the authority’s fiscal
                                                                      year 1996 revitalization plans. Brooks Extension, the focus of the fiscal
                                                                      year 1996 revitalization grant, was completed in 1961 and consisted of
                                                                      three, 16-story buildings containing 453 units. Robert Brooks Homes was



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                           Appendix IV
                           Site Visit Summaries




                           completed in 1943 and contained 834 units. Loomis Courts—a project-
                           based Section 8 development—was completed in 1953 and contained 126
                           units.

                           The density at ABLA was 37.33 units per acre, as compared with Chicago’s
                           average density of 28 units per acre. The buildings at ABLA suffered from
                           significant structural deficiencies as a result of age, weathering, and the
                           lack of proper maintenance. A central heating plant, located at the Jane
                           Addams site, provides the heat for the complex. This system is inadequate,
                           and regulating the amount of heat for each unit has been a problem. The
                           Chicago Housing Authority was awarded a fiscal year 1995 HOPE VI
                           planning grant totaling $400,000 for ABLA and two other sites.



Revitalization and         In addition to the $24.5 million HOPE VI revitalization grant, the Chicago
Community and Supportive   Housing Authority was awarded four HOPE VI demolition grants totaling
                           $2.5 million for Brooks Extension and Robert Brooks Homes. The total
Services Plans             budget for the renovation of Brooks Extension, Robert Brooks Homes, and
                           Loomis Courts is $186 million and includes other public housing funds,
                           equity from low-income housing tax credits, and tax increment financing.
                           The revitalization plans call for the rehabilitation of 330 public housing
                           units at Robert Brooks Homes; the construction of 777 new units at Brooks
                           Extension (336 public housing units, 90 tax credit units, and 351
                           homeownership units); and the rehabilitation of 126 subsidized units at
                           Loomis Courts. A 57,000-square-foot community center to be funded by the
                           city is also part of the plans.

                           Of the $24.5 million revitalization grant, the housing authority plans to set
                           aside $3.6 million for community and supportive services. The community
                           and supportive services plan for ABLA, which was approved in January
                           2002, focuses on employment, education, health, community building, and
                           pilot programs. In addition to special programs funded by the HOPE VI
                           grant, the housing authority plans to implement its service connector
                           system at ABLA. The service connector system will help residents access
                           services through a system of outreach, assessment, referral, and follow-up.



Current Status             The rehabilitation at Robert Brooks Homes has been completed. The
                           reconstruction of 132 units was completed in 1998, and the reconstruction
                           of the remaining 198 units was completed in 2000. Brooks Extension has
                           been demolished (see fig. 9). The housing authority selected a developer




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                          for the entire ABLA development area in December 2002. Construction on
                          the new units at Brooks Extension is expected to start in March 2004.

                          The housing authority has hired a nonprofit organization to serve as ABLA’s
                          service connector, and the program has been in operation since August
                          2001. A consultant has also been hired to implement the community and
                          supportive services plan, including facilitating task forces on employment,
                          education, and health.



Factors Contributing to   The ABLA revitalization has been affected by the need for the revitalization
Current Status            plans to comply with the Gautreaux consent decree. In 1966, African
                          American residents of Chicago public housing filed suit against the Chicago
                          Housing Authority for creating a segregated public housing system. In
                          response, the court issued a judgment that prohibits the housing authority
                          from constructing any new public housing in a neighborhood in which
                          more than 30 percent of the occupants are minorities (limited areas) unless
                          it develops an equal number of units in neighborhoods where less than 30
                          percent are minorities (general areas). In 1987, the court appointed a
                          receiver for the housing authority’s scattered site program, including the
                          development of nonelderly public housing. In the case of ABLA, the
                          receiver and the housing authority had to show the court that, while ABLA
                          was currently in a limited area, the area was going to be revitalized by
                          HOPE VI. In June 1998, the court approved the housing authority’s request
                          to designate ABLA a revitalizing area, thus allowing the development of
                          new nonelderly public housing at the site without requiring an equal
                          number of units to be built in a general area.

                          According to a housing authority official, site planning was progressing at
                          the Brooks Extension site until the housing authority applied, in 1997, for a
                          HOPE VI revitalization grant for the Grace Abbott Homes portion of ABLA.
                          HUD rejected the application, stating that the housing authority needed to
                          develop plans for the entire ABLA site and establish better relationships
                          with the city and the receiver. In 1998, the housing authority submitted a
                          new application that covered all of ABLA and showed that it had worked
                          closely with the city and receiver. While the housing authority was
                          preparing this application, work at Brooks Extension stopped. HUD
                          ultimately awarded the housing authority a fiscal year 1998 grant for the
                          portions of ABLA not covered by the fiscal year 1996 grant.




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Management changes at the housing authority have also affected
implementation of the grant, according to a housing authority official. After
placing the housing authority under administrative receivership for
approximately 4 years, HUD returned control of the housing authority to
Chicago in May 1999. During the reorganization that occurred after the city
resumed control, decisions were delayed. For example, the housing
authority’s negotiations with the program manager selected for ABLA were
delayed, in part, because the agency had just regained control of its
operations and was developing an overall plan for transformation.

According to a housing authority official, the receiver raised some legal
issues that slowed progress at the ABLA site. HOPE VI revitalization grants
are typically awarded to housing authorities. However, under the
Gautreaux case, the receiver believed that the two ABLA grants should be
split so that the funds for “hard” construction costs were awarded to the
receiver, while the funds for social services were awarded to the housing
authority. It took almost 2 years to settle this issue. In October 2000, the
grants were split between the receiver and the housing authority. The only
funds that the housing authority controls are funds for demolition,
relocation, and community and supportive services.

The housing authority had to issue two requests for proposals before
selecting a developer. The first request for proposals to develop Brooks
Extension was issued in November 2001, and the authority received three
responses. The housing authority did not think that the respondents had
sufficient capacity; therefore, it decided to issue another request for
proposals to develop the entire ABLA site. The second request for
proposals was issued in June 2002, and a developer was selected in
December 2002.




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Arverne/Edgemere      The New York City Housing Authority is using $67.7 million in HOPE VI
                      revitalization grant funds to renovate Arverne and Edgemere Houses. Some
Houses, Queens, New   of these revitalization funds were originally awarded to another site, Beach
York                  41st Street Houses, and transferred to Edgemere in December 1996 (see fig.
                      10). All three sites are in Far Rockaway, a peninsula on the southern edge
                      of Queens, south of Jamaica Bay and Kennedy Airport. The housing
                      authority expects to complete the rehabilitation of Arverne and Edgemere
                      by the end of 2004. In addition to the Arverne/Edgemere grant, the
                      authority is overseeing another HOPE VI revitalization grant awarded in
                      fiscal year 1998 for Prospect Plaza.




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Figure 10: Time Line for Arverne/Edgemere Houses




Arverne and Edgemere Houses.                                                                                           HOPE VI Technology Lab at Ocean Bay
                                                                                                                       Apartments (formerly Arverne and
                                                                                                                       Edgemere Houses).

      1995             1996            1997               1998             1999           2000              2001        2002           2003               2004




January:                                                     June:                  November:         January:                                           December:
Revitalization grant                                         Grant                  Revitalization    Start of                                             Projected
awarded to                                                   agreement              plan              rehabilitation                                   completion of
Beach 41st Street                                            executed               conditionally                                                   all rehabilitation
                                                      February:                     approved by HUD                                       July:
                                                      Revised              May:                                                           Projected
                                                      revitalization       CSS plan                                                       completion
                                                      plan submitted       approved                                                       of relocation
                                                  December:                by HUD                                                       June:
                                                  CSS plan                                                                              Projected completion
                                                  submitted                                                                             of interior rehabilitation
                                         June:
                                         First revitalization
                                         plan submitted
                                December:
                                Revitalization grant funds
                                transferred from Beach
                                41st Street to Edgemere
                              October:
                              Revitalization
                              grant awarded
                              to Arverne
Source: GAO.


                                                             Note: This time line is based on GAO analysis of data provided by the New York City Housing
                                                             Authority.




Background                                                   The New York City Housing Authority received a $400,000 planning grant
                                                             for the Arverne and Edgemere sites in fiscal year 1995. In 1996, the
                                                             authority was awarded a revitalization grant for Arverne, and HUD
                                                             transferred the revitalization grant originally awarded to Beach 41st Street




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                           Houses to Edgemere. The funding was transferred from Beach 41st Street
                           after an impasse over the residents’ role in the planning process could not
                           be overcome. The Arverne site, with 418 units, was completed in 1951; the
                           Edgemere site, with 1,395 units, was completed in 1961 (see fig. 10).
                           Although soundly constructed, they were in need of significant
                           modernization and improvement.

                           The area surrounding Arverne/Edgemere lacks essential retail services and
                           adequate recreation and community space. In addition, the high density
                           and current configuration of the buildings have contributed to vandalism
                           and other criminal activity. Joblessness and low educational achievement
                           among residents further weaken the community. Though situated in an
                           attractive locale, between Jamaica Bay and the Atlantic Ocean, the
                           community is extremely isolated with limited transportation links to other
                           parts of New York City.



Revitalization and         The total projected budget for the renovation of Arverne and Edgemere is
Community and Supportive   $233 million, which includes other public housing funds, city funds, and
                           private funds. The revitalization plans for Arverne/Edgemere, renamed
Services Plans             Ocean Bay Apartments, call for the modernization of 1,803 apartments,
                           including lobby and facade improvements and site improvements such as
                           upgrading infrastructure and landscaping. The plans also include the
                           construction of a recreational facility, the expansion of the existing
                           community center and day-care center, and the off-site construction of a
                           health and education center and two retail centers.

                           Of the $67.7 million in revitalization grant funds, the housing authority has
                           budgeted $6.8 million for community and supportive services. The
                           community and supportive services plan, which was approved in May 1999,
                           focuses on case management, training, and self-sufficiency programs.



Current Status             Because the majority of residents chose to remain on-site during the
                           renovation, only 211 residents were temporarily relocated, with the
                           majority of households relocating to vacant units within the development.
                           The renovation is being done in phases. For example, all of the asbestos
                           was removed and electrical work completed before the kitchens and
                           bathrooms were renovated. As of March 2003, 79 percent of the interior
                           modernization work at Arverne and 85 percent of the interior
                           modernization work at Edgemere was complete. The housing authority
                           estimates that all of the apartment modernization work will be completed


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                          by June 2003. Under the revised revitalization plan, the community center
                          will now be combined with the new recreational facility to reduce the
                          overall costs of the plan. This work is under design and is expected to bid
                          fall 2003. Also, the day-care center will be upgraded and expanded to create
                          a state of the art facility with expanded capacity. The day-care center
                          expansion design documents are completed.

                          Community and supportive services are being offered to residents and
                          other community residents. In November 1999, the housing authority
                          opened a Family Resource Center where it administers various training and
                          self-sufficiency programs for the residents. Already operating are the
                          computer lab (see fig. 10), after-school program, and job training classes. A
                          popular project has been the computer incentive program that provides a
                          personal computer system to residents who either work 96 hours
                          volunteering on HOPE VI recruiting and other HOPE VI activities or who
                          participate in a HOPE VI training program. The authority also has
                          contracted with Goodwill Industries to provide case management,
                          counseling, and job preparation, placement, and retention services. To
                          sustain community and supportive services after the expiration of the
                          HOPE VI grant, the authority has created the Ocean Bay Community
                          Development Corporation.



Factors Contributing to   Resident opposition to demolition was one of the issues that led to the
Current Status            impasse at Beach 41st Street Houses. After HUD transferred the HOPE VI
                          funds from Beach 41st Street to Edgemere in December 1996, the housing
                          authority again included demolition in the plans for Edgemere’s
                          redevelopment. The housing authority determined that the best way to
                          meet the demolition requirement would be to remove some top floors from
                          each of three, nine-story buildings, thereby eliminating about 100 units.
                          Subsequently, the housing authority withdrew this plan and proposed to
                          convert dwelling units on the first floor to space for commercial and
                          community services. This approach would also have removed about 100
                          units. The issue became moot when Congress, in the fiscal year 1998
                          appropriations act for the departments of Veterans Affairs and Housing and
                          Urban Development and independent agencies, gave the New York City
                          Housing Authority the option of not following any HOPE VI demolition
                          requirements, and the housing authority abandoned the plans for
                          demolishing the 100 units.

                          It took almost 18 months to get the revitalization plan for
                          Arverne/Edgemere Houses approved. The housing authority first submitted



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a revitalization plan to HUD in June 1997. After HUD returned the plan with
comments for the housing authority to address, the housing authority
submitted a revised plan in February 1998. The housing authority then went
back and forth with HUD on changes to the plan. According to housing
authority officials, the primary point of contention was the types of
economic development activities upon which HOPE VI funds could be
spent. HUD finally approved the housing authority’s revised plan in
November 1999.

The effects of September 11, 2001, have also posed challenges for the
redevelopment of Arverne and Edgemere. Some of the housing authority’s
HOPE VI records were destroyed and had to be recreated. Additionally,
housing authority officials estimated that costs for one portion of the
project had escalated from $22 million to $30 million over the life of the
project—due, in part, to the labor force and materials moving downtown
after September 11. Overall, the housing authority estimated that the
Arverne/Edgemere project was delayed 6 months because of the
September 11 attack.




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Bedford Additions,   The Housing Authority of the City of Pittsburgh was awarded a $26.6
                     million HOPE VI revitalization grant for Bedford Additions in October 1996,
Pittsburgh,          as shown in figure 11. Off-site construction began in September 2002, and
Pennsylvania         relocation and demolition have not yet occurred. The authority was
                     previously awarded HOPE VI revitalization grants for Allequippa Terrace
                     (fiscal year 1993) and Manchester (fiscal year 1995).




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Figure 11: Time Line for Bedford Additions




Bedford Additions before revitalization.                                                                                      Off-site construction under way.


'96        1997               1998               1999               2000               2001               2002                 2003          2004           2005      2006          2007




                                          December:                                                              September:                           December:                     July:
                                          CSS plan                                                               Start of new                         Relocation to            Projected
                                          approved                                                               off-site                             be completed            completion
                                          by HUD                                                                 construction                                                  of all new
                           March:                                                                                                                                            construction
                           Revitalization plan                                                                                                                        May:
                           approved by HUD                                                                                                                            Demolition
                    October:                                                                                                                                          to be completed
                    Revitalization
                    plan submitted
               July:
               Grant agreement
               executed;
               CSS plan submitted
October:
Revitalization
grant awarded
Sources: GAO (except the photos, which are printed with the permission of the Housing Authority of the City of Pittsburgh).


                                                                      Note: This time line is based on GAO analysis of data provided by the Housing Authority of the City of
                                                                      Pittsburgh.




Background                                                            Bedford Additions, part of the larger Bedford Dwellings, was constructed
                                                                      in 1954 and contains 460 units, the majority of which are in three-story,
                                                                      walk-up buildings (see fig. 11). It is located in the Hill District, a
                                                                      neighborhood offering access to many job centers. Many of the buildings at



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                           Bedford Additions had leaky roofs, cracks in the walls, and outdated
                           mechanical systems that had not been well-maintained. Also, 72 percent of
                           the families in its census tract were earning incomes below the poverty
                           level. The housing authority was awarded a $395,700 HOPE VI planning
                           grant for Bedford Dwellings and three other sites in fiscal year 1995.



Revitalization and         The total estimated budget for the revitalization is about $102 million and
Community and Supportive   includes other public housing funds and equity from low-income housing
                           tax credits. The revitalization plans call for
Services Plans
                           • construction of a two-story, 12,000-square-foot community center;

                           • construction of 75 off-site homeownership units and 365 off-site rental
                             units (phases one and two); and

                           • construction of 45 on-site homeownership units and 175 on-site rental
                             units (phase three).

                           Of the 660 total units planned, 220 will be replacement public housing units.
                           In addition, up to 40 of the homeownership units will be made affordable
                           for public housing residents. The off-site units will be constructed first, and
                           then the existing on-site units will be demolished and new units will replace
                           them.

                           Of the HOPE VI funds, the housing authority has budgeted about $5.1
                           million for community and supportive services. A new community center
                           will house the supportive services program, including the case
                           management function, computer learning lab, day care, a family support
                           program, after-school teen program, resident council offices, and housing
                           authority management offices.



Current Status             The community center has been completed, and many of the planned
                           services are operational, including the computer lab. As of March 2003, the
                           housing authority had acquired 235 of the approximately 650 separate
                           parcels of land required for the off-site component of the project.
                           Construction on the first 147 off-site rental units started in September 2002
                           (see fig. 11), and construction on the first 35 off-site homeownership units
                           is scheduled to begin in June 2003.




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Factors Contributing to   The decision to construct the off-site units first and on many different
Current Status            parcels of land has been the major impediment to progress. According to
                          housing authority officials, the residents were fearful of being displaced;
                          therefore, they wanted the housing authority to build the new off-site
                          structures first so that they could be relocated to the new off-site units. The
                          housing authority has been going through the lengthy process of acquiring
                          parcels in the surrounding community either by negotiating the purchase of
                          properties or through eminent domain. It also had to relocate 111 private
                          households after acquiring their properties.

                          Financing the redevelopment also has been a challenge. For example, it
                          was difficult to obtain low-income housing tax credits because the state
                          housing finance agency has established strict guidelines. It wants any units
                          developed as part of a mixed-income project to be contiguous. Because the
                          housing authority could not acquire certain properties, there is a break
                          between two sections of off-site parcels. After convincing the state housing
                          finance agency that it would need two tax credit allocations, one for each
                          section of the off-site parcels, and that it should not finance one without
                          the other, the housing authority was awarded tax credits for the first phase
                          of off-site development. Although this process did not delay the
                          revitalization plans, it did make financing the first phase of development
                          more complicated, according to a housing authority official.




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Connie Chambers,   The City of Tucson Community Services Department, which serves as
                   Tucson’s public housing authority, was awarded a $14.6 million HOPE VI
Tucson, Arizona    revitalization grant for Connie Chambers in late 1996, as shown in figure 12.
                   The grant was closed out in January 2003. The department was also
                   awarded a fiscal year 2000 revitalization grant for Robert F. Kennedy
                   Homes.




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Figure 12: Time Line for Connie Chambers




 Connie Chambers prior to demolition.                                         Santa Rosa Neighborhood Center (top), scattered off-site unit (bottom right), and
                                                                              Posadas Sentinel (formerly Connie Chambers) duplex (bottom left).

1996                1997                           1998                           1999                           2000                 2001                    2002               2003




 October:                                         May:                                                     March:                                December:           January:
 Revitalization                                   CSS plan                                                 Start of new                          Relocation          Closeout
 grant awarded                                    approved                                                 on-site                               completed            of grant
                                                  by HUD                                                   construction                        November:        December:
                                               April:                                                                                          Demolition       Completion of
                                               Revitalization                                                                                  completed        new on-site
                                               plan approved                                                                                                    construction
                                               by HUD
                                  November:
                                  Revitalization
                                  plan submitted;
                                  CSS plan
                                  submitted
                           August:
                           Grant
                           agreement
                           executed
Sources: GAO (except the top left photo, which is printed with the permission of the City of Tucson Community Services Department).


                                                                    Note: This time line is based on GAO analysis of data provided by the City of Tucson Community
                                                                    Services Department.




Background                                                          Connie Chambers, built in 1967, consisted of 200 units (see fig. 12). The
                                                                    surrounding Santa Rosa neighborhood is historic and home to a lower



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                           income population. According to housing authority officials, the primary
                           problem with Connie Chambers was that it was isolated from other
                           communities after construction of a new convention center and police and
                           fire department headquarters. Two out of three households on the public
                           housing waiting list turned it down because of a history of high crime and
                           poor physical conditions. The housing authority was awarded a $370,000
                           planning grant for Connie Chambers in fiscal year 1995. It used the
                           planning grant to conduct maintenance studies and physical needs
                           assessments and to hold meetings with residents.



Revitalization and         The total projected budget for the project is $72 million and includes other
Community and Supportive   public housing funds, equity from low-income housing tax credits, city
                           funds, and bond funds. The revitalization plan for Connie Chambers,
Services Plans             renamed Posadas Sentinel, calls for

                           • rehabilitation of 10 units at another site;

                           • construction of 120 on-site units (60 public housing units and 60 tax
                             credit units);

                           • acquisition of 130 scattered public housing units;

                           • construction of 60 homeownership units;

                           • construction of a child development center, learning center, and health
                             center and expansion of the existing recreation center;

                           • construction of a grocery store; and

                           • an elderly building to be built by a nonprofit organization.

                           Of the $14.6 million revitalization grant, the housing authority has budgeted
                           $1.2 million for community and supportive services. The community and
                           supportive services plan, approved in May 1998, calls for a neighborhood
                           services center to serve as a resource center for residents of the
                           neighborhood and the provision of services such as language classes, an
                           expanded child-care program, and job training.



Current Status             The 10 units at the other site have been renovated, all 120 of the on-site
                           units have been completed, and all 130 scattered sites have been acquired


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                          (see fig. 12). As of March 2003, 54 of the homeownership units had been
                          completed. The child development center and learning center, located in
                          the Santa Rosa Neighborhood Center, were completed in April 2002.
                          Construction on the recreation and health centers is under way. The
                          housing authority was able to close out the grant in January 2003 because
                          the remaining homeownership units and the recreation and health centers
                          were not financed with HOPE VI funds.

                          A Head Start program has been operating in the child development center
                          since January 2002. Another day-care service, operated by a local nonprofit
                          organization, opened in the center in November 2001. It primarily serves
                          working families. The learning center has been operational since April 2002
                          and contains a computer library. The learning center offers basic computer
                          classes in either Spanish or English.



Factors Contributing to   Because the City of Tucson Community Services Department acts as both
Current Status            the city’s public housing authority and community development agency, it
                          was able to draw on other resources for the Connie Chambers
                          revitalization. Funding for the project includes city funds for infrastructure,
                          general city funds, and bonds. In addition, the state housing finance agency
                          agreed to set aside 10 percent of its annual tax credit allotment for HOPE
                          VI sites.

                          The housing authority has involved the residents and the neighborhoods
                          surrounding the Connie Chambers site in the revitalization process. Both
                          residents and the surrounding neighborhoods were involved in developing
                          the revitalization plan. After the revitalization plan was developed,
                          residents were asked to vote on the plan. Of the 181 Connie Chambers
                          households, 107 participated in the vote. Of the 107 that voted, 84 voted in
                          favor of the plan. Only after the residents expressed their support for the
                          plan did the mayor and city council vote to submit the plan to HUD. When
                          the housing authority determined that some residents did not want to
                          relocate outside the neighborhood, even temporarily, it decided to
                          demolish Connie Chambers in phases, starting at each end of the site. While
                          the first phases were under construction, those who did not want to leave
                          the neighborhood were allowed to live in the remaining units. Once
                          construction was complete, they were moved into the new units, and the
                          rest of the original units were demolished.




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Cotter and Lang                                                        The Housing Authority of Louisville was awarded a $20 million HOPE VI
                                                                       revitalization grant for Cotter and Lang Homes in late 1996 (see fig. 13), and
Homes, Louisville,                                                     about 65 percent of the planned units were complete as of March 31, 2003.
Kentucky


Figure 13: Time Line for Cotter and Lang Homes




Cotter and Lang Homes prior to demolition.                                                                 Park DuValle (formerly Cotter and Lang Homes) rental units (bottom left),
                                                                                                           homeownership unit (bottom right), and senior building (top right).

'96       1997              1998              1999              2000              2001              2002              2003         2004           2005     2006         2007      2008




                                    October:                                                                                         June:                                      April:
                                    Demolition completed                                                                             Projected                    Projected completion
                                 August:                                                                                             completion                     of homeownership
                                 CSS plan approved by HUD                                                    November:               of rental units                             units
                              June:                                                                          Revised CSS plan
                                                                       a                                     approved by HUD
                              New construction started on second phase
                             May:                                                                    May:
                             Revitalization plan approved by HUD                                     Revised CSS
                                                                                                     plan submitted
                        February:
                        Revitalization and CSS plans submitted
                     December:
                     Grant agreement executed
                 September:
                 Relocation completed
October:
Revitalization grant awarded
Sources: GAO (except the two left photos, which are printed with the permission of the Housing Authority of Louisville).

                                                                       Note: This time line is based on GAO analysis of data provided by the Housing Authority of Louisville.
                                                                       a
                                                                       The first phase of rental units was begun prior to receipt of the HOPE VI revitalization grant.




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Background                 Cotter Homes, completed in 1953, consisted of 620 units. Lang Homes, built
                           in 1959, contained 496 units (see fig. 13). These two contiguous public
                           housing sites, located in Louisville’s Park DuValle neighborhood, were the
                           largest public housing sites in Louisville. Together, they covered almost 80
                           acres. Almost 80 percent of the residents in the Park DuValle neighborhood
                           lived in poverty. The neighborhood also had the highest violent crime rate
                           per square mile in Louisville. The local newspaper referred to one corner
                           on the Cotter and Lang site as the “meanest” corner in Louisville.
                           Furthermore, the area surrounding the two sites contained vacant or
                           underused industrial buildings, unused school land, vacant failed
                           subsidized housing, and other available housing development sites.



Revitalization and         The total projected budget for the project is $200 million and includes other
Community and Supportive   public housing funds, other HUD funds, and equity from low-income
                           housing tax credits. The revitalization plans for Cotter and Lang Homes,
Services Plans
                           renamed Park DuValle, call for 1,213 new units to be completed in five
                           phases.

                           • Phase one: development of 100 rental units.

                           • Phase two: development of 213 rental units and 150 homeownership
                             units.

                           • Phase three: development of 108 rental units (including some elderly
                             units) and 300 homeownership units.

                           • Phase four: development of 192 rental units.

                           • Phase five: acquisition of 150 off-site rental units.

                           Of the 763 total rental units, 500 will be public housing units, 160 will be tax
                           credit units, and 103 will be market-rate units. The 450 homeownership
                           units will be targeted to households with a variety of incomes. A town
                           center will include space for various types of commercial enterprises. The
                           HOPE VI funds will be used to develop the 150 off-site units and to provide
                           homeownership assistance.

                           Of the $20 million in HOPE VI revitalization grant funds, the housing
                           authority has set aside $3 million for community and supportive services.
                           The focus of its initial community and supportive services plan, approved



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                 in August 1998, was lifelong learning programs and services, such as child
                 care, youth programs, and computer training. The developer would provide
                 services to residents of the Park DuValle revitalization area, and the
                 housing authority would provide case management services to former
                 Cotter and Lang residents that were not residing at the Park DuValle site.



Current Status   Work on the first phase of 100 rental units was begun before the housing
                 authority received its HOPE VI revitalization grant, and construction was
                 completed in 1998. The 321 rental units envisioned for phases two and
                 three also have been completed, and construction on the fourth phase of
                 192 rental units is under way (see fig. 13). Of the 150 planned off-site units,
                 112 had been acquired as of March 31, 2003. As part of the phase three
                 rental units, a 59-unit senior building was constructed. As of March 31,
                 2003, the first 150 homeownership units had been sold, and 147 had been
                 completed. Twenty-eight homeowners received soft second mortgages
                 funded by the HOPE VI program.2 The remaining phase of 300
                 homeownership units is under way. Because it estimates that it can sell
                 only 4 units a month in the Louisville housing market, the housing authority
                 does not expect all 300 units to be completed and sold until April 2008.

                 The housing authority hired Jefferson County Human Services to provide
                 intensive case management services to former Cotter and Lang residents.
                 The emphasis was on preparing former residents to return to Park DuValle.
                 The developer focused primarily on community building in the new Park
                 DuValle neighborhood. For instance, it served as liaison to the Park DuValle
                 Neighborhood Advisory Council—an organization comprised of former
                 residents of Cotter and Lang, Park DuValle public housing residents, and
                 residents of the surrounding neighborhood. However, the housing authority
                 determined that additional efforts were necessary to ensure that all former
                 Cotter and Lang residents, whether or not they were residents of the new
                 community, had access to services aimed toward increasing self-
                 sufficiency. Therefore, it developed a revised community and supportive
                 services plan, which it submitted to HUD in May 2002. HUD approved the
                 plan in November 2002.



                 2
                  The soft second mortgages are recorded liens for 10 years. The amount of the soft second
                 mortgage is forgiven at 20 percent per year beginning with year 6. After 10 years, the equity
                 in the home belongs to the owner. The soft second mortgages are not transferable if the
                 home is sold prior to year 10.




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Factors Contributing to   According to housing authority officials, support from the city, other local
Current Status            entities, and the local HUD field office has been integral to the success of
                          the Park DuValle project. Both the mayor at the time the grant was awarded
                          and the subsequent mayor were very supportive of the project. The city has
                          provided funds and other resources (e.g., the services of the city’s chief
                          architect). The local school board spent $15 million on a new school in the
                          Park DuValle neighborhood, and the health department spent $5 million on
                          a new health center. Staff from the local HUD field office have also been
                          part of the project team. During planning and much of implementation, a
                          management team comprised of representatives from the housing
                          authority, the city, the local HUD field office, and the developer met weekly
                          to discuss the project. Now that much of the construction has been
                          completed, the team meets about once a month.

                          The leadership of the housing authority’s executive director was another
                          factor cited as contributing to the success of Park DuValle. Housing
                          authority officials noted that, because the executive director formerly
                          worked in the mayor’s office, he has been able to strengthen the city’s
                          support for the project. In addition, according to local HUD officials, the
                          executive director’s relationship with residents was very good. During his
                          tenure as executive director, a public housing resident was named the
                          chairman of the housing authority’s Board of Commissioners.

                          Another factor contributing to Louisville’s success is that the housing
                          authority has not had to make any significant modifications to its
                          revitalization plan. The total number of planned units (1,213) has not
                          changed. The few changes that have been made are minor. For example,
                          the housing authority originally planned for the homeownership units to be
                          constructed in three phases but later decided to consolidate the last two
                          phases for a total of two phases. Also, instead of the 125 homeownership
                          units originally planned in phase two, the housing authority was able to sell
                          150 units.

                          The housing authority has been able to obtain multiple sources of funding
                          for the project. In addition to the $20 million in HOPE VI funds, the master
                          budget includes $56.2 million in other public housing funds and $20.5
                          million in other HUD funds. The other sources of funding include $37.2
                          million in equity from low-income housing tax credits and $56.3 million in
                          debt financing. The state housing finance agency set aside 6 years of tax
                          credits for the Park DuValle project.




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Dalton Village,                                                      The Charlotte Housing Authority was awarded a $24.5 million HOPE VI
                                                                     revitalization grant for Dalton Village in October 1996 (see fig. 14). As of
Charlotte, North                                                     March 2003, 194 of 432 total planned units were complete. In addition to the
Carolina                                                             Dalton Village grant, the authority is overseeing two other revitalization
                                                                     grants awarded in fiscal years 1993 and 1998.



Figure 14: Time Line for Dalton Village




Dalton Village prior to demolition.                                                                                              Arbor Glen (formerly Dalton Village) rental units.


'96         1997                  1998                 1999                 2000                  2001             2002            2003             2004             2005         2006




October:                   January:                                                           March:                                                                              June:
Revitalization             Revitalization                                                     Start of new construction                                           Projected completion
grant awarded              plan submitted;                                         September:                                                                    of all new construction
                           rehabilitation                                          Revised revitalization plan approved by HUD
                           completed;
                           first developer                                   May:
                           signed on                                         Revised revitalization plan submitted
                         December:                                       March:
                         CSS plan submitted                              CSS plan approved by HUD
                    September:                                      December:
                    Grant                                           Second developer signed on
                    agreement                                   October:
                    executed                                    Demolition completed
                                                    March:
                                                    Relocation completed
Sources: GAO (except the photos, which are printed with the permission of the Charlotte Housing Authority).


                                                                     Note: This time line is based on GAO analysis of data provided by the Charlotte Housing Authority.




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Background                 Dalton Village was built in 1970 and consisted of 300 units in brick
                           townhouse structures with sloped roofs and clapboard facades, as shown
                           in figure 14. The development was located off Clanton Road, an off-shoot
                           from West Boulevard, which was once a major route to Charlotte’s Douglas
                           International Airport. In addition to the presence of lead-based paint and
                           asbestos materials, the structures at Dalton Village suffered from severe
                           deficiencies due to the age of the buildings. The site conditions were very
                           poor with severe erosion taking place over a large portion of the site, and
                           the lack of adequate drainage devices compounded the site problems.
                           Dalton Village was isolated from the adjoining communities by virtue of
                           noncontinuous street access and a steep hill that physically separated it
                           from the neighboring community.



Revitalization and         The total projected budget for the revitalization project is $44 million,
Community and Supportive   which includes equity from low-income housing tax credits. The
                           revitalization plan for Dalton Village, renamed Arbor Glen, calls for
Services Plans
                           • rehabilitation of 50 existing public housing units and the Family
                             Investment Center;

                           • on-site construction of 144 family and elderly rental units, including 60
                             public housing units;

                           • on-site and off-site construction of 175 rental townhouses, including 70
                             public housing units;

                           • construction of 48 on-site homeownership units, including 20 for public
                             housing residents;

                           • construction of 15 off-site homeownership units designated for public
                             housing residents; and

                           • construction of an outreach center for recreational and educational
                             programs.

                           The housing authority has budgeted $4.1 million of the HOPE VI
                           revitalization grant for community and supportive services. The community
                           and supportive services plan, approved in March 2000, calls for services to
                           be provided at the new outreach center, which would house multipurpose




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                          classrooms and a full-size multipurpose gymnasium. The focus would be on
                          services and programs that promote self-sufficiency.



Current Status            The 50 existing units and the Family Investment Center have been
                          renovated, and the 144 family and elderly rental units are complete and
                          fully occupied (see fig. 14). The housing authority estimates that
                          construction of the on-site rental townhouses will begin in June 2003 and
                          be completed by June 2004. The housing authority has submitted two tax
                          credit applications—one for an additional 23 on-site units and one for 74
                          units at an off-site location. In January 2003, the housing authority
                          completed its acquisition of nearby county land needed for the 48 on-site
                          homeownership units, and groundbreaking is scheduled for summer 2003.

                          The $1.5 million outreach center was completed and opened to the public
                          in March 2002. It is an 11,000-square-foot community and recreational
                          center consisting of a gymnasium, four classrooms, and a computer lab.
                          The center is open not only to Arbor Glen residents but also to the entire
                          Arbor Glen community and nearby neighborhoods. It houses recreational
                          and other educational programs. All of the Arbor Glen public housing
                          residents are required to participate in the family self-sufficiency program.
                          A case manager works with participants to develop an individual service
                          plan and to help the residents meet their self-sufficiency goals, such as
                          those related to education and employment.



Factors Contributing to   The redevelopment of Arbor Glen was delayed initially because the
Current Status            Charlotte Housing Authority changed development partners. According to
                          housing authority officials, the first developer, signed on in 1998, did not
                          have much development expertise, kept changing financial projections, and
                          did not listen to the community or the state housing finance agency. As a
                          result, the initial developer’s application for low-income housing tax credits
                          was denied. In December 1999, the housing authority signed a new
                          development partner for the site. This developer was part of the initial
                          development team; therefore, the housing authority did not have to issue
                          another request for proposals.

                          Since the new developer was retained, the project has moved forward. The
                          housing authority and the new developer worked to develop a new site plan
                          and development scheme that would be more competitive for tax credits.
                          In late 2000, the project was awarded tax credits for the first phase of new




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construction. The first phase of 144 units was completed and leased 6
months ahead of schedule.




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Durkeeville,                                                          The Jacksonville Housing Authority was awarded a $21.5 million HOPE VI
                                                                      revitalization grant for Durkeeville in October 1996 (see fig. 15). Of the 303
Jacksonville, Florida                                                 planned units, 228 have been completed.



Figure 15: Time Line for Durkeeville




Durkeeville prior to demolition.                                                                                          The Oaks at Durkeeville (formerly Durkeeville).


'96          1997                   1998                  1999                   2000                  2001                2002            2003             2004              2005




                           December:                 February:                                                      December:                                                 December:
                           Demolition                CSS plan                                                       On-site                                                    Projected
                           completed                 approved                                                       construction                                            completion of
                       October:                      by HUD                                                         completed                                                off-site units
                       Relocation                December:
                       completed                 CSS plan
                     September:                  submitted
                     Revitalization plan      April:
                     approved by HUD          Start of
                   August:                    new on-site
                   Revitalization             construction
                   plan submitted
                 July:
                 Grant agreement
                 executed
October:
Revitalization
grant awarded
Sources: GAO (except the left photo, which is printed with the permission of the Jacksonville Housing Authority).


                                                                      Note: This time line is based on GAO analysis of data provided by the Jacksonville Housing Authority.




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Background                 The 280 units in the Durkeeville public housing complex were poorly
                           designed, lacked sufficient ventilation, and had extensive plumbing and
                           drainage deficiencies. For example, the roofs were constructed without an
                           overhang, which exacerbated the deterioration of the outside walls (see fig.
                           15). Furthermore, the site consisted of mostly small, one-bedroom units
                           that no longer met the residents’ needs for space. Built in 1936, the overall
                           design of the Durkeeville site had become outmoded. Parking was
                           nonexistent, the density of the housing units was twice that of the
                           surrounding community, and a porous design with alleyways instead of
                           roadways provided an environment conducive to criminal activity.

                           By 1990, the Durkeeville site and its surrounding neighborhood had
                           become Jacksonville’s most dangerous community—the violent crime rate
                           for Durkeeville was 12 times higher than for Jacksonville. The
                           neighborhood surrounding Durkeeville was once a desirable middle-class
                           neighborhood. However, low incomes in the neighborhood contributed to
                           low property values, low rents, and little economic activity; over 40 percent
                           of neighborhood households were below the poverty level, according to the
                           1990 census. The Jacksonville Housing Authority was awarded a fiscal year
                           1995 HOPE VI planning grant totaling $400,000 for Durkeeville.



Revitalization and         The total projected budget for the revitalization is about $37 million, which
Community and Supportive   includes other public housing funds left over from the redevelopment of
                           another Jacksonville Housing Authority property. Several key features of
Services Plans
                           the revitalization plan for Durkeeville, renamed The Oaks at Durkeeville,
                           include

                           • construction of 200 new rental public housing units (of which 40 will be
                             for seniors and the disabled) and 28 homeownership units on the
                             Durkeeville site;

                           • construction of 75 off-site public housing units;

                           • renovation and expansion of the community center;

                           • renovation of two existing buildings for historic preservation; and

                           • retail space containing several businesses and a health clinic.




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                          The housing authority plans to set aside $3.1 million of the revitalization
                          grant for community and supportive services. The community and
                          supportive services plan, approved in February 1999, calls for the
                          renovated community center to become a focal point for the entire
                          community and to include a computer lab; community meeting rooms;
                          social service agencies; adult education classes; and recreational facilities,
                          among other programs.



Current Status            The Jacksonville Housing Authority has completed the on-site
                          construction, which includes the 200 rental units (see fig. 15), 28
                          homeownership units, the renovation of the community center, and
                          rehabilitation of two historic buildings that include a day-care center and
                          resident management offices. Several businesses—including a grocery
                          store, pizza restaurant, Chinese restaurant, and health clinic—have moved
                          into the retail strip adjacent to the site. All of the housing units are
                          occupied. The community center houses the family self-sufficiency
                          program and adult literacy classes, sponsors numerous recreational
                          activities for children, and hosts community meetings. The day-care facility
                          and a museum showcasing Durkeeville’s history are operating on-site.

                          The housing authority does not plan to start the development of the 75 off-
                          site rental units until October 2003. Currently, the housing authority is
                          planning to use a portion of their HOPE VI funds to purchase 75 to 100
                          apartments and convert them to public housing.3



Factors Contributing to   According to officials at the housing authority, on-site construction at
Current Status            Durkeeville was completed in a timely manner for several reasons. First,
                          the housing authority was able to develop a sound, comprehensive
                          revitalization plan because HUD awarded it a planning grant in fiscal year
                          1995. The grant provided the authority with the necessary resources to hire
                          several consultants and invest in extensive outreach to public housing and
                          community residents. Second, the on-site public housing units were funded
                          entirely with public housing funds. The housing authority used only its
                          HOPE VI grant and surplus public housing funds from another
                          rehabilitation project to fund Durkeeville’s redevelopment. The simpler

                          3
                           This will satisfy, in part, a federal court consent decree that stipulates that the Jacksonville
                          Housing Authority must create 225 new public housing units by 2006 in designated areas of
                          Duval County where public housing had not previously been built.




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financial structure of the redevelopment shortened the project’s time
frames by over 1 year, according to one housing authority official.

According to the executive director, in addition to these unique features of
the Durkeeville site, the housing authority enjoys the backing of a
committed board of directors, which includes prominent Jacksonville real
estate developers, attorneys, and former corporate managers. Also
represented on the board are the police department, public housing
residents, and local businesses. This broad base of support, in conjunction
with the executive director’s extensive networking with various
government entities, provided the housing authority with key partnerships
that helped expedite work on the site.

Finally, according to housing authority officials, the decision to place the
HOPE VI-related offices in the community center increased the public
housing residents’ sense of belonging to a community. The increased
number of interactions between public housing and local residents has
improved the overall relations between the two groups. This has had an
overall positive impact on the entire community.

Plans for the off-site portion of the revitalization have not proceeded as
smoothly. First, the initial site that the housing authority chose could not
get approval by the Environmental Protection Agency. The site was once
used for garbage incineration and contains polluted ash in its soil. The
housing authority then proposed to purchase a neglected privately owned
apartment complex (HUD was going to foreclose the property) and convert
all 78 units to public housing, but a local citizens group opposed the plan
and took legal action to enforce a court decree from 2000, which states that
only 25 percent of any apartment complex the authority buys in an area
with a low percentage of minorities can be used for public housing.
Ultimately, HUD did not conduct foreclosure proceedings, and the housing
authority is currently researching other sites.




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Heman E. Perry    The Housing Authority of the City of Atlanta was awarded a $20 million
                  HOPE VI revitalization grant for Heman E. Perry Homes (Perry Homes) in
Homes, Atlanta,   late 1996 (see fig. 16), but the revitalization effort did not move forward for
Georgia           some time, primarily because of changes to the revitalization plans.
                  Construction on the first phase of units began in November 2002. The
                  housing authority also has received revitalization grants for the following
                  sites: Techwood/Clark Howell Homes (fiscal year 1993), Carver Homes
                  (fiscal year 1998), Harris Homes (fiscal year 1999), and Capitol Homes
                  (fiscal year 2001). Centennial Place, the name given to the revitalized
                  Techwood/Clark Howell Homes, was largely completed in 2000 and was the
                  first mixed-use, mixed-income community (with public housing as a
                  component) in the nation.




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Figure 16: Time Line for Heman E. Perry Homes




Perry Homes prior to demolition.                                                                                           Cleared Perry Homes site.


'96      1997             1998             1999             2000             2001             2002            2003           2004        2005          2006        2007          2008




             July:               September:                      August:                                   February:                                                           December:
             Grant               Initial                         Relocation                                Demolition of                                              Projected completion
             agreement           revitalization                  completed                                 community center completed                                   of homeownership
             executed            plan submitted                 July:                                  November:                                                                     units
October:                                                        CSS plan                               Start of new construction                              December:
Revitalization                                                  approved by                           October:                                                Projected
grant                                                           HUD                                   HUD approval of supplement                              completion
awarded                                                       June:                                   to revised revitalization plan                          of rental units
                                                              CSS plan                    February:
                                                              submitted                   Supplement to revised
                                                      December:                           revitalization plan submitted
                                                      Revised                     August:
                                                      revitalization              Demolition of dwelling units completed
                                                      plan submitted
Sources: GAO (except the photos, which are printed with the permission of the Housing Authority of the City of Atlanta).


                                                                      Note: This time line is based on GAO analysis of data provided by the Housing Authority of the City of
                                                                      Atlanta.




Background                                                            Perry Homes and Perry Homes Annex, constructed in 1955, consisted of
                                                                      944 and 128 units, respectively, and were located on approximately 153
                                                                      acres of land (see fig. 16). When the housing authority applied for the
                                                                      revitalization grant, the brick exterior walls had deteriorated, resulting in
                                                                      water damage to walls, floors, and personal belongings. The sanitary sewer
                                                                      system leaked, and the storm drainage system did not function properly.



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                           From 1992–95, an average of 254 Perry Homes residents were victims of
                           crime each year. In addition, more than 60 percent of the residents of Perry
                           Homes and the surrounding neighborhood were living below the poverty
                           line. The Housing Authority of the City of Atlanta received a $400,000
                           HOPE VI planning grant for Perry Homes and one other site in fiscal year
                           1995.



Revitalization and         In addition to the $20 million revitalization grant, the housing authority also
Community and Supportive   was awarded $5.1 million in fiscal year 1998 HOPE VI demolition funds.
                           The total projected budget for the revitalization of the site is $143 million
Services Plans
                           and includes other public housing funds and equity from low-income
                           housing tax credits. The revitalization plan for Perry Homes, renamed West
                           Highlands at Heman E. Perry Boulevard, calls for 800 new housing units to
                           be constructed in five phases. The construction phases are as follows:

                           • Phase one: 124 rental units (50 public housing units, 12 tax credit units,
                             and 62 market-rate units).

                           • Phase two: 152 family rental units (61 public housing units, 19 tax credit
                             units, and 72 market-rate units) and 130 elderly rental units (100 project-
                             based Section 8 units and 30 market-rate units).

                           • Phase three: 152 rental units (61 public housing units, 14 tax credit units,
                             and 77 market-rate units).

                           • Phase four: 142 rental units (56 public housing units, 11 tax credit units,
                             and 75 market-rate units).

                           • Phase five: 100 homeownership units (40 units for public housing
                             eligible families and 60 market-rate units).4

                           In addition to housing, the plan calls for a town center, an 18-hole public
                           golf course, and over 90 acres of green space in the form of parklands,
                           nature trails, and recreational fields.




                           4
                            Although the revitalization plans call for 100 homeownership units, an additional 150
                           market-rate homeownership units may be built on-site, and up to 300 additional
                           homeownership units may be built off-site.




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                          Of the $20 million revitalization grant, the housing authority has budgeted
                          $2.6 million for community and supportive services. It plans to deliver
                          community and supportive services to Perry Homes residents using two
                          basic approaches. First, it provides authoritywide programs that are
                          available to all public housing residents, including residents of HOPE VI
                          sites. These authoritywide programs include the Human Service
                          Management Program—which provides case management services—and
                          the Work Force Enterprise Program—which equips participants with the
                          skills necessary to manage the transition from unemployment to the
                          workforce. Second, the housing authority plans to ensure that Perry Homes
                          residents have access to neighborhood-based programs. Some of these
                          programs will be offered at a new school, public library, and YMCA.



Current Status            All of the Perry Homes residents have been relocated, and demolition has
                          been completed (see fig. 16). Construction on the first phase of 124 rental
                          units began in November 2002. Construction of the rental and
                          homeownership units is scheduled to be completed by December 2006 and
                          December 2008, respectively.

                          HUD approved the community and supportive services plan for Perry
                          Homes in July 2000, and Perry Homes residents have been participating in
                          authoritywide programs. The developer has hired a human services
                          provider to supply case management services specifically for former Perry
                          Homes residents. Services to be provided include case management
                          tracking and referral services. Construction has not yet begun on the town
                          center, which will include the school, public library, and YMCA. The town
                          center also will include a park, retail, and office space.



Factors Contributing to   After the Housing Authority of the City of Atlanta submitted its original
Current Status            revitalization plan for Perry Homes to HUD in September 1998, HUD
                          officials visited the site to discuss issues and concerns that they had about
                          the plan. The plan called for the development of 415 new public housing
                          units on the existing site; the housing authority planned to use only HOPE
                          VI funds and other HUD funds. In a June 2, 1999, letter to the housing
                          authority summarizing its concerns about the plan, HUD questioned
                          whether rebuilding the site entirely with public housing units, without
                          funding to provide meaningful supportive services and without significant
                          partnerships, could result in a sustainable development and provide the
                          maximum benefits to residents.




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In response to HUD’s concerns, the housing authority came up with a new
concept for the Perry Homes site and started developing a new master
plan. In December 1999, the housing authority submitted a revised
revitalization plan to HUD, which called for a mixed-use, mixed-income
community consisting of 750 residential units (40 percent of which would
be public housing units), a recreation center, a public library, and a village
center. After a developer was selected, the revitalization plan was further
refined, and a supplement to the revised revitalization plan was submitted
in February 2002. HUD approved the supplement in October 2002, and
construction began shortly thereafter.




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Henry Horner Homes,   As figure 17 shows, the Chicago Housing Authority was awarded an $18.4
                      million HOPE VI revitalization grant for Henry Horner Homes in late 1996.
Chicago, Illinois     However, the planned revitalization of the site has been delayed by a
                      lawsuit filed by residents and subsequent legal decisions. The Chicago
                      Housing Authority’s scattered site program, which includes the
                      development of any nonelderly public housing, has been under judicial
                      receivership since 1987. The housing authority is in the midst of
                      implementing a 10-year transformation plan, which is a $1.5 billion
                      blueprint for rebuilding or rehabilitating 25,000 units of public housing—
                      enough for every leaseholder as of October 1999—and transforming
                      isolated public housing sites into mixed-income communities. The housing
                      authority has also received revitalization grants for the following sites:
                      Cabrini-Green (fiscal year 1994), ABLA (fiscal years 1996 and 1998), Robert
                      Taylor (fiscal years 1996 and 2001), Madden/Wells/Darrow (fiscal year
                      2000), and Rockwell Gardens (fiscal year 2001).




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Figure 17: Time Line for Henry Horner Homes




Henry Horner high-rise awaiting demolition.


1991      1992    1993       1994     1995         1996      1997      1998     1999      2000        2001      2002          2003     2004      2005       2006




May:                                                             August:                February:                       January:                        December:
Lawsuit filed                                                    Grant                  Second                          Start of new                      Projected
by residents                                                     agreement              court order                     construction                     completion
                                                                 executed              December:                 May:                                        of new
                                                      August:                          First                     Revitalization plan                    construction
                                                      Revitalization                   court order               conditionally                December:
                                                      grant awarded                                              approved by HUD              Projected
                                              September:                                                     December:                        completion
                                              Amended consent                                                Revitalization                   of relocation
                                              decree signed                                                  plan submitted                   and demolition

Source: GAO.


                                                      Note: This time line is based on GAO analysis of data provided by the Chicago Housing Authority.




Background                                            Henry Horner Homes, completed in 1957, and Henry Horner Extension,
                                                      completed in 1961, consisted of a combination of high-rise and mid-rise
                                                      buildings containing 1,659 units (see fig. 17). Henry Horner Homes is
                                                      adjacent to the United Center, the arena where the Chicago Bulls play, and
                                                      is located about 1.5 miles from Chicago’s central business district. At the
                                                      time that the housing authority applied for the grant, the units targeted for
                                                      revitalization had broken windows and doors, sewage backups, insect and



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                           rodent infestation, and missing window child guards. The violent crime
                           rates were three to eight times higher than those for Chicago as a whole,
                           and the vacancy rate in the targeted area was about 50 percent. The
                           Chicago Housing Authority was awarded a $400,000 HOPE VI planning
                           grant for Henry Horner and two other sites in fiscal year 1995.



Revitalization and         In addition to the $18.4 million revitalization grant, the housing authority
Community and Supportive   was awarded a $2.3 million HOPE VI demolition grant for Henry Horner in
                           fiscal year 2000. The total projected budget for the project is $78 million
Services Plans             and includes other public housing funds, equity from low-income housing
                           tax credits, and state and city funds. The revitalization plan calls for the
                           construction of 764 new units on-site—271 public housing units, 132
                           affordable units (80 tax credit rental units and 52 homeownership units),
                           and 361 market-rate units (114 rental units and 247 homeownership units).
                           These units will be constructed in three phases. The housing authority has
                           set aside almost $30,000 of the HOPE VI revitalization grant funds for
                           community and supportive services. Although this amount is small, the
                           housing authority plans to submit a community and supportive services
                           plan for Henry Horner.



Current Status             Over 600 of the planned 1,197 units have been demolished. According to the
                           housing authority, the revitalization plans were developed in such a way as
                           to minimize the temporary relocation of current residents. After the first of
                           three phases of construction is completed, most of the remaining 176
                           households will be relocated to the new units. Construction on the first
                           phase of units began in January 2003. The first units are expected to be
                           ready for occupancy by the end of 2003. The authority and the Horner
                           Resident Committee are currently negotiating the relocation notices that
                           will go out to the residents. The remaining buildings will be demolished on
                           a schedule negotiated with the Horner Resident Committee.



Factors Contributing to    The redevelopment of Henry Horner was delayed for 4 years by legal
Current Status             actions. In 1991, the Henry Horner Mothers Guild filed a suit against the
                           Chicago Housing Authority and HUD alleging, among other things, that
                           Henry Horner had been “de facto” demolished without obtaining HUD or
                           local government approval or providing replacement housing. The case
                           was settled in September 1995 when an amended consent decree was
                           signed. After the housing authority was awarded a HOPE VI revitalization



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grant for Henry Horner in 1996, the Henry Horner plaintiffs raised concerns
about the revitalization plans, including the number of replacement public
housing units, which delayed the project and ultimately resulted in two
subsequent court orders, issued in December 1999 and February 2000. As a
result of these legal decisions, the Chicago Housing Authority is required to
designate 220 units or 35 percent of the total units, whichever is greater, as
very low-income units. Also, any decisions regarding the revitalization of
Henry Horner are subject to the approval of the plaintiffs’ counsel and the
Horner Resident Committee.

Because any remaining work at Henry Horner is subject to approval by the
Horner plaintiffs’ counsel and the Horner Resident Committee, decision-
making has been slow. According to housing authority officials, it took the
Henry Horner Working Group—which includes the Horner Resident
Committee and the Horner plaintiffs’ counsel—about 2 years to develop the
revitalization plan and issue a request for qualifications for a developer. It
took another 4 months after the request for qualifications was issued to
select a developer.




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Herman Gardens,                                                     The Detroit Housing Commission was awarded a $24.2 million HOPE VI
                                                                    revitalization grant for Herman Gardens in October 1996 (see fig. 18).
Detroit, Michigan                                                   Construction has not yet begun, and HUD notified the housing commission,
                                                                    for the second time, in March 2002 that it was in default of its grant
                                                                    agreement. The housing commission previously had been awarded
                                                                    revitalization grants for Jeffries Homes (fiscal year 1994) and Parkside
                                                                    Homes (fiscal year 1995).



Figure 18: Time Line for Herman Gardens




 Herman Gardens prior to demolition.                                                                                   Vacant Herman Gardens site.


'96        1997              1998               1999              2000               2001              2002            2003          2004       2005    2006          2007




October:                       June:                             April:                  August:                December:        January:                       September:
Revitalization                 Relocation                        Demolition              CSS plan               Supplement to    Projected              Projected completion
grant                          completed                         completed               approved               revitalization   start of new            of new construction
awarded            October:                                    March:                    by HUD                 plan submitted   construction
                   Grant                                       First                   June:                August:
                   agreement                                   default notice          CSS plan             Revitalization
                   executed                                                            submitted            plan submitted
                                                                                                     March:
                                                                                                     Second
                                                                                                     default
                                                                                                     notice
Sources: GAO (except the left photo, which is printed with the permission of the Detroit Housing Commission).


                                                                    Note: This time line is based on GAO analysis of data provided by the Detroit Housing Commission.




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Background                 Herman Gardens, built in 1943, originally consisted of 2,144 units on 160
                           acres (see fig. 18). Problems at the site included structural decay,
                           deterioration of underground utility systems, rodents, and hazardous
                           materials contamination. The Detroit Housing Commission received a
                           $400,000 HOPE VI planning grant for Herman Gardens and two other sites
                           in fiscal year 1995.



Revitalization and         In addition to the $24.2 million revitalization grant, the Detroit Housing
Community and Supportive   Commission was awarded, in fiscal years 1998 and 1999, $3.8 million in
                           HOPE VI demolition funds for Herman Gardens. The total projected budget
Services Plans
                           for the revitalization of the site is $232 million and includes other public
                           housing funds, equity from low-income housing tax credits, and city funds.
                           The revitalization plan calls for 804 units—470 rental units (including 258
                           public housing units) and 334 homeownership units. Other elements of the
                           plan include construction of a regional athletic facility on the site and
                           construction of 250,000 square feet of institutional space for a new
                           community college.

                           Of the $24.2 million revitalization grant, the housing commission has
                           budgeted $3.5 million for community and supportive services. The
                           community and supportive services plan, which was approved in August
                           2001, focuses on case management; employment and training; youth and
                           senior services and activities; and partnerships to address job readiness,
                           placement, and retention.



Current Status             Relocation and demolition have been completed (see fig. 18). As of March
                           2002, the Detroit Housing Commission had not submitted a revitalization
                           plan for Herman Gardens. Therefore, HUD notified the housing
                           commission on March 15, 2002, that it was in default of its grant agreement
                           and needed to submit a default resolution plan to avoid losing its grant. As
                           part of the default resolution plan, HUD required the commission to meet a
                           number of requirements, including submitting a revitalization plan and
                           obtaining firm financial commitments from the city. The Detroit Housing
                           Commission submitted its revitalization plan for Herman Gardens to HUD
                           in August 2002 and submitted a supplement to the plan in December 2002.
                           In September 2002, the city council passed a resolution committing $22
                           million to the Herman Gardens project. As of April 2003, HUD had not lifted
                           the default status or approved the revitalization plan. According to a




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                          housing commission official, the revitalization plan states that construction
                          is scheduled to begin in January 2004.

                          However, the housing commission has already formed a number of
                          partnerships to provide community and supportive services to Herman
                          Gardens residents. These services include training in retail sales,
                          computers, manufacturing, and child care. Additionally, 18 different unions
                          have formed a partnership that offers a preapprenticeship program.



Factors Contributing to   Due to management changes, the Detroit Housing Commission developed
Current Status            several different plans for Herman Gardens. The first plan was developed
                          prior to the grant award and called for 672 units of public housing. Before
                          that plan was formally submitted to HUD, the executive director
                          responsible for the plan left the housing commission and was replaced by
                          an interim executive director. By February 1999, the interim executive
                          director had developed a second plan, which proposed a combination of
                          public and market-rate housing as well as a golf course. After a new
                          executive director was hired, the housing commission proposed a third
                          development concept. Although never submitted as a formal revitalization
                          plan, the concept called for a mixed-use, mixed-income development on
                          the site.

                          Problems at one of Detroit’s other HOPE VI projects also contributed to
                          delays at Herman Gardens. According to a housing commission official,
                          HUD visited all three of its grant sites shortly after the commission
                          developed the second plan for Herman Gardens in February 1999. During
                          the visit, HUD recommended that the commission cease work at Herman
                          Gardens and Jeffries Homes until problems at Parkside Homes were
                          addressed. The Parkside Homes project was over budget and behind
                          schedule. Additionally, once work resumed at Herman Gardens and Jeffries
                          Homes, the Jeffries Homes project seemed to be more of a priority for
                          HUD, according to a commission official.

                          According to commission and local HUD officials, being part of city
                          government has also affected the pace of progress on the project. Until
                          recently, all of the commission’s contracts had to be approved by the city
                          council. Currently, only contracts related to the disposition of land upon
                          which public housing is situated are subject to city council approval. The
                          commission also has to go through the city to hire staff. According to a
                          commission official, the commission is in the process of seeking the
                          authority to hire its own staff.



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Because it never formally submitted a revitalization plan for Herman
Gardens, HUD notified the Detroit Housing Commission in March 2000 that
it was in violation of its grant agreement. In December 2000, HUD issued a
letter to the housing commission requiring it to develop a default resolution
plan. The two parties agreed that the housing commission would submit
biweekly progress reports on Herman Gardens. When HUD found these
biweekly reports to be inadequate, it notified the housing commission
again in March 2002 that it was in default of its grant agreement. In the
letter, HUD stated that it had been 52 months since the grant was awarded
and no substantial progress had occurred.




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Hollander Ridge,      The Housing Authority of Baltimore City received a $20 million HOPE VI
                      revitalization grant in October 1996 for Hollander Ridge (see fig. 19).
Baltimore, Maryland   Project activity was brought to a standstill by a series of legal actions, and
                      the funds were ultimately transferred to another public housing site in the
                      city of Baltimore. The housing authority will be selling the Hollander Ridge
                      property to the city upon HUD approval. Additionally, the housing authority
                      has completed construction at two HOPE VI sites—Lafayette Courts (fiscal
                      year 1994) and Lexington Terrace (fiscal year 1995)—and is administering
                      four additional HOPE VI grants as follows: Homeownership Demonstration
                      (fiscal year 1994), Murphy Homes and Julian Gardens (fiscal year 1997),
                      Flag House Courts (fiscal year 1998), and Broadway Homes (fiscal year
                      1999).




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Figure 19: Time Line for Hollander Ridge




 Hollander Ridge prior to demolition.                                                                                    Vacant Hollander Ridge site.


1996                                 1997                                 1998                                  1999                          2000                           2001




                                             August:                                             January:                 September:               July:                        November:
                                             Grant agreement executed                            U.S. District            Revitalization           Fourth Circuit        Federal legislation
                       January:                                                                  Court grants             plan submitted           Federal Appeals         enacted allowing
                       American Civil Liberties Union                                            housing                                           Court overturns          Hollander Ridge
                       writes HUD concerning its legal                                           authority's                                       District Court's              funds to be
                       objections to revitalization plans                                        motion to amend                                   decision;                        used for
                                                                                                 partial consent                                   HUD declares                   Claremont
             October:                                                                            decree allowing                                   Hollander Ridge                   Homes
             Revitalization grant awarded                                                        construction of                                   grant in default February:
 June:                                                                                           senior village at                         April:                   Housing authority
 Partial consent decree                                                                          Hollander Ridge                           Relocation               proposes reuse of
 approved by U.S. District Court                                                                                                           completed;               Hollander Ridge funds;
                                                                                                                                           demolition               demolition completed
                                                                                                                                           started
Sources: GAO (except the left photo, which is printed with the permission of the Housing Authority of Baltimore City).


                                                                       Note: This time line is based on GAO analysis of data provided by the Housing Authority of Baltimore
                                                                       City.




Background                                                             Hollander Ridge was built in 1976 and was located on 60 acres at the
                                                                       eastern edge of Baltimore City. Hollander Ridge was once the public
                                                                       housing of choice, but over time became one of the most distressed
                                                                       communities in the housing authority’s portfolio. The property had over
                                                                       1,000 units of family and elderly public housing. By the late 1990s, only half
                                                                       of the units were occupied, and the crime rate soared above the rates of
                                                                       Baltimore’s other public housing sites. Additionally, Hollander Ridge
                                                                       suffered from significant deferred maintenance, extensive site problems,



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                          and the deterioration of infrastructure and major building systems (see fig.
                          19). Because of its isolation, the site’s residents had little access to public
                          transportation and lacked nearby shopping and employment opportunities.
                          The Housing Authority of Baltimore City received a $700,000 HOPE VI
                          planning grant for Hollander Ridge and one other site in fiscal year 1995.



Current Status            Federal legislation was passed in November 2001 that enabled the housing
                          authority to transfer its HOPE VI funds for Hollander Ridge to Claremont
                          Homes. The revitalization plans for Claremont Homes, which are in the
                          preliminary stages, call for the demolition of all existing low-rise buildings
                          and the construction of a new mixed-income development. The housing
                          authority plans to reserve 73 units at the Claremont Homes site for former
                          Hollander Ridge residents. However, according to the housing authority,
                          the legislation enacted in November 2001 that allowed the housing
                          authority to transfer the Hollander Ridge funds to the site must be amended
                          before any of the plans to revitalize Claremont Homes can be implemented.
                          The legislation currently only allows for the rehabilitation of Claremont
                          Homes. As a result of third-party master planning, the housing authority
                          determined that rehabilitation is not financially feasible; therefore, housing
                          authority officials intend to ask Maryland’s congressional delegation to
                          propose an amendment to the federal legislation that would allow
                          demolition and new construction to occur at the site. Concurrence will be
                          sought from the American Civil Liberties Union (ACLU)—the
                          representative of the residents. The authority has submitted a disposition
                          application to HUD for approval to sell the Hollander Ridge site to the city
                          of Baltimore.



Factors Contributing to   Legal actions and community opposition halted progress at Hollander
Current Status            Ridge and ultimately led to the transfer of the HOPE VI funds to Claremont
                          Homes. In 1995, six public housing families, represented by the ACLU, filed
                          suit against the Housing Authority of Baltimore City and HUD alleging that
                          they had engaged in racial and economic segregation through site selection
                          and development of public housing in Baltimore City since 1937. On June
                          25, 1996, the parties entered into a partial consent decree, which was
                          approved by a United States District Court Judge. Among other things, this
                          decree provides that the housing authority “will not seek public housing
                          funds from HUD for public housing construction or acquisition with
                          rehabilitation in Impacted Areas.” The Hollander Ridge site is located in an
                          impacted area, with a high concentration of low-income housing and a high
                          percentage of minority populations.


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The housing authority’s original plan was to modernize Hollander Ridge by
reducing its density through demolition and reconfiguration of existing
units and upgrading the housing units and amenities. This plan was
consistent with the terms of the partial consent decree, and HUD had
awarded the HOPE VI grant on the basis of this plan. However, the adjacent
community resisted plans to place any type of public housing back on the
site. Community residents had long complained about the site’s high crime
rate and its effect on nearby property values. In response to the local
opposition, the housing authority decided to abandon plans to rebuild
family public housing at Hollander Ridge.

The housing authority and the community agreed to a subsequent plan to
demolish all of the existing public housing units and replace them with
facilities for seniors. The plan called for a senior village, which would
provide affordable housing as well as community-based health and
wellness programs for low- to moderate-income seniors. All 1,000 units
would be demolished, and 450 senior units would be built on-site, 225 of
which would be designated as public housing. The housing authority also
agreed to build a $1.2 million fence around the entire Hollander Ridge site.

Because the plans for a senior village would violate sections of the partial
consent decree and residents would be displaced, the ACLU maintained
strict opposition to the senior village concept. Nevertheless, the housing
authority sought a modification to the decree that would allow the
development of public housing on the Hollander Ridge site. In January
1999, the U.S. District Court approved this request. On July 8, 2000,
Hollander Ridge was imploded. Just a few days later, the Fourth Circuit
Court of Appeals, responding to an ACLU appeal, reversed the District
Court’s order. On July 31, 2000, HUD declared the grant to be in default.
Federal legislation enacted in November 2001 allowed the housing
authority to transfer the funds to its Claremont Homes site. As shown in
figure 19, Hollander Ridge remains a vacant lot.




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Jackson Parkway,                                                      The Holyoke Housing Authority received a $15 million HOPE VI
                                                                      revitalization grant in October 1996 for Jackson Parkway (see fig. 20). Fifty-
Holyoke,                                                              one of the 272 planned units have been completed.
Massachusetts


Figure 20: Time Line for Jackson Parkway




Jackson Parkway prior to demolition.                                                                                  New rental units.


'96          1997                 1998                  1999                 2000                  2001        2002             2003             2004     2005       2006




October:                       March:         January:                                October:                                            December:                 April:
Revitalization                 CSS plan       Relocation                              Start of new                                        Projected             Projected
grant                          approved by completed                                  construction                                        completion         completion of
awarded                        HUD;                                     February:                                                         of demolition   new construction
                               revitalization                           Revitalization plan
                               plan submitted                           approved by HUD
                             February:
                             CSS plan
                             submitted
                    August:
                    Grant
                    agreement
                    executed
Sources: GAO (except the left photo, which is printed with the permission of the Holyoke Housing Authority).


                                                                      Note: This time line is based on GAO analysis of data provided by the Holyoke Housing Authority.




Background                                                            Jackson Parkway was built in 1943 and contained 219 units on a 12.5-acre
                                                                      site in the Churchill section of Holyoke (see fig. 20). According to housing
                                                                      authority officials, the apartments and their residents were isolated from



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                           the economic and social fabric of the surrounding community. In addition,
                           the units were run-down and unappealing. The immediate neighborhood
                           adjacent to Jackson Parkway was marked by abandoned, obsolete, and
                           vacant buildings and was affected by drug dealing and vandalism. The
                           Churchill neighborhood formerly was a residential center for mill workers
                           and other laborers. However, by the 1990 census, the neighborhood’s
                           residents had a 50 percent school drop-out rate and only 37 percent
                           participated in the workforce. Because Jackson Parkway contained almost
                           25 percent of all residential units in the Churchill neighborhood, its
                           revitalization was seen as pivotal to the success of future improvements in
                           the area.



Revitalization and         The revitalization of Jackson Parkway is estimated to cost around $47
Community and Supportive   million—which includes other public housing and HUD funds, other
                           federal funds, and equity from low-income housing tax credits—and will
Services Plans
                           occur in three phases. The first phase will consist of the demolition of 219
                           units and a 42-unit elderly complex and the construction of 50 public
                           housing units, 60 homeownership units, a park, a community center, and a
                           maintenance facility. The second phase will consist of the rehabilitation of
                           two, five-story walkups, which will result in 39 public housing units, and
                           the construction of 11 new public housing units. In the third phase, 112
                           units will be rehabilitated or constructed in the surrounding neighborhood.
                           The new community will be called Churchill and Oakhill Homes.

                           Of the $15 million revitalization grant, $700,000 has been set aside for
                           community and supportive services. The focus of the community and
                           supportive services plan, approved in March 1998, is to implement a
                           comprehensive on-site service delivery system to coordinate existing
                           health and human services with innovative educational and employment
                           opportunities. The Holyoke Housing Authority plans to partner with
                           numerous schools, universities, churches, career development
                           organizations, libraries, and the Chamber of Commerce to implement its
                           self-sufficiency programs.



Current Status             Of the 272 total units to be rehabilitated or constructed, 51 have been
                           completed. The 50 new public housing units planned for phase one were
                           built and fully occupied in summer 2002 (see fig. 20). Additionally, all
                           planned phase one demolition has been completed. The community
                           buildings are in the design phase, and work on the community park has
                           begun and is expected to be completed by summer 2003. One model


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                          homeownership unit has been completed. Also, 270 applications to
                          purchase the 60 homeownership units have been received.

                          Selective demolition has begun for phase two—the rehabilitation of two,
                          five-story walkups. Additionally, land has been cleared and footings and
                          foundation walls have been set. These units are to be completed in the fall
                          of 2003. The housing authority is working with the Catholic Diocese of
                          Springfield and Habitat for Humanity to build new homeownership units on
                          one complete city block. This will be the third and final phase of the
                          revitalization.

                          By the spring of 2000, a resident services department was established and
                          operating to address the needs of former Jackson Parkway residents. Each
                          Jackson Parkway resident was assessed by one of three case managers,
                          who help residents to find employment, acquire GEDs, take English as a
                          Second Language courses, and receive homeownership counseling.



Factors Contributing to   Several factors contributed to delays early in the revitalization process.
Current Status            Because Jackson Parkway was the authority’s first experience with the
                          HOPE VI program, its staff had to overcome an initial learning curve. For
                          example, the staff had to learn about real estate development and low-
                          income housing tax credits and about how to work with developers. Also,
                          HUD’s Inspector General charged the housing authority with procurement
                          violations related to the selection of its first developer. According to HUD
                          officials, they placed procurement review restrictions on the authority
                          because of the lack of sufficient in-house procurement expertise. These
                          restrictions delayed the authority’s ability to obtain an infrastructure
                          contractor and a developer for the site. One housing authority official
                          estimated that the procurement charges delayed the progress of the grant
                          by 1 year.

                          Additionally, approval of key documents took longer than expected. For
                          example, approval of the revitalization plan took 23 months and approval
                          of the mixed-finance proposal for the first phase took 6 months. The
                          housing authority has had seven different HUD HOPE VI grant managers
                          since 1996, and staff believe that this frequent rotation caused temporary
                          disconnects that resulted in delays.




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Lamokin Village,                                                      The Chester Housing Authority was awarded a $14.9 million HOPE VI
                                                                      revitalization grant in October 1996 for Lamokin Village (see fig. 21).
Chester, Pennsylvania                                                 Construction is complete, and all 150 units are occupied. Since 1994, the
                                                                      housing authority has been under judicial receivership resulting from a
                                                                      resident lawsuit concerning distressed housing conditions. The housing
                                                                      authority also was awarded a fiscal year 1998 HOPE VI revitalization grant
                                                                      for Wellington Ridge.



Figure 21: Time Line for Lamokin Village




 Lamokin Village prior to demolition.                                                                              Chatham Estates (formerly Lamokin Village).


1996                   1997                                1998                                1999                      2000                      2001               2002




 October:                                  December:                  September:                    July:                       September:                          June:
 Revitalization                            CSS plan                   Relocation                    Start of new                Demolition                          Rental
 grant awarded                             approved                   completed                     construction                completed                            units
                                           by HUD                                                                                                                completed
                                       November:                July:                                                     June:
                                       CSS plan                 Revitalization                                            Senior
                                       submitted                plan approved                                             building
                                  September:                    by HUD                                                    completed
                                  Revitalization
                                  plan submitted
                            July:
                            Grant
                            agreement
                            executed
Sources: GAO (except the left photo, which is printed with the permission of the Chester Housing Authority).


                                                                      Note: This time line is based on GAO analysis of data provided by the Chester Housing Authority.




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Background                 Lamokin Village was built in the early 1940s and consisted of 38, two- and
                           three-story buildings, totaling 350 units. The site suffered from substantial
                           deterioration; major system problems, such as piping leaks and water table
                           problems; and poor site conditions (see fig. 21). The site also had
                           significant design problems due to its dense, maze-like building
                           configuration with no interior streets. According to the Chester Housing
                           Authority, Chester has been a distressed community for decades. About 56
                           percent of the population of Chester receives some form of government
                           assistance, and HUD has ranked Chester as the most depressed city of its
                           size in the United States. The housing authority was awarded a fiscal year
                           1995 HOPE VI planning grant for Lamokin Village and one other site as a
                           part of the overall recovery plan for the city.



Revitalization and         The total amount budgeted for the redevelopment of Lamokin Village is $27
Community and Supportive   million, which includes other public housing funds and equity from low-
                           income housing tax credits. The revitalization plan for Lamokin Village,
Services Plans
                           renamed Chatham Estates, calls for three phases: (1) 22 new residential
                           buildings with a mix of 110 one-story and duplex row homes, (2) a 40-unit
                           senior building, and (3) 30 off-site homeownership units. All existing units
                           in Lamokin Village were to be demolished.

                           Of the $14.9 million revitalization grant, the housing authority budgeted
                           about $1.2 million for community and supportive services. The community
                           and supportive services plan, approved in December 1997, proposes a
                           comprehensive welfare-to-work strategy designed to cultivate the
                           economic self-sufficiency of Lamokin Village residents. Specific plans
                           include the establishment of a “one-stop shop” for social services, a
                           community center and educational facility to be built on-site, and a
                           comprehensive evaluative component that will examine the impact of
                           HOPE VI on the Chester community.



Current Status             The 150 units, including the 40-unit senior building, planned for phases one
                           and two are 100 percent complete and occupied (see fig. 21). Thirty-eight
                           former residents returned to the family rental units, and 21 former
                           residents moved to the senior building. The third phase of the plan is being
                           transferred to the housing authority’s fiscal year 1998 HOPE VI
                           revitalization grant.




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                          The authority did establish an interagency “one-stop shop” in 1998 that is
                          used as the coordinating point for all programs and partners servicing the
                          authority’s residents. The shop is located in the Chester Crozier Hospital,
                          along with various other social service agencies. For example, the Chester
                          Education Foundation provides an employment program at the hospital.
                          The authority has also included a family self-sufficiency component, which
                          is optional for residents and provides services such as case management,
                          computer hardware and software training, van transportation,
                          homeownership training, and entrepreneurial training. The supportive
                          services funding was expended before construction of the community and
                          educational center could begin; the authority is currently trying to raise
                          additional funding for this center. Finally, Widener University’s School of
                          Social Work has been evaluating impacts and outcomes of HOPE VI
                          initiatives in Chester since 1997.



Factors Contributing to   In 1994, the Chester Housing Authority was placed on HUD’s troubled
Current Status            status list after receiving an extremely low evaluation score. During this
                          same period, a federal judge appointed a federal court receiver for the
                          housing authority in an effort to transform the authority. The receivership
                          is scheduled to end in June 2003. According to officials at the local HUD
                          field office, the receiver has brought about many positive changes for the
                          housing authority and its residents, including the two HOPE VI
                          revitalization grants. In 2002, the authority received a high evaluation
                          score, placing it in HUD’s high-performer category. The receiver ensured
                          that the authority had the proper staffing and knowledge to administer its
                          HOPE VI grants. Additionally, the authority brought the president of the
                          resident council on staff, helping to rebuild the relationship between the
                          authority and its residents. The receiver also created a separate police
                          force to increase the safety and security of the authority’s public housing
                          sites, the lack of which had been a major complaint of former residents.
                          Finally, during the receivership, all of Chester’s public housing family units
                          have either been demolished or rehabilitated.

                          Relying primarily on public housing funds simplified the development
                          process. Tax credit equity was only used to finance the construction of the
                          40-unit senior building. The remainder of the redevelopment was financed
                          by HOPE VI and other public housing funds. In addition, the housing
                          authority elected to act as its own developer of the family units. Finally, all
                          units were constructed on-site, thus the housing authority did not have to
                          purchase additional property.




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North Beach, San                                The San Francisco Housing Authority was awarded a $20 million HOPE VI
                                                revitalization grant for North Beach in October 1996. Construction at the
Francisco, California                           site did not begin until November 2002 (see fig. 22). The housing authority
                                                has also completed three sites with two HOPE VI revitalization grants—
                                                Bernal/Plaza (fiscal year 1993) and Hayes Valley (fiscal year 1995)—and
                                                construction at its Valencia Gardens site (fiscal year 1997) is scheduled to
                                                begin later this year.



Figure 22: Time Line for North Beach




North Beach prior to demolition.                                                       Vacant North Beach site.


1996           1997          1998           1999                  2000          2001               2002                 2003           2004




October:                February:             June:            March:           May:                              January:             December:
Revitalization          Grant                 Revitalization   CSS plan         CSS plan                          Demolition             Projected
grant awarded           agreement             plan             submitted        approved                          completed             completion
                        executed              approved                          by HUD                      November:                       of new
                                              by HUD                                                        Start of new               construction
                                    December:                                                               construction
                                    Revitalization                                                        October:
                                    plan submitted                                                        Relocation
                                                                                                          completed
Source: GAO.


                                                Note: This time line is based on GAO analysis of data provided by the San Francisco Housing
                                                Authority.




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Background                 Located adjacent to Fisherman’s Wharf and surrounding the historic cable
                           car turnaround, North Beach is situated in the heart of San Francisco’s
                           tourist attractions. The site is surrounded by a busy, densely built, vibrant
                           neighborhood that is well-served by public transportation, schools,
                           shopping, and services. However, North Beach itself has been a pocket of
                           poverty, with residents earning, on average, only 17 percent of area median
                           income. The site was built in 1952 and consisted of 13 concrete buildings
                           with 229 walk-up units, which filled two city blocks (see fig. 22). It was
                           poorly designed with large amounts of indefensible space that became
                           havens for criminal activity. Due to repeated earthquake stress, the
                           buildings were weakening and had substandard major systems, including
                           sewer and plumbing. A $400,000 HOPE VI planning grant awarded in fiscal
                           year 1995 for North Beach funded a study of the site. The study determined
                           that due to the dilapidated condition of the site and the high crime rate in
                           the area, complete neighborhood revitalization would be essential to any
                           redevelopment plan.



Revitalization and         In addition to the $20 million revitalization grant, the San Francisco
Community and Supportive   Housing Authority was subsequently awarded a $3.2 million HOPE VI
                           demolition grant for the North Beach site in fiscal year 2001. The total
Services Plans             projected budget is $106 million—up from the $69 million estimated in
                           1996—and includes other public housing funds, other HUD funds, other
                           federal funds, and equity from low-income housing tax credits. The
                           revitalization plans call for 341 units. The 341 units will be divided as
                           follows:

                           • 229 public housing units, which will be a one-for-one replacement for
                             the units that were demolished on both the east and west blocks and

                           • 112 rental apartments for families with incomes below 50 percent of the
                             city median income.

                           Also included in the plans are a parking garage for 323 cars and commercial
                           and retail space surrounding the cable car turnaround area.

                           Approximately $1.5 million of the revitalization grant was set aside for
                           community and supportive services. This service component was created
                           to provide residents with opportunities to achieve self-sufficiency through
                           education, employment, and entrepreneurship. The community and
                           supportive services plan, approved in May 2001, calls for a commitment to



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                          lifelong education that includes the development of basic intellectual skills,
                          specific training for particular types of employment, and a focus on life
                          skills such as parenting.



Current Status            Relocation, abatement, and demolition of both the east and west blocks has
                          been completed (see fig. 22). California awarded the authority $55 million
                          in tax credits in the spring of 2002 for the North Beach site, the largest
                          award in California history. With this additional funding, the housing
                          authority was able to begin construction at the site in November 2002.

                          About half of all residents currently participate in community and
                          supportive services. Participants create an individual plan with a case
                          manager, who then directs the resident to the various services offered, such
                          as employment assistance, computer, and English as a Second Language
                          classes. Additionally, 30 residents from North Beach are enrolled in the
                          housing authority’s family self-sufficiency program. Program participation
                          enables each household to receive up to $1,200 for training in various
                          trades.



Factors Contributing to   According to housing authority officials, the primary factor contributing to
Current Status            delays at North Beach was resident resistance. To address resident
                          concerns regarding relocation, a former executive director initially
                          promised residents that the redevelopment would occur in two phases,
                          which meant that they would not have to be relocated off-site. However,
                          the housing authority later determined that this option would be too
                          expensive, and that the residents would have to be relocated off-site so that
                          redevelopment could occur all at once. The residents were not happy with
                          this decision and were very reluctant to move out of their apartments.

                          Funding shortfalls have also contributed to delays at the North Beach site.
                          San Francisco’s original HOPE VI application requested $30 million to
                          complete the revitalization of North Beach. Because HUD only awarded
                          them $20 million, making up the difference has been difficult. The authority
                          had to add 112 units to the plan in order to convince the city to provide $10
                          million in funding assistance. According to housing authority officials, now
                          that the project has been awarded $55 million in tax credits, the pace of the
                          redevelopment should accelerate.

                          Administering over $118 million in HOPE VI funds for five sites
                          simultaneously has been challenging for the authority’s staff. The housing


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authority has a history of management and financial problems that have
affected its redevelopment efforts. HUD took over the housing authority in
1996 after the Mayor of San Francisco requested HUD’s assistance. The
authority had managerial problems, high crime at its public housing
developments, and problems with the physical condition of its housing
stock. After implementing new policies and procedures and reorganizing
the housing authority, HUD returned it to local control in 1997. Several
years after the housing authority was returned to local control, it developed
financial difficulties and again sought HUD’s assistance. HUD continues to
monitor and provide assistance to the housing authority.

Another factor that delayed the North Beach redevelopment was
environmental problems on-site. Half of the units contained lead paint and
asbestos, and the site’s soil had some arsenic, mercury, zinc, and lead
contamination (due to the site’s early industrial history). As a result, the
city required additional environmental reviews before it gave its approval
to begin construction.




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Riverview and                                                        The Cuyahoga Metropolitan Housing Authority was awarded a $29.7
                                                                     million HOPE VI revitalization grant for Riverview and Lakeview Terraces
Lakeview Terraces,                                                   in October 1996 (see fig. 23). Although the housing authority has completed
Cleveland, Ohio                                                      relocation and demolition, the rehabilitation of units at Lakeview has been
                                                                     slow, and little progress has been made with the construction of new units
                                                                     at Riverview. The housing authority has been awarded two other HOPE VI
                                                                     revitalization grants: a $50 million grant in fiscal year 1993 for Outhwaite
                                                                     Homes/King Kennedy, which is complete, and a $21 million grant in fiscal
                                                                     year 1995 for the Carver Park site.



Figure 23: Time Line for Riverview and Lakeview




Riverview and Lakeview prior to renovation.                                                                    Vacant Riverview site; renovation under way at the Lakeview site.


'96        1997               1998               1999               2000               2001               2002               2003      2004            2005              2006            2007




October:                January:                                       July:                     November:                                    October:                                  June:
Revitalization          Revitalization                                 CSS plan                  Start of                                     Projected start                        Projected
grant                   plan                                           approved by HUD           renovation                                   of new on-site                       completion
awarded                 submitted                                   May:                         at Lakeview                                  construction                      of new off-site
                   October:                                         Demolition at                                                             at Riverview                        construction
                   Grant                                            Riverview completed                                                                                   June:
                   agreement                                       April:                                                                                                 Projected
                   executed                                        CSS plan submitted                                                                                     completion
                                                                                                                                                                          of new on-site
                                                   June:                                                                                                                  construction
                                                   Revised revitalization plan                                                                                            at Riverview
                                                   conditionally approved by HUD
                                                                                                                                                                October:
                                              March:                                                                                                            Projected
                                              Relocation at                                                                                                     completion
                                              Riverview completed                                                                                               of renovation
                                           January:                                                                                                             at Lakeview
                                           Revised revitalization
                                           plan submitted
Sources: GAO (except the left photo, which is printed with the permission of the Cuyahoga Metropolitan Housing Authority).


                                                                     Note: This time line is based on GAO analysis of data provided by the Cuyahoga Metropolitan
                                                                     Housing Authority.




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Background                 Riverview, completed in 1963, consisted of 143 family units and 501 elderly
                           units (see fig. 23).5 Lakeview, completed in 1932, contained 570 family units
                           and 214 elderly units. Riverview and Lakeview are neighboring public
                           housing sites, which collectively housed 715 elderly units and 713 family
                           units. Riverview is on unstable ground, which includes numerous
                           sinkholes. Both developments are located in the Ohio City neighborhood,
                           home to the West Side Market, which has been in operation since the 1880s
                           and attracts around 1 million visitors each year. Due to its age, the
                           Lakeview units had many problems, including high lead levels, lack of
                           parking, and obsolete underground plumbing and storm lines. In addition,
                           the majority of the Lakeview units were one- and two-bedroom units, while
                           the local demand is for three-bedroom and larger units.



Revitalization and         The total projected budget for the Riverview/Lakeview revitalization is
Community and Supportive   about $112 million, which includes other public housing funds, other
                           federal funds, equity from the sale of low-income housing tax credits, bank
Services Plans
                           financing, and other local funds. The current revitalization plan calls for 95
                           new public housing units, 240 rehabilitated public housing units, and 345
                           new market-rate and moderate-income units. For Riverview, there are
                           plans to construct 45 public housing units on-site and 50 off-site, to acquire
                           54 off-site public housing units, and to construct 228 market-rate and 117
                           affordable (tax credit) units. At the Lakeview site, there are plans to
                           renovate 186 public housing units and a community center. There are also
                           plans for site improvements, including the demolition of garage
                           compounds.

                           Of the $29.7 million in HOPE VI funds, the housing authority plans to set
                           aside $5.8 million for community and supportive services. The goals of its
                           community and supportive services plan, approved in July 2000, are to
                           track and provide services to Lakeview residents and relocated families
                           from Riverview, make all interested residents meet the qualifications for
                           moving into the newly renovated units, and help Lakeview and Riverview
                           residents make the transition from welfare to work.




                           5
                            The elderly units were modernized in March 1996 and are not included in the HOPE VI
                           revitalization plans.




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Current Status            The renovation of the first 56 units at the Lakeview site is under way, and
                          six units have been completed (see fig. 23). The demolition of the garage
                          compounds and rehabilitation work are moving along as scheduled,
                          according to the housing authority. The relocation of 98 households and
                          demolition of 135 units is complete at the Riverview site (see fig. 23). The
                          housing authority has also acquired 54 single-family homes in scattered
                          sites, which are fully occupied, but the construction of new units is not
                          scheduled to begin until October 2004. In June 2002, the housing authority
                          received an award for its plan for the Riverview site from the Congress for
                          New Urbanism. The housing authority is in the process of executing a
                          development agreement.

                          Case management activities are in progress for 343 Riverview and
                          Lakeview residents. These residents participate in a range of activities,
                          including entrepreneurial and employment training and educational
                          programs. The housing authority is also in the process of implementing a
                          new system for ensuring that residents can receive the job-training services
                          that they need by using vouchers to purchase services.



Factors Contributing to   The housing authority was experiencing internal problems when the grant
Current Status            was awarded in 1996. The prior administration was not following
                          appropriate procurement procedures, according to HUD officials, and the
                          former executive director was ultimately convicted for theft of public
                          funds, mail fraud, and lying about a loan. A new executive director was
                          hired in late 1998, and the housing authority was finally able to focus on the
                          HOPE VI grant in 1999.

                          The project has also experienced delays due to cost constraints,
                          consideration of community and resident input, and problems with the site.
                          First, the housing authority requested $40 million to implement its
                          revitalization plan, but it was awarded $29.7 million. As a result, it took
                          time for the housing authority to obtain other funding. Next, the housing
                          authority did not originally plan to put public housing back on the
                          Riverview site because the land was sloping and unstable. Due to
                          community and resident opposition to this plan, the housing authority
                          agreed to put public housing units back on-site. Subsequent analysis by an
                          engineering firm revealed that certain areas were stable enough for new
                          construction. Similarly, while the housing authority originally planned to
                          modernize 12 of the buildings at Lakeview, it later revised these plans to
                          include modernization of an additional 66 row-house units.



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Robert S. Jervay Place,                                               The Wilmington Housing Authority was awarded an $11.6 million HOPE VI
                                                                      revitalization grant for Robert S. Jervay Place (Jervay Place) in October
Wilmington, North                                                     1996 (see fig. 24). Relocation and demolition at Jervay Place are complete,
Carolina                                                              but construction has been slow to start.




Figure 24: Time Line for Robert S. Jervay Place




 Jervay Place prior to demolition.                                                                                     New homeownership units.


'96           1997                   1998                   1999                   2000                   2001               2002         2003        2004              2005




                     August:                           February:        November:                                         March:                                     August:
                     Grant                             CSS plan         Demolition                                        Start of new                   Projected completion
                     agreement                         approved         completed                                         construction                    of new construction
                     executed                          by HUD                                                     October:
            April:                             October:                                                           Revitalization
            First                              Relocation                                                         plan approved
            developer                          completed                                                          by HUD
            selected                 May:                                                                April:
 October:                            CSS plan                                                            Second
 Revitalization                      submitted                                                           developer
 grant awarded                                                                                           selected
                                                                                                 December:
                                                                                                 Revitalization
                                                                                                 plan submitted
Sources: GAO (except the left photo, which is printed with the permission of the Wilmington Housing Authority).


                                                                      Note: This time line is based on GAO analysis of data provided by the Wilmington Housing Authority.




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Background                 Jervay Place, constructed in 1951, was made up of 30, two-story, brick
                           buildings that housed 250 units on 14 acres of land (see fig. 24). The
                           building configuration yielded limited defensible space for each dwelling
                           unit and rendered the site vulnerable to criminal activity. The site needed
                           renovation, lead-based paint removal, asbestos abatement, and
                           modifications for the handicapped. In addition, the resident population
                           consisted of young, welfare-dependent, single-parent families.



Revitalization and         The total projected budget for the Jervay Place revitalization is $33 million,
Community and Supportive   which includes equity from low-income housing tax credits, other grants,
                           and private debt. The revitalization plans called for 190 new units to be
Services Plans             developed at Jervay Place and surrounding sites in four phases, excluding a
                           phase dedicated to the implementation of community and supportive
                           services. The construction phases are as follows:

                           • construction of 14 for-sale or lease-purchase units on the original site;

                           • construction of 60 units and a community center on the original site and
                             40 off-site units;

                           • construction of 44 for-sale or lease-purchase units on the original site;
                             and

                           • construction of 32 scattered site for-sale or lease-purchase units.

                           Of the 190 new units, 71 would be public housing units, 29 would be
                           financed with a combination of low-income housing tax credits and
                           project-based Section 8, 28 would be lease-purchase units, and 62 would be
                           other subsidized homeownership units. A 7,000-square-foot, commercial-
                           retail space will also be constructed on-site, but the housing authority has
                           not determined in which phase this will be done.

                           Of the $11.6 million in HOPE VI funds, the Wilmington Housing Authority
                           planned to set aside $1.5 million for community and supportive services.
                           The focus of its service efforts would be transportation, job training and
                           placement, education, health care, and child care. The housing authority
                           also planned to establish partnerships with local schools and businesses.




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Current Status            Relocation, demolition, and 4 of the 14 phase one homeownership units
                          have been completed, and construction of the next 5 units is under way
                          (see fig. 24). For phase two, construction began in November 2002, and tax
                          credits have been approved. For phase three, the housing authority is
                          working on its homeownership plan. The final phase of construction has
                          not begun. The housing authority estimates that all of the units will be
                          complete in August 2005.

                          HUD approved the housing authority’s community and supportive services
                          plan in February 1999. The housing authority administers services through
                          its family self-sufficiency program, through which case managers are
                          assigned to work with individual households and match them with
                          appropriate services. Case managers have worked with participants to
                          assist them with their self-sufficiency goals, including working with
                          residents to prequalify them to purchase the homes constructed in phase
                          one. Residents who wish to return to Jervay Place must be enrolled in this
                          program. As of January 2003, 62 of the 132 original residents were enrolled.



Factors Contributing to   The procurement of the initial development partner was legally challenged
Current Status            by one of the other bidders. According to HUD, a considerable amount of
                          time was spent resolving this issue, and HUD’s Office of General Counsel
                          ultimately determined the challenge was unfounded. However, the housing
                          authority and the initial developer did not work well together, and the
                          developer was released in July 1999. A new developer was hired in April
                          2001, and HUD assigned an expediter—a private-sector expert in finance,
                          real estate development, or community revitalization—to help move the
                          project. Both the housing authority and the second developer had to work
                          through resistance from the community and residents, who did not
                          understand the plans because they were not involved in the planning by the
                          previous developer and who were frustrated by the lack of progress at
                          Jervay Place, according to housing authority officials. As a result of these
                          issues, the housing authority did not submit its revitalization plan until
                          December 2000. HUD approved the plan in October 2001.

                          According to housing authority officials, revitalization also has been
                          adversely affected by the city’s and HUD’s slow approval processes. For
                          example, while the city informed the housing authority in August 2001 that
                          its site plan had been approved, it was informed in December 2001 that the
                          site plan should not have been approved because the setbacks, the space
                          between the building area and the property line, were incorrect. As a result,



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the site plans had to be changed and resubmitted to obtain the city’s
approval. Similarly, housing authority officials stated that HUD’s slow
approval process has contributed to delays. For example, it took HUD 5
months to conditionally approve the revitalization plan. In addition,
housing authority officials stated that they had to take out a line of credit to
begin construction because HUD was taking too long to make the grant
funds available. According to HUD, approval could not be completed until
the housing authority fulfilled several conditions, including submission of a
mixed-finance proposal, a revised implementation schedule, proposed unit
designs, and a revised HOPE VI budget. In addition, the HUD grant
manager assigned to the housing authority was responsible for closing six
mixed-finance deals as well as reviewing new HOPE VI grant applications
during this time frame.




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Robert Taylor Homes    The Chicago Housing Authority was awarded a $25 million HOPE VI
                       revitalization grant in October 1996 for Robert Taylor Homes B (see fig. 25).
B, Chicago, Illinois   Relocation and demolition are complete, and approximately one-quarter of
                       the planned units have been constructed. The housing authority’s scattered
                       site program, which includes the development of any nonelderly public
                       housing, has been under judicial receivership since 1987. The authority is in
                       the midst of implementing a 10-year transformation plan, a $1.5 billion
                       blueprint for rebuilding or rehabilitating 25,000 units of public housing—
                       enough for every leaseholder as of October 1999—and transforming
                       isolated public housing sites into mixed-income communities. The
                       authority was awarded a revitalization grant for Robert Taylor A in fiscal
                       year 2001 and has also received grants for the following sites: Cabrini-
                       Green (fiscal year 1994), ABLA (fiscal years 1996 and 1998), Henry Horner
                       (fiscal year 1996), Madden/Wells/Darrow (fiscal year 2000), and Rockwell
                       Gardens (fiscal year 2001).




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Figure 25: Time Line for Robert Taylor Homes B




Robert Taylor Homes prior to demolition.                                                            The Langston.


'96       1997               1998             1999             2000         2001            2002             2003       2004           2005             2006




                 August:                             October:                December:                                                                 December:
                 Grant                               Demolition completed    Revitalization plan approved by HUD                              Projected completion
                 agreement                March:                                                                                               of new construction
                 executed                 Start of new construction
October:                                January:
Revitalization                          Relocation completed
grant awarded
                              June:
                              CSS plan submitted;
                              CSS plan approved by HUD
                             January:
                             Revitalization
                             plan submitted


Source: GAO.


                                                            Note: This time line is based on GAO analysis of data provided by the Chicago Housing Authority.




Background                                                  The Robert Taylor Homes consisted of over 4,300 units in 28 detached, 16-
                                                            story buildings along Chicago’s State Street corridor, a 4-mile stretch of five
                                                            different public housing sites (see fig. 25). It was the nation’s largest, most
                                                            densely populated public housing enclave. The Robert Taylor Homes were
                                                            divided into two subsites called Robert Taylor A and B. The fiscal year 1996
                                                            HOPE VI revitalization grant is for Robert Taylor B, which was constructed
                                                            between 1959 and 1963, and consisted of 2,400 units spread over 16 high-
                                                            rise buildings. The surrounding neighborhood included many boarded-up



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                           buildings, vacant lots, and a few small businesses. However, the site also is
                           near bus and train services and a technical vocational school.



Revitalization and         In addition to the revitalization grant for Robert Taylor B, the Chicago
Community and Supportive   Housing Authority was subsequently awarded a $6.3 million HOPE VI
                           demolition grant in fiscal year 2000 and a $13 million HOPE VI demolition
Services Plans             grant in fiscal year 2001. The total projected budget for the Robert Taylor B
                           revitalization is $113 million, which includes other public housing funds,
                           other federal funds, conventional debt, and equity from the sale of low-
                           income housing tax credits. The revitalization plans call for the demolition
                           of 762 units and the construction of 251 public housing units in scattered
                           off-site locations throughout the surrounding neighborhoods.

                           Of the $25 million revitalization grant, approximately $1.5 million has been
                           budgeted for community and supportive services. The community and
                           supportive services plan was submitted and approved in June 1998. The
                           plan states that the housing authority will provide case managers to
                           monitor families’ progress in meeting goals established in self-sufficiency
                           plans. The plan also allowed for the housing authority to use a Boys and
                           Girls Club to deliver self-sufficiency activities until a community center
                           was constructed in 1998. The services provided would include a
                           combination of employment; education; and family services, such as child
                           care and health care.



Current Status             As shown in figure 25, a 116-unit site, referred to as The Langston, has been
                           constructed and is at capacity. Twenty-nine of these units are public
                           housing units and are occupied by former residents of Robert Taylor A and
                           B. The remaining units are a mixture of tax credit and market-rate units.
                           Construction of a second site, referred to as The Quincy, is also complete.
                           The Quincy has 107 units, including 27 public housing units, which are fully
                           occupied. The remaining units are also a mixture of market-rate and tax
                           credit units. In February 2003, HUD approved the combination of the 1996
                           grant for Robert Taylor B with the 2001 grant for Robert Taylor A for
                           planning and implementation purposes as well as the extension of certain
                           grant agreement deadlines affecting the 1996 grant. As a result, while the
                           housing authority is still obligated to complete 195 more public housing
                           units under the 1996 grant, these units will be developed as a part of a new
                           three-phase Robert Taylor Master Plan. Construction on the first phase of
                           this plan is scheduled to begin in late 2003.




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                          The housing authority is currently in the process of revising its community
                          and supportive services plan to incorporate its service connector program,
                          in which case managers work individually with residents to provide either
                          necessary services or refer them to the appropriate providers. The housing
                          authority is in the process of locating the original residents, finding out
                          whether they are using any supportive services through the housing choice
                          program, and determining what services they need. According to the
                          housing authority, the primary service provided to the original residents
                          has been relocation assistance. In addition, the Charles Hayes Family
                          Investment Center opened in September 1998 adjacent to the original site,
                          offering a one-stop source for computer training, job placement, medical,
                          and other supportive services.



Factors Contributing to   The revitalization of Robert Taylor B has been slowed by tension early in
Current Status            the relationship between the Chicago Housing Authority and its receiver
                          and by the need for the plans to comply with the Gautreaux consent
                          decree. In 1966, African American residents of the Chicago public housing
                          community filed suit against the housing authority for creating a segregated
                          public housing system. In response, the court issued a judgment that
                          prohibits the housing authority from constructing any new family public
                          housing in a neighborhood in which more than 30 percent of the occupants
                          are minorities (limited areas) unless it develops an equal number of units in
                          neighborhoods where less than 30 percent are minorities (general areas).
                          In 1987, the court appointed a receiver for Chicago’s scattered-site
                          program, which includes the development of nonelderly public housing.

                          According to a housing authority official, the first delay at Robert Taylor B
                          occurred because the housing authority did not develop its revitalization
                          plan with the input of the receiver. The housing authority submitted the
                          plan to HUD in January 1998, and 9 months later HUD informed the
                          housing authority that it could not act on the plans without the
                          concurrence of the receiver. It took over 1 year for the housing authority
                          and the receiver to revise the plans together and to address HUD’s specific
                          concerns. HUD approved the plan in December 1999, but it only partially
                          approved the HOPE VI budget because the housing authority and the
                          receiver had not come to agreement on the receiver fee. The determination
                          of how grant funds should be dispersed between the housing authority and
                          the receiver was not finalized until May 2000.

                          The housing authority also has experienced difficulty obtaining off-site
                          locations for the balance of the public housing units that need to be



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constructed. To address this difficulty, the housing authority has proposed
combining the revitalization efforts of Robert Taylor B with the
revitalization funded under the fiscal year 2001 Robert Taylor A grant. The
housing authority is working on obtaining a revitalizing order for the
Robert Taylor community, which would waive the Gautreaux restrictions.
Revitalizing orders allow the construction of new family public housing
units in limited areas without requiring an equal number of units to be built
in a general area. The revitalizing circumstances must support a reasonable
forecast of economic integration, with the longer term possibility of racial
integration. The housing authority hopes that it can use the work already
completed with the Robert Taylor B grant to show that the area is being
revitalized.

Finally, receipt of the fiscal year 2001 HOPE VI grant for Robert Taylor A
has slowed progress at Robert Taylor B. After receiving this grant, the
housing authority took time to develop a master plan to coordinate the
development of both Robert Taylor A and B. The master plan allows the
housing authority to combine the grants for planning purposes, although
they remain administratively separate. In addition, the Robert Taylor site
has not consistently been a top priority for the housing authority.
According to a housing authority official, other sites that are further along
have been selected to get the majority of the housing authority’s time,
energy, and resources.




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                     Appendix IV
                     Site Visit Summaries




St. Thomas, New      The Housing Authority of New Orleans was awarded a $25 million HOPE VI
                     revitalization grant for St. Thomas in 1996. Although relocation and
Orleans, Louisiana   demolition have been completed, no new units have been constructed (see
                     fig. 26). The housing authority is currently under administrative
                     receivership. The housing authority was also awarded a HOPE VI
                     revitalization grant for the Desire site in fiscal year 1994.




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                                                  Site Visit Summaries




Figure 26: Time Line for St. Thomas




Original St. Thomas buildings.                                                                   Cleared St. Thomas site.


1996           1997                1998   1999               2000               2001               2002            2003            2004            2005




September:             October:                  October:                                   December:               June:                          December:
Revitalization         Grant                     Second                                     Demolition completed    Projected             Projected completion
grant awarded          agreement                 developer                           July:                          start of new           of new construction
                       executed                  selected                            CSS plan                       construction
                      September:                                                     approved
                      First                                                          by HUD
                      developer                                                  June:
                      selected                                                   Relocation
                                                                                 completed
                                                                                May:
                                                                                CSS plan
                                                                                submitted
                                                                    September:
                                                                    Revitalization
                                                                    plan approved
                                                                    by HUD
                                                                August:
                                                                Revitalization
                                                                plan submitted
Source: GAO.


                                                  Note: This time line is based on GAO analysis of data provided by the Housing Authority of New
                                                  Orleans.




Background                                        St. Thomas, completed in 1941, consisted of 1,510 public housing units on
                                                  almost 50 acres (see fig. 26). The site was located in a mixed-use
                                                  neighborhood close to the central business district and the Garden District.
                                                  The neighborhood in which St. Thomas is located was recently designated



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                           Site Visit Summaries




                           as a historic district. St. Thomas had a vacancy rate of 50 percent when the
                           Housing Authority of New Orleans applied for the HOPE VI grant. The
                           original site had a density of approximately 30 units per acre and contained
                           long spaces between buildings, which were conducive to criminal and
                           violent behavior. Moreover, underground utilities were either obsolete or
                           deteriorated. Stormwater flooding and sanitary line overflows were
                           common. The odor of sewage was pervasive throughout the site.



Revitalization and         In addition to the revitalization grant, the Housing Authority of New
Community and Supportive   Orleans was awarded a HOPE VI demolition grant in the amount of $3.5
                           million to demolish 701 units at St. Thomas. With funds from the city, state,
Services Plans
                           tax-exempt bonds, and other sources, the total projected budget for the
                           revitalization of St. Thomas is $293 million. The revitalization plans call for

                           • a total of 1,238 units, including construction of 182 on-site public
                             housing units, 107 on-site public housing eligible rental units, 15 on-site
                             affordable homeownership units, 100 off-site public housing eligible
                             rental units, and 50 off-site affordable homeownership units;

                           • construction of a 200,000-square-foot retail center on 17 acres adjacent
                             to the site; and

                           • historic preservation and renovation of five of the original St. Thomas
                             buildings.

                           Of the $25 million revitalization grant, the housing authority plans to spend
                           $4 million on community and supportive services. The housing authority
                           will attempt to contact all of the original St. Thomas households and
                           conduct assessments of their needs. On the basis of these assessments, a
                           detailed case management plan will be drafted. The St. Thomas community
                           and supportive services plan, which HUD approved in July 2001,
                           documents goals and objectives for achieving self-sufficiency for the
                           residents of St. Thomas in the following areas: employment and income
                           generation, education, training, homeownership training and assistance,
                           health, strengthening families, and services to build community leadership.



Current Status             The St. Thomas site has been cleared, but construction has not yet started
                           (see fig. 26). The relocation of 739 families was completed in June 2001,
                           and demolition of 1,365 units was completed in December 2001. As of April
                           2003, infrastructure work at the St. Thomas site was 60 percent complete.


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                          The transfer of property from the housing authority to the retail developer
                          for the construction of the retail center is scheduled to occur by June 2003.
                          This property transfer is contingent upon the housing authority’s
                          submission of documents to HUD for the closing of the first phase of
                          construction on residential units, an escrow deposit from the developer to
                          guarantee the construction of residential housing, and the environmental
                          clearance for the retail site. State economic development bonds were
                          approved in December 2002, which enabled negotiations regarding the
                          retail center to progress. The historic preservation of five of the original St.
                          Thomas buildings also has begun.

                          The housing authority has hired Kingsley House, a social service provider
                          located near the St. Thomas site, to perform assessments and provide case
                          management plans in accordance with the community and supportive
                          services plan. The Kingsley House, established in 1896, administers a
                          variety of programs from Head Start to adult day care. Assessments have
                          been conducted on 451 of the 739 families that were affected by the
                          redevelopment plans.



Factors Contributing to   According to housing authority officials, progress has been delayed due to
Current Status            funding shortfalls. Although the housing authority requested $40 million,
                          HUD awarded $25 million, which was not enough to revitalize the St.
                          Thomas site. Similarly, the city could provide $6 million of the $20 million
                          needed for infrastructure at the site. As a result, the developer had to take
                          time to identify other funding sources. Moreover, it took approximately 2
                          years from the time that the developer told HUD its intentions to employ
                          tax-increment financing (TIF) until the New Orleans City Council approved
                          it. Approval of the TIF was delayed due to public pressure against the TIF
                          concept and the project itself. Moreover, the state bond commission did not
                          approve the issuance of bonds until December 2002, after nearly 6 months
                          of delays due in part to the need to complete environmental review
                          processes.

                          Also, although the housing authority selected a developer in September
                          1997, the HUD Office of Inspector General identified problems with the
                          selection process.6 Specifically, the Inspector General found that the


                          6
                           U.S. Department of Housing and Urban Development, Developer Selection; St. Thomas
                          HOPE VI Grant; New Orleans, Louisiana, 98-FW-201-1813 (Fort Worth, Texas: July 24,
                          1998).




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housing authority allowed the majority of the selection panel members to
be nonhousing authority individuals. The Inspector General also found that
the interaction of the initial developer with certain members of the
selection panel and St. Thomas residents constituted both a perceived and
actual conflict of interest. As a result, the housing authority selected a new
developer in October 1999. Once selected, the new developer reconfigured
the revitalization plan.

Delays continue because the St. Thomas site is located in a historic district.
Preservationists opposed demolition of existing buildings and the
construction of the retail center because of its size, design, financing,
impact upon traffic, and negative effect upon local businesses. The housing
authority consulted with environmental and preservationist groups and
executed a Memorandum of Agreement in September 2000 that stipulated
the preservation of five of the original St. Thomas buildings and a
warehouse as well as other measures aimed at minimizing adverse
environmental impact in and around St. Thomas. Consultation began in
2001 for an amended Memorandum of Agreement to consider the retail
component proposed for the site.

In July 2002, a nonprofit organization filed a lawsuit against the housing
authority and HUD (1) stating that they were not in compliance with
environmental and historic preservation laws and (2) seeking HUD to
withhold all HOPE VI funds from the housing authority. Since the filing of
the lawsuit, HUD has completed a supplemental environmental assessment
and has published a finding of no significant impact. Moreover, the housing
authority, HUD, and other parties have executed an amended
Memorandum of Agreement. The case was reopened in March 2003, but it
was dismissed by a judge in April 2003.

Finally, the Housing Authority of New Orleans has had a long history of
management problems, and its public housing has long been in very poor
condition. In 1996, HUD entered into a “cooperative endeavor agreement”
with New Orleans to correct problems at the housing authority. Under this
agreement, HUD dissolved the housing authority’s board of commissioners
and chose a HUD representative as Executive Monitor to oversee the
authority’s progress in implementing improvements. In 2002, after the
housing authority had made little progress, HUD took control of its
management and operations. According to HUD officials involved in the
receivership, they are working on reallocating staff resources, reorganizing
the housing authority’s structure, and cutting back on unnecessary
expenditures.



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                      Site Visit Summaries




Theron B. Watkins     The Housing Authority of Kansas City, Missouri, received a $13 million
                      HOPE VI revitalization grant for Theron B. Watkins in November 1996 (see
Homes, Kansas City,   fig. 27). This grant has funded the revitalization of the Watkins site and will
Missouri              fund additional revitalization plans at another site and off-site units. The
                      authority has had numerous problems related to management and
                      maintenance of its properties, and it was placed under judicial receivership
                      in 1994. The authority also was awarded three other HOPE VI revitalization
                      grants—a fiscal year 1993 revitalization grant for Guinotte Manor, a fiscal
                      year 1997 revitalization grant for Heritage House, and a smaller
                      revitalization grant for Heritage House awarded in fiscal year 1998 that is
                      complete.




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                                                         Appendix IV
                                                         Site Visit Summaries




Figure 27: Time Line for Theron B. Watkins Homes




                                                                                                    Theron B. Watkins Homes after revitalization.


'96       1997                1998               1999             2000                  2001      2002             2003             2004                 2005




                               June:                 August:                      December:                                                              October:
                               Revitalization plan   CSS plan                     CSS plan                                                  Projected completion
                               approved by HUD       submitted                    approved                                                 of off-site construction
                      December:                                                   by HUD
                      Relocation                                    June:
                      completed;                                    Demolition
                      revitalization                                completed
                      plan submitted                             April:
                 August:                                         Completion
                 Grant agreement                                 of on-site
                 executed                                        rehabilitation
November:
Revitalization
grant awarded
Source: GAO.


                                                         Note: This time line is based on GAO analysis of data provided by the Housing Authority of Kansas
                                                         City, Missouri.




Background                                               For many years, the Theron B. Watkins site served as the symbol for urban
                                                         decline in Kansas City. With its deteriorated structures, large open
                                                         entryways, and outdated and neglected electrical systems, the site suffered
                                                         from many of the same problems identified in housing of similar design
                                                         throughout the country. The site was built in 1953 and contained 288 units
                                                         in 22, three-story buildings. In the late 1980s, living conditions at the site
                                                         began to deteriorate at a rapid pace with drug dealing and related crime
                                                         rampant; units in disrepair and neglect; and the housing authority unable to



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                           Site Visit Summaries




                           address problems due to its mismanagement problems. These conditions
                           created an unsafe living environment that prompted residents to vacate the
                           site in large numbers. Upon the arrival of the receiver in 1994, problems at
                           the site included a 43 percent vacancy rate; enormous backlogs of
                           uncompleted maintenance work; high rates of criminal activity; and
                           hundreds of families living in dangerous, substandard conditions.



Revitalization and         According to the revitalization plan, the Housing Authority of Kansas City,
Community and Supportive   Missouri, would use their $13 million HOPE VI revitalization grant to fund
                           portions of several redevelopment projects. The majority of the grant
Services Plans
                           would fund the rehabilitation of 75 units at the Theron B. Watkins site.
                           (Other public housing funds would be used to complete the rehabilitation
                           of the remaining units.) Additionally, some of the HOPE VI funds would be
                           used to rehabilitate 74 townhomes at the housing authority’s Wayne Miner
                           site. Finally, the funding would be used to demolish 24 units at Theron B.
                           Watkins. These units would be replaced in two off-site communities. Of the
                           $13 million revitalization grant, $1.4 million was budgeted for community
                           and supportive services. The funds would be used to provide case
                           management, community policing, and programs and activities. An
                           additional $314,000 would be used to renovate the housing authority’s
                           family development center.



Current Status             Of the 173 total planned units, 149 have been completed. The rehabilitation
                           of 75 units at the Theron B. Watkins site is complete (see fig. 27), as is the
                           renovation of the family development center. The rehabilitation of the 74
                           townhomes at the Wayne Miner site was completed in March 2003. The
                           replacement of the 24 demolished units in two, off-site, mixed-income
                           developments remains in the planning stage. However, due to recent tax
                           credit awards, construction on 13 of the 24 replacement units is scheduled
                           to begin in June 2003.

                           Community and supportive services for residents of Theron B. Watkins
                           include bilingual case management for the large immigrant population,
                           community policing, transportation, public health programs, and youth
                           development activities. The housing authority recently conducted a needs
                           assessment of its residents, which demonstrated the residents’ preference
                           for case management. Services for children are offered at an on-site
                           community center, including Head Start, Parents as Teachers, Boy/Girl
                           Scouts, and the Police Athletic League.




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                          Appendix IV
                          Site Visit Summaries




Factors Contributing to   The housing authority had already begun the revitalization of Theron B.
Current Status            Watkins with other public housing funds when the fiscal year 1996 HOPE VI
                          revitalization grant was awarded. Additionally, the receivership improved
                          the management of the housing authority, which ensured that the authority
                          had the staffing and expertise to implement its HOPE VI grants.

                          Although the on-site renovation was completed by April 2000, the other two
                          parts of the redevelopment effort have faced challenges. The housing
                          authority’s initial HOPE VI application included the Wayne Miner site as a
                          mixed-income development, but after an evaluation of financial feasibility
                          and market demand, the housing authority decided that mixed-income
                          development would not be sustainable at the site. Thus, the housing
                          authority had to redo its plans for the site to include only public housing.
                          The plans to replace the 24 demolished Theron B. Watkins units at two, off-
                          site, mixed-income developments were delayed when the housing
                          authority’s fiscal years 2001 and 2002 applications for low-income housing
                          tax credits were denied. However, in early 2003, one of the two mixed-
                          income developments was awarded tax credits, and construction is
                          expected to begin in June 2003. The housing authority plans to reapply for
                          tax credits for the other development in the fall of 2003.




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                                                                     Appendix IV
                                                                     Site Visit Summaries




Tobe Hartwell Courts                                                 The Spartanburg Housing Authority was awarded a $14.6 million HOPE VI
                                                                     revitalization grant for Tobe Hartwell Courts and Tobe Hartwell Extension
and Tobe Hartwell                                                    in October 1996 and has completed all of the planned public housing and
Extension,                                                           homeownership units, a community center, and nearly half of the planned
                                                                     tax credit units (see fig. 28).
Spartanburg, South
Carolina


Figure 28: Time Line for Tobe Hartwell Courts and Tobe Hartwell Extension




 Tobe Hartwell Courts prior to demolition.                                                            Tobias Booker Hartwell Campus of Learners (formerly Tobe Hartwell Courts
                                                                                                      and Tobe Hartwell Extension): rental units, computer room, and gymnasium.


1996           1997                      1998                     1999                     2000                    2001              2002              2003           2004




 October:                               May:                    April:                                       February:                  July:                        November:
 Revitalization                         Revitalization          Start of new                                 Completion of              Completion of                  Projected
 grant awarded                          plan approved           construction                                 replacement                homeownership units           completion
                                        by HUD;              March:                                          public housing                                          of tax credit
                                        CSS plan             Demolition                                      units                                                           units
                                        approved             completed
                                        by HUD
                                    March:
                                    Relocation
                                    completed
                                January:
                                Revitalization
                                plan submitted;
                                CSS plan submitted
                      August:
                      Grant agreement
                      executed
Sources: GAO (except the left photo, which is printed with the permission of the Spartanburg Housing Authority).


                                                                     Note: This time line is based on GAO analysis of data provided by the Spartanburg Housing Authority.




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                           Appendix IV
                           Site Visit Summaries




Background                 Tobe Hartwell Courts and Tobe Hartwell Extension—constructed in 1941
                           and 1952, respectively—contained 266 units in concrete and masonry
                           buildings (see fig. 28). High density, narrow streets, limited rehabilitation
                           options, and general disrepair characterized the development. In 1996,
                           incidents of crime were 19 percent higher at this development than crime in
                           Spartanburg public housing in general, and nearly 40 percent of the
                           residents did not have a high-school diploma. The housing authority was
                           awarded a $400,000 HOPE VI planning grant for Tobe Hartwell Courts and
                           Extension in May 1995.



Revitalization and         The total projected budget for the project is $30 million, which includes tax
Community and Supportive   credit equity and private funds. The revitalization plans for Tobe Hartwell
                           Courts and Tobe Hartwell Extension, renamed the Tobias Booker Hartwell
Services Plans
                           Campus of Learners, call for 268 new units to be developed in the following
                           four phases:

                           • Phase one: 118 public housing replacement units and a community
                             center on the original site.

                           • Phase two: 50 single-family homes on two off-site locations.

                           • Phase three: 50-unit, off-site apartment complex (40 low-income
                             housing tax credit units and 10 public housing units).

                           • Phase four: another 50 low-income housing tax credit off-site units.

                           Of the $14.6 million in HOPE VI funds, approximately $803,000 was set
                           aside for community and supportive services. The community and
                           supportive services plan, approved in May 1998, stated that case managers
                           would administer the program and monitor residents’ progress. The
                           community center would be the hub of the supportive services component
                           and would include a day-care facility, a computer center, a clinic, meeting
                           rooms, staff offices, and a combined gymnasium and multipurpose
                           community room.



Current Status             The 118 replacement public housing units were completed in February
                           2001 and are now fully occupied (see fig. 28). All 50 homes are complete, 36
                           have been sold, and contracts are in place for 7. Of the 50 tax credit units
                           planned for phase three, all have been constructed and accepted. Site



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                          Appendix IV
                          Site Visit Summaries




                          infrastructure work is complete for phase four, and the housing authority is
                          awaiting the 2003 low-income housing tax credit cycle to apply for building
                          funds for this phase.

                          A needs assessment of the residents was updated in January 2000, and
                          provision of supportive services began in December 2000. The community
                          center is complete, and the day-care and health-care components are fully
                          operational. Classes are also under way in the computer lab, and case
                          managers are on-site.



Factors Contributing to   Spartanburg Housing Authority officials believe that they have been
Current Status            successful for several reasons. First, receipt of a planning grant enabled the
                          housing authority to thoroughly plan the revitalization. As a result of this
                          early planning, the housing authority made few changes to their plans after
                          the revitalization grant was awarded. Also, housing authority officials
                          emphasized that they involved their residents early and often, enabling
                          them to avoid the delays and difficulties that many other housing
                          authorities have experienced. Moreover, housing authority officials
                          emphasized that their previous executive director provided strong
                          leadership and was the driving force behind the planning and
                          implementation of their revitalization grant.

                          The financing of this grant was relatively simple compared with the
                          financing that other housing authorities must arrange to construct mixed-
                          income developments. For example, the housing authority put all public
                          housing units back on-site. In addition, in South Carolina, the state housing
                          finance agency sets aside low-income housing tax credits for HOPE VI
                          sites. This made it easier for the housing authority to obtain tax credits for
                          its off-site components.




                          Page 130                      GAO-03-555 HUD's Management of the HOPE VI Program
Appendix V

Comments from the Department of Housing
and Urban Development                                                    Append
                                                                              x
                                                                              i
                                                                              V




             Page 131   GAO-03-555 HUD's Management of the HOPE VI Program
Appendix V
Comments from the Department of Housing
and Urban Development




Page 132                        GAO-03-555 HUD's Management of the HOPE VI Program
Appendix VI

GAO Contacts and Staff Acknowledgments                                                            AppenV
                                                                                                       d
                                                                                                       xiI




GAO Contacts      David Wood, (202) 512-8678
                  Paul Schmidt, (312) 220-7681



Staff             In addition to those named above, Catherine Hurley, Kevin Jackson,
                  Barbara Johnson, Alison Martin, John McGrail, Sara Moessbauer, Marc
Acknowledgments   Molino, Lisa Moore, Barbara Roesmann, Paige Smith, Ginger Tierney, and
                  Carrie Watkins made key contributions to this report.




                  Page 133                       GAO-03-555 HUD's Management of the HOPE VI Program
Glossary



Case management            An experienced case manager assesses the needs and circumstances of
                           each family holistically and makes referrals to an appropriate range of
                           service providers on the basis of priorities that these individual
                           assessments suggest. Also see community and supportive services.



Community and supportive   Services such as child care, transportation, job training, job placement and
services                   retention services, youth programs, addictions counseling, and parenting
                           classes.



Community and supportive   Contains a description of the types of community and supportive services
services plan              that will be provided to residents, the proposed steps and schedules for
                           establishing arrangements with service providers, the plans for actively
                           involving residents in supportive services planning and implementation,
                           and a system for monitoring and tracking the performance of the
                           supportive services programs as well as resident progress. Also see
                           community and supportive services.



Consent decree             A judicial decree that sanctions a voluntary agreement between parties in
                           dispute.



Defensible space program   A program that restructures the physical layout of communities to allow
                           residents to control the areas around their homes and reduce crime. For
                           example, common entryways and grounds are replaced with private
                           entrances and yards.



Elderly rental unit        A unit designated for an individual or for a family whose head, spouse, or
                           sole member is a person 62 years of age or older. An elderly family may
                           include elderly persons with disabilities and other family members who are
                           not elderly and who may or may not have disabilities.



Family rental unit         A unit of affordable rental housing developed for use by two or more
                           persons in a development.




                           Page 134                     GAO-03-555 HUD's Management of the HOPE VI Program
                               Glossary




Family self-sufficiency        A HUD program that encourages communities to develop local strategies to
program                        help assisted families obtain employment that will lead to economic
                               independence and self-sufficiency. Public housing agencies work with
                               welfare agencies, schools, businesses, and other local partners to develop a
                               comprehensive program that gives participating family members the skills
                               and experience to enable them to obtain employment that pays a living
                               wage. When a family volunteers to participate in the program, the housing
                               authority and the head of the family execute a contract of participation that
                               specifies the rights and responsibilities of both parties. The 5-year contract
                               specifies goals and services for each family. The housing authority
                               establishes an interest-bearing escrow account for each participating
                               family. The housing authority credits the escrow account, based on
                               increases in earned income of the family, during the term of the contract. If
                               the family completes the contract and no member of the family is receiving
                               welfare, the amount of the account is paid to the head of the family.



HOPE VI demolition grant       Awarded to housing authorities from 1996 to the present, these grants fund
                               the demolition of severely distressed public housing, the relocation of
                               residents affected by the demolition, and the implementation of supportive
                               services for permanently relocated residents.



HOPE VI planning grant         Awarded to housing authorities from 1993 to 1995, these grants were used
                               to fund studies for the area to be revitalized, to develop a plan of
                               revitalization, for economic development, and for technical support.



HOPE VI revitalization grant   Revitalization grants—which have been awarded since the program’s
                               inception—fund, among other things, the capital costs of major
                               rehabilitation, new construction, and other physical improvements;
                               demolition of severely distressed housing; and community and supportive
                               services programs for residents, including those relocated as a result of
                               revitalization efforts.



Low-income housing tax         Low-income housing tax credits provide tax incentives for private
credit program                 investment in the development and rehabilitation of housing for low-
                               income households. Under this program, states are authorized to allocate
                               federal tax credits as an incentive to the private sector to develop rental



                               Page 135                      GAO-03-555 HUD's Management of the HOPE VI Program
                            Glossary




                            housing for low-income households. After the state allocates tax credits to
                            developers, the developers typically offer the credits to private investors.
                            The private investors use the tax credits to offset taxes otherwise owed on
                            their tax returns. The money that private investors pay for the credits is
                            paid into the projects as equity financing.



Market-rate unit            Housing unit with no income eligibility restrictions for renters or
                            homeowners.



Mixed-finance development   A method of public housing development that involves a combination of
                            public and private financing sources and may include the ownership of
                            public housing units by a housing authority, or an entity other than the
                            housing authority in which the authority may or may not have an
                            ownership interest.



Mixed-finance proposal      A proposal that must be approved by HUD prior to the development of
                            units financed with a combination of public and private funds. The
                            proposal consists of 12 sections of narrative and attachments and includes
                            basic descriptive information, such as the number and types of units
                            planned, the development schedule, and the sources and uses of funding.



Mixed-income development    A development that combines public housing families with other residents
                            of various income levels in order to decrease the economic and social
                            isolation of the public housing families.



Project-based Section 8     A HUD rent subsidy program that attaches the subsidy to a unit instead of a
Program                     person. Under this program, landlords are responsible for ensuring that
                            these units are leased only to qualified tenants and that the units meet HUD
                            standards.



Revitalization plan         Consists of a series of documents and submissions that govern the
                            revitalization of a public housing development. The revitalization plan
                            includes, among other things, the grantee’s HOPE VI application, budgets, a
                            community and supportive services plan, a relocation plan, and any



                            Page 136                      GAO-03-555 HUD's Management of the HOPE VI Program
                          Glossary




                          supplemental submissions that HUD requests following its review of the
                          HOPE VI application and as a result of a site visit to the development.



Tax credit unit           Units financed with low-income housing tax credit equity. Also see low-
                          income housing tax credit program.



Tax increment financing   Allows a municipality to provide financial incentives to stimulate private
(TIF)                     investment in a designated area (a TIF district) where blight has made it
                          difficult to attract new development. TIF can be used to support new
                          development or the rehabilitation of existing buildings in industrial,
                          commercial, residential, or mixed-use development proposals. Funding for
                          TIF-eligible activities is derived from the increase in incremental tax
                          revenues generated by new construction or rehabilitation projects within
                          the boundaries of the TIF district. States determine what activities are
                          eligible uses of TIF funds; these activities may include land acquisition, site
                          preparation, building rehabilitation, public improvements, and interest
                          subsidy.




(250107)                  Page 137                      GAO-03-555 HUD's Management of the HOPE VI Program
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