PROGRAM HIGHLIGHTS

SUMMARY OF BUDGET ESTIMATES

1. SUMMARY OF BUDGET ESTIMATES

   The fiscal year 2001 Budget proposes an appropriation of $62 million for research, technology, and policy analysis, including $12 million for the Partnership for Advancing Technology in Housing (PATH) initiative.

   Administered by the Assistant Secretary for Policy Development and Research (PD&R), $50 million will support ongoing research and policy analysis, including expanded work to support HUD's implementation of the Government Performance and Results Act (GPRA). The fiscal year 2001 Budget request reflects a $15 million increase in funding from the fiscal year 2000 appropriation of $35 million for basic Research and Technology (R&T). Included in the increase for basic R&T will be funds for activities to measure and improve HUD's performance under GPRA and perform related program evaluations. Funding in the amount of $12 million is requested for the third year of the PATH program. This is a $2 million increase from the fiscal year 2000 appropriation of $10 million. This increase for PATH will permit this successful public/private initiative to expand the pace in the development of new technologies.

   The evaluation, research and analysis that is undertaken with the R&T funds contributes directly to improving the Department's policy decisions and programs.

   The 2001 research plan will build on the 2000 agenda. It will focus PD&R's efforts on current policy topics of significance to the Nation while continuing housing market surveys and other core activities. The focus for 2001 will be on the following types of activities:

   • studies of housing assistance policies and programs, including housing vouchers, the Low-Income Housing Tax Credit and HOME;
   • studies of the impacts of public housing demolition and the conversion of assisted housing projects to tenant-based assistance on families and neighborhoods;
   • research and development to improve HUD's performance management systems;
   • studies of the impacts of multifamily and public housing reform legislation;
   • studies of FHA's performance and impact in a changing market for housing finance;
   • evaluation of Elderly Housing Programs;
   • monitoring, maintaining and assessing FHA's automated scorecard;
   • improving information available on conditions in cities;
   • continued work on the multiyear HOPE VI, Moving to Opportunity (MTO), Bridges to Work, and Jobs Plus evaluations;
   • evaluation of the use and impacts of HUD economic development programs;
   • research under PATH to develop and disseminate technologies that will result in housing that is substantially more affordable, durable, disaster resistant, safer and energy/resource efficient;
   • studies of the effects of welfare reform and links among welfare reform workforce development, and housing and community development activities;
   • studies of effective and ineffective approaches to regional problem-solving that partner cities, suburbs, and rural areas;
   • research studies to assess the Government Sponsored Enterprises (GSE) role in affordable lending;
   • research studies utilizing geographic information systems (GIS) and land market information systems (LMIS) as tools for locally based planning and development;
   • research on the process and impacts of HUD 2020 Management Reform on the Department and those it serves;
   • research on the evolution and management of metropolitan regions globally; and
   • research on homeless prevention programs.

   PD&R carries out many routine responsibilities essential to the proper functioning of the Department's programs and fulfillment of its mission. These include calculating the key parameters used in housing and community development programs; conducting periodic surveys of housing markets and the housing stock; and analytical and policy support for HUD's program oversight of the Fannie Mae and Freddie Mac.

   Priority projects being developed in 2000 subject to budget limitations include the following:

   • research related to the PATH initiative;
   • an evaluation of the long run impacts of homeownership for low- and moderate income families;
   • studies of Section 8 location patterns and neighborhood impacts;
   • early implementation of HUD's new Welfare-to-Work Voucher Program;
   • research on the effects of housing assistance on self-sufficiency of adults and children;
   • evaluation of additional HOPE VI sites, assessing the impacts of newly occupied, mixed-income public housing developments on families and neighborhoods;
   • research to support new Government Sponsored Enterprises (GSE) housing goals;
   • major new research into how the economic prosperity of cities and suburbs are intertwined;
   • operation of an information clearinghouse to support the Office of University Partnerships;
   • studies of transition and permanent housing for the homeless;
   • data collection and support for the annual State of the Cities Report;
   • MTO Operations and Tracking;
   • Community Empowerment Fund Pilot;
   • evaluation of the family self-sufficiency program;
   • study of State and local decision-making on funds for affordable housing;
   • studies of the dynamics of severe rent burden among low income renters; and
   • assistance to Central American hurricane reconstruction.

   In addition, PD&R takes the lead for HUD in promoting cooperation and the exchange of information and data with foreign governments and international organizations.

2. CHANGES FROM 1999 ESTIMATES INCLUDED IN THE 2000 BUDGET

   The funds actually obligated in 1999 ($47 million for R&T and $10 million for PATH) were $1.7 million less than the $59.0 million estimated. The decrease occurred because funds for some of the projects were reserved in 1999, but were not obligated by the end of the fiscal year. Funds for these projects will be obligated in 2000. Spending authority was increased by $.6 million due to the collection of funds from Federal sources. Additionally, the $10 million transfer from U.S. AID was received at the end of fiscal year 1999 for Central American Disaster Relief, but not in time for the obligation of funds nor the incurrence of administrative costs. Funds from this transfer will be obligated in 2000. The sum of $1.7 million, $.6 million, and $10 million results in a total carryover of $12.3 million. Actual outlays of $27.2 million were less than the estimate of $42 million due to contractors billing on a much slower pace than anticipated.

3. CHANGES FROM ORIGINAL 2000 BUDGET ESTIMATES

   The 2000 Budget requested a total appropriation of $50 million ($40 million for Research and Technology and $10 million for PATH). The appropriated level in 2000 is $35 million for Research and Technology and $10 million for PATH for a total of $45 million. The increase in the 2000 obligation estimate is due to the addition of the $2.3 million and the $10 million (transfer from U.S. AID) of unobligated funds carried over from 1999 which will be obligated in 2000 and includes an estimated $100 thousand for recoveries, offset by the decreased budget authority. The projected outlays of $53 million are slightly higher reflecting the slower pace of contractor billing experienced in 1999 offset by the increased obligation level.

   Referring to the obligation table on page 4, Category I, Program Evaluation and Monitoring includes planned evaluations such as the examination of the effectiveness of local Continuum of Care Strategies in the integration of homeless shelter and service systems and evaluations related to HUD's implementation of welfare reform. Category IIA, Housing Programs, includes planned projects such as Elderly Housing. This category also includes $500,000 for the establishment of the Commission on Affordable Housing and Health Care Facility Needs in the 21^st Century as mandated in the 2000 Appropriations Act. Category IIB, Safety and Standards, includes research on manufactured housing. Category IIC, Housing Markets, provides funding for the American Housing Survey (AHS) and work on financial markets. Category IID, Fair Housing, includes planned research in support of the Department's fair housing initiatives, and other related research. Category IIE, Local Government Management, Community Urban Development includes planned research in Community Economic Growth and Development and Regional Housing Opportunities. Category IIG, Research Support, includes clearinghouse and dissemination activities.

EXPLANATION OF INCREASES AND DECREASES

The 2001 appropriation request is $17 million more than the 2000 level, reflecting increases of $15 million in R&T and $2 million in PATH activities. Included in the $15 million increase in R&T are funds to support GPRA research and development, GPRA performance analysis and related program evaluation activities. The $2 million increase for PATH will expand the pace of technological development needed to address PATH goals and expand interagency cooperative research efforts. A significant portion of additional PATH resources would be used to support interagency research to assure that housing affordability is fully considered, supportive and complementary to other important PATH goals such as housing disaster resistance, sustainability and durability. The 2001 obligation level is only $4.7 million more than the 2000 level even with a projected $17 million increase in budget authority. This occurs as a result of adding $12.3 million carryover funds to the 2000 estimate. The increase in the outlay estimate is due mainly to the requested increase in budget authority. Following are three other significant areas of focus.

PROGRAM DESCRIPTION AND ACTIVITY

1. Legislative Authority. Title V of the Housing and Urban Development Act of 1970, as amended, authorizes and directs the Secretary to undertake programs of research, studies, testing and demonstrations relating to the missions and programs of the Department. Work under this authority is a principal source for Departmental program and policy reforms. In order to ensure effective use of the results of these activities, the Secretary is authorized to disseminate significant reports, data, and information to Departments and agencies of Federal, State and local governments, to industry, and to the general public.
2. Policy Development and Research. The Assistant Secretary for Policy Development and Research is responsible for the development, planning, and execution of HUD research and demonstration programs; for assisting in the formulation of Department policy; and for disseminating HUD research results. In addition, the PD&R organization has principal responsibility for providing economic and policy analysis, and staff assistance to the Secretary in determining national housing and community development goals, program priorities, and objectives.
3. Goals of the Research Program. PD&R's goal is to provide reliable and objective data and analysis to inform policy decisions--today and in the future. PD&R has a leadership role in informing the Department in the area of strategic planning and provides both current and multiyear perspectives on program policies and performance. The following table shows the obligation levels for each of the 3 fiscal years.

The increase will help fund research and development to improve HUD's performance management system. GPRA requires agencies to use program evaluations to develop strategic goals and performance indicators. Properly designed program evaluations support GPRA performance in four ways: they identify the causal linkages that enable programs to produce results for citizens and communities; they measure the success of programs in achieving these results; they lay a foundation for performance budgeting through cost-effectiveness analysis; and they advise HUD on how institutions that receive its funds can more effectively report their performance (so that HUD, in turn, can report to Congress and other stakeholders). New research funding would support GPRA-related enhancements to existing and planned evaluations so that they support strategic planning and performance measurement and budgeting. The funds will also help develop improved performance measures in terms of their relevance, data quality, validation and verification.

The increase will also serve to expand PD&R's capacity to perform GPRA performance analysis. HUD is required to report annually to Congress on achievements relative to the performance goals in its Annual Performance Plans. A performance report that is meaningful and that provides program guidance must include analysis of the relative influence of HUD programs and of external factors, such as economic and demographic trends.

Research work in this area has led to the continued development of strategies for increasing the efficiency and effectiveness of Federal housing programs for low-income families. Major research areas include the future of the multifamily assisted rental stock, improving the effectiveness of tenant-based housing assistance, and efforts that support the Department's programs to reduce drug related crime.

In 2001, the research program will focus on the reform of public housing and project-based rental assistance. It will examine how local housing strategies are crafted and implemented, using the HOME program and the Low Income Housing Tax Credit.

Funds in the amount of $500,000 are included in 2000 for the establishment of the Commission on Affordable Housing and Health Care Facility Needs in the 21^st Century as mandated in the 2000 Appropriations Act.

The principal goal of this research is to aid in providing safe and sound housing at an affordable cost. Research on building codes and standards, environmental hazards, manufactured housing, removal of regulatory barriers, and simplification of building regulations are all covered under this category, topics of broad relevance to the goal of making housing more affordable and liveable, but beyond the charter of the PATH initiative.

PD&R will undertake research to explore new cost-saving approaches for production, rehabilitation, and maintenance that enhance affordability and to identify regulatory barriers that contribute to the high cost of housing construction and housing rehabilitation. Work will continue on manufactured housing research with particular attention given to the development of improved installation technologies and methods for disaster resistance. Research will continue on new materials for single family housing including the deconstruction of older inner city buildings as a source for building materials. Particular emphasis will be on research to develop new technologies for regulatory tools and regulatory streamlining that can encourage cost-effective rehabilitation, and codes and statutes to support sustainable growth.

Research support will also be provided to further evolve model State zoning codes, and model subdivision ordinances for use by State and local governments.

Housing and financial market data are essential for the formulation of housing and community development policy. As rapid changes in the housing and housing finance markets continue to occur, it is essential for policymakers to keep abreast of these changes and to understand their potential and actual impacts on homebuilding, the affordability and availability of both owner-occupied and rental housing, and on FHA and Ginnie Mae activity and financial soundness. In addition, surveys will be continued to obtain measures of customer satisfaction and to develop indices of program performance.

The American Housing Survey (AHS), a Congressionally mandated survey, is the Nation's primary source of information on the housing stock and housing conditions. Since 1973, the Census Bureau has surveyed a nationally representative sample of approximately 60,000 housing units in odd-number years to gather information on the condition of those units and the characteristics of their residents. In even-number years, smaller, longitudinal samples are surveyed to provide similar data for each of 47 large metropolitan areas at 4- or 6-year intervals. HUD, other government agencies, private entities, and researchers use this information to assess the housing needs of the country, evaluate the performance of national housing policy, and study the dynamics of the housing market. The AHS is the largest single share of the R&T budget.

In 2001, PD&R proposes to continue funding for the Residential Finance Survey (RFS) but substantially less support will be required than in 2000. The Residential Finance Survey, a component of the decennial census, provides detailed information on the financing of non-farm residential properties, both owner-occupied and rental properties. Unless HUD provides funding, this valuable survey will not be conducted as part of the 2000 Census.

Survey of New Home Sales and Housing Completions provides monthly and annual data on sales, completions, and prices of new homes. Data are used by HUD and other agencies, and two leading economic indicators for the Nation originate from these data.

Survey of Market Absorption of New Multifamily Units provides quarterly national data on how quickly new multifamily units are rented, by rent level and number of bedrooms.

Survey of New Manufactured Housing Placements compiles data on the number of new manufactured housing units sold or leased and placed on site by manufactured housing dealers for residential use, in and out of home sites.

Several areas will be covered by the Housing Finance research. In the FHA single family area, research will focus on the implementation of a mortgage scorecard for measuring the credit risk of FHA borrowers. This mortgage scorecard will be the key component of an automated underwriting system for FHA borrowers. Other applications of mortgage and credit scoring will be explored. Research will also focus on estimation of county-level house prices for determining FHA loan limits, loss mitigation strategies for resolving FHA defaults, FHA's Adjustable Rate Mortgage Program, and the neighborhood and regional determinants of FHA defaults and loss severities. The nature of affordable lending in the single family market will be examined using Home Mortgage Disclosure Act (HMDA), Federal Housing Administration (FHA), and Government Sponsored Enterprise (GSE) data. Finally, in the multifamily area, research will examine the affordability characteristics of multifamily loans being insured by FHA and FHA's risk-sharing programs.

Support also will be provided to the Secretary for certain Government Sponsored Enterprises (GSE) activities, including: (1) consideration of new program requests; (2) monitoring of GSE performance under geographical and income-based housing goals; (3) examining the role of Fannie Mae and Freddie Mac in the affordable lending market; (4) administering fair lending requirements; and (5) writing annual reports to Congress.

The Department's research agenda in the area of fair housing will include the impact of the transformation of the Section 8 and public housing programs on patterns of segregation and desegregation and continued support of the evaluation of the Moving to Opportunity (MTO) voucher demonstration. Analyses will continue on housing market discrimination by lenders, appraisers, insurers, and other housing market intermediaries; research will also be conducted on Title VI and Title VIII enforcement including studying the disposition of complaints, and will directly support the Department's expanded fair housing and fair lending initiatives.

This research agenda will evaluate the Department's efforts to create jobs and economic opportunities and improve urban economies through economic development and revitalization activities. In addition to ongoing analyses of Empowerment Zones and Enterprise Communities, studies continue on the Economic Development Initiative (EDI), Section 108, and other current and past economic development programs. PD&R will continue to collect and make available basic data on the economic and social condition of cities. In 2001, PD&R will assess the success of the Community Empowerment Fund Pilot established in 2000.

Starting in 2000 and continuing in 2001, research will be conducted on the interdependence of cities and suburbs. Major new research is planned regarding the relationship between economic prosperity in central cities and economic prosperity in suburbs. Also, work on regional problem-solving will support effective regional cooperation with the goal of improving regional economies and the quality of life, particularly for low-income families.

This part of the PD&R budget is critical to: (1) ensure that our research results are widely disseminated and diffused so that they are used, and (2) provide administrative support to PD&R, including the funding of short-term, high priority policy analyses and research. PD&R will work to incorporate state-of-the-art practices in the dissemination of best-practice useful knowledge.

The 2001 request includes $12 million to continue the PATH. The PATH initiative has completed its first full year of operation and is well on its way towards addressing the ambitious "National Construction Goals" that have been set for this major public/private partnership. By the year 2010, the Partnership aims to reduce the time to market new technologies, cut the energy use and the environmental impact of new homes by 50 percent, increase housing durability by 50 percent, reduce natural hazard risk by 50 percent while at the same time reduce the monthly cost of new housing.

To meet these goals, PATH joins together key agencies in the Federal sector, with leaders from home building, product manufacturing, insurance and financial industries. The PATH program uses a systematic, integrated approach to moving new technologies into the marketplace. Innovative technologies are identified by PATH's manufacturing partners in cooperation with researchers at Federal laboratories. Industry, working together with PATH's public partners, develop and deploy the technologies for the next generation of American housing. Promising products are evaluated by PATH's partner organizations concerned with building codes and standards. Qualified products are then placed in PATH's "technology inventory" and reliable information distributed to builders nationwide.

PATH has a number of major achievements including:
• a Coordinating Committee of over 60 leaders in industry and government;
• an operating plan and a detailed progress report submitted to Congress;
• the first-ever Federal interagency housing technology research agenda;
• cooperative research with major building product manufacturer to develop new technologies;
• the first-ever National Science Foundation funded university-based research effort to address building technology goals;
• a major consumer oriented website which is visited by over 25,000 persons a month; and
• technical assistance to 5 "national pilots" and 12 demonstrations sites that include major support of other HUD programs. These demonstration sites include a Hope VI site, an Indian reservation, and employer-developed housing as well as market-based developments.