WASHINGTON - While significant progress has been made in reducing modernization and rehabilitation needs in public housing, a new Department of Housing and Urban Development study finds that $22.5 billion in funding was needed in 1998 to meet existing modernization needs.

The report - Capital Needs of the Public Housing Stock in 1998: Formula Capital Study - shows there was a backlog of existing modernization and accrual needs in public housing despite a sharp reduction from the last study of capital needs in 1990. In that year, the total existing unfunded need was $33 billion (in 1998 dollars).

HUD's 2001 budget proposal requests $2.95 billion for the Public Housing Capital Fund, which housing authorities use to develop, modernize and rehabilitate units. The budget request also seeks $650 million for HOPE VI, which housing authorities use to demolish and replace severely distressed public housing and to revitalize affected communities.

Existing modernization needs are the cost of repairs and replacements for plumbing, heating/air and electrical systems to keep them in working condition. These costs include adding, upgrading or replacing systems that are old and outdated, but not routine maintenance. The study also found that approximately $2 billion is needed on an ongoing basis for accrual needs. These needs are the cost needed annually to cover expected ongoing repairs and replacements beyond ordinary maintenance, assuming existing modernization needs are met.

The needs estimates in the study are based on physical inspections of a sample of 684 public housing developments containing 229,973 units in 219 public housing authorities. This representative sample covered the majority of public housing units nationwide.

In addition to estimating the capital needs for public housing as of 1998, this study was also developed to help HUD revise the allocation rules for distributing funds by formula to public housing authorities under the new Capital Fund. After negotiating a new formula with representatives of housing authorities, residents, and other public housing experts, HUD published a new formula this past March.

Copies of the study are available from the Public and Indian Housing Information and Resource Center, P.O. Box 8577, Silver Spring, MD 20907 (telephone 1-800-955-2232; fax 301-585-6271).