Through these four components, the Department and its local partners are improving the quality of public housing stock and management and making these communities better, safer places to live. For example, the HOPE VI program has provided $2 billion in funding for the demolition and revitalization of 68 of the worst public housing developments. The Administration's "One Strike and You're Out" policy is based on the idea that public housing is a privilege, not a right, and residents who commit crime and peddle drugs should be screened out or immediately evicted. These efforts contribute to the Department's efforts to increase access to healthy, affordable housing and will continue.

The Department is undertaking two major efforts in order to advance its efforts to transform public housing: comprehensive legislative action on public and assisted housing and internal management reforms to improve HUD's own administration and monitoring of the program.

Increasing the supply of affordable rental housing

A fundamental role of the Department is to ensure that Americans of all income levels have access to decent quality housing at a cost that does not drive out spending for food, clothing, and other necessities. This has been a difficult role given budget constraints. Over 5 million very low income renter households pay more than half their income for rent or live in severely substandard housing. Until recently the Department was able to make some headway in addressing these "worst case needs" for housing assistance by adding each year to the total number of families served by assisted housing. Recently, however, the Congress has denied HUD's requests for modest numbers of "incremental" units of assistance.

Without the ability to address directly the severe housing needs of the lowest income families, HUD's programs are concentrating on (1) creating a supply of housing that is affordable to renters and homeowners whose incomes are low but who do not have extremely low or poverty level incomes; and (2) maintaining the public and assisted housing programs that currently serve over 4 million needy households, most of whom would have worst case needs if they were not receiving assistance.

HUD will construct or rehabilitate more than 400,000 units per year through HOME, Community Development Block Grants (CDBG), FHA multifamily insurance, Housing for Special Populations (elderly and disabled), and Housing Opportunities for Persons with AIDS (HOPWA). Continued Federal funding for public housing and renewal of expiring subsidies under the Section 8 programs will ensure that the overall number of families assisted by these programs does not decline and that they provide decent and affordable housing.

Section 8

HUD continues to request funding for incremental Section 8 certificates and vouchers in order to meet the needs of those Americans who have worst case housing needs and do not receive housing assistance. Portable, tenant-based certificates and vouchers are the best vehicle for addressing unmet needs for affordable rental housing, as well as for contributing to other strategic objectives such as reducing the isolation of low-income groups (see objective 4) and providing empowerment and self-sufficiency opportunities to support the transition from welfare to work (see objective 5).

HUD is committed to cost-effective administration of all of the Section 8 programs, both tenant-based and project-based, to ensure that these programs operate at the lowest cost compatible with providing good quality housing in a broad range of neighborhoods.

The growth in tenant-based housing assistance provides opportunities for de-concentration of low-income and minority families in particular from our inner cities. The Department seeks to attract a greater number of responsible landlords into the Section 8 program and increase community receptivity of Section 8 families, and to ensure that the families make informed choices about where to live. The Regional Opportunity Counseling program will enhance the Section 8 program's ability to help welfare families make the transition to self-sufficiency and help working families continue work. (see objective 4).

Public Housing

Funds will be provided, by formula, for both capital improvements and for management improvements. The formula accelerates the allocation and use of capital improvement funds by replacing a competitive process which may include a complicated, time-consuming, staff-intensive application process. Housing Authorities may use allocated funds for redesign, reconstruction, rehabilitation, renovation, non-routine maintenance, such as lead-based paint testing and abatement, or accessibility improvements for the disabled. Allocated funds may also be used for replacement housing when demolition or disposition is authorized for buildings or entire developments that are not viable.

Federal Housing Administration

FHA Multifamily will provide mortgage insurance to construct or rehabilitate approximately 100,000 units per year under a variety of rental apartment programs. For many of these units, the Multifamily Fast Track Processing Program will be employed to reduce both time and money spent by the Government in processing mortgage insurance applications. Housing programs for special populations (elderly and disabled) will provide approximately 5,000 units per year of additional housing under the Section 202 and 811 programs. In addition, new multifamily projects will be introduced for under-served markets including small and very small projects, mixed income housing, pool insurance and balloon financing. FHA will also continue to work on alternative systems for program delivery through risk sharing with housing finance agencies and Government Sponsored Enterprises (GSEs).

Physical inspection scores/Assessment Centers

HUD is taking several steps to assure that Multifamily projects are maintained in a decent, safe and sanitary condition. Housing is working with PIH to establish a new, uniform protocol for physical inspections for all FHA and PIH properties. In the not too distant future, all projects will be visited and rated using the new protocol. Each project will receive a numerical score for evaluative purposes by the new assessment center. Projects that are not in good physical condition will be referred to the new enforcement center.

Community Planning and Development

Using funds made available under the HOME Program, States and local participating jurisdictions will acquire, construct or rehabilitate approximately 29,000 units of rental housing each year. In addition, approximately 9,000 families will be assisted through HOME-funded tenant based rental assistance. Since the program began in FY 1992, over 122,000 rental units have been committed and 37,000 families have received tenant based rental assistance. Ninety-one percent of families assisted for rental housing are at 50% of area median income or below, far exceeding statutory requirements. Forty-five percent of families have incomes at 30% of rental housing or below, but such families must also receive tenant-based assistance from HOME or from the Section 8 program to enable them to pay a reasonable percentage of income for rent.

CPD is in the process of implementing a new system to more accurately show how many units of housing have been built or rehabilitated through the Housing Opportunities for Persons with AIDS (HOPWA), HOME and CDBG programs so that progress of one community can be compared with that of another community. CPD has a program of technical assistance to help communities who are lagging behind to improve their performance.

Low-Income Housing Tax Credit

The low income housing tax credit is a key element in the Administration's strategy for adding to the stock of rental housing that is affordable without additional subsidy for families who have low incomes. Tax credit units are affordable for families with extremely low or poverty level incomes when they also have tenant-based rental assistance. The tax credit is administered by the Treasury Department and is evaluated by HUD as a major component of Federal housing policy. HUD estimates that the tax credit has produced more than 600,000 units of rental housing since its enactment in 1986.

Program Evaluation

One of the most significant annual evaluations on this topic is the "worst case housing needs" study. In this annual report to Congress, based on the American Housing Survey and the most up-to-date HUD program data, HUD analyzes the types of American families that have the most severe problems with housing conditions and affordability and reports on trends in those problems over time. The Department also has on-going a major evaluation of the HOPE VI program to revitalize distressed public housing. HUD also has developed and tested resident surveys to measure the quality of housing occupied by families receiving tenant-based rental assistance. Other recent studies include evaluations of the Comprehensive Grant Program to modernize public housing and of alternative funding mechanisms for funding public housing.

Linkage to HUD 2020: Management Reform Plan

PIH faces many challenges as it continues to transform public housing across America. In order to successfully meet these challenges, PIH will align is staff resources to address the greatest needs. It will establish centers that house "back office' activities, freeing Field Office staff to target their energies on monitoring and providing services to 3,400 Housing Authorities and the 1.4 million families they house.

PIH will establish its own grants center; establish, in coordination with Housing, a Department-wide Section 8 Financial Processing Center; participate in the Department-wide Real Estate Assessment Center; establish Troubled Agency Recovery Centers to work with troubled Housing Authorities; and undertake other privatization and streamlining efforts to encourage greater productivity and accountability with local PIH partners and customers.

The cross-cutting Real Estate Assessment Center will review physical inspections and financial statements of PHAs and multifamily projects. The Enforcement Center will be responsible for taking aggressive action to enforce compliance with legal requirements to preserve decent, safe, and sanitary housing for lower and moderate income households. The Enforcement Center will identify and initiate appropriate sanctions and civil and criminal actions in a timely manner. For multifamily properties, this may include foreclosure, acquisition, or disposition of properties. For public housing agencies with a failing grade for one year, it may include judicial receivership. For CPD and FHEO grantees guilty of fraud, waste, or abuse of funds, HUD may withhold or recapture grant money.

Given new, more effective approaches to assessing PHAs, HUD will be in a position to move quickly to identify "troubled" PHAs. Because of the complexity and sensitivity experienced by the Department in past work with troubled agencies, we need to make greater efforts to turn around troubled PHAs and prevent them from reaching that stage. This will require more staff attention, which is difficult to allocate given the competing priorities for administering a multitude of programs with limited staff resources.

To deal with "failing" PHAs, PIH will establish two Troubled Agency Recovery Centers (TARCs). Any agent/agency receiving a failing annual assessment score will be referred to a TARC, which will develop and implement an intervention strategy to bring the agent/agency to passing scores. The TARCs will be arms of PIH's existing Office of Troubled Agency Recovery, located in Headquarters. For further details on this program, please refer to page 63 of the Management Reform Plan.

Programmatically, HUD will revise PHMAP to include better assessment and propose receivers for troubled management and privatize the HOME VI construction management and development process as appropriate. Authorizing legislation for these, and other reforms, has been proposed. For a more detailed discussion, please see page 66 of the Management Reform Plan.

External Factors

As with other objectives, HUD's ability to provide affordable housing to the needy is greatly constrained by the broader economy. The number of housing units that HUD directly affects is a small percentage of the Nation's housing stock and a rather small percentage even of the stock available to those with low incomes. Increases in unemployment, increases in the cost of developing housing, and changes in people's abilities to rehabilitate housing all are major factors affecting housing affordability over which HUD has little control.

Within the assisted stock itself, external factors affect HUD's ability to provide affordable housing. When tenant-paid rents are established as percent of income, declining incomes necessitate greater subsidies. This means that fewer families can be assisted with the same amount of funds. These factors make HUD's efforts in this area highly dependent on the unemployment rate, particularly among the working poor, and the numbers of people who lose income as a result of welfare reform.

How annual performance goals support the achievement of this objective

Increasing availability of affordable housing requires a two-pronged approach. Not only does HUD need to increase the supply, but also to transform public housing. To increase the supply, we must endorse more multifamily loans and risk-sharing mortgages. HUD must partner with communities to shorten the length of time between approval for demolition of uninhabitable units and completion of construction of new units. Several measures provide a gauge of increased availability. See Appendix I for specific performance measures.

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