GAO Releases Report on HUD Rental Assistance Demonstration

The Government Accountability Office (GAO) recently issued a report at the request of Ranking Member of the House Committee on Financial Services Maxine Waters (D-CA) examining the public housing component of the Rental Assistance Demonstration (RAD). Congress created RAD in FY 2012 as a demonstration to test whether PHAs could leverage Section 8 rental assistance contracts to raise private debt and equity to make public housing capital improvements and thereby preserve low-income housing. One component of RAD initially allowed up to 60,000 public housing units to be converted from public housing capital and operating assistance to Section 8 project-based vouchers (PBVs) or to Section 8 project-based rental assistance (PBRA). Congress has increased the unit cap three times despite the absence of an evaluation of the impact of this “demonstration” on residents. The cap was recently raised to 455,000 units.

The report is entitled “Rental Assistance Demonstration: HUD Needs to Take Action to Improve Metrics and Ongoing Oversight.” GAO found that HUD does not systematically use its data systems to track the effects of RAD conversions on resident households (such as changes in rent and income, or relocation) or monitor use of all resident safeguards. Rather, since 2016, HUD has required public housing agencies or other post-conversion owners to maintain resident logs and collect such information. But the resident logs don’t contain historical program information.

According to GAO, HUD hasn’t developed a process for systematically reviewing information from its data systems and resident logs on an ongoing basis. HUD has been developing procedures to monitor compliance with some resident safeguards—such as the right to return to a converted property—and begun a limited review of compliance with these safeguards. However, HUD hasn’t yet developed a process for monitoring other safeguards—such as access to other housing voucher options. Federal internal control standards require agencies to use quality information to achieve objectives, and obtain and evaluate relevant and reliable data in a timely manner for use in effective monitoring. Without a comprehensive review of household information and procedures for fully monitoring all resident safeguards, HUD can’t fully assess the effects of RAD on residents.

HUD officials stated that HUD intends to develop procedures to identify and respond to risks to long-term affordability, including default or foreclosure in RAD properties. However, GAO finds that HUD hasn’t yet done so. According to federal internal control standards, agencies should identify, analyze, and respond to risks related to achieving goals and objectives. Procedures that address oversight of affordability requirements would better position HUD to help ensure RAD conversions comply with program requirements, detect potential foreclosure and other risks, and take corrective actions.