Detailed Information on the
American Dream Downpayment Initiative Assessment

Funding an independent evaluation of the ADDI program that is currently underway. This evaluation will assess the default rates of ADDI-assisted and HOME-assisted homebuyers compared to the default rates of FHA-insured homebuyers. The study will examine households that received assistance from 2000 through 2005. Default rates are an indicator of a program's relative success in assisting first-time homebuyers by measuring the long-term sustainability of first-time homeownership. The study results will inform future ADDI policy development and management practices.

Establishing an exclusive ADDI data element in HUD's Integrated Disbursement and Information System (IDIS) if ADDI is re-authorized after Federal Fiscal year 2007, and funding is available to make this change. This change will ensure that the ADDI data can be used reliably to assess ADDI performance, policy, and impact.

Measure: The number of low-income households who receive ADDI assistance to achieve the benefits of homeownership for the first time.

Explanation:This measure demonstrates progress towards achieving HUD's Strategic Goal of expanding national homeownership opportunities. This measure also demonstrates progress in achieving the purpose of the ADDI program - to help low-income households become first-time homeowners. To date, nearly 23,000 low-income households have received ADDI assistance to achieve the benefits of homeownership for the first time. [Note: Projections beyond FY 2008 are based on $50 million in ADDI appropriations, the level of HUD's FY 2008 Budget Request. HUD will adjust its future ADDI targets based on actual appropriations.]

Measure: The number of ADDI unit-years of affordability provided to low-income first-time homebuyers.

Explanation:This is a new performance measure, added in Federal Fiscal Year 2007. Units occupied by ADDI-assisted first-time homebuyers must remain affordable for a minimum of five years. The number of affordable unit-years (units x affordability period) is a proxy for the stability of the first-time homebuyers. The ADDI measure is a subset of the comparable HOME performance measure. [Note: Projections beyond FY 2008 are based on $50 million in ADDI appropriations, the level of HUD's FY 2008 Budget Request. HUD will adjust its future ADDI targets based on actual appropriations.]

Measure: The increase in the average ADDI assistance per unit will not be greater than 3% per year.

Explanation:This is a new efficiency measure, added in Federal Fiscal Year 2007. This measure reflects the ability of ADDI to leverage significant other funding. The baseline year is FY 2006 when the average per unit assistance was $7,500. The ADDI Act permits State and local participating jurisdictions to provide ADDI assistance to each eligible household up to the greater of $10,000 or 6% of the unit purchase price. Therefore, this baseline average of $7,500 per unit already reflects an efficiency, as it is significantly below the amount permitted by ADDI. [Note: Projections beyond FY 2008 are based on $50 million in ADDI appropriations, the level of HUD's FY 2008 Budget Request. HUD will adjust its future ADDI targets based on actual appropriations.]

Is the program purpose clear?

Explanation: The program purpose of ADDI is provided in the authorizing legislation, the American Dream Downpayment Act (Title I, Pub.L. 108-186), approved December 16, 2003. This Act amended section 271 of the National Affordable Housing Act (42 U.S.C. 12821) and authorized ADDI appropriations for Federal Fiscal Years 2004 through 2007. The purpose of ADDI is to help low-income households become first-time homeowners. Federal ADDI funds are provided to State and local government participating jurisdictions (or "PJs") based on a separate ADDI allocation formula under the HOME program. State and local government participating jurisdictions must use these ADDI funds to provide eligible low-income households with assistance for downpayment and closing costs, and for necessary rehabilitation work in conjunction with a home purchase.

Evidence: The American Dream Downpayment Act (Title I, Pub.L. 108-186) can be found through HUD's ADDI web page at: http://www.hud.gov/addi/.

Does the program address a specific and existing problem, interest, or need?

Explanation: The President has made expanding homeownership, especially for minority households, a national priority. Although homeownership is at an all-time high, homeownership remains out of reach for many Americans. The Millennial Housing Commission Report (pp 2, 20, 21) concluded that despite the 1990s housing boom, one of the most significant housing challenges facing the nation is the homeownership gap for minority households. Numerous studies have documented the advantages of homeownership to families and communities. A significant barrier to homeownership is the lack of money for down payment and closing cost assistance. According to "Mind the Gap," a 2001 study by the Neighborhood Reinvestment Corporation (p 4), a third of renters could afford monthly payments but were prevented from buying a home because they lacked wealth to cover down payment and/or closing costs. A more recent April 2005 HUD study, "The Potential of Down Payment Assistance for Increasing Homeownership Among Minority and Low-Income Households" concluded that small amounts of down payment assistance can be very effective in stimulating fairly large numbers of renter households to become homeowners (pp vi, 24-27). Down payment assistance of as little as $1,000 can lead to a 19% increase in the purchase of homes by low-income households. While the increase declines as the level of assistance rises, assistance up to $10,000 can lead to a 34% increase in overall homeownership. According to this HUD study, the impact on underserved groups is even greater - a 41% increase in low-income homeownership, a 49% increase in Black homeownership and a 48% increase in Hispanic homeownership (p 26). ADDI addresses this need by providing down payment and closing cost assistance to low-income first-time homebuyers up to $10,000 or 6% of the unit purchase price - the range of assistance that has the greatest marginal impact on increasing low-income homeownership. ADDI therefore contributes to closing the homeownership gap for underserved groups.

Evidence: Information about the President's National Homeownership Initiative can be found at: http://www.whitehouse.gov/infocus/. The President's initiative "A Home Of Your Own: Expanding Opportunities for All Americans" can be found at http://www.whitehouse.gov/infocus/homeownership/toc.htm. A copy of the Millennial Housing Commission report can be found at: http://govinfo.library.unt.edu/mhc/MHCReport.pdf. The "Mind the Gap" 2001 study by the Neighborhood Reinvestment Corp (p 4) can be found at: http://www.nw.org/Network/pubs/studies/documents/mindthegap2002.pdf. HUD's April 2005 study "The Potential of Down Payment Assistance for Increasing Homeownership Among Minority and Low-Income Households" (pp vi, 24-27) can be found at: HUDUser under Publications at: http://www.huduser.org.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: While ADDI is the only Federal program with a dedicated funding stream that targets low-income first-time homebuyers for down payment and closing cost assistance, there are multiple Federal, state, local, and private programs that provide the same type of assistance. Both the federal HOME and Community Development Block Grant (CDBG) programs can be used as direct assistance for first-time homebuyers. HUD's most recent HOME production report indicates that over 330,000 homebuyers have been assisted with HOME funds since 1992, when the HOME program was enacted. According to a 2004 HUD independent evaluation "Study of Homebuyer Activity Through the HOME Investment Partnerships Program," approximately 85% of the HOME State and local participating jurisdictions use their HOME funds for homebuyer assistance programs (sections 3.2, 3.5). 79% of these participating jurisdictions provide HOME assistance directly to the homebuyers, such as down payment and closing costs assistance (section 5.1.1). The HUD study also found that most HOME participating jurisdictions used their HOME funds in combination with other state, local, and private funds in order to provide the level of subsidy that low-income homebuyers need. These other funding sources included state housing finance agencies, Federal Home Loan Banks, the Rural Housing Service, non-profit organizations and for-profit organizations. The Neighborhood Reinvestment Corporation through its NeighborWorks network organizations also reports using federal dollars combined with other funding sources to assist low-income homebuyers. HUD's report noted that the availability of other funding sources for homebuyer assistance influences the decisions of State and local participating jurisdictions about whether to allocate HOME funds for homebuyer activities (section 3.5.2).

Evidence: HUD's Office of Policy Development and Research report "Study of Homebuyer Activity through the HOME Investment Partnership Program" (sections 3.2, 3.5, 5.1.1) can be found through HUDUser at: http://www.huduser.org/publications/hsgfin/homebuy.html. The ADDI legislation and HUD's implementing regulations can be found at: http://www.hud.gov/addi. The HOME legislation and implementing regulations can be found at: http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/. The CDBG legislation and implementing regulations can be found at: http://www.hud.gov/offices/cpd/communitydevelopment/rulesandregs/. The HOME Production report can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/production/033107.pdf.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The ADDI program is designed to help low-income households become first-time homebuyers. The use of ADDI funds is limited to down payment and closing costs, and the costs of necessary rehabilitation work to ensure that homes are decent, safe, sanitary and lead-free. In this way, ADDI funds are used to leverage other private and public funding. HUD's April 2005 study, "The Potential of Down Payment Assistance for Increasing Homeownership Among Minority and Low-Income Households" concluded that small amounts of down payment assistance can be very effective in stimulating fairly large numbers of renter households to become homeowners. This study also concluded that if a $5,000 grant program were implemented, 1.3 million more households would become homeowners (pp vi, 24-27). ADDI is also designed to provide State and local participating jurisdictions with the flexibility to structure their ADDI programs to best meet local first-time homebuyer needs and priorities, based on local plans and strategies. Funding is distributed to State and local participating jurisdictions using a needs-based block grant formula that measures the total low-income households residing in rental housing - a proxy for the ADDI target group. This block grant approach has proven to be an efficient approach for distributing Federal funds quickly, and an effective way to address the great variation in housing needs throughout the country. ADDI funds can be used to purchase various types of owner-occupied housing, including 1-4 family units, condominiums, cooperatives, land trust interests and manufactured housing. 375 State and local participating jurisdictions receive ADDI funds.

Evidence: The ADDI legislation and implementing regulations can be found at: http://www.hud.gov/addi/. HUD's April 2005 down payment study (pp vi, 24-27) can be found through HUDUser under Publications at: http://www.huduser.org.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The ADDI Act limits ADDI beneficiaries to low-income households who have not owned a home in the prior three years. Displaced homemakers, and families owning a manufactured home (not permanently affixed to a foundation) also qualify. These requirements ensure that ADDI funds are only used to assist the intended beneficiaries of the ADDI program. The ADDI Act also requires HUD to allocate funds using a needs-based formula that reflects the total number of low-income households residing in rental housing, in effect targeting the greatest potential number of low-income first-time homebuyers. Because the ADDI Act created ADDI as a set-aside within the HOME program, only State and local jurisdictions that already participate in the HOME program receive an ADDI allocation. Therefore, ADDI participating jurisdictions already have processes in place to administer the ADDI program and address the program's purpose.

Evidence: The ADDI legislation and HUD's regulations for implementing ADDI can be found at: http://www.hud.gov/addi/.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: HUD has two long-term performance measures that focus on ADDI outcomes. The first measure is an established performance measure that includes ADDI program contributions. The second measure is a new performance measure for Federal Fiscal Year 2007. The President has set a national goal for 5.5 million new minority homeowners over ten years. In response, HUD established the first performance measure "the number of new minority homebuyers who are assisted with HUD programs". This performance measure is an indicator of closing the minority homeownership gap. The annual number of minority households who receive ADDI assistance to become first-time homebuyers contributes to achieving this performance measure and the long-term national goal. For Federal Fiscal Year 2007, HUD has established a second ADDI performance measure "the number of ADDI unit-years of affordability provided to low-income first-time homebuyers". This measure is a proxy indicator for the stability of the low-income households who receive ADDI assistance. This performance measure also demonstrates the effectiveness of the ADDI program in continuing to serve these low-income households during the long-term affordability period.

Evidence: Long-term performance measures can be found in HUD's FY 2003-2008 Strategic Plan Goals H1, H2 (pp 9,11) at: http://www.hud.gov/offices/cfo/reports/03strategic.pdf, and HUD's FY 2006-2011 Strategic Plan Goals A1, A2 (pp 12) at: http://www.hud.gov/offices/cfo/reports/hud_strat_plan_2006-2011.pdf. Performance accomplishments can be found in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. See the PART performance measures section.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Ambitious quantified targets and timeframes have been set for the long-term performance measures identified in Question 2.1. For Federal Fiscal Year (FY) 2006, ADDI funding was $24.75 million, a decrease of 50% from FY 2005. For FY 2007, the Administration requested $100 million, but the ADDI allocation remained at $24.75 million. HUD's ADDI targets and accomplishments reflect this reduction. For the measure "the number of new minority homebuyers who are assisted with HUD programs", HUD has based its quantified targets on the assumption that the average ADDI down payment assistance is $5,000 per household and that about half of the assisted first-time homebuyers will be minority households as evidenced by the number of first-time minority homebuyers that have received ADDI assistance since 2003, when the ADDI program was enacted. HUD's targets are ambitious because the maximum amount of ADDI assistance allowed is $10,000 or 6% of the unit purchase price. HUD's targets also assume that State and local participating jurisdictions will leverage ADDI assistance with other funding sources. For the new measure "the number of ADDI unit-years of affordability provided to low-income first-time homebuyers", HUD has established a FY 2007 target of 25,253 unit-years of affordability. The baseline year for this measure is FY 2003, the year that ADDI was enacted. This target is ambitious because it assumes that every unit will be able to meet its minimum long-term affordability requirement of at least five years. Targets have been established for FY 2007 through FY 2011. HUD plans to transmit ADDI re-authorization language to extend the ADDI program from FY 2008 through FY 2011. Targets for FY 2008 through FY 2011 are based on HUD's FY 2008 Budget Request. HUD will adjust these targets according to actual appropriations.

Evidence: Quantified targets and timeframes for the long-term performance measures can be found in HUD's FY 2003-2008 Strategic Plan Goals H1, H2 (pp 9,11) at: http://www.hud.gov/offices/cfo/reports/03strategic.pdf, and HUD's FY 2006-2011 Strategic Plan Goals A1, A2 (p 12) at: http://www.hud.gov/offices/cfo/reports/hud_strat_plan_2006-2011.pdf. See the PART performance measures section.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The performance measure for "the number of low-income households who receive ADDI assistance to achieve the benefits of homeownership for the first-time," demonstrates progress towards the long-term performance measures that are identified in Questions 2.1 and 2.2. This measure directly relates to the achievement of HUD's long-term goals and to the purpose of the ADDI program.

Evidence: Performance accomplishments can be found in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. See the PART performance measures section.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Baselines and ambitious targets have been established for the ADDI program's annual performance. For Federal Fiscal Year (FY) 2007 the following annual target has been established: 5,000 low-income households will receive ADDI assistance to achieve the benefits of homeownership for the first-time. HUD projects that about half of these new homebuyers will be minority households. The baseline year is FY 2003 which is the year ADDI was enacted. This is an ambitious annual target. HUD has based its target on the assumption that the average ADDI down payment assistance is $5,000 per household, even though the maximum amount allowed is $10,000 or 6% of the unit purchase price. HUD's target assumes that State and local participating jurisdictions will leverage ADDI assistance with other funding sources. HUD measures the accomplishment of this annual target based on data entered by State and local participating jurisdictions into HUD's Integrated Disbursement and Information System (IDIS). HUD posts monthly ADDI progress reports on HUD's ADDI webpage. If ADDI is reauthorized after FY 2007, annual targets will be established for additional Federal Fiscal Years.

Evidence: Accomplishment of the annual targets is measured based on data entered by State and local participating jurisdictions into HUD's Integrated Disbursement and Information System (IDIS). HUD posts monthly ADDI progress reports on HUD's ADDI webpage. Year end performance accomplishments can be found in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. See the PART performance measures section.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: HUD's partners, the State and local participating jurisdictions that receive ADDI funds, are responsible for implementing the ADDI program. The ADDI legislation and regulations require that ADDI funds be used to assist low-income households achieve the benefits of homeownership for the first time. Therefore, HUD's partners, the State and local participating jurisdictions, must commit to using ADDI funds for this purpose as a condition of receiving ADDI funds. 375 State and local jurisdictions participate in the ADDI program. The flexibility of ADDI allows these State and local participating jurisdictions to easily combine ADDI funds with other homebuyer assistance in order to meet local priorities, and achieve the ADDI program's annual and long-term goals. Even those State and local participating jurisdictions that receive a minimal ADDI allocation or those in high cost areas can assist first-time homebuyers by using their ADDI funds in combination with HOME, or other homebuyer assistance programs. State and local participating jurisdictions must report on their use of ADDI funds through HUD's Integrated Disbursement and Information System (IDIS). HUD prepares monthly ADDI progress reports that are posted on HUD's ADDI web page. HUD staff follow up with those State and local participating jurisdictions that evidence inadequate progress in assisting low-income first-time homebuyers. To reduce the cost burden of administering ADDI, HUD has developed implementing regulations and guidance that enable State and local participating jurisdictions to administer ADDI through their HOME programs.

Evidence: The ADDI legislation can be found at: http://www.hud.gov/addi/. The March 30, 2004, "HOME Investment Partnerships Program; American Dream Downpayment Initiative; Interim Rule" can be found at: http://www.hud.gov/addi/. HUD's ADDI guidance can also be found at: http://www.hud.gov/addi/. HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/addi/businessrules. pdf.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Two independent studies have been completed that relate to the ADDI program. One study was completed by the Government Accountability Office (GAO). The other study was completed by HUD's Office of Policy Development and Research. The GAO conducted an independent evaluation of the full scope of the ADDI program and issued a report in June 2006. GAO reviewed ADDI data, took data samples from grantees, conducted interviews, and made site visits to assess the impact of the ADDI program. GAO could not arrive at a conclusion about the ADDI program's impact or effects due to the existing ADDI data collection limitations of HUD's Integrated Disbursement and Information System (IDIS). GAO recommended that HUD re-engineer IDIS to capture discrete ADDI data, if the ADDI program was re-authorized after Federal Fiscal Year 2007. HUD's Office of Policy Development and Research conducted an independent study of the potential for down payment assistance efforts to increase homeownership and issued a report in April 2005 "The Potential of Down Payment Assistance for Increasing Homeownership Among Minority and Low-Income Households." This study analyzed longitudinal data from the 1996 U.S. Census "Panel of the Survey of Income and Program Participation (SIPP)". Although this study did not evaluate the ADDI program, this study was encouraging as it relates to the ADDI program design. The study found that small amounts of down payment assistance can be very effective in stimulating fairly large numbers of renter households to become homeowners. For example, the study concluded that if a $5,000 grant program were implemented, 1.3 million more households could become homeowners, than expected without this level of assistance (pp vi, 24-27). HUD has also contracted for an independent evaluation of ADDI homebuyer default rates. This evaluation is currently underway. Completion is targeted for 2008.

Evidence: The June 2006 GAO Report (GAO-06-677) on ADDI can be found at: http://www.gao.gov/new.items/d06677.pdf. HUD's April 2005 down payment study (pp vi, 24-27) can be found through HUDUser under Publications at: http://www.huduser.org.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The ADDI budget requests reflect the accomplishment of ADDI's annual and long-term performance goals. HUD's Integrated Disbursement and Information System (IDIS) provides "real time" data on the production of ADDI units. HUD uses this data to establish ADDI budget estimates and long-term performance goals. HUD is able to estimate the effect of changes in ADDI program funding on ADDI annual and long-term performance targets, using an average per unit subsidy calculation. The ADDI Act establishes the maximum amount of ADDI assistance per eligible household at the greater of $10,000 or up to 6% of the unit purchase price. Therefore, HUD uses $5,000 per unit to estimate the number of households that can be assisted with a proposed budget appropriation. HUD's budget also estimates the staff (FTE) needed to administer the ADDI program.

Evidence: HUD's FY 2007 budget justification can be found at: http://www.hud.gov/offices/cfo/reports/2007/main_toc.cfm.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: ADDI has two strategic planning areas that need to be addressed. HUD has taken productive steps to resolve each. First, the ADDI program authorization ends after Federal Fiscal Year (FY) 2007. The Administration is proposing to re-authorize ADDI through FY 2011. Second, HUD has had ADDI data collection issues that limit the ability to credibly assess the program. After ADDI enactment in 2003, HUD conducted a cost-benefit analysis, and determined that it was not cost-effective to implement additional changes to HUD's Integrated Disbursement and Information System (IDIS) to collect information exclusively on ADDI projects, given the ADDI program's relatively short authorization period. To address this issue, HUD issued interim IDIS ADDI Business Rules that provide guidance to State and local participating jurisdictions about how to input data into IDIS on ADDI expenditures and completed units. The Government Accountability Office (GAO), in its review of ADDI, found that HUD's interim IDIS ADDI data collection approach had limitations, as the data reflected a mixture of ADDI and HOME funded units. GAO also concluded that HUD had initially provided inconsistent guidance to participating jurisdictions on IDIS ADDI data entry. Nevertheless, of the data that GAO sampled, GAO found that 70 percent of the units were attributable to ADDI funds; the remaining units were attributable to HOME funds. To address the GAO findings, HUD will establish an exclusive ADDI data element in IDIS if ADDI is re-authorized and funding is available to make this change. This change will ensure that the ADDI data can be used reliably to assess ADDI performance, policy, and impact.

Evidence: The June 2006 GAO Report (GAO-06-677) and recommendations, and HUD's response (pp 26-30) can be found at: http://www.gao.gov/new.items/d06677.pdf. HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/addi/businessrules. pdf. Informal transmittal of ADDI re-authorization language was submitted to the Congress in May, 2007.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: HUD regularly collects performance data on down payment assistance to first-time homebuyers through HUD's Integrated Disbursement and Information System (IDIS). This data is entered into IDIS by ADDI State and local participating jurisdictions in accordance with HUD's ADDI IDIS Business Rules. HUD uses this IDIS data to manage its ADDI program partners. While this data is helpful for judging the general progress of the ADDI program, there are inherent data limitations caused by the current interim data collection method. The Government Accountability Office (GAO) reviewed the ADDI program. GAO found that HUD's interim IDIS ADDI data collection approach had limitations, as the data reflected a mixture of ADDI-funded and HOME-funded units. GAO also concluded that HUD had initially provided inconsistent guidance to participating jurisdictions on IDIS ADDI data entry. For these reasons, the current IDIS ADDI data is not discrete and not completely credible for attributing all reported accomplishments to the ADDI program. Nevertheless, GAO found that 70 percent of the sampled units were attributable to ADDI funds; the remaining units were attributable to HOME funds. To address GAO's findings, HUD will establish an exclusive ADDI data element in IDIS if ADDI is re-authorized and funding is available to make this change. This change will ensure that the ADDI data can be used reliably to assess ADDI performance, policy, and impact.

Evidence: HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/addi/businessrules. pdf. Monthly ADDI accomplishments reports can be found on HUD's ADDI web page at: http://www.hud.gov/offices/cpd/affordablehousing/reports/. The June 2006 GAO Report (GAO-06-677) and HUD's response can be found at: http://www.gao.gov/new.items/d06677.pdf. HUD's monitoring Handbook 6509.2 Exhibit 7.5 can be found at: http://www.hudclips.org. HUD's Notice CPD 06-10 describes the Risk Analysis process. This notice can be found through: http://www.hudclips.org.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The Director of HUD's Office of Affordable Housing Programs (OAHP) is responsible for accomplishing ADDI program results, including the ADDI long-term performance goals. All year-end performance evaluations of OAHP managers reflect the accomplishment of ADDI goals. Internal quarterly reports, based on data entered by State and local participating jurisdictions into HUD's Integrated Disbursement and Information System (IDIS), track progress towards meeting the ADDI performance goals. HUD prepares monthly ADDI accomplishment reports that are posted on HUD's ADDI web page. HUD Field Office staff follow-up with those State and local participating jurisdictions that evidence inadequate ADDI progress. HUD has developed checklists, monitoring goals, and annual risk analysis for HUD Field Office staff to use to conduct on-site monitoring of ADDI performance and compliance. HUD Field Office managers are accountable for meeting these monitoring goals, following-up to resolve any findings or concerns, and providing technical assistance to ADDI participating jurisdictions to improve ADDI performance.

Evidence: Year-end performance accomplishments can be found in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. Year-end results are reported in HUD's Performance and Accountability Report. The FY 2006 report (pp 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf. HUD's monitoring handbook and checklists instruct HUD Field Offices on how to evaluate local jurisdiction's homebuyer activities (including ADDI). The HUD monitoring Handbook 6509.2 Exhibit 7.5 can be found at: http://www.hudclips.org. HUD's Notice CPD 06-10 describes the Risk Analysis process. This notice can be found through: http://www.hudclips.org.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: While certain ADDI data limitations exist (see Question 3.1), HUD's data suggests that the ADDI program obligates its funds at a reasonable rate. HUD provides instructions to State and local participating jurisdictions about how to reserve and obligate ADDI funds. Each State and local participating jurisdiction obligates its ADDI funds in accordance with the procedures that have been established for the HOME and ADDI programs. HUD's Integrated Disbursement and Information System (IDIS) is a "real time" system that provides information on each State and local participating jurisdiction's total allocation and use of HOME and ADDI funds. HUD staff track the commitment, obligation, and outlays of funds, and follow up with State and local participating jurisdictions to ensure that program deadlines are met.

Evidence: HUD's instructions for designating new State and local participating jurisdictions, reserving and obligating funds, and reallocating funds are set forth in Notice CPD 06-05. This notice can be found at: http://www.hud.gov/offices/cpd/lawsregs/notices/2006/06-05.doc. HUD issues monthly deadline compliance status reports. These reports can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/index.cfm. HUD's monitoring handbook and checklists instruct HUD Field Offices on how to evaluate local jurisdiction's homebuyer activities (including ADDI). HUD monitoring Handbook 6509.2 Exhibit 7.5 can be found at: http://www.hudclips.org. Information about the Single Audit Act can be found in OMB Circular A-133. The Part 4 Compliance Supplement addresses the auditing of HUD's programs. A-133 can be found at: http://www.whitehouse.gov/omb/financial/fin_single_audit.html.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: HUD has established a new ADDI efficiency performance measure for Federal Fiscal Year (FY) 2007. HUD will measure the increase in the "average ADDI assistance per unit." This measure demonstrates the efficiency of ADDI in serving a greater number of households and leveraging other funds. The baseline year is FY 2006, or $7,500 per unit. The average ADDI assistance should not increase more than 3%, or $7,725 in FY 2007. Based on the assumption that the Congress will reauthorize and continue funding the ADDI program after FY 2007, HUD projects similar levels of efficiencies into future years. HUD has established procedures to measure and achieve ADDI program efficiencies and cost effectiveness. ADDI is a flexible program that is designed to work with other Federal, state and local affordable homebuyer programs. HUD tracks quarterly progress towards achieving the ADDI goals, based on information entered by State and local participating jurisdictions into HUD's Integrated Disbursement and Information System (IDIS). In October 2006, HUD launched a new Outcome Performance Measurement System (OPMS) for HUD's Community Planning and Development (CPD) programs, including ADDI. The first outcome results will be available after September 30, 2007. As discussed under Question 2.8, HUD conducted a cost-benefit decision not to implement costly changes to collect exclusive ADDI data through HUD's Integrated Disbursement and Information System (IDIS). A June 2006 Government Accountability Office (GAO) report concurred with HUD that creating new data controls for ADDI in IDIS would be prudent only if ADDI is reauthorized beyond FY 2007 (p 26).

Evidence: Performance accomplishments can be found in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. See the PART Performance Measures section. Year-end results are reported in HUD's Performance and Accountability Report. The FY 2006 GAO Report (GAO-06-677) (p 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf. Information about HUD's Outcome Performance Measurement System can be found at: http://www.hud.gov/offices/cpd/about/performance/.

Does the program collaborate and coordinate effectively with related programs?

Explanation: ADDI is designed to coordinate effectively with other federal, state and local housing programs. ADDI can provide downpayment and closing cost assistance to purchase housing that is developed through these other programs. The ADDI block grant approach enables State and local participating jurisdictions to design their ADDI programs in ways that best meet local needs. These needs and partnerships are identified in the annual Consolidated Action Plans that each jurisdiction must submit to HUD for approval.

Evidence: The ADDI legislation and implementing regulations, which describe the purpose of ADDI and its flexible design, can be found at: http://www.hud.gov/addi/. Information about HUD's Consolidated Plan requirements for State and local participating jurisdictions can be found at: http://www.hud.gov/offices/cpd/about/conplan/index.cfm. HUD provided guidance on how to administer the ADDI program in the March 30, 2004, "HOME Investment Partnerships Program; American Dream Downpayment Initiative; Interim Rule", HOME and ADDI "Side by Side Comparison", ADDI Questions and Answers, Field Office guidance memoranda and HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules. These guidance documents can be found at HUD's HOME/ADDI web page under Resources: http://www.hud.gov/addi/.

Does the program use strong financial management practices?

Explanation: HUD requires State and local participating jurisdictions that receive ADDI funds to have strong financial management practices. State and local participating jurisdictions must follow the cost principles and financial management practices that are set forth in 24 CFR part 85 and OMB Circular A-87. State and local participating jurisdictions must enter financial and program data into HUD's Integrated Disbursement and Information System (IDIS). IDIS provides "real time" data on funds use. State and local participating jurisdictions must also comply with the Single Audit Act. HUD Field Office staff routinely monitor State and local participating jurisdictions. HUD has developed checklists, monitoring goals, and annual risk analysis guidance, including compliance with financial management requirements, for Field Office staff to use to conduct on-site monitoring of ADDI performance and compliance. HUD Field Office managers follow-up to resolve any findings or concerns, and provide technical assistance to ADDI participating jurisdictions to improve ADDI performance.

Evidence: OMB Circular A-87 governs cost principles of financial management, and can be found through: www.omb.gov. 24 CFR part 85 can be accessed through the electronic Federal Register found at: http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=%2Findex.tpl. Information about HUD's Integrated Disbursement and Information System can be found at: http://www.hud.gov/offices/cpd/systems/idis/library/index.cfm. HUD's April 20, 2004 Memorandum provides guidance to HUD Field Offices on reporting ADDI in HUD's Integrated Disbursement and Information System (IDIS). This memo can be found at: http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/idisinstructions.pdf. HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules instruct State and local participating jurisdictions on how to report ADDI accomplishment data in IDIS. The ADDI Business Rules can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/addi/businessrules.pdf. Information about the Single Audit Act can be found in OMB Circular A-133. The Part 4 Compliance Supplement addresses the auditing of HUD's programs. A-133 can be found at: http://www.whitehouse.gov/omb/financial/fin_single_audit.html.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: HUD has taken steps to address program management issues. The Government Accountability Office's (GAO) June 2006 ADDI report recommended that if the Congress re-authorizes ADDI beyond Federal Fiscal Year (FY) 2007, HUD should seek funds to revise HUD's Integrated Disbursement and Information System (IDIS) to distinguish between ADDI-funded and HOME-funded first-time homebuyer activities. To address GAO's findings, HUD will consider the cost-benefit of revising IDIS to incorporate an exclusive ADDI data element so that the data can be used to reliably assess ADDI program performance, policy, and impact. In the interim, HUD's IDIS ADDI Business Rules provide guidance to State and local participating jurisdictions about how to enter ADDI data into IDIS. HUD will continue to issue ADDI notices and guidance to grantees when clarification is appropriate.

Evidence: HUD provided guidance on how to administer ADDI as part of HUD's HOME program in the March 30, 2004, "HOME Investment Partnerships Program; American Dream Downpayment Initiative; Interim Rule", HUD's HOME and ADDI "Side by Side Comparison, and HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules. This guidance can be found at HUD's ADDI web page: http://www.hud.gov/addi/. GAO's ADDI recommendations can be found in its June 2006 report (GAO-06-677) at: http://www.gao.gov/new.items/d06677.pdf.

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: HUD has issued ADDI regulations and provided other guidance to State and local participating jurisdictions about how to comply with the ADDI program and reporting requirements. HUD's Integrated Disbursement and Information System (IDIS) collects information about ADDI funds use. IDIS also collects information about ADDI beneficiaries and leverage. HUD issues monthly ADDI accomplishment reports for each State and local participating jurisdiction based on this IDIS data. HUD Field Office staff follow-up with those State and local participating jurisdictions that evidence inadequate ADDI performance. HUD Field Offices are required to conduct an annual risk analysis to select State and local participating jurisdictions for on-site monitoring reviews. The number of visits is determined by local HUD Field Office management plans. HUD has developed a handbook and checklists for HUD Field Office staff to use to conduct on-site monitoring of ADDI performance and compliance. All State and local participating jurisdictions must also comply with the Single Audit Act. HUD staff follow-up to resolve any findings or concerns in accordance with established timeframes, and to provide technical assistance to ADDI participating jurisdictions to improve ADDI performance.

Evidence: Information about HUD's Integrated Disbursement and Information System (IDIS) can be found at: http://www.hud.gov/offices/cpd/systems/idis/library/index.cfm. HUD provided guidance on how to administer the ADDI program in the March 30, 2004, "HOME Investment Partnerships Program; American Dream Downpayment Initiative; Interim Rule", HOME and ADDI "Side by Side Comparison", ADDI Questions and Answers, Field Office guidance memoranda and HUD's Integrated Disbursement and Information System (IDIS) ADDI Business Rules. These guidance documents can be found at HUD's HOME/ADDI web page under Resources: http://www.hud.gov/addi/. HUD's Integrated Disbursement and Information System (IDIS) ADDI monthly accomplishment reports can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/index.cfm#addi. HUD's monitoring handbook and checklists instruct HUD Field Offices on how to evaluate local jurisdictions' homebuyer activities (including ADDI). HUD's monitoring Handbook 6509.2 Exhibit 7.5 can be found at: http://www.hudclips.org. HUD's Notice CPD 06-10 describes the Risk Analysis process. It can be found through: http://www.hudclips.org. Information about the Single Audit Act can be found in OMB Circular A-133. The Part 4 Compliance Supplement addresses the auditing of HUD's programs. A-133 can be found at: http://www.whitehouse.gov/omb/financial/fin_single_audit.html.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: HUD collects "real time" ADDI performance data through HUD's Integrated Disbursement and Information System (IDIS). State and local participating jurisdictions use IDIS to draw ADDI funds and to report on ADDI funds use for low-income first-time homebuyer activities. IDIS also collects information about ADDI beneficiaries and leverage. This information is readily provided to the public. HUD issues monthly ADDI accomplishment reports for each State and local participating jurisdiction that can be viewed on HUD's ADDI web page. Year-end performance data is reported in HUD's Annual Performance and Accountability Report.

Evidence: HUD's Integrated Disbursement and Information System (IDIS) ADDI monthly accomplishment reports can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/index.cfm#addi. Year-end results are reported in HUD's Performance and Accountability Report. The FY 2006 report (p 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: State and local participating jurisdictions enter ADDI data into HUD's Integrated Disbursement and Information System (IDIS) in accordance with HUD's ADDI IDIS Business Rules. According to this data, over 23,000 low-income households have received down payment assistance to become first-time homebuyers since FY 2004. However, the Government Accountability Office (GAO) concluded that only 70 percent of the ADDI-assisted households reported in IDIS could be directly attributed to ADDI assistance, based on GAO's sampling of HUD's IDIS data. This discrepancy was caused by the IDIS system's non-discrete HOME and ADDI data elements, and HUD's need to use an interim data collection method to approximate ADDI data. Because IDIS does not have a discrete ADDI data element that can distinguish between ADDI-funded and HOME-funded down payment assistance, it is difficult to assess the direct impact of the ADDI program in causing a net spending increase on down payment/closing cost assistance for low-income first-time homebuyers. While the combined ADDI and HOME data reflect an overall increase in down payment assistance to low-income first-time homebuyers, it is not possible to separately attribute spending or accomplishments to the ADDI program or to the HOME program. Nevertheless, by using GAO's findings to extrapolate from HUD's ADDI IDIS data, it can be demonstrated that ADDI has contributed to HUD's long-term performance measure, the President's homeownership initiative and HUD's strategic goal of closing the minority homeownership gap. From 2004 to 2006 ADDI achieved about 86 percent of its annual performance goals, which is above average. About 50 percent of the new ADDI homebuyers were minority households. ADDI's progress in achieving HUD's long-term performance measure of housing affordability has yet to be determined because this is a new measure. Accomplishment data for this new performance measure will be available at the end of Federal Fiscal Year 2007.

Evidence: The June 2006 GAO report can be found at: http://www.gao.gov/new.items/d06677.pdf. Year-end results are reported in HUD's Performance and Accountability Report. The FY 2006 report (p 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf. Baselines and quantified targets for long-term performance measures can be found in HUD's FY 2003-2008 Strategic Plan Goals H1, H2 (pp 9,11) at: http://www.hud.gov/offices/cfo/reports/03strategic.pdf, in HUD's FY 2006-2011 Strategic Plan Goals A1, A2 (pp 12) at: http://www.hud.gov/offices/cfo/reports/hud_strat_plan_2006-2011.pdf, and in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf.

Does the program (including program partners) achieve its annual performance goals?

Explanation: According to the ADDI data entered by State and local participating jurisdictions into HUD's Integrated Disbursement and Information System (IDIS) in accordance with HUD's ADDI IDIS Business Rules, and extrapolated based on the Government Accountability Office's (GAO) findings that there are data limitations for what can be attributable to ADDI, the ADDI program appeared to achieve its annual goals to a large extent. On average, ADDI achieved 86 percent of its goals for the three years (2004-2006) reported by HUD in its annual Performance and Accountability Reports.

Evidence: Year-end results are reported in HUD's Performance and Accountability Report. The FY 2006 report (p 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf. Baselines and quantified targets for long-term performance measures can be found in HUD's FY 2003-2008 Strategic Plan Goals H1, H2 (pp 9,11) at: http://www.hud.gov/offices/cfo/reports/03strategic.pdf, in HUD's FY 2006-2011 Strategic Plan Goals A1, A2 (pp 12) at: http://www.hud.gov/offices/cfo/reports/hud_strat_plan_2006-2011.pdf, and in HUD's Fiscal Year 2007 Annual Performance Plan (p 75) at: http://www.hud.gov/offices/cfo/reports/pdfs/app2007.pdf. The June 2006 GAO report (p26 -30) can be found at: http://www.gao.gov/new.items/d06677.pdf.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Beginning in Federal Fiscal Year (FY) 2007, HUD established a new ADDI efficiency measure: "the increase in the average ADDI assistance per unit will not be more than 3% per year." The baseline year for this measure is FY 2006 when the average per unit assistance was $7,500. Although this is a newly established measure, a review of IDIS ADDI data demonstrates that this ADDI outcome has been consistently achieved since FY 2004. Past ADDI data shows that from FY 2004 to 2006, ADDI efficiency has been within the 3% target range, as follows: 9/30/2004 = $7,876; 9/30/2005 = $7,557 = -4.05%; 9/30/2006 = $7,479 = -1.03%; 4/30/2007 = $7,596 = +1.56%. The ADDI Act permits State and local participating jurisdictions to provide ADDI assistance to each eligible household up to the greater of $10,000 or 6% of the unit purchase price. Therefore, this baseline average of $7,500 per unit reflects the cost efficiency of ADDI, as it is significantly below the amount permitted by the ADDI Act. The ADDI Act and implementing regulations establish ADDI as a set-aside within the HOME program, thereby allowing efficiencies in program administration. The flexibility of the ADDI program enables State and local participating jurisdictions to easily combine ADDI funds with other homebuyer assistance programs in order to meet HUD's long-term ADDI goals. Even those State and local participating jurisdictions that receive a minimal ADDI allocation or those in high cost areas can assist low-income first-time homebuyers by using their ADDI funds with HOME, FHA insurance or other State and local homebuyer assistance programs.

Evidence: Year-end results are reported in HUD's Performance and Accountability Report, based on data entered by ADDI Participating Jurisdictions into HUD's Integrated Disbursement and Information System (IDIS) in accordance with the ADDI IDIS Business Rules. HUD's IDIS ADDI Business Rules can be found at: http://www.hud.gov/offices/cpd/affordablehousing/reports/addi/businessrules.pdf. HUD's FY 2006 Performance and Accountability Report (p 22-25) can be found at: http://www.hud.gov/offices/cfo/reports/2006/2006par.pdf. Also see the PART Performance Measures section.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: Because ADDI was enacted in December 2003 and ADDI funds have only been available since the summer of 2004, the time period has been relativley short to evaluate the program's long-term impacts, and compare it to other programs. The one independent and available evaluation of ADDI was completed by the Government Accountability Office (GAO), but this study did not reach a conclusion due to the program's data limitations.

Evidence: The American Dream Downpayment Act (Title I, Pub.L. 108-186) can be found through HUD's ADDI web page at: http://www.hud.gov/addi/.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Because of the short time period since the implementation of the ADDI program in 2004, there has only been one independent study that attempted to assess the effectiveness of the ADDI program. This study was conducted by the Government Accountability Office (GAO) and issued in June 2006. The GAO concluded that an assessment of the ADDI program was constrained due to program data limitations. However, the results of HUD's April 2005 independent study "The Potential of Down Payment Assistance for Increasing Homeownership Among Minority and Low-Income Households" are encouraging. Although not an evaluation of the ADDI program, this study demonstrated the efficacy of using the ADDI approach. The study simulated the effects of small amounts of down payment assistance on homeownership and found that small amounts of assistance are strong predictors for increased homeownership. The study concluded that a $5,000 grant program could result in 1.3 million more households becoming homeowners (pp vi, 24-27). HUD has funded an independent evaluation of the ADDI program that is currently underway. This evaluation will assess the default rates of HOME-assisted and ADDI-assisted homebuyers compared to the default rates of FHA-insured homebuyers. The study will examine households that received assistance from 2000 through 2005. Default rates are an indicator of a program's relative success in assisting first-time homebuyers by measuring the long-term sustainability of first-time homeownership. The study is planned to be completed in 2008.

Evidence: The June 2006 GAO report can be found at: http://www.gao.gov/new.items/d06677.pdf. The January 2005 HUD Office of Policy Development and Research report "The Potential of Downpayment Assistance for Increasing Homeownership Among Minority and Low-Income Households" can be found at: http://www.huduser.org/publications/HOMEOWN/downpayasstlih.html.