Detailed Information on the
HOPE VI (Severely Distressed Public Housing) Assessment

Administration recommends terminating the HOPE VI program.

Measure: The HOPE VI program will leverage $585 million of other financing.

Explanation:This measure tracks the program's success in leveraging other public and private funds, which is critical to the construction and management of HOPE VI developments.

Measure: Number of households relocated.

Explanation:Current households must be relocated before demolition and redevelopment can begin.

Measure: Number of severely distressed public housing units demolished under HOPE VI annually.

Explanation:Units demolished is one of two key outputs used by HUD to track the implementation of HOPE VI revitalization plans. Targets are based on HOPE VI plans submitted by Public Housing Agencies.

Measure: Number of public housing units constructed or rehabilitated under HOPE VI.

Explanation:Units constructed or rehabilited is one of two key outputs used by HUD to track the implementation of HOPE VI revitalization plans. Targets are based on HOPE VI plans submitted by Public Housing Agencies.

Measure: Number of units occupied.

Explanation:Number of HOPE VI units occupied after redevelopment is complete.

Measure: The average completion time for projects funded by HOPE VI grants awarded since fiscal year 1999 decreases.

Explanation:This indicator measures average completion time of unit production of HOPE VI projects from the execution date of the grant agreement. The average does not include projects funded by HOPE VI grants awarded before fiscal year 1999.

Is the program purpose clear?

Explanation: The program's purpose is to: (1) improve the living environment of public housing residents through the demolition, rehabilitation, and replacement of obsolete public housing projects; (2) contribute to the improvement of the surrounding neighborhood; (3) provide housing that will avoid or decrease the concentration of very low-income families; and (4) create opportunties for residents to achieve self-sufficiency.

Evidence: The purpose is expressed in section 24(a) of the US Housing Act of 1937 and the Committee on Appropriations Senate Report 102-356.

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

Explanation: Through new construction or rehabilitation, the program addressed distressed and obsolete public housing properties, transforming them into mixed-income communities. However, the program has accomplished its primary goal to demolish 100,000 severely distressed public housing units by 2003.

Evidence: In 1992, the National Commission on Severely Distressed Public Housing estimated 86,000 federally subsized public housing units were severely distressed and subjecting the families residing in them to extreme poverty and intolerable conditions. The 86,000 unit estimate later became the goal to address 100,000 severely distressed public housing units by 2003.

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

Explanation: HOPE VI is one of a select number of tools available to housing authorities to revitalize distressed or obsolete public housing. HOPE VI works in conjunction with other Federal, state, and local programs to leverage financing, but statute provides other means to address these properties.

Evidence: The Public Housing Reform Act of 1998 outlined new authority for housing authorities to issue bonds against future approriations, opening a large source of revenue to address projects on a HOPE VI-scale. The same act provided authority to mandatorily or voluntarily convert to housing vouchers properties failing a viability cost test.

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

Explanation: The program has been shown to be more costly than other programs that serve the same population. It also has an inherently long, drawn-out planning and redevelopment process. Some Public Housing Authorities (PHAs) lack the capacity to manage their redevelopment projects.

Evidence: In a GAO report (GAO-02-76), the housing-related costs of a HOPE VI unit were shown to be 27 percent higher than a housing voucher and 47 percent higher when all costs were included. There are also significant delays in the execution and completion of these grants. Only 15 of 193 grants awarded through FY 2002 have been completed.

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The majority of funds have been awarded to larger, distressed developments averaging 300 units or more. However, the program has been criticized for not having a workable definition of severely distressed housing or a grant award process that addresses the most severely distressed public housing.

Evidence: The Notice of Funding Availability (NOFA) weighs several factors in awarding grants including capacity, need, soundness of approach, ability to leverage, and coordination and community planning. At times the HOPE VI NOFA has given funding priority to the largest properties which typically are the most distressed. However, more recently the HOPE VI NOFA has placed more emphasis on proposals that are farther along in the development process.

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: The program's primary long-term goal is to demolish 100,000 of the Nation's severely distressed public housing units. HUD has recently established a new long-term goal to increase the timely performance of grantees. However, outcome-oriented goals and measures that focus on improved quality of life or increased self-sufficiency among residents were never developed.

Evidence: HUD's Annual Performance Plans track the program's ability to contribute to the 100,000 unit demolition goal. HUD's recent Strategic Plan establishes a new goal to increase the timely performance of grantees by ensuring 100 percent of grants awarded through 2001 are completed by 2008. However, this target is weak given the current average grant completion time is already eight years.

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

Explanation: In 1996, HUD committed to demolishing 100,000 severely distressed public housing units by 2003.

Evidence: Annual Performance Plans.

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

Explanation: Annual goals are output-oriented and focus on the number of residents relocated, units demolished and rebuilt as well as occupied.

Evidence: Most annual goals appear in HUD's Annual Performance Plans. However, there are no annual measures in the plans that can demonstrate HUD's progress in achieving its new goal to improve the timeliness of HOPE VI grantees.

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

Explanation: Goals have not been consistently ambitious, and have become less aggressive in 2004.

Evidence: Resident relocation, unit demolition, and unit construction goals for 2003, 2004, and 2005 have been set lower than acheivements made in prior years even though over $3.3 billion in balances remain unspent.

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

Explanation: Grantees are committed to output goals and report progress on their revitalization efforts to HUD on a quarterly basis. The Grantees' partners are generally committed to their roles in the revitalization projects, as well. Despite such commitment, in order to implement the complex mixed-finance deals, Grantees are reliant on the cooperation of a variety of outside partners, such as city and county governments, state housing finance agencies, equity investors, resident groups, and community groups, all of whom are not directly accountable to the grantee or HUD.

Evidence: Grantees populate the Quarterly Progress Reporting System with resident relocation, unit demolition, and construction information along with other activities. Other factors may impede the accomplishment of these goals, such as incongruencies in financing cycles, administrative and staffing problems and litigation.

Are independent and quality 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: The program has received numerous independent evaluations that have focused on various elements of the program from per unit costs to tracking the quality of life of former residents.

Evidence: The GAO, HUD IG, and Urban Institute among others have reviewed HOPE VI management, performance, cost, and social impact.

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: HUD has been able to estimate the effect of funding changes on the level of HOPE VI program activity. Budget requests for the program have been sufficient to reach the goal of removing 100,000 distressed units from the public housing inventory by 2003. Acknowledging the goal was accomplished, HUD did not request funding for the program in 2004 or 2005.

Evidence: Budget requests along with supporting materials, such as Congressional Justifications, identify the number of residents to be relocated, units to be demolished, and units to be newly constructed or rehabilitated to be supported by the funding request.

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

Explanation: HUD has taken steps to identify and address weaknesses in program administration including the creation of a database to hold grantees accountable to their performance goals.

Evidence: The Quarterly Progress Reporting System was created to set performance goals for resident relocation, demolition, etc. and track their achievement.

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 collects performance information from grantees on a quarterly basis and uses the information to sanction non-compliant grantees and inform stakeholders and policy makers of the program's progress.

Evidence: Grantees populate the Quarterly Progress Reporting System with resident relocation, unit demolition, and construction information along with other activities. HUD has restructed grant agreements with PHAs that have fallen behind schedule.

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: Although HUD has increased the emphasis on accountability in recent years, HUD generally applies enforcement measures on a case-by-case basis.

Evidence: Although HUD has taken corrective action with non-performing PHAs including New Orleans, Puerto Rico, and Detroit, other grantees continue to miss performance measures.

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

Explanation: The program has significant obligated and unobligated balances. On average, grantees do not begin to draw down funds until at least three years after the grant is awarded.

Evidence: Of the $6 billion appropriated for the HOPE VI program from 1993 through 2003, $2.7 billion in obligated balances and $560 million in unobligated balances remain unspent.

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

Explanation: The program has total development and per-unit cost limits, but does not measure the efficiency to which grantees use their funding.

Evidence: 24 CFR 941 outlines public housing development cost limits.

Does the program collaborate and coordinate effectively with related programs?

Explanation: A fundamental characteristic of HOPE VI is its ability to leverage additional funding. Revitalization projects are funded through a variety of sources including the state-administered Low-Income Housing Tax Credit, public and private debt, and other local, state, and Federal sources. The program must also work in concert with HUD's Section 8 housing vouchers program to provide relocation housing.

Evidence: As outlined in the NOFA, HOPE VI applications are scored on their abillity to leverage funding and in-kind benefits such as social services. A GAO report (GAO-03-91) found that HOPE VI leveraging has increased but the majority of matching funds are federal.

Does the program use strong financial management practices?

Explanation: Significant obligated and unobligated balances accumulate while grantees prepare for the redevelopment process.

Evidence: Of the $6 billion appropriated for the HOPE VI program from 1993 through 2003, $2.7 billion in obligated balances and $560 million in unobligated balances remain unspent.

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

Explanation: HUD has taken steps to increase grantee monitoring and accountability, but deficiencies remain. The majority of redevelopment grants have not been completed and recent changes to the NOFA, which are expected to expedite the delivery of revitalized housing and services, have not had time to materialize.

Evidence: Only 15 of 193 grants awarded through FY 2002 have been completed. Revisions to the 2002 HOPE VI NOFA require applicants to be farther along in the development process in order to reviece an award are too new to assess.

Are grants awarded based on a clear competitive process that includes a qualified assessment of merit?

Explanation: HOPE VI grants are awarded on a competitive basis through an annual NOFA as required by the HUD Reform Act. In an effort to ensure the most worthy applications are funded, the application criteria has increased in complexity over the years.

Evidence: The NOFA rates applicants on five factors: capacity, need, the soundess of the approach, ability to leverage resources, and coordination and community planning.

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

Explanation: Although the program uses oversight and administrative tools to emphasize timeliness and accountability in the implementation of the grants, there is insufficient capacity for HUD to fully oversee all levels of these highly complex redevelopment projects.

Evidence: The primary tools for achieving these objectives include grant monitoring, holding grantees accountable to following their development schedule, extensive use of the Quarterly Progress Reporting System, risk assessment of grantees, and training. The fact that most grantees have fallen behind schedule at one time or another indicates a problem with oversight capacity.

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 performance data from grantees on a quarterly basis, but does not make it publicly avavilable.

Evidence: Performance data is collected through the Quarterly Progress Reporting System.

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

Explanation: At the end of 2002, HUD had funded and approved the demolition of over 140,000 units enabling it to eventually surpass its goal to demolish 100,000 severely distressed units. However, HUD failed to formalize outcome-oriented goals for other objectives of the program such as increased self-sufficiency among residents and improving the economic vitality of the surrounding neighborhood.

Evidence: In the 2004 Annual Performance Plan, HUD reports that, through 2002, it had demolished 88,922 units and is on track to achieve the 100,000 unit demolition by the end of 2003.

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

Explanation: Since defining output measures in HUD Annual Performance Plans, HOPE VI achieves its annual performance goals half of the time. However, as stated in question 2.4 their annual goals are not ambitious.

Evidence: HOPE VI achieved half of its annual goals outlined in the 2001 and 2002 Annual Performance Plans.

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

Explanation: Program management does not focus on reducing costs or achieving efficiencies.

Evidence: Total development costs are set according to regional construction indeces which are inflated each year. Resources for social services are 15 percent of the total grant and are in addition to the total development cap. Grantees are given flexibility to work within the caps.

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

Explanation: The cost and length of time it takes to complete redevelopment under HOPE VI calls into question whether it is an efficient method for meeting the current and future redevelopment needs of the pubic housing program particularly when compared with other assisted-housing options.

Evidence: In a GAO report (GAO-02-76), the housing-related costs of a HOPE VI unit were shown to be 27 percent higher than a housing voucher and 47 percent higher when all costs were included. In addition to being more costly, on average, five years pass between the time a HOPE VI award is made and a new unit is occupied in contrast to the HOME program which only takes two years.

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

Explanation: Evaluations conclude that the program is effective at removing distressed properties and replacing them with attractive mixed-income housing although at a slow pace. However, questions remain about how well the program helps residents achieve self-sufficeny and what happens to those who do not return to the revitalized property.

Evidence: The GAO, HUD IG, and Urban Institute have evaluated the performance of the HOPE VI program.