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On August 8, The Government Accountability Office (GAO) released Affordable Housing: Improvements Needed in HUD’s Oversight of the Housing Trust Fund Program. The report examines (1) the number and production rate of HTF units; (2) how selected grantees have used HTF and other funding sources, and the development costs of their projects; and (3) HUD’s HTF oversight and reporting. GAO analyzed data from HUD and a nongeneralizable sample of 12 grantees (selected for diversity in location and project characteristics and accounting for about 42 percent of HTF funding in 2021) on HTF-assisted projects completed by March 1, 2022.

Housing Trust Fund Allocations for 2022, by State

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What GAO Found:

  • As of March 1, 2022, Housing Trust Fund (HTF) grantees had developed 2,186 rental units (in 263 projects) for households with extremely low incomes (not exceeding 30 percent of the area median). Grantees had also committed HTF funds to another 519 projects with an estimated 6,646 units designated for extremely low-income households.
  • Once grantees began receiving HTF funds in late 2016, production of completed units averaged about seven units per quarter from the fourth quarter of 2017 through 2018, but grew to almost 300 units per quarter in 2021.
  • For the 12 selected grantees GAO reviewed, HTF accounted for about 10 percent of the total funds for 70 completed projects. Equity from investors in Low Income Housing Tax Credits was the largest funding source. The average development cost for these 70 projects was about $232,000 per unit but varied by project type and location.

HUD had not adequately monitored grantee compliance with requirements for reporting project completion dates and had not properly communicated to grantees the requirement they submit cost certifications for completed HTF projects.

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GAO Recommendations:

  1. Develop and implement a centralized process to monitor HTF grantees’ compliance with the requirement to enter completion information in IDIS within 120 days of the final project drawdown;
  2. Develop and implement a centralized process to monitor data in IDIS on the total number of units in completed projects for likely errors;
  3. Enhance communication of the cost certification requirement to grantees;
  4. Conduct a comprehensive assessment of HTF fraud risks in accordance with GAO’s Fraud Risk Framework and HUD’s fraud risk management policy; and
  5. Disclose that the amount of non-HTF funds may be under-reported and that HTF units are only a portion of the total units in HTF-assisted projects.

HUD officials said they are drafting procedures for field monitoring of HTF grantees that is expected to begin in fiscal year 2024. While this monitoring could help address some of the weaknesses GAO identified, HUD could take additional steps in the near term to help ensure that HTF funds are used efficiently and effectively and that Congress understands the program’s performance.