gao report 10-905 - hud must improve oversight of analysis of impediments

8/8/2019 GAO Report 10-905 - HUD Must Improve Oversight of Analysis of Impediments

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GAOUnited States Government Accountability Office

Report to Congressional Requesters

HOUSING ANDCOMMUNITYGRANTS

HUD Needs toEnhance ItsRequirements andOversight of

Jurisdictions FairHousing Plans

September 2010

GAO-10-905


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United States Government Accountability Office

Accountability Integrity Reliability

Highlights of GAO-10-905, a report tocongressional requesters

September 2010

HOUSING AND COMMUNITY GRANTS

HUD Needs to Enhance Its Requirements andOversight of Jurisdictions Fair Housing Plans

Why GAO Did This Study

Pursuant to the Fair Housing Act,Department of Housing and UrbanDevelopment (HUD) regulationsrequire grantees, such as cities, thatreceive federal funds through theCommunity Development BlockGrant (CDBG) and HOME InvestmentPartnerships Program (HOME) tofurther fair housing opportunities. In

particular, grantees are required toprepare planning documents knownas Analyses of Impediments (AI),which are to identify impediments tofair housing (such as restrictivezoning or segregated housing) andactions to overcome them. HUD hasoversight responsibility for AIs. Thisreport (1) assesses both theconformance of CDBG and HOMEgrantees AIs with HUD guidancepertaining to their timeliness andcontent and their potential usefulnessas planning tools and (2) identifies

factors in HUDs requirements andoversight that may help explain anyAI weaknesses.

GAO requested AIs from arepresentative sample of the nearly1,200 grantees, compared the 441 AIsreceived (95 percent response basedon final sample of 466) with HUDguidance and conducted work atHUD headquarters and 10 officesnationwide.

What GAO Recommends

GAO recommends that, throughregulation, HUD require grantees toupdate their AIs periodically, follow aspecific format, and submit them forreview. HUD neither agreed nordisagreed with the recommendationsbut noted recent efforts to improvecompliance and oversight.

What GAO Found

On the basis of the 441 AIs reviewed, GAO estimates that 29 percent of all CDBGand HOME grantees AIs were prepared in 2004 or earlier, including 11 percentfrom the 1990s, and thus may be outdated. HUD guidance recommends thatgrantees update their AIs at least every 5 years. GAO also did not receive AIs from25 grantees, suggesting that, in some cases, the required documents may not bemaintained, and several grantees provided documents that did not appear to beAIs because of their brevity and lack of content. GAO reviewed 60 of the currentAIs (those dating from 2005 through 2010) and found that most of these

documents included several key elements in the format suggested in HUDsguidance, such as the identification of impediments to fair housing andrecommendations to overcome them. (See table below for common impedimentsidentified in 30 of these 60 current AIs.) However, the vast majority of these 60AIs did not include time frames for implementing their recommendations or the

signatures of top elected officials, as HUD guidance recommends, raisingquestions about the AIs usefulness as a planning document. As a result, it isunclear whether the AI is an effective tool for grantees that receive federal CDBGand HOME funds to identify and address impediments to fair housing.

HUDs limited regulatory requirements and oversight may help explain why manyAIs are outdated or have other weaknesses. Specifically, HUD regulations do not

establish requirements for updating AIs or their format, and grantees are notrequired to submit AIs to the department for review. A 2009 HUD internal study

on AIs, department officials, and GAOs work at 10 offices identified criticaldeficiencies in these requirements. For example, HUD officials rarely requestgrantees AIs during on-site reviews to assess their compliance with overall CDBGand HOME program requirements, limiting the departments capacity to assessAIs timeliness and content. While HUD initiated a process to revise its AIregulatory requirements in 2009, what the rule will entail or when it will becompleted is not clear. In the absence of a department-wide initiative to enhanceAI requirements and oversight, many grantees may place a low priority onensuring that their AIs serve as effective fair housing planning tools.

Commonly Cited Impediments to Fair Housing in Selected AIs

Impediment Description of impediment

Zoning and site

selection

Building and zoning codes, which may contain lot requirements suchas minimum street frontage and front yard setbacks, and amenities(e.g., landscaping), that can affect the feasibility of developing low-and moderate-income housing.

Public services Inadequate public services, such as schools, in areas whereminorities or people with disabilities may live.

Lending policies andpractices

Less favorable mortgage lending terms from private lenders, such ashigher interest rates, for minority borrowers than are generallyavailable for nonminority borrowers with similar risk characteristics.

Source: GAO analysis of 30 current AIs.View GAO-10-905 or key components.For more information, contact Orice WilliamsBrown at (202) 512-8678 [email protected].
http://www.gao.gov/products/GAO-10-905http://www.gao.gov/products/GAO-10-905http://www.gao.gov/products/GAO-10-905http://www.gao.gov/products/GAO-10-905http://www.gao.gov/products/GAO-10-905


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Page i GAO-10-905

Contents

Letter 1

Background 4Many Grantees AIs Are Outdated or Otherwise Out of

Conformance with HUD Guidance and Thus There Is Limited Assurance They Serve as Effective Fair Housing Planning Tools 9

HUDs Limited Regulatory Requirements and Oversight andEnforcement Approaches May Help Explain Why Many AIs AreOutdated or Contain Other Weaknesses 22

Conclusions 31Recommendations for Executive Action 32

Agency Comments and Our Evaluation

Appendix I Objectives, Scope, and Methodology 38

Appendix II Comments from the Department of Housing and

Urban Development 45

Appendix III GAO Contact and Staff Acknowledgments 48

Tables

Table 1: HUDs Suggested Format for AI 7Table 2: Authorship of 60 Current AIs 16Table 3: Most Commonly Cited Impediments to Fair Housing in

Selected AIs 17Table 4: HUDs Key Elements Represented in 60 Current AIs 19Table 5: CPD On-site Reviews in 2009 for Selected HUD Field

Offices and Number of Times Grantees AIs Were Reviewedor Obtained 28

Table 6: Reasons Grantees Offered for Not Sending AIs to GAO 39

Figures

Figure 1: Estimated Completion Dates of CDBG and HOMEProgram Grantees AIs 11

Figure 2: Estimated Percentages of Outdated AIs, by HUD Region 12

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Abbreviations

AFFH affirmatively further fair housing AI Analysis of Impediments to Fair Housing ChoiceCAPER Consolidated Annual Performance and Evaluation

ReportCDBG Community Development Block GrantConPlan Consolidated PlanCPD Office of Community Planning and DevelopmentDCI data collection instrumentESG Emergency Shelter GrantsFHAct Fair Housing Act of 1968FHEO Office of Fair Housing and Equal OpportunityHMDA Home Mortgage Disclosure ActHOME HOME Investment Partnerships ProgramHOPWA Housing Opportunities for Persons with AIDSHUD Department of Housing and Urban DevelopmentRecovery Act American Recovery and Reinvestment Act of 2009

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Page 1 GAO-10-905

United States Government Accountability OfficeWashington, DC 20548

September 14, 2010

Congressional Requesters

The Fair Housing Act (FHAct) of 1968, as amended, prohibitsdiscrimination in the sale, rental, and financing of housing on the basis ofrace or color, religion, sex, national origin, familial status, or disability.1Section 808(e) (5) of the FHAct also requires the Department of Housingand Urban Development (HUD) to administer its housing and urbandevelopment programs, including formula grant programs such as the

Community Development Block Grant program (CDBG) and HOMEInvestment Partnerships Program (HOME), in a manner that affirmativelyfurthers fair housing (AFFH)that is, that eliminates housingdiscrimination, promotes fair housing choice, and fosters compliance withthe nondiscrimination provisions of the FHAct.2 In fiscal year 2009, theseprograms provided over $5 billion in funding to nearly 1,200 eligiblecommunities and jurisdictions and the median grant size was about $1.4million. To help fulfill the AFFH requirement, HUD regulations requiregrant recipients, such as municipalities and counties, to

prepare a planning document known as an Analysis of Impediments toFair Housing Choice (AI), which is to identify any potential impedimentsto fair housing choice within the jurisdiction (such as exclusive zoninglaws or segregated housing patterns);

take appropriate actions to overcome the effects of any impedimentsidentified in the AI, such as revising zoning ordinances; and

maintain records reflecting the analysis and actions taken.HUD views the AI as a tool that serves as the foundation for fair housingplanning by municipalities, counties, and other grantees that receivefederal funds through their participation in the CDBG, HOME, and othergrant programs. The department is also responsible for overseeing and

1Pub. L. No. 90-284, title VIII, 82 Stat. 81 (1968), as amended, codified at 42 U.S.C. 3601-

3619.

2This review covers only the CDBG program, which provides block grants to states, cities,

and counties for a variety of affordable housing activities, and the HOME program, whichsupports the production of affordable housing. Other HUD formula grant programs thatmust comply with AFFH requirements include the Housing Opportunities for Persons with

AIDS (HOPWA) program, and the Emergency Shelter Grants (ESG) program.

Housing and Community Grants


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enforcing grantees compliance with AFFH requirements and guidance,including those pertaining to their AIs.

Grantees compliance with AFFH requirements and the effectiveness ofHUDs oversight and enforcement have been called into question throughlitigation and reports and testimonies for some years. In August 2009, theDepartment of Justice and HUD announced a fair housing settlement withWestchester County in New York, a CDBG grantee that was required toconduct an AI. A federal district court had concluded that the county wasaware that racial and ethnic segregation and discrimination persisted in itsmunicipalities, but its AI made no mention of these practices or any plan

to address them. The litigation ended in an agreement that required thecounty to invest $51.6 million in affordable housing over the next 7 yearsand to undertake and fund marketing, public education, and otheroutreach efforts to promote fair and affordable housing. 3 Further, fairhousing groups have conducted studies and stated in testimony that manygrantees fail to prepare substantive AIs and that HUDs oversight andenforcement of the AI requirements have been minimal. 4 In 2009, HUDcompleted an internal study, which found that many AIs were outdated orappeared to have been prepared in a cursory fashion and found that thedepartments oversight was limited.5 Associations that represent grantees,such as the U.S. Conference of Mayors, have stated that their members arecommitted to furthering fair housing but have noted a variety of challengesinvolved in doing so, including limited funding for conducting the AIs anda lack of clear HUD guidance on preparing an AI. HUD officials havestated that the department has not always fulfilled its obligation to assist

3U.S. Department of Housing and Urban Development, HUD and Justice Department

Announce Landmark Civil Rights Agreement in Westchester County (news release, Aug.10, 2009); DOJ, Westchester County Agrees to Develop Hundreds of Units of Fair and

Affordable Housing in Settlement of Federal Lawsuit (news release, Aug. 10, 2009).

4National Fair Housing Alliance, Analysis of Impediments to Fair Housing Study(1997);

and Still Separate and Unequal: The State of Fair Housing In America (written testimonysubmitted by William R. Tisdale, Metropolitan Milwaukee Fair Housing Council, July 15,2008).

5See U.S. Department of Housing and Urban Development, Policy Development Division,

Office of Policy Development and Research, Analysis of Impediments Study(WashingtonD.C., 2009). According to HUD officials who conducted the study, the goal was to assessthe extent to which the AIs were produced in accordance to HUDs 1996Fair Housing

Planning Guide . The study focused on a number of issues, including the timeliness ofsubmissions of the AIs, and also categorized the impediments to fair housing choice asoutlined in the AIs.

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grantees in meeting AFFH requirements but is in the process of developinga rule that will provide the guidance grantees need.6

Given your questions about grantees compliance with AFFHrequirements, particularly the quality of their AIs, and HUDs oversightactivities, you asked that we conduct a review of relevant issues.Specifically, our report (1) assesses both the conformance of CDBG andHOME grantees AIs with HUD guidance pertaining to their timeliness andcontent, as well as the AIs potential usefulness as fair housing planningtools, and (2) identifies factors that may help explain any potentialweaknesses in grantees AIs, particularly factors related to HUDs

regulatory requirements and oversight and enforcement approaches.

To address the first objective, we selected a representative sample of 473CDBG and HOME grantees from the total population of 1,209 fiscal year2009 program participants and requested their most recent AIs. Wereceived AIs from 441 of the 466 grantees in our final sample, for aresponse rate of 95 percent.7 We reviewed these 441 AIs to, among otherthings, estimate the extent to which all CDBG and HOME programgrantees had updated their AIs in accordance with HUD guidance and aninternal department study on AI compliance. 8 Further, we analyzed anonrepresentative subset of 60 of the 281 current AIs we received (thoseprepared from 2005 through 2010 that were among the total of 441 AIsprovided) to determine whether grantees or an external party hadprepared the documents, and compared them with HUD guidance todetermine whether they followed the departments recommended format.Finally, we reviewed 30 AIs from this nonrepresentative subset to

6For example, John D. Transvina, Assistant Secretary for Fair Housing and Equal

Opportunity, U.S. Department of Housing and Urban Development, statement before theSubcommittee on Housing and Community Opportunity, Committee on Financial Services,

U.S. House of Representatives,Housing Fairness Act of 2009, Hearing on H.B. 476Jan.20, 2010.

7The initial sample of 473 was reduced to 466, after we determined that 7 grantees were not

required to prepare AIs. For example, while HUDs fiscal year 2009 program list containedthese 7 grantees, HUD officials said that, in fact, some of them were incorrectly labeled as

program participants that year.

8All national estimates for percentage of outdated AIs reported from the survey resultshave a margin of error within plus and minus 5 percentage points at the 95 percentconfidence level.



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categorize commonly identified types of potential impediments to fairhousing choice.9

For the second objective, we reviewed HUDs policies, procedures, andguidance for overseeing and enforcing the AFFH requirement, particularlypertaining to AIs, as well as information on resource levels for theseactivities. We also reviewed the 2009 internal HUD study on AI complianceand oversight; annual reports that grantees are required to submit to HUDthat, among other items, may discuss AFFH activities; public testimony bysenior HUD officials; and documentation and data on enforcementactivity. In addition, we interviewed HUD officials at headquarters and in

three regional and seven field offices that we selected on the basis ofvarying criteria, including the size of the jurisdiction, as measured by thenumber of grantees within each jurisdiction; geographic location; andpotential risk of nonconformance, as measured by the estimated incidenceof outdated or missing AIs. Appendix I provides more details about ourobjectives, scope, and methodology.

We conducted this performance audit from October 2009 to September2010, in accordance with generally accepted government auditingstandards. Those standards require that we plan and perform the audit toobtain sufficient, appropriate evidence to provide a reasonable basis forour findings and conclusions based on our audit objectives. We believethat the evidence obtained provides a reasonable basis for our findingsand conclusions based on our audit objectives.

A number of HUDs large grant programs are subject to the AFFHrequirement. These programs include the following:

Background

CDBG program: The CDBG program is authorized by Title I of theHousing and Community Development Act of 1974, as amended. Theprogram provides annual grants to states, metropolitan areas, and urbancounties to fund an extensive array of community development activities,

such as providing decent housing and a suitable living environment andexpanding economic opportunities that primarily benefit Americans of

9Both the 60 and 30 current AIs were selected to be reflective of the sample of 281 current

AIs in terms of geographic diversity and grant size.



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modest financial means. The CDBG program was funded at about $3.6billion in fiscal year 2009, making CDBG the largest grant program, withthe largest number of grantees.

HOME program: The HOME program is the largest government-sponsoredaffordable housing production program. HOME was authorized under TitleII of the Cranston-Gonzalez National Affordable Housing Act of 1990, asamended, and provides grants to states and localities, often in partnershipwith local nonprofit groups. These grants are used to fund a wide range ofactivities that build, buy, and rehabilitate affordable housing for rent orsale and provide direct rental assistance to low-income people. The

program was funded at about $1.8 billion in fiscal year 2009.

HOPWA program: HOPWA is intended to address the urgent housingneeds of low-income Americans living with HIV/AIDs, who aredisproportionately represented in low-income minority communities.HOPWA funds may be used for a wide range of housing, social services,program planning, and development costs. HOPWA funds also may beused for health care and mental health services, chemical dependencytreatment, nutritional services, case management, assistance with dailyliving, and other supportive services. HOPWA was funded at about $310million in fiscal year 2009.

ESG program: The ESG provides homeless persons with basic shelter andessential supportive services. It also provides short-term homelessprevention assistance to persons at imminent risk of losing their ownhousing due to eviction, foreclosure, or utility shutoffs. The ESG wasfunded at about $1.7 billion, in fiscal year 2009.

AI RequirementEstablished in HUDRegulations

To help ensure that grantees receiving funds through the CDBG and otherformula grant programs are meeting the AFFH requirements, HUDregulations require them to prepare and maintain AIs. HUD defines the AIas a comprehensive review of potential impediments and barriers to theright to be treated fairly when seeking housing. The AI is expected to

cover public and private policies, practices, and procedures affectinghousing choice and assess how they all affect the location, availability, andaccessibility of housing. Grantees are also to develop strategies andactions to overcome these barriers based on history, circumstances, andexperiences. In effect, the AI is a tool that is intended to serve as the basisfor fair housing planning; provide essential information to policymakers,administrative staff, housing providers, lenders, and fair housing advocate;and assist in building public support for fair housing efforts. Grantees mayuse a portion of their CDBG and other grant funds to prepare their AIs,



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and AIs may be prepared by the grantees themselves or under contractwith external parties, such as fair housing groups, consultants,universities, or others.

While HUD regulations require grantees to prepare AIs, other requirementspertaining to these local planning documents are limited. For example,HUD has not issued regulations specifying how often grantees shouldupdate their AIs or the specific elements that should be included in them.HUD regulations also do not require grantees to submit their AIs to thedepartment for review and approval. Instead, CDBG and HOME granteesare to annually certify to HUD that they are meeting AFFH requirements,

which include having prepared an AI, taking steps to address identifiedimpediments, and maintaining records of their actions. HUD generallyaccepts grantees annual AFFH certifications, including that they haveprepared AIs, and will not initiate further reviews unless evidence to thecontrary emerges from complaints or through the departments routinemonitoring activities.

While HUD has not issued regulations that specifically define when thegrantees must update their AIs, or what elements they must include, it hasissued recommended guidance on these subjects. As discussed in thisreport, for example, HUD has issued guidance recommending thatgrantees update their AIs every 3 to 5 years. In 1996, HUD also issued a fairhousing guide, which included a suggested format for AIs and otherimportant fair housing planning elements (see table 1). The format andelements include an introduction and executive summary; jurisdictionaland background data, such as demographic data and analysis; and anevaluation of the jurisdictions current fair housing legal status, such as alisting and description of fair housing related complaints that have beenfiled and their status or resolution. Further, the suggested format andother elements include a listing of the impediments identified, proposedactions and time frames to overcome them, and the signatures of topelected officials.



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Table 1: HUDs Suggested Format for AI

Suggested element Description

Introduction and executive summary ofthe analysis

Explains who conducted the AI and identifies the participants and methodology used,funding source, and summaries of impediments found and actions to address them.

Jurisdictional background data Includes demographic, income, employment, housing profile, maps, and other relevantdata.

Evaluation of jurisdictions current fairhousing legal status

Discusses fair housing complaints and compliance reviews that have resulted in a chargeor finding of discrimination, fair housing discrimination suits filed by the Department ofJustice or private plaintiffs, the reasons for any trends or patterns in complaints andenforcement, and other fair housing concerns.

Identification of impediments to fairhousing choice

Identifies impediments to fair housing.

Conclusions and recommendations forovercoming impediments

Summarizes any impediments identified in the analysis and presents recommendations toovercome identified impediments.

Time frames for implementingactions to overcome impediments

Sets out the time frame for completing each action or set of actions to serve as milestonestoward achieving the actions.

Signature page Includes the signature of a chief elected official, such as a mayor.

Source: HUD 1996 Fair Housing Planning Guide.

Note: HUDs 1996 Fair Housing Planning Guidesuggested format included one other element,description of current public and private fair housing programs and activities in the jurisdiction, whichwas not included in our review. While the fair housing guidances suggested AI format does notinclude time frames for implementing recommendations to address identified impediments, timeframes are discussed elsewhere in the guide as a component of fair housing planning.

Grantees AFFH ActivitiesMay Also Be Addressed inOther Required Reports toHUD

Although HUD does not require grantees to submit their AIs to thedepartment for review and approval, it does require them to periodicallysubmit other reports on their overall use of CDBG and other grantprogram funds, such as HOME, HOPWA, and ESG. In some cases, HUDspecifically requires that grantees include in these reports informationabout their AFFH activities. These AFFH activity reports include thefollowing:

Consolidated Plan (ConPlan): The ConPlan, which grantees must file withHUD for review and approval every 5 years, is a planning document that

identifies low- and moderate-income housing needs within a communityand specifies how grantees intend to use federal funds to address thoseneeds. According to HUD, the purpose of the ConPlan is to enablegrantees to shape the various housing and community developmentprograms into effective, coordinated neighborhood and communitydevelopment strategies. Within their ConPlans, grantees are to providetheir AFFH certifications annually, as described here.



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Annual Action Plan: Grantees are required to submit an Annual ActionPlan. These annual plans lay out how the grantees plan to achieve theoverall objectives in their consolidated plans in the coming fiscal year.

Consolidated Annual Performance and Evaluation Report (CAPER):Within 90 days at the end of the program year, grantees that have approvedConPlans must file a CAPER with HUD, which reports on the progressthey have made in carrying out the activities described in their AnnualAction Plans. The CAPER must include, among other things, actions takento affirmatively further fair housing. HUD is responsible for reviewing theaccuracy of the CAPER. Because HUD does not require grantees to submit

AIs, the CAPER serves as the main document that department officials useto learn about grantees fair housing activities and accomplishments.

HUDs AFFH OversightStructure Involves TwoOffices and NumerousRegional and Field Offices

Two HUD offices share responsibility for overseeing CDBG and HOMEgrantees compliance with AFFH requirements, including those pertainingto their AIs: the Office of Community Planning and Development (CPD)and the Office of Fair Housing and Equal Opportunity (FHEO). CPD isresponsible for helping ensure that grantees are in overall compliance withCDBG and other grant program requirements. For example, CPD isresponsible for ensuring that grantees spend federal funds on approvedactivities, such as affordable housing creation and communitydevelopment. To carry out their oversight activities, CPD staff are toreview and approve grantees ConPlans, Annual Action Plans, and CAPERsand conduct on-site monitoring reviews of a limited sample of high-riskgrantees each year to assess their compliance with various programrequirements, including those pertaining to AFFH. HUD has the authorityto disapprove a ConPlan if the grantees AFFH certification is inaccurateor missing. Disapproval of a ConPlan may result in withholding CDBG andother formula grant funds until the grantee submits an adequate AFFHcertification within an established time frame. While CPD serves as HUDsmain liaison with grantees, FHEO maintains final authority to determineand resolve matters involving fair housing compliance, including the AFFH

requirement. In carrying out their responsibilities, FHEO staff may use theresults of CPDs oversight activities, such as its reviews of granteesreports and on-site monitoring reviews. FHEO staff also are toindependently review grantee reports, such as their CAPERs, and mayconduct on-site monitoring reviews of grantees on a limited basis.

HUD maintains 10 regional offices and 81 field offices. CPD and FHEOstaff are located in approximately 44 of the field offices, which haveprimary responsibility for monitoring and enforcing AFFH requirements,



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including those pertaining to AIs. Field and regional office staff generallyconsult with CPD and FHEO officials in HUDs headquarters offices onkey decisions and activities, including whether to disapprove a granteesConPlan or AI.

While we estimate that the majority of grantees have current AIs inaccordance with HUD guidance, many others may be outdated per theguidance. Specifically, we estimate that 29 percent of all AIs wereprepared in 2004 or earlier, including 11 percent that date from the 1990s.Because many grantees AIs are outdated, they may not provide a reliable

basis to identify and mitigate current impediments to fair housing that mayexist within their communities. We also (1) did not receive AIs from 25grantees despite repeated requests that they provide them, which suggeststhat, in some cases, grantees may not maintain the documents as isrequired; and (2) several grantees provided documents with their status asAIs not clear due to their brevity and lack of content. While the majority ofgrantees may have current AIs, we question the usefulness of many suchAIs as fair housing planning documents. We reviewed a subset of currentAIs we received (those dating from 2005 through 2010) for a variety ofreasons, including to gain insights into the types of impediments theyidentified and to determine whether they included the key elementsidentified by HUD in its 1996 fair housing guidance. 10 The most commonlycited impediments to fair housing choice were zoning restrictions,inadequate public services in low-and moderate-income areas, lendingdiscrimination, and a lack of public awareness about fair housing rights.Further, we found that current AIs generally contained several basicelements suggested in HUDs guidance, such as demographic data andanalysis, and recommendations to overcome identified impediments.However, a significant majority of the current AIs did not identify timeframes for implementing the recommendations or contain the signaturesof top elected officials as is also suggested in HUDs guidance. As a result,these AIs may not provide a reliable basis for measuring the granteesprogress in overcoming impediments or reasonable assurance that top

elected officials endorse the recommendations in the AI and areaccountable for implementing them. In sum, our review found limitedassurances that grantees are placing needed emphasis on preparing AIs as

Many Grantees AIsAre Outdated orOtherwise Out of

Conformance withHUD Guidance andThus There Is LimitedAssurance They Serveas Effective FairHousing PlanningTools

10As discussed in this section, we reviewed 30 current AIs to identify commonly cited

impediments in them. We also reviewed 60 current AIs, including these 30 to determinetheir authorship and to assess their conformance with the suggested elements of the formatin HUDs 1996Fair Housing Planning Guide .



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effective planning tools to identify and address potential impediments tofair housing as required by statutes governing the CDBG and HOMEprograms and HUD regulations and guidance. 11

An Estimated 29 Percentof AIs Are Outdated andThus May Not Provide aReliable Basis forIdentifying and Mitigating

Current Impediments toFair Housing

We estimate that while 64 percent of all grantees have current AIs, 29percent may be outdated having been prepared in 2004 or earlier(including 11 percent from the 1990s), and the date for 6 percent could notbe determined (fig. 1). While HUD has not officially defined whatconstitutes an outdated AI through regulation, it has issued guidance thataddresses how often an AI should be updated. Using HUDs guidance and

interviews with department officials as criteria, we define an AI asoutdated if it was completed in 2004 or earlier. Specifically, HUDs 1996Fair Housing Planning Guidethe main reference document for granteesin developing AIssuggests that grantees conduct or update them at leastevery 3 to 5 years, in part to be consistent with the consolidated planningcycle.12 On February 14, 2000 and again on September 2, 2004, HUD issuedmemorandums to all CPD and FHEO officials to remind grantees to updatetheir AIs annually when necessary, but especially at the beginning of a newconsolidated 5-year planning cycle. In addition, HUDs 2009 study ongrantees AI conformance concluded that the grantees with AIs datingfrom the 1990s may place a low priority to them and that such AIs shouldbe updated.13

11Section 104(b)(2) of the Housing and Community Development Act of 1974, as amended

(42 U.S.C. 5304) requires, among other things, that each CDBG grantee certify to HUDssatisfaction that the grantee will AFFH. Section 105 of the Cranston-Gonzalez National

Affordable Housing Act, (42 U.S.C. 12705) established a requirement of a comprehensivehousing strategy as a condition of a grantee receiving grants from HUD, primarily CDBGand HOME programs. The strategy includes a certification that grantees receiving the HUDgrants will AFFH.

12U.S. Department of Housing and Urban Development, Office of Fair Housing and Equal

Opportunity,Fair Housing Planning Guide: Volume 1 (Washington, D.C.: 1996).

13U.S. Department of Housing and Urban Development, Policy Development Division,

Office of Policy Development and Research,Analysis of Impediments Study (Washington,D.C.: 2009).



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Figure 1: Estimated Completion Dates of CDBG and HOME Program Grantees AIs

Source: GAO analysis of GAO data.

AIs from:

0 10 20 30 40 50 60 70 80

2005 to2010

1990s thru2004

Dateunknown

Percentage

64%

29%

6%

2000-2004(18%)

1990s(11%)

Date unknown

Potentially dated

Current

Note: Percentages do not add to 100 due to rounding.

The incidence of outdated AIs was generally consistent across the countryand among both large and small grantees. 14 Figure 2 shows the percentageof grantees with outdated AIs in each of the geographic areas covered byHUDs 10 regional offices, which ranged from a low of 14 percent inRegion IV to a high of 45 percent in Region VII. Despite the variation, onlyone region had a statistically significant difference between its percentageof outdated AIs and the percentage at the national level.15

14We defined grantees that received less than $500,000 as small and those receiving

$500,000 or more as large. We found that grantees that received less than $500,000 of CDBGand HOME funds did not produce significantly more outdated AIs than those that receivedmore funds. Grant size is a proxy for the size of the grantee, because funds are allottedbased on population, among other factors.

15All regional estimates for the percentage of outdated AIs reported from the survey results

have a margin of error within plus and minus 15 percentage point at the 95 percentconfidence level.



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Figure 2: Estimated Percentages of Outdated AIs, by HUD Region

Sources: GAO analysis of GAO data; Art Explosion (map).

Region I

(25%)

Region II

(44%)

Region V

(36%)

Region VIII

(30%)

Region

X

(23%)

Region

X

Region

IX

Region

IX

(28%)

Region VI

(33%)

Region III

(29%)

Region IV

(14%)

Region VII

(45%)

HUDs 2009 internal study on AI conformance also concluded that manygrantees AIs were outdated.16 Specifically, in examining the timeliness of45 AIs in its sample, HUD found that about 18 percent (8) were producedbefore 2000 and had not yet been updated. While the HUD study provides

16U.S. Department of Housing and Urban Development, Policy Development Division,

Office of Policy Development and Research,Analysis of Impediments Study (Washington,D.C.: 2009).



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some insights into the AIs, its findings cannot be generalized to the entirepopulation because of limitations in its sampling methodology. 17

Because many grantees AIs are outdated, they may not provide a reliablebasis for identifying and mitigating impediments to fair housing. Forexample, HUDs 1996 fair housing guidance suggests that grantees usedemographic data from the U.S. Census Bureau when preparing their AIsand to update these planning documents as new census data becomesavailable. Updated census data could indicate demographic trends withina jurisdiction that might be useful in preparing an AI, such as whetherparticular areas of a jurisdiction are becoming progressively more or less

segregated over time and the potential reasons thereof. Moreover,according to one FHEO field office official, grantees should update theirAIs every 5 years per the guidance, because the impediments to fairhousing in a particular community evolve and change, and new issues canoccur on a continuing basis. Another FHEO field office official said that anAI dated from the 1990s would not be considered current under anycircumstances. The official said that grantees should update their AIsperiodically to adjust to the development of potential impediments to fairhousing choice within their communities. For example, the official notedthat, subprime mortgage lending grew substantially during the 2000s, andsubprime mortgage lenders potentially disproportionately targetedminority borrowers, which resulted in many foreclosures among suchgroups.18 Without taking steps to update their AIs, whether grantees thatreceive federal funds through the CDBG, HOME, and other grant programsare sufficiently focused on overcoming current impediments to fairhousing that may exist within their communities is unclear.

17These limitations include the use of unweighted population estimates.

18Subprime lending generally involves the origination of mortgages to borrowers who may

represent greater default risks than prime borrowers, due for example to lower creditscores, on terms that may increase the potential for default. For example, a commonsubprime mortgage product would be an adjustable rate mortgage in which the interestrate increases substantially after the expiration of a lower teaser rate. Some have allegedthat subprime mortgage originators disproportionately targeted minority borrowers earlierin this decade, which resulted in disproportionate foreclosure rates amongst suchborrowers in recent years.



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We did not receive AIs from 25 grantees, despite intensive follow upefforts that included multiple e-mails and phone calls to appropriateofficials. Representatives from some of these grantees offered severalreasons for not providing the requested AIs. For example, representativesfrom two grantees said that they could not find their AIs, and arepresentative from another said an AI had not been prepared. Further,representatives from 8 grantees stated that they had already sent us theirAIs, although we have no record of receiving them. We cannot definitivelydetermine that all these grantees are out of compliance with statutes andHUD regulations requiring grantees to maintain AIs. However, the failureof these grantees to provide AIs, together with the results of HUDs 2009

study that also found that some grantees did not provide AIs as requested,raises questions about whether some jurisdictions may be receivingfederal funds without preparing the documents required to demonstratethat they have taken steps to affirmatively further fair housing. 19

We Did Not Receive AIsfrom 25 Grantees and theBrevity and Lack ofContent of Others RaisedQuestions about WhetherThey Were AIs

Our analysis of the 441 AIs we received from grantees also indicates thatthe documents ranged in length from several hundred pages withsupporting graphs and other materials to a few pages of content. 20 Forexample, one grantees AI contained 64 tables illustrating a wide variety ofinformation, ranging from a breakdown of the grantees population byrace, ethnicity, and poverty status to the rates at which low-incomeapplicants in the grantee were denied conventional loans. While AIs mayconsist of many pages, length does not necessarily indicate the quality ofthese documents. For example, some lengthy AIs we reviewed had reportsattached, including their CAPERS, that grantees were required to submitto HUD separately. On the other end of the spectrum, we identified fivedocuments whose status as AIs was unclear based on their brevity andlimited content. Specific examples are as follows:

One grantee provided a four-page survey of residents within thecommunity on fair housing issues.

One grantee provided a two-page document that largely discussed itsprogress in implementing a local statute pertaining to communitypreservation and that contained two sentences describing a fair housingimpediment.

19As discussed in this report, HUD field office officials also identified at least one grantee

that received funds without having prepared an AI.

20We analyzed the length of all the AIs we received (current, outdated, and undated).



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One grantee provided a three-page document that contained descriptionsof activities designed to help the homeless and other special needs groupsand described the actions that the grantee took to address barriers toaffordable housing.

One grantee provided a four-page description of the community itself, andit did not identify impediments to fair housing.

One grantee provided a two-page e-mail that identified one impediment tofair housing choice, and in follow up conversations an official from thisgrantee, confirmed that the document constituted its AI.

Given the brevity and lack of content in these documents, they may notconstitute AIs as required by the CDBG and HOME statutes and HUDregulations.

Analysis of Current AIsIndicates That Authorshipand Types of IdentifiedImpediments to FairHousing Vary Widely

While many AIs are outdated or, in some cases, grantees may not maintainthe documents as required by HUD, we did estimate that 64 percent ofgrantees have prepared current AIs. To gain insights into current AIs, wereviewed a subset of 60 of the 281 such documents that we received for avariety of reasons, including to determine their authorship.21 HUDs 1996guidance suggests that AIs may be authored by grantees, fair housing or

industry groups, universities or colleges, or any combination thereof. Ouranalysis indicates that grantees, through their community developmentand planning offices, for example, had prepared about half of the 60current AIs we reviewed (table 2). In 9 of the 60 cases we reviewed, thegrantee had contracted with a fair housing organization; in 9 of the 60cases with a private consulting firm; and in 4 cases with a university orcollege. In about 6 of the cases, the AI did not identify the author, or theauthors identity was not clear.

21While this subset is not generalizable to the population of all grantees, we used several

criteria in drawing it to help ensure that it reflected the characteristics of AIs that wereceived. For example, we chose the subset on a weighted geographic basis to help ensurethat it reflected grantees located across HUDs 10 regional offices. We also sought to helpensure that the subset reflected jurisdictions size as based on CDBG and HOME grantamounts in fiscal year 2009.



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Table 2: Authorship of 60 Current AIs

Author type Number

Grantee 29

Consulting firm 9

Fair housing organization 9

University or college 4

Mixed (more than one author type) 2

Other (e.g., housing task force) 1

Cannot determine author 6

Total 60

Source: GAO analysis of 60 AIs that were prepared from 2005 through 2010.

We also reviewed 30 of the 60 current AIs to identify the types ofimpediments to fair housing choice that had been identified by thegrantees. 22 While these grantees cited a variety of potential impediments intheir AIs, at least half identified four types of impediments (table 3): (1)zoning and site selection, (2) neighborhood revitalization, (3) lendingpolicies and practices, and (4) fair housing informational programs. 23

22

In selecting the 30 AIs to review, we included both large and small grantees from each ofHUDs 10 regional offices. We identified all impediments and coded them from 1 to 13based on the categories described in HUDs 1996Fair Housing Planning Guide . A secondreviewer then verified the coding. Appendix I contains more information on ourmethodology.

23Other impediments that grantees cited included tenant selection procedures used by

public housing agencies and other assisted/insured housing providers, sales of subsidizedhousing and possible displacement, property tax policies, planning and zoning boards,building codes, and fair housing enforcement. See chapter 5 of HUDsFair Housing

Planning Guide (1996).



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Table 3: Most Commonly Cited Impediments to Fair Housing in Selected AIs

Impediments Description of impediments

Zoning and site selection Building and zoning codes, which may contain lot requirements such as minimumstreet frontage and front yard setbacks, and amenities (e.g., landscaping), that canaffect the feasibility of developing low- and moderate-income housing.

Placement of new or rehabilitated housing for low-and moderate-income groups inareas that already have high concentrations of this type of housing or have zoningrequirements that encourage such concentrations.

Neighborhood revitalization, municipal andother services, employment-housingtransportation linkage

Inadequate public services in low-and moderate-income areas, where manyAfrican-American, Hispanics, and people with disabilities may live, includingschools, recreational facilities, social service programs, parks, roads, transportation,

street lighting, trash collection, and police protection.Lending policies and practices Less favorable mortgage lending terms from private lenders, such as higher interest

rates, for African-Americans or other minority borrowers than are generally availablefor nonminority borrowers with similar risk characteristics.

Informational programs Lack of access to information about the rights and responsibilities associated withfair housing, potentially creating an environment favorable to discriminatorypractices.

Source: GAO analysis of 30 current AIs.

We also identified specific examples of each of these four impedimentsand the grantees planned actions to address them as described here.

Zoning and site selection. One AI we reviewed, which was prepared onbehalf of several grantees by a regional planning unit within a localuniversity, identified some of their established or planned land use policiesas potential impediments to fair housing. For example, the AI found thatsome of the grantees had minimum lot-size requirements for buildingsingle-family residences that could limit housing affordability. The AInoted that a 1-acre minimum lot size, for example, would create land coststhat would make owning or renting homes on such lots unaffordable tolow-income families. Further, the AI noted that some of the grantees wereconsidering requiring that all new homes be constructed of brick, arequirement that could substantially increase construction costs comparedwith siding and make the homes unaffordable to low-income families. Toaddress these potential impediments, the AI recommended that the

grantees (1) ensure that a sufficient portion of their communities werezoned for multifamily construction and that lot sizes for single-familyhousing were small enough to keep single-family housing affordable and(2) consider the potential impact on housing affordability, including onminority families, before adopting building codes that require all-brickconstruction.

Neighborhood revitalization, municipal and other services, employment-housing transportation linkage. One AI prepared by a private nonprofit



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fair housing organization on behalf of several grantees noted that theareas transportation system was inadequate to service the needs of allresidents. The AI concluded that residents who wanted or needed to usepublic transportation were obliged to limit their residences to thejurisdictions in which their jobs were located even if they wanted to liveelsewhere. To address this impediment, the AI recommended that thegrantees support a regional transportation system that not only providedservices to low- and moderate-income households throughout the area butalso met the needs of employers in geographic areas that were notcurrently served.

Lending policies and practices. An AI for a large county comprisingseveral grantees included a review of data required under the HomeMortgage Disclosure Act (HMDA).24 The analysis found that mortgage

lenders in the jurisdiction denied the applications of upper-income blackapplicants at a rate that was three times higher than the rate for equallysituated white applicants. Further, the AI found that the loan denial ratefor Hispanic mortgage applicants was twice as high as that of equallysituated white applicants. The AI recommended that the grantees contractwith a consultant to prepare and conduct training for mortgage lenders toencourage their voluntary compliance with fair housing laws. Finally, theAI recommended that the grantees continue to monitor HMDA data todetermine if the educational programs had a positive effect on loan denial

rates for minorities.

Fair housing informational programs. An AI for a county concluded thatbecause the grantee received few complaints from residents about fairhousing, there might be a lack of public knowledge about fair housingrights and responsibilities. The AI suggested that because residents mightnot be aware of such issues, landlords and others involved in the realestate business could feel that they had more leeway in dealing withpotential home buyers and renters. As a result, the AI recommended that

24Pub. L. No. 94-200, title III, 89 Stat. 1125, codified at 12 U.S.C. 28012810. HMDA

requires lending institutions to collect and publicly disclose information about housingloans and applications for such loans, including the loan type and amount, property type,and income level and other characteristics of borrowers (such as ethnicity, race, and sex).

All federally insured or regulated banks, credit unions, and savings associations with totalassets exceeding $39 million, as of December 31, 2008, with a home or branch office in ametropolitan statistical area that originated any secured home purchase loans orrefinancing are required to file HMDA data. Regulation C, 12 C.F.R. 203.3(e)(1), 203.4(2009); see also Home Mortgage Disclosure, 73Fed. Reg. 78616 (Dec. 23, 2008)(establishing an adjustment from $37 million to $39 million). Further, most mortgagelending institutions located in a metropolitan statistical area must file HMDA data. 12C.F.R. 203.3(e)(2), 204.4 (2009).



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the grantee should promote fair housing education through publicworkshops, presentations at schools and libraries, public serviceannouncements in English and Spanish, and the distribution of fairhousing literature at all county facilities and events.

Lack of Time Frames forImplementingRecommendations and theSignatures of Top ElectedOfficials Raises Questions

about the Usefulness ofMany Current AIs asPlanning Documents

While current AIs may identify a variety of potential impediments to fairhousing and strategies to overcome them, questions exist about the statusof many such AIs as local planning documents. As part of our review, wefound that the 60 current AIs generally included five of the seven keyelements in the suggested format for AIs contained in HUDs 1996 fairhousing guidance (table 4). Specifically, four of these elements werepresent in over 55 of the 60 grantees AIs: jurisdictional background data,evaluation of fair housing legal status, identifications of impediments tofair housing choice, and conclusions and recommendations. Theintroduction and executive summary were present in 52 of the granteesAIs. However, we found that only 12 of the AIs included time frames forimplementing recommendations for overcoming impediments and thatonly 8 AIs included the signatures of top elected officials.

Table 4: HUDs Key Elements Represented in 60 Current AIs

Suggested elements to be included in the AI Number

Introduction and executive summary of the analysis 52Jurisdictional background data 57

Evaluation of jurisdictions current fair housing legal status 56

Identification of impediments to fair housing choice 58

Conclusions and recommendations for overcomingimpediments

56

Time frames for implementingactions for overcoming impediments

12

Signature page 8

Source: GAO analysis of a subset of 60 randomly selected current AIs.

Note: HUDs 1996 Fair Housing Planning Guidesuggested format included one other element,

description of current public and private fair housing programs and activities in the jurisdiction, whichwas not included in our review. While the fair housing guidances suggested AI format does notinclude time frames for implementing recommendations to address identified impediments, timeframes are discussed elsewhere in the guide.

The lack of time frames for implementing proposed actions among asubstantial majority48 of the subset of 60 current AIs we reviewedispotentially significant. HUDs guidance on including estimated time framesfor implementing recommendations is generally consistent with our viewthat time frames are an important component of effective strategic and



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other planning process. Recognizing the importance of specific timeframes, officials from one HUD field office we contacted routinelyprovided technical advisory notices to aid grantees that were preparing orupdating their AIs. These notices recommend, among other things, thatgrantees include benchmarks and timetables for implementing actions intheir AIs. In the absence of established time frames in AIs, determiningwhether grantees are achieving progress in implementingrecommendations to overcome identified impediments is difficult.

Further, our finding that 52 of the 60 current AIs did not include thesignatures of top elected officials raises questions as to whether the

officials endorse the analyses and support suggested actions in the AIs andare accountable for implementing them. These questions may beparticularly significant with respect to the 25 AIs identified in table 2 thatwere prepared by an external party under contract, such as a fair housinggroup or consultant, rather than by the grantee through one of itsagencies. Our review indicates that none of these 25 AIs had been signedby the grantees top elected officials. While HUD field office officials wecontacted said the lack of these signatures did not necessarily mean thatthe grantees did not plan to implement the actions described in thedocuments, other HUD officials disagreed. For example, officials from twofield offices said that the lack of such signatures suggested that thegrantees may not endorse the analysis and recommendations in the AIs.Officials from one of these field offices said that, in the absence of thesignature of a top elected official, an AI had little value as a planningdocument. We note that HUD requires authorizing grantee officials to signdocuments that, among other things, certify that their ConPlans identifycommunity development and housing needs, contain specific short- andlong-term objectives to address such needs, and certify that the grantee isfollowing its department-approved plan. This is not an uncommonaccountability model for compliance-based regulatory structures.25Without the signatures of top elected officials, it is not clear that granteeshave established plans to identify and address impediments to fair housingwithin their jurisdictions.

We identified an example of an AI that lacked time frames for addressingimpediments and had not been signed by a top elected official and that didnot appear to be functioning as an effective planning document. This AI,

25For example, the Sarbanes-Oxley Act of 2002 requires senior officials of public companies

to sign a certification that the companies financial statements are correct.



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which was prepared under contract by a fair housing group, had 15specific recommendations, including conducting fair lending testing andestablishing an effective code enforcement program.26 We contacted theCDBG representative for this grantee, who said that he believed that the AIcontained just two recommendations. The official also stated that, due toother priorities, the grantee had not yet had time to implement either ofthese two recommendations and did not have immediate plans to do so.

HUDs 2009 study also raises questions about the usefulness of many AIsas planning documents to identify and address potential impediments tofair housing. As discussed previously, this study concluded that many of

the AIs in its sample dated from the 1990s, which HUD said indicated thatthese grantees place a low priority on the documents. According to theHUD study, moreover, many of the AIs reviewed did not conform to thedepartments guidance and appeared to have been prepared in a cursoryfashion. In sum, our findings that many AIs are outdated, may not beprepared as required, or lack time frames and signatures, together with thefindings of HUDs study, raise significant questions as to whether the AI iseffectively serving as a tool to help ensure that all grantees are committedto identifying and overcoming potential impediments to fair housingchoice as required by statutes governing the CDBG and HOME programsand HUD regulations.

26Fair housing testing may involve the use of individuals posing as renters or buyers to

determine whether housing providers are complying with fair housing laws.



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HUDs AI requirements and oversight and enforcement approaches havesignificant limitations that likely contribute to our findings that many suchdocuments are outdated or contain other weaknesses. In particular, HUDsregulations have not established standards for updating AIs or the formatthat they must follow, and grantees are not required to submit their AIs tothe department for review. According to HUDs 2009 internal report on AIcompliance, and CPD and FHEO officials, the limited regulatoryrequirements pertaining to AIs and limited resources and competingpriorities adversely affect the departments capacity to help ensure theeffectiveness of AIs as fair housing planning documents. Moreover, ourwork involving 10 HUD field offices identified specific instances that

illustrate the limitations in the departments AI oversight and enforcementapproaches and the need for corrective actions.27 For example, we foundthat HUD officials rarely request grantees AIs during on-site monitoringreviews or receive complaints from the public about such documents,which means that the department often has minimal information about thestatus of grantees AIs in terms of their timeliness and content. Converselywhile we identified instances where certain field offices took proactivesteps to help ensure the integrity of the AI process, such as one officesefforts to better ensure that grantees update their AIs periodically, theseinitiatives were not common. Recognizing the limitations in its AIrequirements and oversight and enforcement approaches, in 2009, HUDinitiated a process to update relevant regulations, but it is not clear whatissues any revised regulatory requirements will address or when they willbe completed. HUD has also developed plans to address limited staffingresources that may have undermined its capacity to oversee grantees AIsor implement any new regulatory initiatives, but it is unclear how effectivethe initiatives will be. We note that some proposals that have been made,such as a requirement that grantees submit their AIs to HUD for review,would not necessarily involve a significant commitment of staff resourcesand could have important benefits. In the absence of a department-wideinitiative to strengthen AI requirements and oversight and enforcement,many grantees may place a low priority on ensuring that their AIs serve aseffective planning tools.

HUDs LimitedRegulatoryRequirements andOversight andEnforcementApproaches May HelpExplain Why Many

AIs Are Outdated orContain OtherWeaknesses

27During our review, we interviewed officials from 3 HUD regional offices and 7 field

offices. To facilitate the discussion in the report, we use the term field office to cover all10 of the offices we contacted.



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HUD Regulations Do NotEstablish Standards for theTimeliness of AIs or theirFormat, and Grantees AreNot Required to SubmitThem for the DepartmentsReview

As discussed previously, HUDs regulatory requirements pertaining to AIsare limited. While HUD regulations require grantees to prepare AIs, theydo not specify when grantees must update them or the specific format theymust follow. Moreover, HUDs regulations do not require grantees tosubmit their AIs to the department on a routine basis for review to helpensure their effectiveness as a tool to identify and address impediments tofair housing. Instead, pursuant to statutes governing the CDBG and HOMEprogram, grantees are required to annually self-certify by attesting to HUDthat they are in compliance with the departments AFFH requirements,including those pertaining to the AI. Specifically, the self-certification,which is generally a one-page document, attests that the grantee has

completed an AI, has taken steps to overcome the impediments identifiedin the AI, and maintains records of its efforts. In general, HUD officials,pursuant to department regulations, are to accept these self-certificationsas sufficient evidence that the grantee has an AI and is acting to implementits recommendations.

While HUD does not require grantees to submit their AIs on a routinebasis, CPD and FHEO officials, who share AFFH oversight andenforcement responsibilities, use several approaches to monitor theiroverall compliance with AFFH requirements, including those requirementsthat pertain to AIs. Specifically, these approaches, while limited, caninvolve CPD or FHEO officials obtaining grantees AIs and following up asmay be deemed necessary. The following efforts describe how HUDgenerally carries out these responsibilities:

Reviews of grantee reports and plans that, among other things, are toaddress AFFH compliance. HUD CPD and FHEO officials are to regularlyreview documents that grantees annually submit on their overall plans andperformance in complying with CDBG and other grant programrequirements. For example, at the end of the fiscal year, grantees arerequired to submit their CAPER to HUD, which discusses their progress inmeeting their objectives for the use of CDBG and other grant funds. Aspart of the CAPER, HUD requires grantees to include a description ofactions taken to AFFH. If determined necessary by a HUD reviewer ofeither the Annual Action Plan or the CAPER, the department could requestthat a grantee provide its AI for review and analysis.

On-site monitoring reviews to assess grantee compliance with HUDrequirements, which can include reviews of AFFH documentation, such

as AIs. Under HUD policy, CPD field officials are to conduct a limitednumber of risk-based, on-site monitoring reviews each year to assessgrantees compliance with a variety of CDBG and other grant requirements.



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In some cases, FHEO officials may join CPD officials on these monitoringreviews or conduct independent monitoring reviews. HUD headquartersestablishes annual criteria for assessing risk each year and the percentageof on-site monitoring reviews to be conducted. The criteria can include theamount of the CDBG or HOME grant, the amount of time that has passedsince the last on-site review, and employee turnover in grantee officesresponsible for implementation of CDBG and other grant programs. CPDofficials generally were directed to visit at least 10 to 15 percent of thegrantees under their jurisdiction annually. As part of these reviews, CPDmay request that grantees provide copies of their most recent AIs. CPDstaff or FHEO staff may review these AIs and follow up with the grantees

where deemed warranted.

Reviews as part of a complaint. HUD may also receive complaints aboutgrantees AFFH compliance from a range of sources, including individuals,fair housing groups, or federal, state, or local agencies. In conductinginvestigations in response to such complaints, CPD or FHEO staff mayrequest that grantees provide their AIs as deemed appropriate.

If HUD officials identify concerns with grantees AIs through theseprocesses, they can take several different actions. These actions include

technical assistance, such as training workshops, to complete an AI; a Special Assurance document, which HUD may draft in order to outline

a number of tasks that a grantee must do to fulfill requirements, includingdescribing actions to overcome the effects of identified impediments, andcreating a timetable for accomplishing these actions; these assurancesusually are signed by the grantees chief elected official to signifycooperation; and

withholding CDBG and HOME funding by disapproving a granteesConPlan for failure to comply with requirements, including completion ofan AI. According to HUD officials, this action is a last resort and rarelyused.



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HUDs 2009 Study, CPDand FHEO Officials andOur Work at 10 FieldOffices Have IdentifiedLimitations in theDepartments Capacity toHelp Ensure That AIsServe as Effective PlanningTools

HUDs 2009 internal study, CPD and FHEO officials in headquarters andfield offices, as well as our analysis involving 10 field offices haveidentified significant limitations in the departments long-standing AIrequirements and oversight and enforcement approaches. HUD officialsalso cited staffing resource constraints as undermining their oversightcapacity and ability to implement corrective measures. Regarding HUDs2009 study, it concluded that the departments limited AI regulatoryrequirements and oversight processes contributed to the studys findingsthat many AIs were outdated or otherwise did not conform with thedepartment 1996 fair housing guidance. To better ensure that granteesconform with HUD guidance, the report suggested requiring grantees to

submit their AIs for review and approval. The report noted that, becausegrantees are not currently required to submit AIs to HUD, a possible firststep could simply be to implement a submission requirement. However,the report also noted that HUD would have to dedicate sufficientresources to conduct reviews of AIs and develop appropriate criteria forassessing them. The study suggested that HUD consider both (1) requiringgrantees to post their AIs on the Internet and (2) compiling all submittedAIs to be posted online at a single clearing house Web site to enhancetransparency and increase public awareness of the documents. Further,the study suggested that HUD update its fair housing guidance and provideadditional technical assistance to grantees to help ensure they preparemore effective AIs. For example, the study suggested that HUD assistgrantees in obtaining the data necessary to prepare AIs and providerelevant training. However, HUD officials said the department has not yetacted to implement the recommendations in the study.

While HUD has not yet acted on the recommendations in the 2009 internalstudy, senior headquarters officials cited limited regulatory requirementsas adversely affecting oversight efforts. In the absence of specificregulatory requirements, CPD officials said it is difficult for field offices toensure that grantees update their AIs within specified time frames orconform to a specific format in preparing the documents, including thesignatures of top elected officials. In contrast, the CPD staff noted that

there are specific regulatory requirements pertaining to granteesConPlans, Annual Action Plans, and CAPERs, including when thesedocuments must be prepared and what must be included, which facilitatestheir oversight efforts. Additionally, CPD and FHEO officials in HUDsheadquarters cited limited resources and competing regulatory prioritiesas limiting oversight of grantees AIs and AFFH compliance generally andpotentially posing challenges to any new regulatory initiatives. CPDofficials said that obtaining and reviewing grantees AIs is a low priorityfor field office staff due to competing demands and limited resources, and



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additional resources and technical expertise would be required for staff toreview and approve AIs as suggested in the departments internal study.

CPD and FHEO officials from the 10 HUD field offices we contacted alsocommented about limited AFFH regulatory requirements and oversightapproaches. For example, officials from 7 of the 10 field offices told usthat because grantees are not required to submit their AIs, verifyingwhether grantees had AIs or had updated them was difficult. Some fieldoffice staff officials also said that, because grantees are not required tosubmit their AIs, their capacity to assess grantees overall compliance withAFFH requirements is limited. For example, without requiring grantees to

submit their AIs, the officials said that they could not verify whether thepotential impediments to fair housing choice that may be cited in otherdocuments, such as the grantees 5-year ConPlan and CAPERs, were thesame impediments listed in their AIs. One field office officials suggestedthat HUD require grantees to submit their AIs as part of their 5-yearconsolidated plans to enable them to verify that the two documents wereconsistent. Officials from several field offices also recommended that HUDrevise its regulations to require that AIs meet certain standards fortimeliness and completeness, which they said would enhance theirabilities to oversee and enforce the program.

Further, CPD and FHEO field office officials agreed with HUDheadquarters officials that declining resources and competing prioritieshad limited their ability to assess grantees AIs or AFFH compliancegenerally. Representatives from all of the 10 HUD offices we contactedsaid that their staff levels had decreased recently while their workload hadincreased, especially with the implementation of the American Recoveryand Reinvestment Act of 2009 (Recovery Act).28 For example, FHEO andCPD officials in several field offices told us that they were losing staff dueto retirements and promotions. One FHEO Field Office Director said thatit had one official currently available to monitor 54 entitlement granteescompliance with all relevant statutes and regulations, including thosepertaining to AFFH, within the offices jurisdiction. Additionally, CPD and

FHEO officials in one office commented that, at one time they had enoughstaff to regularly send both a CPD and FHEO representative on on-sitemonitoring reviews, but with staff reductions over the years, they are no

28HUD received over $13 billion dollars in Recovery Act funding, including $1 billion to

support projects within the Community Development Block Program which HUD staffmust implement and oversee. See Pub. L. No. 111-5, American Recovery and Reinvestment

Act of 2009, 123 Stat. 115 (2009).



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longer able to continue this practice. Field office officials also stated thatwork priorities were often shifting, making it difficult for them toconsistently focus on one aspect of CDBG and other grant programcompliance.

We identified the following specific examples that illustrate how HUDslimited oversight and enforcement program on a nationwide basis mayhave contributed to many AIs being outdated or not otherwise in fullconformance with department guidance, and further support the need forcorrective actions to address these limitations:

Our review of CAPERs for a group of grantees with outdated AIs raisesquestions about the value of such reports as a means of assessing AFFH

compliance. As discussed previously, HUDs annual reviews of CAPERsand other required grantee reports are a key means by which departmentofficials assess AFFH compliance in the absence of a requirement thatgrantees routinely submit their AIs for review. We selected anongeneralizable sample of 30 grantees with outdated AIs from the 441grantees that sent us AIs.29 We requested that HUD provide the most

recently available CAPER report for each of these 30 grantees to help usdetermine what information these reports contain about the grantees AIs,and the department provided 27 CAPERs. In 17 of the 27 cases, thegrantees mentioned that they had an AI but did not specify the AIs date. In

such cases, HUD field offices that rely on CAPER reviews to help assessAFFH compliance may not be aware AIs are outdated unless theyspecifically follow up with the grantee to find out the date of its AI. In 10cases, the grantees CAPERs disclosed the date of their AI which, in somecases, was from the 1990s. The extent to which HUD officials identify suchdisclosures in CAPERs or follow up on them was not clear.

Field offices CPD on-site monitoring programs and complaint reviewprocesses provide a limited basis for assessing grantees AIs and taking

follow up actions as may be required. We obtained data from 7 of the 10field offices we contacted regarding the number of CPD on-site grantee

29While this subset is not generalizable to all grantees with outdated AIs, we used criteria in

drawing it to help ensure that they reflected the diversity seen in the sample of granteeswith outdated AIs in our original sample. Specifically, we chose the subset on a weightedgeographic basis to help ensure that it included grantees located across HUDs 10 regionaloffices. We also sought to ensure that the subset reflected grantees in terms of the size ofCDBG grants they received in fiscal year 2009. We selected between one and four grantees

per HUD region weighted slightly more toward grantees with larger grants since they weremore prevalent grantees with AIs completed prior to 2005 in all but two HUD regions.



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reviews they conducted in 2009 and the number of times they obtained orreviewed AIs during such monitoring. As table 5 indicates, CPD field officeofficials reported collecting or reviewing AIs in 17 of the 88 reviews.Moreover, officials from these 7 field offices said they rarely if ever receivepublic complaints about a grantees AI. Given the absence of publiccomplaints, which could be due to the fact that there may be a generalpublic unawareness that grantees are required to prepare AIs, thecomplaint process does not appear to provide a systematic basis for HUDto identify potential limitations in grantees AIs and follow up with them asnecessary.

Table 5: CPD On-site Reviews in 2009 for Selected HUD Field Offices and Number of

Times Grantees AIs Were Reviewed or Obtained

HUD officeNumber of

grantees

Number of CPD on-site grantee

monitoring reviews

Number of AIs thatare reviewed

and/or obtained

Office 1 23 2 0

Office 2 54 32 0

Office 3 21 19 2

Office 4 18 6 2

Office 5 25 3 3

Office 6 29 4 4Office 7 105 22 6

Total 275 88 17

Source: GAO analysis of CPD monitoring data from seven field offices.

Our visits to field offices located in the two HUD regions with thehighest incidence of outdated AIs illustrate some of the inherentlimitations in the departments oversight and enforcement processes.According to an FHEO official in one of these offices, historically, it hasgenerally been unaware of the current state of a grantees AIs, because thegrantees did not routinely submit them. In 2010, this official said the fieldoffice requested that all of the grantees under its jurisdiction submit their

AIs, so that the office could gain a better perspective on the timeliness ofthe AIs. In one case, the official said that the office learned that a granteethat had been certifying its AFFH compliance for several years did nothave an AI. At the other field office, we identified instances where itaccepted AFFH certifications under questionable circumstances. Forexample, in one case, representatives from a grantee told us that theycould not find its AI. When we asked field office officials about thiscircumstance, they said that the grantee had provided a two-pagesummary of an AI that it completed in 1996. Field office officials said that



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they viewed the summary as sufficient evidence that the grantee hadcompleted an AI. Moreover, in distributing CDBG and other grant fundseach year, this field office sends routine communications which, amongother things, remind grantees to update their AIs periodically. While this isa potentially positive step, the field office does not appear to take anyadditional steps to ensure that AIs are not outdated. For example, weidentified at least one grantee subject to the field offices jurisdiction thathas received such communications for four consecutive years, but its AIwas prepared in the 1990s.

While our analysis generally verified that there are limitations in HUDs

overall AI oversight and enforcement approaches that require correctiveaction, we identified practices in certain field offices that appear designedto better ensure that AIs are effective planning documents and thatgrantees fulfill overall AFFH requirements. As discussed previously, in2010, one HUD field office we contacted independently requested that allgrantees within its jurisdiction provide their AIs for review, which allowedFHEO officials to determine that many such AIs were outdated, and onegrantee did not have an AI. In another example, officials from one fieldoffice said that they maintain ongoing communications with grantees to,among other things, determine the date they completed their AIs. In caseswhere an AI is determined to be outdated, officials told us that they workclosely with the grantee through technical assistance to bring the AI up to

date. We corroborated the field offices assertion by reviewing the AIs wereceived from grantees under its jurisdiction and found that all of thegrantees had sent us updated AIs. Another field office has establishedprocedures to use special assurance agreements, which were discussedpreviously, to help ensure that grantees revise AIs that may have identifieddeficiencies. However, these initiatives by individual field offices appear tobe isolated examples within HUDs general approach to AI and AFFHoversight, which provides limited assurances that AIs serve as effectiveplanning tools to identify and address impediments to fair housing.

HUD Has Taken Steps toBegin to AddressRegulatory, Oversight, andResource Limitations, butThese Efforts Are Ongoing

Recognizing the limitations in AI and AFFH requirements and its oversightprocesses, in 2009, HUD initiated a process to review and revise itsexisting regulations. In 2009, HUD officials held several listeningsessions with key stakeholders, such as grantees and fair housing groups,to help identify approaches to enhance the AI and AFFH processes. InJanuary 2010, HUDs Assistant Secretary for Fair Housing and EqualOpportunity testified that the department was working on a proposed



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regulation to enhance AFFH compliance.30 According to a senior HUDattorney, revising the AFFH regulation is a priority for HUD, and theproposed rule may cover a variety of topics, including enhancements tothe guidance provided to grantees on preparing AIs and improvements inthe departments oversight and enforcement approaches. However, untilthe rule is proposed, it is not clear what topics it will address. The HUDattorney also said that the departments tentative time frame for publishinga proposed rule to revise AFFH requirements is in December of 2010.However, the attorney also said that this proposed time frame had notbeen finalized and was subject to change.

HUD has also established initiatives to help address staffing limitationsthat, as discussed previously, may have affected its overall CDBG andother grant program oversight and enforcement approaches, includingthose pertaining to AIs and AFFH requirements, as well as its capacity toimplement any new regulatory initiatives. For example, on March 26, 2010,the HUD Secretary sent out a memorandum on the agencys TargetedRecruitment Strategy for fiscal years 2010-2012. In this document, theSecretary described a strategy for addressing HUDs need to identifyqualified individuals for its talent pipeline over the next three fiscal years.The Secretary stated that this strategy would incorporate the utilization ofvarious federal programs that are designed to recruit and retain studentsto positions in the federal government, such as the PresidentialManagement Fellows Program, the Student Career Experience Program;and the Student Temporary Employment Program. During our review, aCPD official said that the office recently announced a buyout for certainofficials and that CPD was moving more aggressively to recruit and hireapproximately 50 new employees in the next 3 months with the skills toprovide grant oversight, assess grantee and community needs, amongother activities.

While the effects of these plans and initiatives remain to be seen, we notethat some of the proposals to enhance HUDs AI and AFFH oversight andenforcement approaches would not necessarily involve a significant

commitment of additional staff resources. In particular, requiring granteesto submit their AIs for review, without necessarily approving them, wouldallow CPD and FHEO officials to perform a variety of basic tasks to better

30John D. Transvina, Assistant Secretary for Fair Housing and Equal Opportunity, U.S.

Department of Housing and Urban Development, statement before the Subcommittee onHousing and Community Opportunity, Committee on Financial Services, U.S. House ofRepresentatives,Housing Fairness Act of 2009, Hearing on H.B. 476Jan. 20, 2010.



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ensure their quality. These tasks could include verifying whether AIs (1)have been prepared as required, (2) updated in accordance with HUDguidance, (3) include all elements suggested in the 1996 fair housingguidance, and (4) are consistent with AFFH discussions in other keydocuments, particularly CAPERs. If HUD officials identified any areas ofconcern with grantees AIs through such analysis, they could follow up asnecessary, through technical assistance, enforcement actions, or otheractivities as may be necessary, to better ensure that AI serve as effectivetools to identify and overcome impediments to fair housing. Moreover, theresource demands could also be mitigated if grantees submitted their AIson a periodic basis over a period of time rather than all at once within a

specified period.

While HUD regulations have required the preparation of AIs for manyyears, whether they serve as an effective tool for grantees that receivefederal funds through the CDBG and other programs to identify andaddress impediments to fair housing within their jurisdictions is unclear.We estimate that 29 percent of all AIs are outdated, including 11 percentthat were prepared in