The Housing and Urban Development Department has taken a look at its housing rehabilitation programs and concluded that they are a good idea, particularly the brand-new rental rehabilitation plan.
Well-chosen rehab projects not only make more housing available to low-income families but also stimulate private investment in rental property, the department's study found.
However, on the same day the report was being released and Secretary Samuel R. Pierce Jr. was putting out a statement about how HUD would help local governments implement the new rehab program, the Office of Management and Budget was saying there wasn't going to be a new rehab program.
"The rental rehabilitation grant program is to be terminated" without ever really getting started, and "the department will seek repeal" of the law authorizing it, OMB wrote in its budget "passback" to HUD.
Perhaps the coincidence of the passback and report will prove helpful to Pierce, who has appealed the OMB decision personally to President Reagan. The report contains several conclusions that could boost his arguments.
"Based on results for projects that fit the profile for the new program, it seems likely to be highly productive" in generating units that will remain affordable to lower-income households, the report said.
The report looked at how HUD rehab programs have performed in both retrieving units for the housing stock (or preventing units from being abandoned) and in making units available for lower-income families.
It concluded that rehab works best when local governments have wide flexibility in choosing projects and devising financing, and when the rehabilitation itself is not too extensive -- i.e., costing between $5,000 and $15,000 a unit.
More substantial rehabs, those that cost more than $15,000 a unit, are effective at recovering or saving housing, but the cost in public money is too high. Lighter rehab puts money into units that probably would have stayed in the housing stock anyway.
The new program, which would provide a maximum of $5,000 per unit in federal money and would require the locality to match it, would give local officials flexibility but prevent them from going overboard on spending.
Said June Koch, assistant secretary for policy development and research, in an interview yesterday: "Clearly, it's the way to go."
LOSERS' BOWL . . . The department has a small (by government standards) amount of money left after the first round of housing development grants (HoDAGs), and is considering inviting unsuccessful applicants to try again.
The $26.9 million still available in fiscal 1985 funds isn't enough to warrant a full-scale open competition, but presumably is too much not to allocate. If it does allow a rerun, it will let applicants modify their proposals to try to meet HUD criticisms.
HoDAGs are designed to provide seed money that will entice new private capital into multifamily housing. There were 141 winners in the first round, which is expected to produce more than 14,000 units.