Local officials administering federal block-grant housing funds have concentrated on aiding homeowners, even though they admit that renters in their communities are in greater need of assistance, a congressional study has found.
The study also determined that local authorities are not enthusiastic about converting major federal housing programs to block grants -- despite the increased flexibility such an arrangement would allow -- unless the total amount of money available is to be increased.
The findings, by Congress' General Accounting Office, are significant because of the growing interest in the Reagan administration and on Capitol Hill in applying a block-grant approach to housing.
"Congress and the administration are currently rethinking federal housing policies and strategies. One trend seems to be away from federally administered production programs... and toward increasing local discretion and flexibility over the use of federal funds for housing," the report said.
Currently, most federal housing money is disbursed through federally administered programs. The principal exception is the Community Development Block Grant program, which has been in existence since 1974. The GAO surveyed local officials who have been handing out the money to find out what sort of use has been made of it.
The survey found that the block-grant money was used to finance "a wide range of housing activities," including renovation, new construction, and energy conservation, and that it did go mainly to low- and moderate-income people.
It also found that communities tended to use "less innovative financing methods, such as grants," and that the program attracted relatively little in the way of supplementary private funds.
The principal finding, however, was that "communities have concentrated on helping homeowners even though they reported that renters have a greater need for assistance." Figures supplied by local officials indicated that 225 percent more renter households needed help and "that substantially more rental units need rehabilitation than owner-occupied units."
"When compared to need, however, significantly more owner-occupied units were assisted under the CDBG program than rental units," the report said.
The Department of Housing and Urban Development, asked by the GAO to comment, replied that local officials emphasized aid to homeowners, especially at first, because much of their experience had been with the federal Section 312 program, which is aimed at homeowners. And the officials expected other federal programs, especially Section 8, to help fill renters' needs, HUD said.
The GAO countered that, "While the Section 8 and public housing programs do provide for rental rehabilitation, most of the funding is for assistance to existing housing and new construction activities. These activities cannot effectively address the rental rehabilitation needs identified by local officials."
A spokesman for the GAO also noted that much of the need is concentrated among smaller rental buildings, those with about five to 20 units, which the federal categorical programs don't reach. The CDBG program, on the other hand, "is particularly well-tailored" to this size project, he said.
Stephen Bollinger, HUD assistant secretary for community planning and development, emphasized that the administration is not seeking a massive conversion of federal programs to block grants. "We have determined that the best way to go is the modified Section 8 certificate [voucher] approach. The federal government does not need to be in the business of building housing units for low- and moderate-income people," he said, noting that private enterprise can provide such units if people have a way, such as vouchers, of paying for them.
He also said he does not agree with the implication of the GAO report that a block-grant program might result in needier but less politically active groups such as renters losing benefits to more influential groups such as homeowners.
Any legislation would "target specific recipients, and... any activity would have to pass the test" of whether it is meeting the target, he said.
The GAO study found that most local officials support consolidation of existing federal housing programs into block grants, and feel that a long-term, all-purpose block-grant program would be most beneficial. But their support is strongly affected by expected future levels of federal funding. "... Local support for a housing block grant is strongest when the officials assume that federal funds would increase... [and] markedly deteriorates when officials assume federal funds would decrease," the report said.
The report observed that the administration is seeking $150 million for fiscal 1983 for a new rental rehabilitation grants program. "This program would provide grants to states and units of local governments for up to one-half the cost" of renovating single-family homes and small rental projects. The money would go to rehabilitate an estimated 30,000 units, the GAO said.
It is hoped that this approach would result in more efficient subsidies that would provide more housing at less cost to the Treasury.
But the GAO spokesman said that experience with rehabilitation of rental property remains fairly limited, and that, if the government were to create a new and enlarged block-grant program, the "mechanisms for implementing it would get more complicated." He said he believes that the federal government would have to provide additional administrative assistance to the localities for them to run the program successfully.
He also said he thinks there is a size "threshold below which it would be difficult for a small city to run a rental rehabilitation program."
The spokesman said that the report, which was issued last month, has been well received both at HUD and on Capitol Hill, and that the GAO has been asked to do additional studies on rental rehabilitation costs.