Revised Methods of Providing Federal Funds for Public Housing Agencies, 1994

In response to a 1990 congressional mandate, HUD commissioned this report, which analyzes several approaches to calculating Federal subsidies for the operation, maintenance, and modernization of public and Indian housing. Three types of systems are examined: operating cost subsidy systems; capital cost subsidy systems; and "combined" systems that cover both operating and capital expenditures. Under the current funding formulas, operating assistance is provided to public housing agencies through the Performance Funding System (PFS). PFS relies on adjusted 1975 cost data for a group of "well managed" PHAs as the basis for determining allowable operating expenses. An alternative method for calculating operating subsidies uses private market data to determine benchmark operating costs.

The report includes a comparative analysis of operating costs for low-income public and private multifamily housing in central city locations. In addition to operating subsidies, PHAs with 250 or more units receive capital improvement moneys under the Comprehensive Grant Program (CGP), while the older Comprehensive Improvement and Assistance Program (CIAP) continues to serve small PHAs. The study found that extra-large PHAs received $403 per unit per month (PUM) in FY 1992, compared to $183 PUM for very small PHAs.

The study's final simulation based subsidies for both operations and capital improvements on a Fair Market Rent (FMR) system, in which PHAs would be paid the difference between the market value of their dwelling units and the amount of rent paid by tenants. The FMR system, however, does not adequately compensate for the costs of clearing the long- standing backlog of repairs and maintenance to public housing.

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