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RCED-83-126 1 (1983-03-15)

handle is hein.gao/gaobabmwv0001 and id is 1 raw text is: 



                   UNITED STATES GENERAL ACCOUNTING OFFICE
                              WASHINGTON, D.C. 20548


 RESOURCES. COMMUNITYM
AND ECONOMIC DEVELOPMENT                         March 15, 1983
     DIVISION

     B-211061


     The Honorable Henry B. Gonzalez
     Chairman, Subcommittee on Housing
       and Community Development                              120954
     Committee on Banking, Finance
       and Urban Affairs
     House of Representatives

     Dear Mr. Chairman:

          Subject: Interim Report on GAO's Review of the Urban
                    Development Action Grant Program
                    (GAO/RCED-83-126)

          On February 10, 1983, we briefed your office on the pre-
     liminary results of our Urban Development Action Grant (UDAG)
     Program review. At the request of your office, we are providing
     an interim report on major issues included in our review, in
     order that it can be used during the program's reauthorization
     process.

          The Housing and Community Development Act of 1977 author-
     ized the Department of Housing and Urban Development (HUD) to
     assist severely distressed cities and urban counties in allevi-
     ating physical and economic deterioration. These local govern-
     ments receive economic development assistance through grants
     which are to be used to stimulate additional private investment
     and, therefore, economic growth. The legislation provided that
     25 percent of available UDAG funds would be for small cities
     under 50,000 population and not central to a standard metro-
     politan statistical area.

          Our review focused in part on the UDAG Program's limited
     success in assisting most of the 10,161 eligible small cities.
     Overall, slightly less than 8 percent (783) of the eligible
     small cities have ever applied for a UDAG, while just over 4
     percent (422) have been awarded one. These statistics are
     largely a reflection of the very low participation in UDAG by
     small cities with populations under 2,500. Within this popula-
     tion category are 80 percent (8,077) of the UDAG-eligible small
     cities. However, less than 1 percent (67) of these cities have
     been able to obtain UDAG financing. To find out why small city
     participation in UDAG has been low, we statistically sampled and
     conducted telephone interviews with the most distressed small
     cities of all population sizes. Among the reasons we found
     contributing to their low participation were lack of knowledge

                                                            (384804)

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