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113154 1 (1980-08-21)

handle is hein.gao/gaobacxtg0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 IN REPI.Y REIER TO: COMMUNITY AND ECONOMIC / OIVILLOPMejNT DIVISION j 1' /I~? /~i/e /,4sc~/~fAUG 2 1 1980 The Honorable Lawrence B. Simons Assistant Secretary for Housing- Federal Housing Commissioner Department of Housing and Urban Development 113154 Dear Mr. Simons: In our current review of the cost-effectiveness of section 8 partially assisted projects we have observed a problem that we believe warrants your attention. This is the practice of some section 8 project owners who are leas- ing units, for which section 8 assistance is available, to market rate tenants rather then section 8 eligible house- holds. The problem affects both partially and fully assisted projects. Although leasing to such ineligible market rate households is permissible under the section 8 regulations, we believe the current policy and procedures relating to their inclusion in assisted housing could be improved. As you know the Department of Housing and Urban Development recently (1) lowered to 10 percent the percentage of assis- ted units in any project which can be rented to households who are ineligible for section 8, and (2) developed new sanctions for dealing with project owners who fail to comply with the 10 percent limitation. We agree with these changes but feel that some additional measures are needed. Since HUD is currently making revisions to certain of the regulations applicable to section 8 and rewriting the section 8 contract forms, we believe you should consider, 1) further lowering the percentage limitation on ineligible households to 5 percent, with no exception for partially assisted projects, 2) issuing explicit enforcement guidelines for use by HUD area offices in dealing with proj- ect owners who exceed the limitation on ineligible households and 3) making the new percentage limitation on ineligibles applicable to completed projects for which the earlier 20 percent limitation is still in affect.

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