Nsttute for . Research on , Po ~ / Er ' ~ / Discussion , Iv ' , I I Papers a Cost - Effectiveness Study of Leased

The purpose of this study is to determine the cost-effectiveness of various ways of providing housing services for low-income families through the leased public housing approach, whereby a local housing authority leases from the private sector and·sublets to tenants for no more than 25 percent of their adjusted incomes. The paper compares the cost-effectiveness of programs involving the leasing of new housing versus those involving existing housing. Our evidence tends to favor the hypothesis that the former is slightly more cost-effective than the latter. Other study findings are (a) that using FHA financing increases the cost of the leased housing program by about 18 percent, and (b) that leasing single-family homes costs over 8 percent more than providing comparable units in a fully-leased apartment building. The stu~y found no evidence that other policy decisions--such as particular methods of obtaining units and assigning families; responsibility for rent collection and repairs; the number of years a unit remains. in the program--affect the cost-effectiveness with which housing services are provided. This suggests that such decisions can be made without regard to cost-effectiveness. A COST-EFFECTIVENESS STUDY OF LEASED PUBLIC HOUSING The purpose of this study is to determine the cost-effectiveness of various ways of providing housing services for low-income families through the leased public housing approach. In this apjproacha local~ housing authority (LHA) leases units from the private sector and in turn sublets them to low-income tenants for not more than 25 percent of their adjusted incomes. The leased public housing approach was first made possible by the 1965 amendments to the United States Housing Act of 1937. Before that, public housing was mainly of the "conventional" type whereby the LHA purchased sites and supervised planning, construction, and management. A third type also developed in 1965 is known as the Turnkey I procedure; it allows the LHA to purchase units proposed, designed, and constructed by private developers on their own sites. 1 From 1974 through the first quarter of 1976, leased public housing has been the dominant form of newly provided low-rent public housing; 95 percent of the 385,000 applications received by the Department of Housing and Urban Development (HUD) for low-rent public housing during 2 this period were for leased units. However, just recently the Housing Authorization Act of 1976 was passed in an attempt to breathe new life into the old, non-leased, low-rent public housing programs. Summar~f Results One of the reasons for the emphasis on the leased-housing approach in providing housing services for low-income groups was that it was thought that" the leased-housing approach was more cost-effective than the conventiona1 or turnkey methods. The National Housing Policy Review Task