Summary: GAO responded to comments by the Department of Housing and Urban Development (HUD) on GAO testimony concerning HUD's Urban Development Action Grant program. A study had been made of the economic impact of each grant under the program; GAO then visited each site location and the HUD regional office. Contrary to HUD assertions, all available data known to exist at the time was examined prior to the testimony, and GAO methodology used in the study was based on proper assumptions.
There are a number of issues concerning the grants that should be addressed and researched in further detail, the basic issue being whether these federal funds contribute to the economic development and vitality of distressed cities. Investigating the extent to which the grants create permanent jobs, contribute to future revenues of the cities, and leverage private investment are aspects of the economic development issues that should shed some light on the degree of success of the grant program. HUD's claims of permanent jobs will not create those jobs; only a well-designed and well-administered program will accomplish the benefits expected by Congress.
