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Rebuilding the Research Capacity at HUD 11 Vision for the Future: Recommendations Urban society has changed radically over the past 40 years and today’s cities look and function quite differently than they did when HUD was established in 1965. The demographic make-up of urban residents, as well as the location and nature of employment opportunities available to them, are just some of the changes that generate urban challenges with important implications for equity, access to opportunity, and the vitality and sustainability of urban communities. The types of programs overseen by HUD and the operational and policy challenges facing the agency have also changed dramatically over the past 40 years. Public housing and government housing construction programs have been largely replaced by housing demand subsidies, while federal urban renewal programs have been completely replaced by locally sponsored development projects financed by a partnership between federal and local agencies. Similarly, today’s housing finance system looks very different than it did 40 years ago, when most home purchases were financed by local savings and loans or other thrift institutions through over-the-counter passbook savings accounts. In 1965 there was no federal regulation of the real estate settlement process, and no federal construction standards for manufactured housing. These changes could not have been foreseen when PD&R was created, and they certainly affect the nature of housing and urban development research required for the development of policy in the future. For example, in light of the current subprime mortgage crisis, PD&R clearly could play expand its important work on subprime mortgages and predatory lending practices in order to continue to inform the policy development process as
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Rebuilding the Research Capacity at HUD modifications in housing finance practice are being proposed. Responding to these and other challenges will require a much stronger and broadly based research capacity in PD&R. Attention will need to be paid both to exploring more comprehensive and sustainable models in planning and construction as well as the potential for new market-based approaches to urban development. In this chapter the committee offers its vision for what PD&R should become in the future. VISION FOR TOMORROW’S PD&R The analysis in this volume of HUD’s research capacity and the research program has found much to praise within the confines of a very small staff that is charged with policy development and research in support of public expenditures of about $37 billion a year. As documented in this volume, the research program has produced excellent work over a long period of time and has served the nation well. The committee concludes, however, that the public interest would be better served with a broader mandate for PD&R. The office needs additional financial and intellectual resources to allow it to continue and expand its current role in analyzing existing and proposed HUD programs, and it also needs resources to play a larger role in the national research community on a wide variety of housing and urban development policy issues. Although additional resources are necessary for PD&R to realize its full potential, some aspects of an expanded role for PD&R can be achieved without significant new resources. The committee envisions PD&R as a leader along two dimensions: (1) informing and improving public understanding of HUD programs through research and analysis, and (2) shaping the focus of the national research community in the social, engineering, and environmental sciences on both housing and urban development. By this prescription, the committee envisions PD&R as moving beyond the role of supporting HUD’s existing housing programs to become a leading institution for seeking solutions to the nation’s housing and urban development problems and for meeting society’s future needs in these areas. PRAGMATIC ROLE The efforts of PD&R serve several functions. One role is the evaluation and assessment of existing policies and programs. Program evaluation helps to establish the facts about an issue and create the context for analyzing whether a specific program should be modified to improve performance. The result is a set of more effective policies and programs based on the analysis and review of program performance. A second function for the Office is policy analysis and development—the creative process by which
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Rebuilding the Research Capacity at HUD problems are defined, policy alternatives are considered, and new policies are conceived and implemented. Through this function, the office can foster creativity and innovation throughout the department in addressing housing and urban development. Finally, a third role is to continually promote basic research in all its primary areas of focus. This research is the vehicle of discovery that serves as the foundation for innovation and advancement: Basic research can sharpen the problem definition for policy analysis and can lead to better methods to enhance the analytical power of program evaluations. PD&R can fulfill these functions across the range of topics and issues that fall under the department’s purview. These activities include two distinct mandates: housing research and urban development research. PD&R’s future role is likely to be different between these two areas, as it has been to date, because HUD’s role is different. Housing programs constitute over 80 percent of HUD’s annual budget and will continue to claim a large share for many years into the future. These are federal programs, designed at the federal level, in response to national priorities. PD&R has and will continue to have a major role in evaluating these programs and developing and analyzing possible new policies and programs. Urban development programs are and have been quite different. The creation of PD&R coincided with a major policy shift from categorical programs, intended to promote urban development in specified dimensions, to block grants to local and state governments, for the purpose of funding local initiatives. PD&R’s urban development research has been much less focused on the specific actions of local governments and much more on basic issues of program design, such as block grant formulas, and on broad trends in urban phenomena. The future PD&R can build on this history. Although it is convenient to discuss housing and urban development research separately, it is worth emphasizing that successful execution of PD&R’s mission will often involve work at the interfaces of these components to provide a consistent, synergistic, and balanced portfolio of activity. Housing Research The department’s largest and most significant mandates and programs focus on housing. Thus, PD&R needs the on-going capacity to support policy analysis and development, as well as program evaluation, for the major public expenditures that are the responsibility of the agency. The office needs to be capable of innovative policy research that includes spatial, social, economic, and financial analysis, and be able to conduct this research on a continuing basis. The day-to-day operation of major programs, such as vouchers and public housing, can clearly benefit from constant monitoring,
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Rebuilding the Research Capacity at HUD observation, and analysis. For one example, HUD allows individual jurisdictions to amend rules and practices in administering the voucher program. This variation provides “natural experiments” that allows researchers to investigate whether variations in specific program features result in better outcomes, improved administration, or reduced administrative costs. This knowledge can generate benefits far beyond those accruing to the agency of the state or local government that is initially awarded the variance. Periodic or irregular reviews of the most expensive programs are important but not sufficient for a vital PD&R. Important policy issues can arise in relatively small programs. PD&R should be in a position to analyze and evaluate all of HUD’s programs. The committee has identified a number of programs that have received no research attention for a number of years, including programs that have been the subject of congressional hearings. Further, this work should not be limited to existing federal programs. Initiatives at state and local levels can be the source of new ideas and successful strategies for addressing national problems. Smaller demonstration projects can be extremely valuable in serving as the basis for larger subsequent policy initiatives. And these demonstrations need not be small. Indeed, the current voucher program emerged from a series of both small-scale and very large-scale, policy experiments. However, such demonstrations will only effectively serve this purpose if they receive adequate attention in evaluation. The same research attention should be given to HUD’s regulatory responsibilities. Elsewhere in the report, the committee has documented valuable research on meeting the affordable housing goals established for the government sponsored enterprises (GSEs), on standards for disclosure of settlement charges in housing transactions, and on construction and safety standards for manufactured housing. These are important issues in U.S. housing policy, often with far-reaching effects on the economy. HUD continues to have major regulatory authority over real estate settlement practices and manufactured housing standards (in the case of the GSEs, its authority is being transferred to a new regulator), and it is important that PD&R be able to support the regulatory activities and evaluate their outcomes. The committee’s vision of PD&R extends to areas well beyond HUD’s current programs. PD&R has sponsored important research on predatory lending, although HUD’s authority is limited to FHA-insured mortgages. This area becomes more important as policy makers consider substantial changes in the housing finance system in response to the subprime mortgage problem. In a similar manner, while the technology of housing does not directly relate to many of HUD’s current programs, technology directly affects housing construction and affordability, and people’s living standards and styles. It seems likely that analysis of future HUD programs will not be
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Rebuilding the Research Capacity at HUD limited to questions of economics and social policy, but will be intertwined with technical questions of safety, disaster risk, and building performance. Urban Development Research In part, HUD was born because of the urban unrest in America during the 1960s, which was marked by crises in race relations, concentrated poverty, and disinvestment in urban centers. Since then, there has been further decline in some old-line industrial cities, together with the rise of new, spatially dispersed cities. As mentioned above, HUD’s urban development programs are not designed or intended to set national policies, but PD&R can do important and relevant work. As one important example, HUD oversees the large Community Development Block Grant (CDBG) Program, which supports locally designed actions for the economic and social development of disadvantaged neighborhoods and their residents. A major reason for substituting federal funding of programs initiated by local governments for direct programs imposed by the federal government was the presumption that local and state governments were able to design and execute programs better adapted to local circumstances. In the intervening years, states and localities have used many different strategies for using CDBG funds. With more comprehensive program evaluation, much more could be done to document and learn from the successes and failures of local governments in these varied uses of CDBG funds and urban investments. In particular, hard-headed research on what “worked” and what “failed” in particular circumstances could greatly increase the efficiency of the CDBG Program at the national level. A decade of resources devoted to enterprise zones and empowerment zones has seen a variety of choices made by local governments using federal funds in the local development process. Yet little is currently available to evaluate these choices and to learn from the experiences. This is a missed opportunity. The diffusion of successful applications of CDBG or empowerment and enterprise funding will require considerable attention to dissemination and outreach activities. The committee envisions PD&R at the center of efforts to disseminate information and ideas about how local governments can best use federal programs in their local interests. There is little evidence that HUD or PD&R currently embraces this function. Many other activities also fall under the umbrella of urban development. Basic research on the nature of urban space can help to improve the effectiveness of local economic development policies, by allowing for designs that better address the linkages between a neighborhood and its surroundings. Economic policies are not independent of the analysis of the technical considerations of urban transportation systems and the alternatives for moving people and freight. Applied research can further understanding of the
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Rebuilding the Research Capacity at HUD mechanisms and circumstances by which racial and economic separation and discrimination continues to limit economic and social interaction. More broadly, with mounting concerns about global climate change as well as the impact of man on the environment, it is possible that HUD will also be increasingly asked to pay attention to issues of sustainable urban development. The effective use of “smart growth” planning principles that yield high-density, mixed-use, mixed-income communities will need to be explored. And the potential for new planning approaches—such as those that minimize the need for automobile transportation and extensive infrastructure development while at the same time providing socially and economically integrated family-oriented communities—will need to be better understood. Both research functions, housing research and urban development research, embrace a large component of social science and economic analysis. And these research functions require, and are informed by, technical research and technology research. The committee concludes that it is important to integrate technological research activities into both housing and urban development. For housing and urban infrastructure, technology research is the translation of the principles of the physical and biological sciences toward practical goals of process or product. The process could be designing procedures or a construction technique, and products could be new materials or combinations of materials to achieve a specific purpose. Research often begins close to basic science principles and progresses to development tasks to achieve a product for commercialization. The later stages of product development are best left to private entities. PD&R should not engage in product development, or demonstrations that showcase particular commercial products. But PD&R can play a central role in guiding technology research and regulation of buildings and on emerging issues in engineering and design, such as energy utilization, construction methods, and building materials. The office can encourage development of basic knowledge and provide leadership in analyzing the impact of generic designs and innovations on building codes, regulations, life safety and affordability; efficient engineering and economic choices between up-front capital investment and life-cycle energy costs; and the spatial pattern of capital investment in urban areas, with a particular focus on linkages between transportation and housing investments. For example, university-based engineers have studied the impact of hurricanes and earthquakes on homes that enable others to improve house design and construction. This research has intrinsic value in its own right, but it also provides knowledge that PD&R can contribute to HUD policy development. An important role for PD&R can be to facilitate work by these communities in searching for solutions that benefit both housing and urban development. An equally important role
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Rebuilding the Research Capacity at HUD for PD&R is to be a focal point for dissemination of technical innovation and knowledge about new technologies to everyone involved in housing and urban development. CATALYTIC ROLE In addition to supporting programmatic functions of the department, PD&R can also take the lead in fostering, stimulating, and leading the body of policy-relevant social science and technology research conducted outside of HUD on issues of housing and urban development. The research office of a cabinet-level department devoted to housing and urban development is the natural focal point for initiating wide-ranging collaborative research with private industry, university centers, and nonprofit organizations. This leadership role can be executed in many ways. For example, a university grants program of modest proportions, in which awards were made by a committee of university and HUD officials, could stimulate relevant research using HUD data at very low cost. PD&R’s research cadre, focusing on programmatic issues to date, is a possible model. Focused and regular conferences on technological or engineering issues, sponsored by HUD and held in Washington, could inform both federal and local leaders about technical work of potential practical value to both. A regular program of short-term appointments to PD&R by academic or nonprofit leaders could also define a leadership role for HUD in this larger community. Better use of on-line computer technology could place HUD at the center of a national discussion on future directions for urban America. Seamless availability of HUD data sets, administrative data as well as survey data, could greatly stimulate research undertaken outside of HUD and PD&R. Development of closer linkages to research talent in the country would likely yield a high payoff in understanding urban areas and in designing housing and urban policy. A goal of these linkages is the development of more holistic research. In this sense, the committee is mindful of the vision of Jane Jacobs, who saw that the value of urbanization lay in opportunities for interpersonal engagements and the productive intellectual spillovers that result from them. The committee recognizes that a great many important urban issues are not solely in HUD’s purview. Sustainable urban development necessarily involves the U.S. Departments of Energy and Transportation and the Environmental Protection Agency, as well as HUD. The problems of urban governance, such as the provision of public safety and quality education, concern HUD, the Department of Education and the Department of Justice. The development of a stronger housing finance system will be primarily the responsibility of the Treasury Department and the financial regulators; HUD’s role will be important but subsidiary.
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Rebuilding the Research Capacity at HUD Nevertheless, while other federal departments and agencies are concerned with specific urban issues, PD&R is in a unique position to provide professional leadership in developing integrated research on the social, economic, and technical problems facing housing and cities. Without an integrated approach, policy can result in fractured approaches to these urban problems, achieving at best partial success. Indeed, the problems of today’s urban communities require a comprehensive combination of economic, medical, social, ecological, and technological expertise. There is precedent for this type of integrative approach and for a HUD leadership role. The Smart Growth Office of the Environmental Protection Agency, which was initially funded in part by HUD, has emerged as the leader in defining and crafting the broad federal response to identifying new ways to facilitate more compact cities and to improve the quality of life of urban residents. Other examples of offices conducting policy-relevant research in other cabinet departments include the Agency for Health Care Research and Quality and the Office of Research, Development, and Information in the Department of Health and Human Services (HHS). HUD and PD&R should consider these and other relevant examples as potential models in the exercise of leadership in defining policy-relevant research and in encouraging high-quality urban research. PD&R cannot reasonably expect to lead all of the needed initiatives. The challenges of urban America are sufficiently broad that no one department will be able to direct effective responses to all of them. However, in those cases in which PD&R is not the leader of the initiative, it is essential that the office have a “place at the table” to offer input in shaping the agenda for research on housing and on urban development. ORGANIZATION Since its inception, PD&R has exercised responsibility for both policy development and research and has also played a significant though not predominant role in determining the level and distribution of the annual HUD budget. These activities are interconnected. Policy development and research are clearly synergistic. Programmatic evaluations may yield anomalous results that, in turn, can stimulate research, and the results of that research can improve policy. For one example, program evaluation research seemed to suggest that voucher recipients had lower exit rates from unemployment in metropolitan areas with many housing authorities. Rigorous research subsequently established that, because vouchers were not portable across housing authorities, recipients were less likely to accept jobs entailing relocation to another part of a metropolitan area and into the jurisdiction of a different housing authority. This led to demonstrations of administrative
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Rebuilding the Research Capacity at HUD cooperation among several housing authorities and ultimately to a system of geographically portable housing vouchers. The policy development and research functions are also synergistic with budgetary responsibilities. The appropriate budget for existing programs may depend on small changes that can be affected by careful policy development. Choices about budget allocation across programs and program offices may often depend on forecasts and circumstances derived from scientific or financial research. For these reasons, the research, policy development, and some budget functions have been combined at HUD. In this respect, HUD’s organizational structure is similar to that in other cabinet agencies, for example, HHS. It is nevertheless true that PD&R plays a less central role in the development of HUD’s budgetary and legislative proposals than does the analogous agency in HHS, the Office of the Assistant Secretary of Planning and Evaluation (OASPE). There has been a long tradition in HHS of close collaboration between OASPE and the Office of the Assistant Secretary for Management and Budget (OASMB) in the budget process—with OASMB leading the development of the department’s annual budget proposals with input from OASPE, and OASPE leading the development of accompanying legislative proposals. Policy research, analysis, and program evaluation have played an integral part in the design of new legislative proposals and in the decision to contract, expand, or modify existing programs. In any agency, the successful combination of these functions depends on a clear delineation of the distinct roles of research and policy development. Research must ensure scientific rigor and adhere to the highest standards of objectivity and accuracy. The environment for research must facilitate—indeed require—dispassionate inquiry. Policy development can draw on the findings of this research to craft proposals and programs consistent with the direction of the administration and Congress. Yet the production of “research” has to be distinct from the production of “policy briefs.” Of course, this does not mean that research should not be used in support of current policies. And there is no reason that research results should not be used “to improve current policies.” But the standard for research is scientific rigor, and the organizational incentives should facilitate and reward dispassionate analysis. The discussion in this chapter reinforces the importance of dissemination in improving housing and urban development in America. Dissemination includes publicizing better organization and operation to professionals in local government. Dissemination includes providing better information about public choices and options to public leaders—city managers and mayors—to improve decision making about housing and urban development. Dissemination also includes regular communica-
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Rebuilding the Research Capacity at HUD tions with engineers, scientists, and academics about housing and urban development. The effectiveness of PD&R could be improved significantly in two important ways: to emphasize research and policy development activities in support of urban development, complementing its work on housing; and to provide much more attention to dissemination through regular outreach activities and through the development of an “extension service” that would “translate” research results into an applied form and then extend that applied knowledge to urban stakeholders. One other significant organizational change is suggested by our analysis. Currently PD&R administers a variety of programs that are valuable neither in policy development nor research. The current organization has two disadvantages. First, the budget and staffing of PD&R are misleading. Due to the size of these other programs, PD&R devotes far fewer resources to policy development and research than its budget would suggest. Second, the importance of these activities has somewhat “delegitimized” the research and policy development outputs of the office. RECOMMENDATIONS The committee presents here its full set of recommendations. Major recommendations are numbered consecutively. Other recommendations are numbered according to the chapter in which they appeared. Major Recommendation 1: PD&R should regularly conduct rigorous evaluations of all HUD’s major programs. Major Recommendation 2: PD&R should actively engage with policy makers, practitioners, urban leaders, and scholars to frame and implement a forward-looking research agenda that includes both housing and an expanded focus on sustainable urban development. Major Recommendation 3: PD&R should treat the development of the in-house research agenda more systematically and on a par with the external research agenda. Major Recommendation 4: Formalizing what has been an informal practice over most administrations, the secretary should give PD&R’s independent, research-based expertise a formal role in HUD’s processes for preparing and reviewing budgets, legislative proposals, and regulations. Major Recommendation 5: PD&R should strengthen its surveys and administrative data sets and make them all publicly available on a set schedule.
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Rebuilding the Research Capacity at HUD Major Recommendation 6: PD&R should develop a strategically focused, aggressive communication plan to more effectively disseminate its data, research, and policy development products to policy makers, advocates, practitioners, and other researchers. Major Recommendation 7: In order to effectively implement the above six recommendations, the secretary should refocus PD&R’s responsibilities on its core mission of policy development, research, and data collection. Perhaps most critically, the committee concludes that the current level of funding for PD&R is inadequate. Although the committee was directed not to offer budget recommendations, it is evident to the committee that many of PD&R’s problems stem from the erosion of its budget, and that the office cannot accomplish the recommendations presented here without resources for additional well-trained research staff, data collection, and external research. In addition to these major recommendations, the committee also makes a number of more detailed recommendations largely intended to facilitate and expand upon the major recommendations. Recommendation 3-1: Congress and the secretary should assign PD&R responsibility for conducting rigorous, independent evaluations of all major programs and demonstrations and should ensure that the necessary data collection protocols and controls are built into the early stages of program implementation. Recommendation 3-2: Congress should allocate a small fraction of HUD program appropriations to support rigorous evaluations designed and conducted by PD&R. Recommendation 3-3: PD&R should design and fund more ambitious, large-scale studies that answer fundamental questions about housing and mortgage markets and about the impact and effectiveness of alternative programs and strategies. As part of this effort, PD&R should launch at least two new large-scale studies annually, partnering with other federal agencies and philanthropic foundations when appropriate. Recommendation 3-4: PD&R should ensure that its research reports adhere to established research standards before the research begins and greater accuracy and precision by everyone who participates in the writing, reviewing, and editing of its reports.
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Rebuilding the Research Capacity at HUD Recommendation 3-5: When PD&R designs intermediate-scale studies that do not involve large-scale data collection from a statistically representative sample of agencies or individuals, it should make more effective use of administrative data and limit its use of small (nonrepresentative) samples of site visits and interviews. Recommendation 3-6: PD&R should conduct more small grant competitions that invite new research ideas and methods and should increase funding to support emerging housing and urban scholars in the form of dissertation and postdoctoral grants. Recommendation 4-1: PD&R should expand its direct involvement in housing and urban development technology research. Recommendation 4-2: PD&R should provide small research grant competitions, perhaps in partnership with the National Science Foundation, that focus on basic and enabling research in technology and maintain a distance from implicit product endorsement or demonstration. Grants or contracts should be awarded in an open competitive process in which proposals are evaluated and priorities set through an independent expert panel. Recommendation 4-3: As HUD programs develop to address new emerging problems—such as sustainable housing or sustainable urban development—PD&R should adopt a systems approach that brings together in-house social science and technology expertise to guide and implement such programs; technology research should support HUD policy development. Recommendation 4-4: PD&R should partner with other federal agencies and philanthropic foundations to fund major studies of significance in technology. Recommendation 5-1: PD&R should develop a formal process for setting the in-house research agenda with clear priorities and timelines for project delivery. As priorities shift during the year, changes in delivery dates should be formally noted. Recommendation 5-2: PD&R should develop a more explicit relationship between the in-house and external research agendas. Not following up internally conducted baseline studies with formal external studies of the systematic impacts of policy change risks wasting internal resources. Recommendation 5-3: PD&R should encourage and assign staff to attend selected conferences on a regular basis, to help staff stay up to date on
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Rebuilding the Research Capacity at HUD evolving research and methods, find out about promising scholars, gain insight on emerging policy questions, and generate fresh ideas about potential research that HUD should be conducting. Recommendation 5-4: The assistant secretary of PD&R should provide incentives to professional research staff to publish their work. Recommendation 6-1: The loss of staff capacity in offices and divisions that specialize in policy development should be reversed. Recommendation 6-2: The appointment of a deputy assistant secretary for policy development should be routinely given a high priority. Recommendation 7-1: The number of metropolitan areas in the AHS, the frequency with which they are surveyed, and the sizes of the sample in each area should be increased substantially. Recommendation 7-2: PD&R should modify the AHS to increase its usefulness for program evaluation and policy development. Administrative data should be used to identify the combination of programs that provide assistance on behalf of each household, and the sample of households receiving housing assistance should be greatly increased. PD&R should also increase the use of topical modules in the AHS, funded in part by external sources. Recommendation 7-3: PD&R should establish an ad hoc committee to thoroughly review the content and other aspects of the AHS. Recommendation 7-4: Ensuring that the Residential Finance Survey is conducted in 2011 should be a high priority. Recommendation 7-5: PD&R should assign a high priority to the production of an up-to-date Picture of Subsidized Households. Recommendation 7-6: PD&R should produce a public-use version of HUD’s administrative data sets that provide information on the characteristics of HUD-assisted households, and it should develop procedures for providing access to a restricted-use version of the data set that contains more detailed information about household location to any reputable researcher. Recommendation 7-7: PD&R contracts for studies that involve the collection of data of interest to many researchers should contain a restricted-use version of the data set that would be available to any reputable researcher
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Rebuilding the Research Capacity at HUD and a public-use version when at least one important research use of the data set does not require information on the location of the household at a low level of geography. Recommendation 7-8: PD&R should use its Customer Satisfaction Survey to collect information on the housing and neighborhood conditions right before and after receipt of housing assistance for a random sample of new recipients to assess the effects of housing assistance. Recommendation 8-1: PD&R should modernize the HUD USER website. Recommendation 8-2: The HUD USER website should be made more user-friendly, enabling users to locate HUD publications and data sets more easily. It should be possible to identify publications by author and subject (including individual HUD programs) more easily. Recommendation 8-3: The bibliography available on HUD USER should allow users to search by author, discipline, and publication. Recommendation 8-4: Both internal and external research reports should be brought to the attention of interested readers more aggressively, with more accessible summaries.