Exhibit 1: Changes in the 1997 American Housing Survey Affecting Estimates of Worst Case Needs

• For the first time, the survey was conducted using Computer Assisted Personal Interviewing (CAPI). This change should increase accuracy by identifying and immediately correcting inconsistent responses at the time of interview. However, responses to questions are likely to be affected in unknown ways by the questionnaire reorganization and changes in interview timing;

• The Census Bureau changed both the computers and the processing software/language used. Thus, all the software for processing the data, editing the data, allocating missing values, recoding and transforming variables, preparing tables, and estimating variances had to be rewritten.

Estimates of worst case needs were also directly affected by changes in the questions used to identify households receiving rental assistance. In AHS data before 1997, households were counted as receiving Federal housing assistance if they answered "yes" to one of the following questions: "Is the building owned by a public housing authority? Does the Federal Government pay some of the cost of the unit? Do the people living here have to report the household's income to someone every year so they can set the rent?" Although the households identified as assisted by these questions resembled those counted by program data, detailed examination revealed that households often did not report their assistance status correctly. (See Duane T. McGough, Characteristics of HUD-Assisted Renters and Their Units in 1993, May 1997, and Mark Shroder and Marge Margin, "New Results from Administrative Data," May 1996.) In particular, almost half of households responding that "a State or local government pay[s] some of the cost of the unit" were found to participate in Federal assistance programs, suggesting that the past practice in worst case reports of counting such households as unassisted was misleading.

Based on research using focus groups of assisted households, a different battery of questions was determined to better identify receipt of housing assistance. Accordingly, the order and content of the AHS questions about housing assistance were changed. The questions now used to identify assisted households are: As part of your rental agreement, do you need to answer questions about your income whenever your lease is up for renewal? (If so,) to whom do you report your income? Do you pay a lower rent because the government is paying part of the cost of the unit? Is the building owned by a public housing authority?

This new battery of questions identifies 5.6 million households as participating in rental assistance programs, 400,000 more than the total of units with Federal, State, or local assistance reported in 1995. This total is consistent with the sum of all households actually assisted by Federal rental assistance programs run by HUD and the Department of Agriculture, of low-income renters occupying units assisted by the Department of the Treasury's low-income housing tax credit (LIHTC), and of renters aided by State and local programs. It is highly unlikely, however, that the number is exactly comparable to the 1995 estimate of 5.2 million, or that the total number assisted actually grew by 400,000 over the 1995-97 period.

Because worst case needs include households with severe physical problems, the 1997 estimates are also affected by changes in questions and processing regarding plumbing and other physical problems. Many questions were changed in wording to allow respondents to concentrate sequentially on whether a problem meeting the more precise definition occurred in their home and whether it occurred within the time period specified (such as the previous 3 months). Thus, although the improved questionnaire counts 1.8 million households with severe physical problems in 1997 compared to 2 million households in 1995, it is unlikely that the total number of units with severe physical problems really fell by 200,000 between 1995 and 1997.