# Special Attention of: Notice FHEO: 2002-01

FHEO Office Directors

FHEO Hub Directors Issued: March 13, 2002

FHEO Program Center Directors Expires: March 13, 2003

FHEO Lead Equal Opportunity Specialists

FHEO Office of Enforcement

and Programs Cross References:

> HUD Handbook 1840.1, Rev-3 "Departmental Management Control Program;
> Monitoring Desk Guide;
>
> Handbooks 8004.1 "Consolidated Civil Rights Monitoring Requirements,
> Public Housing Agency, Section 8 Existing and Lower Income Public
> Housing Programs; 8003.2, "Fair Housing and Equal Opportunity
> Monitoring of Community Development Programs;" and 8025.1,
> "Implementation of Affirmative Fair Housing Marketing Requirements
> Handbook."

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Subject: Office of Fair Housing and Equal Opportunity (FHEO) Risk
Analysis Guidance

###### Section 1: Introduction

I. [Background]{.underline}.

A.  One of the primary goals of the HUD Management Reform Plan is to
    restore public confidence in the Department's program management and
    monitoring operations. Therefore, in FY 2000, the Department
    announced the Compliance and Monitoring Initiative (CMI) that was
    designed to move the Department toward the development and
    implementation of a comprehensive approach to program monitoring and
    compliance. One of the goals of CMI is to establish and utilize
    clear and consistent guidelines for risk assessment and program
    management for determining when Remote (off-site) Monitoring vs.
    On-site Monitoring should be used. The purpose of this guidance is
    to establish standards for field staff of the Office of Fair Housing
    and Equal Opportunity (FHEO) in conducting risk analysis. This
    notice sets priorities and provides guidance on how best to manage
    identified risks with available resources consistent with HUD
    Headquarters policy and guidance in the Monitoring Desk Guide and
    HUD Handbook 1840.1 Rev-3, Departmental Management Control Program.

    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

B.  In managing risk in the Fair Housing Initiatives Program (FHIP) and
    Fair Housing Assistance Program (FHAP), FHEO staff should consider
    risk of fraud, waste, abuse, mismanagement, and failure to
    accomplish funded activities. In managing risk regarding Community
    Planning and Development (CPD), Public and Indian Housing (PIH), or
    Housing recipients, FHEO staff should consider [only civil rights
    related risk]{.underline}.

C.  HUD Handbook 1840.1 Rev-3, Chapter 7, states that the risk-based
    monitoring process requires involvement by all management levels.
    The major steps for implementing risk-based monitoring (outlined in
    Section 7-3 of this Handbook) include:

> 1\. Identifying program missions, goals, risks and monitoring
> objectives to determine what is to be monitored. The foundation for
> oversight activities will consist of appropriate management controls
> for achieving program mission and goals. This is largely accomplished
> through the Department\'s Management Control Program. Identified risks
> are analyzed, and monitoring objectives are set based on this
> analysis.
>
> 2\. Developing methods to rate risk participants, programs and
> functions, including assessing the Department\'s exposure to fraud,
> waste, and mismanagement. Some risks are specific to particular types
> of participants or programs. Criteria should be developed for
> establishing risk profiles. These risk profiles will also be effective
> in assessing the level of resources required to execute risk-based
> monitoring activities.
>
> 3\. Developing and communicating strategies and plans for oversight of
> identified risks. The oversight strategies for managing risk, as
> articulated in HUD directives and plans, address priority objectives
> to be achieved in areas such as:

a.  Timely risk-based monitoring;

b.  Current program monitoring guidance;

c.  Properly trained staff; and

d.  Appropriate resource allocations for risk-based participant
    monitoring and program execution.

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4.  Selecting programs/program participants for monitoring within
    available resources, based on monitoring objectives and risk
    profiles established by program areas.

5.  Assuring that effective and efficient risk-based monitoring
    activities are performed, including identifying whether follow-up
    corrective actions are necessary and the use of sanctions.

6.  Documenting the process and recording the rationale for choosing
    participants.

II\. [Purpose, Objective, and Intended Audience]{.underline}.

A.  The following outline provides for FHEO monitoring and compliance
    review. Selection for monitoring and/or compliance review should be
    made by field FHEO management at the lowest appropriate level - Hub,
    Program Center, Branch, or Local Site, as determined within each
    Hub. FHEO risk management includes program and financial risk for
    FHIP and FHAP recipients and civil rights risk for CPD, PIH, and
    Housing recipients. FHEO staff is thus required to perform risk
    management for an extremely large universe of recipients, and this
    workload makes it impossible to perform numerical risk rating and
    ranking of all recipients in this universe. In addition, the
    necessity to address serious civil rights problems as they appear
    requires an extremely flexible risk management system that is also
    tightly focused on tracking and addressing these problems.
    Therefore, risk management should be performed as discussed below.

B.  The overall objective of the risk-based monitoring process is to
    allocate a larger share of monitoring resources to those program
    functions posing the highest risk. To ensure adequate oversight,
    monitoring reviews and resources are to be adjusted through a risk
    weighing process that will determine both the entities and
    activities to be reviewed. This provides a rationale for why some
    functional areas or program participants are more closely monitored
    than others.

C.  This process described in this notice is to be used consistently by
    all FHEO offices in performing risk management and in making
    selections for monitoring and compliance review.

III\. [Definitions]{.underline}.

> [Current Civil Rights Related Problems]{.underline} - civil rights
> related problems reported in the current fiscal year or in the fiscal
> year immediately preceding the current year.
>
> [FHEO Compliance Review]{.underline} - a review performed by FHEO
> staff to determine if a grantee has complied with specific federal
> civil rights laws or specific HUD civil rights regulations.
>
> [FHEO Monitoring Review]{.underline} - a review performed by FHEO
> staff to determine if a grantee has conducted its HUD-funded
> activities in accordance with HUD's civil rights related program
> requirements (CRRPRs). Monitoring review findings are confined to
> findings of fact. A monitoring letter will be issued to address the
> problems identified and negotiations may begin to resolve the
> problems. The findings of noncompliance on CRRPRs and issuance of
> sanctions are activities for a compliance review. A monitoring review
> may be on-site or remote.
>
> [FHEO On-site Monitoring]{.underline} - a monitoring review that
> involves a visit to the grantee's location.
>
> [FHEO Remote Monitoring]{.underline} - a monitoring review done
> without a visit to the grantee's location.
>
> [Grantee]{.underline} - a state or local government, unit of state or
> local government, public housing agency (PHA), private non-profit
> organization, or private profit-making company, that receives HUD
> financial assistance.
>
> [Recipient]{.underline} - grantee.
>
> [Risk]{.underline} - a chance that something will go wrong or a factor
> in a recipient's policies, program, or activities that increases the
> probability that something will go wrong in a manner that can result
> in fraud, waste, abuse, mismanagement or failure to comply with civil
> rights related program requirements.
>
> [Unresolved]{.underline} - a charge, finding, or DOJ lawsuit for which
> there is no settlement agreement or Voluntary Compliance Agreement
> (VCA).

######### Section 2: Fiscal Year Planning

I. [Management Plan]{.underline}. During the first quarter of the fiscal
year, once the Headquarters-required goals are available and no later
than December 30, each FHEO office should develop a plan showing the
recipients for which it plans to conduct:

A. FHIP monitoring

> B. FHAP monitoring

C. Program On-site Monitoring

> D. Program Remote Monitoring
>
> E. Compliance Review

II\. [Management Plan should]{.underline}:

A. Specify numbers of planned monitoring and compliance reviews, by
program category and type (compliance review, on-site monitoring, or
remote monitoring), any local criteria used for selection and the
rationale for the local criteria, and the list of recipients to be
monitored or reviewed, with planned monitoring dates and resources
needed. Grantees on the list should be selected according to the
selection methodology provided below.

B. Be flexible, so that it can be amended based on identified local
needs. The plan should be updated at least quarterly, and it may be
updated more frequently if local needs require it. Local selection
criteria may also be changed during the fiscal year, as necessary due to
problems identified.

C. Include all monitoring and compliance reviews necessary to meet
Headquarters as well as local goals. Whenever an office uses local
criteria for selection of on-site Monitoring visits and/or compliance
reviews, it must document the local criteria, the reasons for their use,
and how each recipient selected for on-site monitoring or compliance
review fits the local criteria. Whenever an office changes its local
criteria during the course of a fiscal year, it must document the
reasons for the change.

III\. Copies of the plan should be provided to the FHEO Hub Director, to
FHEO Headquarters, and to all CPD, PIH, and Housing Offices whose
recipients are reviewed by staff of the FHEO office. Each FHEO office
should keep a copy of its fiscal year plan, with information on all
local criteria and all modifications, in a central location accessible
to all FHEO office staff.

######## Section 3: Fair Housing Initiatives Program/Fair Housing Assistance Program

I. [FHIP and FHAP Risks]{.underline}. Currently, FHIP and FHAP agencies
are both integral parts of HUD's fair housing program and receive
funding directly from FHEO. The bases for program monitoring are the
current grant agreement, and/or cooperative agreement, including all
their attachments and addenda. The risk criteria identified under II
below are designed to assess risk that:

A.  The recipient will fail to accomplish the activities for which HUD
    funding is provided.

B.  HUD funds will be stolen, wasted, or misspent.

C.  The recipient will fail to comply with HUD's program regulations or
    requirements.

D.  The recipient will fail to comply with HUD's financial regulations
    or requirements.

II\. [FHIP and FHAP Risk Profile]{.underline}. By the end of the first
quarter of each fiscal year, each FHIP and FHAP Government Technical
Representative (GTR), with the assistance of Government Technical
Monitors (GTMs) will prepare a risk profile for each active FHIP and
FHAP recipient, using the Risk Profile forms provided as attachments A
and B.

> GTRs and GTMs will rely on the following sources of information in
> preparing FHAP and FHIP Risk Profiles:

A. FHAP

> 1\. The current Cooperative Agreement, including all attachments and
> addenda;
>
> 2\. Case closure and case review documentation;
>
> 3\. Payment reviews or other activity tracking documentation;
>
> 4\. The most recent monitoring report and any follow-up
> correspondence; and
>
> 5\. Any documentation of technical assistance on file.
>
> 6\. Documentation supporting grantee attendance at HUD
> sponsored/required training.
>
> 7\. Most recent audit report.

B. FHIP

1\. Current Grant Agreement(s), including all attachments and addenda;

> 2\. Quarterly reports and submissions, including financial reports,
> narrative reports, and other documentation;

3\. Payment reviews or other activity tracking documentation;

4\. The last, most recent monitoring report and any follow-up
correspondence; and

5\. Any documentation of technical assistance on file.

> 6\. Documentation supporting grantee attendance at HUD
> sponsored/required training.

7\. Most recent audit report.

III\. [FHIP and FHAP Monitoring]{.underline}.

##### FHEO's goal is to monitor all FHIP and FHAP recipients on-site.

##### 

##### If resources are not available to conduct on-site monitoring of all high risk recipients, the determining factors will be the first three criteria listed in Attachments A and B. FHEO offices should select recipients for monitoring as follows:

##### 1. FHEO's goal is to select all high-risk recipients for On-site Monitoring.

##### 

##### 2. Select as many moderate-risk recipients for On-site Monitoring as possible, selecting in order by point totals.

> 3\. A limited number of low-risk participants should be selected for
> monitoring, in order by point totals, per the guidance in the
> Departmental Management Control Program Handbook 1840.1, Rev-3,
> Section 7-6, B.

4\. Perform Remote Monitoring for all other FHIPs and FHAPs.

##### 

**[Section 4: Civil Rights Related Risks in CPD, PIH, and Housing
Programs]{.underline}**

I. [Recipients Covered under the Civil Rights-Related Program
Requirements (CRRPRs)]{.underline}.

A.  Recipients receiving HUD grants or loans from Community Planning and
    Development (CPD), Public and Indian Housing (PIH), or Housing. For
    such recipients, FHEO may perform:

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1.  Remote program monitoring;

2.  On-site program monitoring; or

3.  Compliance review governed by civil rights and fair housing statutes
    and regulations (see Section 5).

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B.  In monitoring or reviewing these recipients, FHEO is concerned only
    with civil rights related risks. Issues such as financial status and
    age of program, while relevant to risk management by CPD, PIH, and
    Housing, are generally irrelevant to risk assessment by FHEO of CPD,
    PIH, and Housing program recipients.

> Recipient red flags are the criteria for assessing:

1.  Risk exposure to the Department;

2.  The likelihood that a recipient has failed or refuses to comply with
    program requirements; or

3.  The recipient has performed unacceptably.

# C. Civil Rights Related Risks in CPD, PIH, and Housing Programs

1.  [Serious problems likely to cause discrimination in the recipient's
    program activities]{.underline}. Examples of such serious problems
    include, but are not limited to: adoption of a local preference that
    significantly disadvantages members of a protected class, opening a
    waiting list in a manner that effectively prevents a substantial
    percentage of eligible minorities or persons with disabilities from
    applying, and use or adoption of a policy requiring that residents
    be able to live independently.

2.  [Serious failure to comply with HUD's civil rights related
    requirements]{.underline}. Examples of a serious failure include,
    but are not limited to: failure of a CDBG or HOME recipient to
    develop an Analysis of Impediments to Fair Housing Choice (AI),
    failure of a CDBG or HOME recipient to develop and implement a plan
    to address fair housing impediments, and failure of a Housing
    recipient covered by Affirmative Fair Housing Marketing regulations
    to develop the required Affirmative Fair Housing Marketing Plan
    (AFHMP).

3.  [Minor, technical failure to comply with HUD's civil rights related
    requirements]{.underline}. Examples of a minor failure include, but
    are not limited to: failure by project management to have the
    project's approved AFHMP available on-site, failure to include the
    Equal Housing Opportunity logo or slogan in project advertising or
    signs, and failure to display HUD's Equal Housing Opportunity
    poster.

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D.  Determination of the existence of civil rights problems should be
    based on careful tracking of the following data by FHEO staff:

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1.  Results of monitoring and front-end reviews (checklists) performed
    by CPD, PIH, and Housing staff or contractors.

2.  Consolidated Plans, Annual Actions Plans, Consolidated Annual
    Performance and Evaluation Reports (CAPERs), AIs, Public Housing
    Agency (PHA) Plans, and other program documents submitted to FHEO
    staff.

3.  Unresolved issues from prior-year FHEO monitoring.

4.  Informal complaints brought to the attention of FHEO directly or via
    CPD, PIH, and Housing staff.

5.  Charges and findings of noncompliance based on formal fair housing
    and civil rights complaints filed against HUD recipients.

6.  Private civil rights law suits filed against HUD recipients and
    brought to the attention of FHEO staff.

7.  Equal opportunity issues brought to the attention of FHEO staff by
    other means, such as newspaper reports or reports from outside civil
    rights or community organizations.

#### 

#### E. An essential tool in identifying and tracking civil rights related problems is the review of Civil Rights Front-End checklists submitted to FHEO by CPD, PIH, and Housing, or their contractors. HUD provides Civil Rights Front-End checklists for use by:

#### 

#### 1. CPD - CDBG Entitlement Community monitoring, State CDBG monitoring, HOME monitoring, and Section 504 monitoring for all CPD recipients.

#### 

#### PIH - Low Rent Public Housing and Rental Assistance Program monitoring, Section 504, data Public Information Center and Multi-tenant Characteristics System, and PHA Plan review.

#### Housing - Affirmative Fair Housing Marketing Plan (AFHMP) review and project

#### monitoring and Section 504 limited monitoring.

> F. FHEO has provided training for CPD, PIH, and Housing staff in the
> use of these Front-End checklists. HUD requires that CPD, PIH,
> Housing, and contractor staff report identified civil rights problems
> to FHEO and forward to FHEO all completed Civil Rights Front-End
> checklists. FHEO staff must review the checklists, track identified
> civil rights problems, and select recipients for remote or on-site
> FHEO program monitoring or compliance review, as appropriate, based on
> the problems identified.
>
> G. FHEO offices will track problems using a computer database. FHEO
> Headquarters will provide a database template under separate cover. A
> copy of the database template will be posted on the FHEO website. The
> database should track all FHEO Program Operations activity regarding
> CPD, PIH, and Housing recipients, including all information regarding
> problems reported on Front-End checklists by CPD, PIH, Housing, and
> their contract reviewers, other reports of grantee civil rights
> problems, review of Consolidated Plans, AIs, CAPERs, PHA Plans, and
> other documents submitted to FHEO staff, FHEO participation in
> consultation meetings, technical assistance provided in person or by
> mail, and FHEO monitoring, and include space for providing details of
> problems, actions taken by FHEO to address these problems with the
> recipients, and follow-up. The database should also track Fair Housing
> Act charges and conciliated charges involving grantees, and Title VI
> and Section 504 findings and VCAs. Until this program operations
> database is implemented, FHEO field staff offices may continue to use
> their own tracking systems in maintaining information that will assist
> them in conducting risk analyses.

II\. Selection Methodology for CRRPRs.

> A. FHEO offices should select all high-risk and moderate
> risk-recipients for compliance review (see Section 5 below), On-site
> Monitoring, or Remote Monitoring as appropriate, in accordance with
> the methodology provided in this Subsection. You should identify
> high-risk and moderate risk grantees using the risk factors provided
> in Section 4.III. below.
>
> B. FHEO offices may also select low-risk recipients (those for which
> FHEO has no currently identified civil rights problems) for focused
> Remote Monitoring on a specific issue, for On-site Monitoring, or for
> compliance review, through the use of local selection criteria as
> discussed below. For all other low-risk recipients not so selected,
> FHEO staff will perform only limited Remote Monitoring through review
> of Consolidated Plans, Annual Action Plans, and CAPERs for CPD
> recipients, and through review of Civil Rights Front-End checklists
> for all recipients.
>
> C. Selection for On-site FHEO Program Monitoring. Annually during the
> first quarter of the fiscal year, each FHEO office should query the
> program operations database to produce a list of grantees with risk
> factors and analyze this list in accordance with Section 4.III. below
> to identify high-risk and moderate-risk grantees. This list should be
> updated by a new database query at least once each quarter, and more
> often if necessary.

1.  Each FHEO office should consider for possible compliance review (see
    Section 5 below) any high-risk grantee for which an existing problem
    presents the possibility that the grantee is in violation of federal
    civil rights law or implementing regulation.

2.  Each FHEO office should perform On-site Monitoring of as many of its
    high-risk recipients not selected for compliance review as possible.
    If On-site Monitoring of all high-risk recipients is not possible,
    select for On-site Monitoring among high-risk recipients in the
    following priority order, starting with category (a):

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a.  Monitoring visits necessary to track compliance with court orders or
    Voluntary Compliance Agreements;

b.  Visits necessary to address the problems of high-risk recipients
    (document the reasons for the necessity of each On-site Monitoring
    planned on this basis); and/or

c.  Visits necessary to collect information regarding current or
    potential civil rights problems, because volume or complexity of
    information needed makes it difficult to collect through Remote
    Monitoring, or because recipient is not responsive to requests for
    information needed to conduct Remote Monitoring. (Document the
    reasons for the necessity of each visit planned on this basis.)

> 3\. Selection for Remote FHEO Program Monitoring. You should select
> for remote monitoring all high-risk and moderate-risk recipients not
> selected for On-site Monitoring or for compliance review.
>
> 4\. Once all high-risk recipients have been monitored, and if workload
> permits, you may select for On-site Monitoring visits among
> moderate-risk recipients by use of local criteria (see below for
> examples of local criteria).
>
> 5\. If workload permits, you may select low-risk participants (no
> problems reported) for additional on-site monitoring visits by use of
> local criteria.
>
> 6\. When making selections for monitoring of moderate or low risk
> recipients based on the use of local criteria, [document]{.underline}
> the local criteria used, the reasons for the choice of those specific
> local criteria, and how the recipients selected for monitoring fit the
> local criteria.
>
> 7\. Examples of local criteria include but are not limited to:

a.  Size of recipient programs and number of persons potentially
    adversely affected

> by reported problems.

b.  A decision to focus on a particular geographic area and a particular
    type of

recipient because of complaints received or other identified issues,
such as:

1\) An FHEO office may decide to monitor a particular metropolitan
area's CDBG entitlement cities on-site for AI implementation because it
has received a number of reports that CDBG Entitlement Cities in that
area are not implementing their AIs.

2\) An FHEO office may decide to monitor a particular housing market
area's assisted multifamily housing developments for accessibility to
persons with disabilities because commercial redevelopment underway will
soon create increased demand for housing in that area.

> D. For detail guidance on monitoring of HUD programs for CRRPRs,
> please refer to HUD Handbooks 8004.1, "Consolidated Civil Rights
> Monitoring Requirements, Public Housing Agency, Section 8 Existing and
> Lower Income Public Housing Programs;" 8003.2, "Fair Housing and Equal
> Opportunity Monitoring of Community Development Programs; and 8025.1,
> "Implementation of Affirmative Fair Housing Marketing Requirements
> Handbook."

III\. Identification of High, Moderate, and Low-Risk Recipients. All
factors listed under high risk have equal weight, and all factors listed
under moderate risk have equal weight.

A.  Community Planning and Development Recipients

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1.  High-risk recipients include, but are not limited to, recipients for
    which FHEO is informed of any one of the following current problems:

    a.  An outstanding unresolved Fair Housing Act charge;

    b.  An outstanding unresolved Fair Housing Act lawsuit filed by the
        Department of Justice alleging an ongoing pattern or practice of
        discrimination;

    c.  An outstanding unresolved letter of noncompliance findings under
        Title VI of the Civil Rights Act of 1964, Section 504 of the
        Rehabilitation Act of 1973, Section 109 of the Housing and
        Community Development Act of 1974, or other federal civil rights
        law;

    d.  An outstanding unresolved court finding of violation of the Fair
        Housing Act, Title VI, Section 504, or the Americans with
        Disabilities Act (ADA);

    e.  Failure to conduct an Analysis of Impediments (for new grantees,
        failure to conduct an AI within two years of first receiving
        CDBG and/or HOME funding);

    f.  Failure to develop a plan of action to address identified
        impediments (for new grantees, failure to develop a plan of
        action within a year after first completing an AI);

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    g.  Failure to take appropriate actions to address any identified
        impediments to fair housing choice, in accordance with the
        certifications required by HUD regulations at 24 CFR Part 91 and
        24 CFR 570.601 (or for new grantees, failure to engage in such
        actions within a year after first completing an AI);

    h.  Failure to engage in affirmative outreach to eligible members of
        protected classes;

    i.  Selection policies or practices that adversely impact members of
        protected classes;

    j.  Discriminatory selection of beneficiaries;

    k.  Failure to provide modifications and accommodations necessary to
        make programs and facilities accessible to persons with
        disabilities;

    l.  Failure to correct serious civil rights related problems
        identified by CPD or FHEO in prior years; and/or

    m.  An existing civil rights VCA or court order for which HUD has
        not yet confirmed that all required actions have been completed.

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2.  Moderate-risk recipients include, but are not limited to, recipients
    for which FHEO is informed of any one of the following current
    problems:

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a.  Failure to keep records of the race and ethnicity of beneficiaries
    as required by HUD regulation 24 CFR 1.6(b);

b.  Failure to keep records of actions taken to address identified
    impediments to fair housing choice as required by HUD regulations in
    24 CFR Part 91;

c.  Failure to maintain a current Analysis of Impediments (AI) to Fair
    Housing Choice, updated annually where necessary, in accordance with
    the instructions provided in the joint CPD-FHEO memorandum of
    February 14, 2000;

d.  Failure to maintain a current fair housing action plan to address
    identified impediments to fair housing choice and to affirmatively
    further fair housing in accordance with the instructions provided in
    the joint CPD-FHEO memorandum of February 14, 2000;

e.  Failure to include an existing plan of action to further fair
    housing in the Annual Action Plan submission;

f.  Failure to include a report of fair housing actions taken in the
    Consolidated Annual Performance and Evaluation Report (CAPER); or

g.  Failure to correct minor civil rights related problems (including
    but not limited to failure to display HUD's Equal Housing
    Opportunity poster and failure to include the Equal Housing
    Opportunity logo or slogan in advertising or signs) identified by
    CPD or FHEO in prior years.

> 3\. Low-risk recipients are all CPD recipients (within the
> jurisdiction of the FHEO office) with no reported problems.
>
> B. Public and Indian Housing Recipients

1.  High-risk recipients include, but are not limited to, recipients for
    which FHEO is informed of any one of the following current problems:

a\. An outstanding unresolved Fair Housing Act charge;

> b\. An outstanding unresolved Fair Housing Act lawsuit filed by the
> Department of Justice alleging an ongoing pattern or practice of
> discrimination;
>
> c\. An outstanding unresolved letter of noncompliance findings under
> Title VI of the Civil Rights Act of 1964, Section 504 of the
> Rehabilitation Act of 1973, Section 109 of the Housing and Community
> Development Act of 1974, or other federal civil rights law;
>
> d\. An outstanding unresolved court finding of violation of the Fair
> Housing Act,
>
> Title VI, Section 504, or the Americans with Disabilities Act (ADA);
>
> e\. Impermissible eligibility policies, such as a requirement that
> tenants be able to live independently;
>
> f\. Impermissible waiting list management policies or practices, such
> as a practice of placing applicants with disabilities on a waiting
> list for accessible units without also placing such applicants on the
> general waiting list;
>
> g\. Adoption of a local preference that significantly disadvantages
> members of protected class;
>
> h\. Waiting list management or tenant selection policies or practices
> that adversely impact members of protected classes, such as a practice
> of opening the waiting list for one day only and requiring all
> applicants to appear at the Housing Authority office on that day;

i\. Residency requirements;

> j\. Subjective tenant selection policies (based on somebody\'s
> opinions or feelings rather than on facts or evidence) that appear
> likely to permit selection decisions to be made based on information
> relating to race, color, religion, national origin, sex, disability,
> or familial status;

k\. Failure to engage in affirmative outreach to eligible members of
protected classes;

l\. Discriminatory tenant selection;

> m\. Failure to provide modifications and accommodations necessary to
> make programs and facilities accessible to persons with disabilities;
>
> n\. Failure to correct serious civil rights related problems
> identified by PIH or FHEO in prior years; and/or
>
> o\. An existing civil rights VCA or court order for which HUD has not
> yet confirmed that all required actions have been completed.

2.  Moderate-risk recipients include, but are not limited to, recipients
    for which FHEO is informed of any one of the following current
    problems:

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a.  Failure to keep records of the race and ethnicity of beneficiaries
    as required by HUD regulations 24 CFR 1.6(b);

b.  Failure to keep records of actions to further fair housing, in
    accordance with HUD regulation 24 CFR 903.7(o); and

c.  Failure to correct minor civil rights related problems (including
    but not limited to failure to display HUD's Equal Housing
    Opportunity poster and failure to include the Equal Housing
    Opportunity logo or slogan in advertising or signs) identified by
    PIH or FHEO in prior years.

> 3\. Low-risk recipients are all PIH recipients (within the
> jurisdiction of the FHEO office) with no reported problems.
>
> C. Housing Recipients
>
> 1\. High-risk recipients include, but are not limited to, recipients
> for which FHEO is informed of any one of the following current
> problems:
>
> a\. An outstanding unresolved Fair Housing Act charge;
>
> b\. An outstanding unresolved Fair Housing Act lawsuit filed by the
> Department of Justice alleging an ongoing pattern or practice of
> discrimination;
>
> c\. An outstanding unresolved letter of noncompliance findings under
> Title VI of the Civil Rights Act of 1964, Section 504 of the
> Rehabilitation Act of 1973, Section 109 of the Housing and Community
> Development Act of 1974, or other federal civil rights law;
>
> d\. An outstanding unresolved court finding of violation of the Fair
> Housing Act, Title VI, Section 504, or the Americans with Disabilities
> Act (ADA);
>
> e\. Conduct of initial marketing and tenant selection for a new
> development covered by HUD's AFHMP regulations, without a HUD-approved
> AFHMP;\\
>
> f\. Impermissible eligibility policies, such as a requirement that
> tenants be able to live independently;
>
> g\. Impermissible waiting list management policies or practices, such
> as a practice of placing applicants with disabilities on a waiting
> list for accessible units without also placing such applicants on the
> general waiting list;
>
> h\. Subjective tenant selection policies (based on somebody\'s
> opinions or feelings rather than on facts or evidence) that appear
> likely to permit selection decisions to be made based on information
> relating to race, color, religion, national origin, sex, disability,
> or familial status;
>
> i\. Failure to engage in affirmative outreach to those groups least
> likely to apply;
>
> j\. Opening a waiting list in a manner that effectively prevents a
> substantial percentage of eligible minorities or persons with
> disabilities from applying;
>
> k\. Neighborhood residency preferences or other residency preferences
> that adversely impact members of protected classes;
>
> l\. Discriminatory tenant selection;
>
> m\. Failure to provide modifications and accommodations necessary to
> make programs and facilities accessible to persons with disabilities;

g.  Failure to correct serious civil rights related problems identified
    by Housing or FHEO in prior years; and/or

h.  An existing civil rights VCA or court order for which HUD has not
    yet confirmed that all required actions have been completed.

> 2\. Moderate-risk recipients include, but are not limited to,
> recipients for which FHEO is informed of any one of the following
> current problems:
>
> a\. Failure to keep records of the race and ethnicity of beneficiaries
> as required by HUD regulation 24 CFR Part 1.6(b);

b\. Failure to update an AFHMP that is more than 10 years old;

c\. Failure to submit a revised AFHMP for HUD approval as required;

> d\. Failure to keep an approved AFHMP available for inspection
> on-site;

e\. Failure to adhere to the procedures specified in an approved AFHMP;

f\. Use of a residency preference when such preference has not been
approved by

> HUD;
>
> g\. Failure to keep records of affirmative outreach as specified in
> HUD Handbook 8025,1 REV-2, paragraph 4-5; and/or
>
> h\. Failure to correct minor civil rights related problems (including
> but not limited to failure to display HUD's Equal Housing Opportunity
> poster and failure to include the Equal Housing Opportunity logo or
> slogan in advertising or signs) identified by Housing or FHEO in prior
> years.

3.  Low-risk recipients are all Housing recipients (within the
    jurisdiction of the FHEO

> Office per HUD's Real Estate Management System - REMS) with no
> reported problems.

###### Section 5: Compliance Review

I. FHEO offices should conduct a compliance review when necessary to
determine whether a recipient is in violation of civil rights laws or
HUD's implementing regulations, in accordance with FHEO Headquarters
guidance and management goals. HUD regulations provide for the following
types of civil rights compliance review:

> A. Section 504 of the Rehabilitation Act of 1973 (disability),
> implementing regulations at 24 CFR Part 8 (such a review would also
> cover compliance with applicable provisions of Title II of the
> American with Disabilities Act);

B. The Architectural Barriers Act of 1968 (disability), implementing
regulations at 24 CFR Part 40 and 24 CFR Part 41;

> C. Title VI of the Civil Rights Act of 1964 (race, color, national
> origin), implementing regulations at 24 CFR Part 1;
>
> D. Executive Order 11063 (race, color, religion, sex, or national
> origin in federally-owned or HUD-assisted residential property),
> implementing regulations at 24 CFR Part 107;
>
> E. Affirmative Fair Housing Marketing requirements under the
> Department of Housing and Urban Development Act of 1965 and the Fair
> Housing Act, implementing regulations at 24 CFR Part 108 and 24 CFR
> § 200.600;
>
> F. The Age Discrimination Act of 1975 (age discrimination),
> implementing regulations at 24 CFR Part 146;
>
> G. Section 109 of Title I of the Housing and Community Development Act
> or 1974 (race, color, national origin, religion, sex, in programs
> funded under Title I of the 1974 Act), implementing regulations at 24
> CFR Part 6; and/or
>
> H. Section 3 of the Housing and Urban Development Act of 1968
> (economic opportunity for low-income persons), implementing
> regulations at 24 CFR Part 135.

II\. [FHEO offices should perform all compliance reviews
necessary]{.underline}:

> A. Because an existing civil rights problem (recorded in the FHEO
> office database and/or identified by a program office, by earlier FHEO
> monitoring, or as the result of a complaint or through the news media)
> [presents the possibility that the recipient is in violation of
> federal civil rights law or implementing regulation]{.underline} as
> stated; or
>
> B. Under FHEO Headquarters management goals, specific recipients
> should be selected for review under Headquarters goals either on the
> basis of Headquarters-specified criteria or on the basis of local
> criteria, as appropriate. Examples of local criteria include but are
> not limited to:
>
> 1\. A decision to focus on a particular geographic area and a
> particular type of recipient because of complaints received or other
> identified issues, such as:
>
> a\. An FHEO office may decide to perform Section 504 compliance
> reviews of a particular housing market area's assisted multifamily
> housing developments, focusing on accessibility to persons with
> disabilities because commercial redevelopment underway will soon
> create increased demand for housing in that area.

b\. An FHEO office may decide to perform Title VI and Section 504
compliance reviews of a large PHA in a particular state, because during
the previous fiscal year it had not performed any compliance reviews of
PHAs in that state.

> 2\. Size of recipient programs, number of persons potentially
> adversely affected by reported problems, and/or significant racial or
> ethnic imbalance between a Public Housing Agency's waiting lists and
> beneficiaries or among a PHA's individual developments. These factors
> may be analyzed by using data provided by HUD's Multifamily Tenant
> Characteristics System (MTCS) and/or PIH Information Center (PIC).

C. When making selections for compliance review based on the use of
local criteria, [document]{.underline} the local criteria used, the
reasons for the choice of those specific local criteria, and how the
recipients selected for compliance review fit the local criteria.

D. FHEO local offices should refer recipients to the appropriate FHEO
Hub or Program Center to be considered for possible compliance review
whenever an existing problem presents the possibility that the recipient
[is in violation]{.underline} of federal civil rights law or HUD
implementing regulation.

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> Kenneth L. Marcus
>
> General Deputy Assistant Secretary
>
> Office of Fair Housing and Equal
>
> Opportunity

FHAP AGENCY - ANNUAL RISK PROFILE ATTACHMENT A

Agency Name:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Active Cooperative Agreement Number
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Any agency that falls within a particular criterion receives the full
number of points for that criterion.

+---------------------------------------------------------+------------+
| **[CRITERION \[points\]]{.underline}**                  | # POINTS   |
+---------------------------------------------------------+------------+
| ## Open audit finding(s) \[30\]                         |            |
+---------------------------------------------------------+------------+
| ## More than 80%                                        |            |
|  of open cases are aged (more than 100 days old) \[30\] |            |
+---------------------------------------------------------+------------+
| **More than 10% of cases submitted for payment during   |            |
| the past year (July 1 - June 30) were rejected or       |            |
| required additional information for acceptance \[30\]** |            |
+---------------------------------------------------------+------------+
| **During the past year (July 1 - June 30) more than 25% |            |
| of case closures have been submitted more than 30 days  |            |
| after closure \[15\]**                                  |            |
+---------------------------------------------------------+------------+
| **Fair housing supervisor has left the agency within    |            |
| the past year or two or more investigators have left    |            |
| the agency within the past year (July 1 - June 30)      |            |
| \[15\]**                                                |            |
+---------------------------------------------------------+------------+
| **FHAP in the first year of capacity-building funding   |            |
| \[15\]**                                                |            |
+---------------------------------------------------------+------------+
| **FHAP in the third year of capacity-building funding,  |            |
| required to switch to contributions funding in the      |            |
| following year \[12\]**                                 |            |
+---------------------------------------------------------+------------+
| **No audit for past 3 years \[10\]**                    |            |
+---------------------------------------------------------+------------+
| **Record-keeping problems persisting for two or more    |            |
| years \[5\]**                                           |            |
+---------------------------------------------------------+------------+
| **No on-site FHEO monitoring in past 3 years \[5\]**    |            |
|                                                         |            |
| **(not new recipient)**                                 |            |
+---------------------------------------------------------+------------+
| **No agency staff or commissioners attended the most    |            |
| recent HUD-required training \[5\]**                    |            |
+---------------------------------------------------------+------------+
| **POINT TOTAL**                                         |            |
+---------------------------------------------------------+------------+

POINT TOTAL RISK RATING (check one)

30 or more High risk \_\_\_\_\_

10 - 29 Moderate risk \_\_\_\_\_

under 10 Low risk \_\_\_\_\_

GTM\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date\_\_\_\_\_\_\_\_\_\_

Signed:

GTR\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date\_\_\_\_\_\_\_\_\_\_

FHIP GRANTEE - ANNUAL RISK PROFILE ATTACHMENT B

Grantee Name:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Active Grant Numbers (Component)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Any grantee that falls within a particular criterion receives the full
number of points for that criterion.

+---------------------------------------------------------+------------+
| **[CRITERION \[points\]]{.underline}**                  | # POINTS   |
+---------------------------------------------------------+------------+
| **Open audit finding(s) \[30\]**                        |            |
+---------------------------------------------------------+------------+
| **Persistant performance problems (extending over two   |            |
| or more quarters in the past year), including but not   |            |
| limited to failure to complete tasks according to the   |            |
| schedule provided in the Statement of Work \[30\]**     |            |
+---------------------------------------------------------+------------+
| **Existing financial problems requiring on-site         |            |
| follow-up \[30\]**                                      |            |
+---------------------------------------------------------+------------+
| **New FHIP never monitored on-site by FHEO \[15\]**     |            |
+---------------------------------------------------------+------------+
| **Key staff have left the grantee within the past year  |            |
| \[15\]**                                                |            |
+---------------------------------------------------------+------------+
| **FHIP that has been monitored by FHEO under past       |            |
| grants but has not been monitored on-site under current |            |
| grant(s) \[12\]**                                       |            |
+---------------------------------------------------------+------------+
| **Funds drawdown substantially behind schedule and/or   |            |
| project submissions substantially behind schedule       |            |
| \[12\]**                                                |            |
+---------------------------------------------------------+------------+
| **No audit for past 3 years \[10\]**                    |            |
+---------------------------------------------------------+------------+
| **Record-keeping problems persisting for a year or more |            |
| \[5\]**                                                 |            |
+---------------------------------------------------------+------------+
| **No on-site FHEO monitoring of grantee in past 3 years |            |
| \[5\] (not new recipient)**                             |            |
+---------------------------------------------------------+------------+
| **No grantee staff attended the most recent             |            |
| HUD-required training \[5\]**                           |            |
+---------------------------------------------------------+------------+
| **POINT TOTAL**                                         |            |
+---------------------------------------------------------+------------+

POINT TOTAL RISK RATING (check one)

30 or more High risk \_\_\_\_\_

10 - 29 Moderate risk \_\_\_\_\_

under 10 Low risk \_\_\_\_\_

GTM\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date\_\_\_\_\_\_\_\_\_\_

Signed:

GTR\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Date\_\_\_\_\_\_\_\_\_\_