Legal Opinion: GCH-0080

Index: 2.231, 2.270

Subject: Vacancy Reduction Program

January 26, 1993

NOTE TO: NANCY CHISHOLM

FROM: BOB KENISON

SUBJECT: Vacancy Reduction Program

This responds to your cc mail message requesting legal advice as to

whether section 14(p)(4)(A) of the USH Act requires, for each PHA

participating in the vacancy reduction program, an \"onsite assessment
of the

vacancy situation of the agency by a team of knowledgeable observers.\"
You

propose construction of the statute to require only that HUD offer to
provide

for such an assessment, at the option of the PHA. The justification you

suggest is that there is much available data on the causes and cures for

vacancy problems, thus making an assessment unnecessary. It does not
appear

to us that there is a persuasive nexus between the availability of such
data

and making such an assessment optional with the PHA, since obviously a
problem

exists notwithstanding the availability of data.

Two issues are presented: whether an assessment must be made and when

it must be made. As to the former, we believe that the statutory
language

\"shall provide,\" in its plain meaning, is not the same as \"shall make

available\" at the option of the PHA. We do not believe that this
statutory

language can reasonably be construed as requiring only that HUD offer an

assessment, which the PHA can decline and still comply with the program

requirements. It may be further observed, that unlike either formula
funding

(comp. grant and operating subsidy) or discretionary programs (CIAP and
PH

development) PHAs with specified vacancy levels are required to
participate in

the program, although program funding depends on submission of an
acceptable

plan and competitive selection.

The legislative history pertinent to this issue is sparse. The only

discussion we found is contained in the NAHA Conference Report (H.R.
Rep.

1201-943, p. 425): \"A team of HUD and PHA experts would be available to
visit

each designated PHA to independently assess the reasons for the
agency\'s high

vacancy rate. The team would consider any management deficiencies which
might

be contributing to the vacancy problem and would recommend a series of

management improvements to be included in an agency\'s vacancy reduction
plan.\"

The 1992 Act amended section 14(p)(4)(A) to provide that the assessment
team

shall include officials of the PHA involved, without discussion.

The 1992 Act, however, also amended section 6(j) of the USH Act to

provide that, upon designating a PHA as troubled and determining that a
review

will not duplicate any assessment made under section 14(p), \"the
Secretary

shall provide for an on-site independent assessment of the management of
the

agency.\" This statutory provision provides for the assessment to be
carried

out by a team of knowledgeable individuals selected by HUD and specifies

issues the assessment shall consider, to the extent HUD deems
appropriate.

This assessment team is required to consult with the residents and
public and

private entities in the jurisdiction.

The requirement for an assessment under section 6(j) originated in the

Senate Bill and is explained in the Senate Committee Report (S. Rep.
102-332,

p\. 47). This Report states that \"The committee bill would require
HUD\...to

provide for an on-site independent management assessment carried out by
a

knowledgeable assessment team.\" The Report expresses the belief that

independent experts are in a better position than HUD to determine the
root

causes of management deficiencies and recommend actions to remedy the

deficiencies. It further emphasizes the requirement for consultation
with

tenants since they \"are the real \'experts,\' knowing better than
anyone else

the effects of bad management.\" Troubled PHAs are subject to both

assessments, although the 1992 amendments stipulate that a troubled PHA
can

only receive vacancy reduction funding if it is making substantial
progress in

remedying its management deficiencies or provides reasonable assurances
that

it will do so.

Although we do not believe that either assessment requirement may be

regarded as optional, either with PHAs or HUD, we have two suggestions
for

dealing with the time and resource problems presented. First, as to
troubled

PHAs, which presumably have the worst problems, a section 6(j)
assessment can

be made so as to meet the statutory requirements under both sections
6(j) and

14(p), so that only one assessment would be required.

Secondly, as to the section 14(p) assessment, we believe there is

considerable latitude as to the timing of the assessment. Assuming that
PIH

wishes to condense the procedures, with particular reference to the FY
1993

NOFA, we believe that the PHA\'s vacancy reduction plan could be
submitted in

response to this NOFA, with assessments prior to submission for those
PHAs

that want or need help in preparing their plans. As to other PHAs, with

particular reference to those for which you propose that no assessment
be

made, we believe that the assessment could be made after HUD reviews of
the

plans and tentative decisions as to priorities have been completed,
somewhat

similar to the CIAP joint reviews. Provided that recaptures would not be

involved, we would not rule out making these assessments after
reservation of

funds.