7460.5

CHAPTER 11. INCENTIVES

11-1 OBJECTIVE. The objective of this Chapter is to identify the

incentives and relief afforded high-performing PHAs which perform in

an exemplary manner.

11-2 REQUIREMENTS FOR INCENTIVES.

A. PHAs must have completed (all funds expended) a modernization

program within the last two fiscal years and achieve a total

weighted score of no less than 90% on indicator (2),

modernization, in order to qualify for incentives in the program

area of modernization. 24 CFR § 901.135(b)

B. PHAs must achieve a total weighted score of no less than 90% on

indicator (12), development, and have a project under development

which has not reached Date of Full Availability (DOFA), or

projects which reached DOFA within the last five years, in order

to qualify for incentives in the program area of development.

24 CFR 901.135(c)

C. A PHA that is designated a high performer will be afforded

incentives in several program areas as well as be relieved of

specific HUD requirements, effective upon notification of high

performer designation and until the next assessment is completed.

All incentives will be awarded on this basis. 24 CFR

901.135(a)

11.3 GENERAL INCENTIVES FOR HIGH-PERFORMING PHAS. 24 CFR

901.135(d)(1)

A. The Department shall annually publish a listing of PHAs that have

been designated as high-performing. (6)(j)(2)(A)(ii) of the

Act and 24 CFR 901.135(d)(1)(i)

B. High-performing PHAs will receive a Certificate of Commendation

from the Department as well as special public recognition.

(6)(j)(2)(A)(ii) of the Act and 24 CFR 901.135(d)(1)(ii)

C. Requisitions for leased housing annual contributions (Form

HUD-52977, Request for Partial Payment of Fixed Annual

Contribution, Leased Projects) will be submitted annually rather

than quarterly (as presently provided by the Low-Income Leased

Housing Handbook 7430.1, as revised) by high-performing PHAs.

24 CFR 901.135(d)(1)(iii)

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7460.5

Chapter 11, paragraph 11-3 (continued)

D. High-performing PHAs will be deemed to be a lower risk and,

therefore, will be monitored less frequently on a risk analysis

basis. 24 CFR 901.135(d)(1)(iv)

E. Representatives of high-performing PHAs will be requested to

serve on Departmental Working Groups that will advise the

Department in such areas as troubled PHAs, performance standards

for all PHAs, incentives for high-performing PHAs, etc. 24 CFR

901.135(d)(1)(v)

F. The Department will utilize a PHA\'s PHMAP assessment score as the

management capabilities component in grant programs, such as

modernization, drug elimination, child-care, etc. Where

appropriate, extra points for high-performing PHAs may be awarded

in the scoring of grant programs.

11-4 FINANCIAL MANAGEMENT INCENTIVES FOR HIGH-PERFORMING

PHAS. 24 CFR 901.135(d)(2)

A. High-performing PHAs will submit Form HUD-52599, Statement of

Operating Receipts and Expenditures, annually instead of

semiannually. 24 CFR 901.135(d)(2)(i)

B. High-performing PHAs will not be required to submit operating

budget revisions for routine expenses (including administration)

and nonroutine expenditures) for HUD approval as long as there is

no overrun of the Total Operating Expenditures shown in the

HUD-approved budget (Form HUD-52564, Operating Budget, The

Performance System Funding (PFS) Handbook 7475.13, as revised,

Appendix XIII, line 890). While high-performing PHAs must

document budget revisions for their own files, and must

incorporate those revisions in the year-end financial statement,

they need not submit them to HUD for approval or as information

copies. 24 CFR 901.135(d)(2)(ii)

C. High-performing PHAs will submit Form HUD-52295, Report of

Tenants Accounts Receivable, annually instead of semiannually.

The end of the PHA\'s fiscal year is the annual reporting date, as

required in the Financial Management Handbook 7475.1, as revised.

24 CFR 901.135(d)(2)(iii)

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7460.5

Chapter 11 (continued)

11-5 OCCUPANCY INCENTIVES FOR HIGH-PERFORMING PHAS. 24 CFR

901.135(d)(3)

A. High-performing PHAs will not be required, to receive prior HUD

approval for occupancy of dwelling units by PHA employees,

provided the PHA charges market rents for such units. (This

eliminates the requirement for HUD approval under both the Public

Housing Occupancy Handbook 7465.1, as revised, and the conversion

provisions of the Demolition, Disposition and Conversion Handbook

7486.1, as revised.) The requirement for prior HUD approval

will, however, continue to apply if the employee-occupant is

charged less than market rent. PHAs should not automatically use

Section 8 Fair Market Rents (FMR) as a basis for \"market rents.\"

Market rents are rents for comparable standard non-luxury, rental

units in the neighborhood or community. Often the market rent

and the Section 8 FMR will be the same or nearly the same, but

specific characteristics of the project, such as location, may

dictate a lower or higher rent. Such units, however, shall be

removed from the Unit Month Available count in the Performance

Funding System calculations. 24 CFR 901.135(d)(3)(i)

B. An internal occupancy audit may be conducted by a high-performing

PHA in place of an audit by the Field Office, at the option of

the PHA, when the previous audit was conducted by the Field

Office, provided that the PHA meets all of the following

conditions: 24 CFR 901-135(d)(3)(ii)

1\. The PHA has no open occupancy audit findings; 24 CFR

901.135 (d) (3) (ii) (A)

2 The PHA has sufficient and knowledgeable staff to allow the

internal audit to be conducted by staff other than those

responsible for day-to-day determinations of resident

eligibility and resident payments. A small PHA can contract

with a high-performing PHA or agency to perform an internal

occupancy audit, since PHAs can contract for administrative

functions generally. Also, a PHA can trade this function

with another PHA at no cost, if it so chooses; 24 CFR

901.135(d)(3)(ii)(B)

3\. The PHA is not in priority category one or two as defined in

the Occupancy Audit Handbook 7465.2, as revised; and 24 CFR

901.135(d)(3)(ii)(C)

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7460.5

Chapter 11, paragraph 11-5B (continued)

4\. The internal audit shall be conducted in accordance with

Handbook 7465.2, as revised. 24 CFR

901.135(d)(3)(ii)(D)

11-6 MODERNIZATION INCENTIVES FOR HIGH-PERFORMING

MODERNIZATION PHAS. PHAs must have completed (all funds expended) a

modernization program within the last two fiscal years and achieve a

total weighted score of no less than 90% on indicator #2,

modernization, in order to qualify for incentives in the program area

of modernization. 24 CFR 901.135 (b) and (d)(4)

A. High-performing PHAs are relieved of the need for prior HUD

review of architects\'/engineers\' contracts. 24 CFR

901.135(d)(4)(i)

B. High-performing PHAs are relieved of the need for HUD review for

construction and bid documents. 24 CFR 901.135(d)(4)(ii)

C. High-performing PHAs are relieved of the need for HUD review of

contract modifications (change orders). 24 CFR

901.135(d)(4)(iii)

D. High-performing PHAs are relieved of the need for HUD review of

Request for Proposals (RFPs) and contract modifications for

management improvement contracts. 24 CFR 901.135(d)(4)(iv)

E. High-performing PHAs are relieved of the need for HUD review of

budget revisions that delete or substantially revise approved

work items, add new work items or incur costs in excess of the

approved budget amount for any work item, but not budget

revisions that incur costs in excess of the approved budget

amount for any project or change the method of accomplishment

from contract to force account labor. 24 CFR 901.135 (d) (4)

\(v\) )

11-7 DEVELOPMENT INCENTIVES FOR HIGH-PERFORMING PHAS. PHAs

must achieve a total weighted score of no less than 90% on indicator

#12, development, and have a project under development which have not

reached Date of Full Availability (DOFA), or projects which reached

DOFA within the last five years, in order to qualify for incentives in

the program area of development. 24 CFR 901.135(c) and (d)(5)

A. High-performing PHAs may submit applications in response to a

Notice of Fund Availability (NOVA) with no further evidence of

their capability to develop additional public housing units; full

points in the rating criteria for

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7460.5

Chapter 11, paragraph 11-7A (continued)

development experience will be awarded, if experience is a NOFA

criterion. 24 CFR 901.135(d)(5)(i)

B. High-performing PHAs may approve construction modifications

(change orders) that do not increase the contract amount and

which are consistent with the original approved plans. 24 CFR

901.135(d)(5)(ii)

C. High-performing PHAs will not be required to obtain prior HUD

approval under the Development Handbook 7417.1, as revised, for

contracts for professional and technical services. 24 CFR

901.135(d)(5)(iii)

D. High-performing PHAs are relieved of the need for prior HUD

approval of contracts for legal, architectural, engineering, or

inspection services in connection with development, including the

PHAs methodology for selection. 24 CFR 901.135(d)(5)(iv)

11-8 COMPLIANCE REQUIREMENTS. Relief from any standard procedural

requirements does not mean that a PHA is relieved from compliance with

the provisions of Federal law and regulations or other handbook

requirements. For example, although a high performer may be relieved

of requirements for prior HUD approval for certain types of contracts

for services, it must still comply with all other Federal and State

requirements that remain in effect, such as those for competitive

bidding or competitive negotiation (refer to 24 CFR 85.36). 24 CFR

901.135(e)

A. PHAs will still be subject to regular Independent Auditor (IA)

audits. 24 CFR 901.135(e)(1)

B. Office of Inspector General (OIG) audits or investigations will

continue to be conducted as circumstances may warrant. 24 CFR

901.135(e)(2)

11-9 REGIONAL ADMINISTRATOR\'S DISCRETION. 24 CFR 901.135(f)

A. The Regional Administrator will have discretion to subject a PHA

to any requirement that would otherwise be omitted under the

specified relief. The discretion may be exercised in cases where

there is evidence indicating seriously deficient performance that

casts doubt on the PHAs capacity to preserve and protect its

public housing developments and operate them in a manner

consistent with Federal law and regulations. 24 CFR 901.135

\(f\)

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7460.5

Chapter 11, paragraph 11-9 (continued)

B. Examples of this evidence include, but are not limited to: 24

CFR 901.135(f)

1\. Substantial allegations or findings of fraud, abuse, or

mismanagement; 24 CFR 901.135(f)

2\. Noncompliance with law, such as Fair Housing and Equal

Opportunity (FHEO) statutes, based on such sources as FHEO

compliance investigations or reviews, OIG audits or

investigations, IA audits, and routine reports and reviews;

or 24 CFR 901.135(f)

3\. Evidence that the PHAs certification of indicators is not

supported by the facts. 24 CFR 901.135(f)

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