##### DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

**\[Docket No. FR- 4970-N-02\]**

#  Notice of Outcome Performance Measurement System for 

#  Community Planning and Development Formula Grant Programs

**AGENCY:** Office of the Assistant Secretary for Community Planning and
Development, HUD

**ACTION:** Notice

SUMMARY: On June 10, 2005, HUD's Office of Community Planning and
Development (CPD) published a notice in the [Federal]{.underline}
[Register]{.underline} titled, "Notice of Proposed Outcome Performance
Measurement System for Community Planning and Development Formula Grant
Programs; Request for Comments." The notice described an outcome
performance measurement system that was developed for grantees that
receive funding from the Community Development Block Grant program
(CDBG), HOME Investment Partnerships program (HOME), Emergency Shelter
Grants program (ESG), and the Housing Opportunities for Persons with
AIDS program (HOPWA).

The system was developed by a joint working group made up of members of
the Council of State Community Development Agencies (COSCDA), the
National Community Development Association (NCDA), the National
Association for County Community Economic Development (NACCED), the
National Association of Housing and Redevelopment Officials (NAHRO), the
National Council of State Housing Agencies (NCSHA), CPD, HUD's Office of
Policy Development and Research (PD&R), and the Office of Management and
Budget (OMB). The June 10, 2005, notice described the proposed system
and solicited comments from the public, particularly from formula
program grantees, on the proposed performance measurement system. This
final notice discusses and addresses the comments received and
incorporates appropriate changes.

FOR FURTHER INFORMATION CONTACT: Margy Coccodrilli, CPD Specialist,
Office of Block Grant Assistance, Room 7282, Department of Housing and
Urban Development, 451 Seventh Street, SW, Washington, DC 20410-7000,
telephone (202) 708-1577, extension 4507 (this is not a toll-free
number). Hearing- or speech-impaired individuals may access this number
through TTY by calling the toll-free Federal Information Relay Service
at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

The Government Performance and Results Act of 1993 (GPRA) mandates that
federal programs improve their effectiveness and public accountability
by focusing on results. The OMB developed the Program Assessment Rating
Tool (PART) to monitor compliance with the GPRA and to rate federal
programs for their effectiveness and ability to show results.

Many CPD grantees have been frustrated by the inability to "tell their
story" to their citizens and other stakeholders about the outcomes of
the investments they have made in their communities using federal,
state, and local resources. The inability to clearly demonstrate program
results at the national level, which is the standard required by OMB's
program assessment process, can have serious consequences for program
budgets. On June 10, 2005, HUD published (70 FR 34044), a notice
describing a proposed outcome performance measurement system and
solicited comments. The system would enable HUD to collect information
on the outcomes of activities funded with CPD formula grant assistance,
and to aggregate that information at the national and local level.
Reports would be made available to allow grantees to compare their
performance to that of their peers. Based on the proposed system and
taking into consideration the comments received, this notice establishes
the outcome performance measurement system. This system is not intended
to replace existing local performance measurement systems that are used
to inform local planning and management decisions and increase public
accountability.

This performance measurement system will be incorporated into HUD's
Integrated Disbursement and Information System (IDIS), thus allowing for
simplified data collection. The objectives and outcomes will appear on
IDIS screens and grantees will select the objective and outcome that
applies to each activity that the grantee undertakes. The indicators
will be generated according to the matrix code, and for CDBG grantees,
by the national objective. The possible indicators for each activity
will also appear on an IDIS screen and the grantee will indicate which
indicator(s) apply to that activity, as carried out by the grantee.

The indicators in this framework represent most of the activities that
are undertaken by grantees of the CPD formula grant programs, but HUD
acknowledges that there may be some activities that may not fit well
into any of the indicator categories. While such activities may be very
important to local interests, their numbers would not make a significant
impact on a national level and could create a burden for other grantees.
Therefore, the joint working group that developed the system decided to
include indicators that can encompass most of the activities undertaken
by grantees.

Separate from what the new performance measurement system can provide,
the Department would like to be able to demonstrate potential outcomes
such as higher homeownership rates and property valuations, lower
unemployment rates and improved education levels, increased commercial
and private investments, and additional assisted businesses that remain
operational for at least three years. HUD will consult with the working
group, grantees, and other interested parties to determine whether and
how a set of particular community-level outcome measures can be
established and uniformly applied. In the future, HUD may use the same
or similar universal measures and standards to assess performance in
other federal economic and community development programs. For example,
HUD intends to obtain information on the development of brownfields and
will consult with grantees on how best to collect such information. HUD
will also undertake research to address such issues, and determine how
frequently to assess progress, evaluate programs, perform analyses, and
disseminate results based upon data that is comparable and generally
available.

The structure of the new performance measurement system is consistent
with the goals and objectives contained in HUD's Strategic Plan for the
years 2006 to 2011, including expanding access to affordable housing,
fostering a suitable living environment, and expanding economic
opportunities.

The objectives, outcomes, and indicators described in this notice will
appear this spring in the existing version of IDIS. Grantees will be
requested to enter available data at that time. This fall, Phase I of
the re-engineered IDIS will be released and grantees will be required to
enter the performance data.

When Phase II of the re-engineered IDIS is released, HUD expects the
overall administrative burden for grantees to be reduced; HUD's intent
is to have the Consolidated Plan, Annual Action Plan, and Consolidated
Annual Performance and Evaluation Report (CAPER) integrated into one
single performance measurement system. In the interim, elements of the
system may be incorporated into the Consolidated Plan Management Process
(CPMP) Tool so that local objectives and outcomes can be entered at the
beginning of the Consolidated Plan or Annual Action Plan development
process, and accomplishments under those objectives and outcomes can be
reported on in the CAPER.

II\. Discussion of Public Comments

[General Comments]{.underline}.

The public comment period closed on September 8, 2005. In addition to
the 56 comments submitted in writing to HUD headquarters, additional
comments were received during an interactive satellite broadcast from
HUD headquarters in Washington, DC, and five regional feedback sessions
that were held in San Francisco, Philadelphia, Detroit, Atlanta, and
Austin. Each of those events provided opportunities for public comment.

There were multiple requests for HUD to develop a performance
measurement website that would contain all the information that has been
made available. That request has been acknowledged and there is now a
CPD website that hosts this information. The URL is:

[**http://www.hud.gov/offices/cpd/about/performance/index.cfm**](http://www.hud.gov/offices/cpd/about/performance/index.cfm).

A number of comments praised the outcome measurement system and thanked
HUD and the working group for the simplicity of the system; also, many
comments posed questions. These questions are addressed in a question
and answer format that has been distributed to grantees and is available
on the Performance Measurement website. Several comments requested
clarification of terms and definitions. These have been provided to
grantees and are available on CPD's Performance Measurement website.

There were also many comments made about IDIS that were important to
that system, but not necessarily relevant to the inclusion of the
performance measurement indicators. Those comments have been forwarded
to CPD's System Development and Evaluation Division.

There were also comments on the Consolidated Plan Management Process and
those comments have been forwarded to CPD's Office of Policy Development
and Coordination.

Many comments suggested that issues and terminology of local interest be
added to the framework. Unfortunately, because the framework was
developed to capture national indicators in a standardized format,
unique local information cannot be included. However in CPD

Notice 03-09, issued in September 2003, HUD encouraged grantees to
develop local performance measurement systems that complement this new
national system by capturing the results of activities of local
importance.

[Specific comments]{.underline}.

[Comment]{.underline} -- There were several comments indicating that
these performance measures should replace Consolidated Plans, Annual
Action Plans, Consolidated Annual Performance and Evaluation Reports
(CAPER), and Performance Evaluation Reports (PER).

[Response]{.underline} -- HUD anticipates that when Phase II of the IDIS
re-engineering is complete in 2007, Consolidated Plans, Annual Action
Plans, CAPERs, and PERs will become one continuous document.

[Comment]{.underline} -- There were several comments indicating the need
for training on the performance measurement system and generally on
IDIS, and specific training for entitlements, states, and urban
counties, sub-recipients; training grantees to train their
sub-recipients; and guidance/training on how the indicators apply to
each program.

[Response]{.underline} -- HUD expects to provide training on IDIS in
2006. This training will incorporate the performance measurement
framework; also, HUD has prepared guidance, questions and answers, and
definitions. This, along with other related information, are available
on CPD's Performance Measurement website.

[Comment]{.underline} -- Several commenters indicated that changes to
administrative procedures, and possibly to grantee staffing, would have
to be made at the local level and some asked that HUD provide assistance
to tell grantees how this should be done.

[Response]{.underline} -- HUD will provide training on what data will
need to be collected, but grantees will determine within their own
administrative procedures how to coordinate the front-end planning,
implementation, and reporting of activities. Because grantee procedures
vary significantly based on agency size and expertise, HUD is not the
appropriate entity to develop local administrative procedures for
grantees.

[Comment]{.underline} -- Some comments referred to the difficulty that
grantees would have in developing outcome statements.

[Response]{.underline} -- HUD will use the data that are reported and
aggregated in IDIS to develop the outcome statements. If a jurisdiction
has an activity that does not fit into the framework, that grantee may
create an outcome statement in the narrative of the CAPER or PER to
provide information to their citizens about the results of the activity.

[Comment]{.underline} -- Comments asked that HUD clarify the timing of
when grantees will begin using the performance measurement system.

[Response]{.underline} -- The elements of the outcome performance
measurement system will appear in the existing version of IDIS in Spring
2006. Because of the need for HUD to show results, grantees will be
requested to enter data as soon as the system is available. Later in
2006, Phase I of the re-engineered IDIS will be released. At that time,
grantees will be required to enter the performance data into the system.

[Comment]{.underline} -- There were comments suggesting that 40 percent
be included in the breakout of numbers for area median income because
this number would help show the percentage of "working poor;" that many
projects exceed the HOME program minimum levels and assist persons
between 30 percent and 50 percent; and that breaking down those income
levels would cause additional work for CDBG grantees.

[Response]{.underline} -- Individual program requirements dictate the
income percentages that are to be reported. Therefore, grantees need
only provide the information that is currently required for each
specific program. The area median income percentages published in this
notice reflect the range of information required by all four CPD formula
grants. When grantees enter data for activities into IDIS, only the
income percentages applicable to those program activities will be
populated for selection.

[Comment]{.underline} -- Several commenters urged HUD to provide
sufficient time for grantees to revise forms and other business
practices, that data collection should not begin until the re-engineered
IDIS is available, and that information pertinent to these changes
should be made available to grantees as soon as possible.

[Response]{.underline} -- On October 28, 2005, CPD issued a memo that
provided the basic information needed to revise forms, such as
applications from sub-recipients for funding, sub-recipient agreements,
and client applications. Grantees could also use that memo to begin to
plan for any administrative changes that might be required.

[Comment]{.underline} -- Some commenters requested that an indicator for
section 504 compliance be included for owner-occupied housing units.

[Response]{.underline} -- HUD agrees. Although section 504 does not
apply to homeowners, the accessibility indicator has been added for
owner-occupied units that are made accessible for persons with
disabilities.

[Comment]{.underline} -- One comment received stated that there was no
way in the system to report female heads of household.

[Response]{.underline} -- In IDIS, grantees are currently required to
report the number of female heads of household for housing activities
that meet the national objective of low-mod housing; therefore, no
additional data is required.

[Comment]{.underline} -- Several comments reflected the need for
additional resources to cover the added costs of administrative
workload, training, and technology development.

[Response]{.underline} -- HUD is making every effort to minimize
workload burden. HUD expects the increased administrative workload to be
reduced as HUD streamlines the planning and reporting requirements.
While plans for training are not yet complete, HUD will attempt to
reduce grantee costs by conducting training using technology such as the
Performance Measurements website, broadcasts, and webcasts, and possibly
local training provided through field offices. Also, HUD expects to
provide training at conferences of the national associations that were
involved in the development of the system.

[Comment]{.underline} -- Several commenters asked HUD to develop sample
forms that can be used to collect the additional data.

[Response]{.underline} -- Since grantees differ greatly in
administrative procedures, based on agency size and expertise, HUD is
not the appropriate entity to develop specific sample forms. However,
HUD will provide guidance on data collection that will assist grantees
in adding appropriate language to existing forms.

[Comment]{.underline} -- There were several comments that suggested
changes to the flow chart that was included in the proposed outcome
performance measurement system.

[Response]{.underline} -- The flow chart could not be designed to
accommodate the various requests and the full scope of all activities.
Because many commenters considered the flow chart to provide little
value, it has been removed from the final notice of the outcome
performance measurement system.

[Comment]{.underline} -- Several comments stated that ESG and HOPWA
indicators should include case management.

[Response]{.underline} -- HOPWA case management activities will be
reported in the HOPWA Annual Performance Reports and later in IDIS. ESG
does not currently collect information on case management activities in
IDIS.

[Comment]{.underline} -- Several comments indicated that the system
should provide the ability to capture more than one objective and more
than one outcome for each activity.

[Response]{.underline} -- The objectives closely mirror the statutory
objectives of each program. Grantees will select the one objective that
the activity is intended to meet. To prevent the dilution of data and
capture the largest numbers possible for each outcome, grantees are
encouraged to select the outcome that best describes the result of the
activity. However, if a grantee feels strongly that an activity is best
represented by two outcomes, it would indicate the primary outcome and
the additional outcome.

[Comment]{.underline} -- There were comments suggesting that only
indicators required by each specific program should be required for
reporting.

[Response]{.underline} -- Both the proposed and final notices state that
grantees will report these data only if the indicator is appropriate to
the program.

[Comment]{.underline} -- One comment stated that Community Housing
Development Organization (CHDO) operating costs should not be included
in the system.

[Response]{.underline} -- Up to 5 percent of a participating
jurisdiction's HOME allocation may be used to pay eligible CHDO
operating costs. However, the use of HOME funds for this purpose, or for
administrative costs generally, does not directly result in a measurable
output in terms of affordable housing units produced or households
assisted. In fact, the use of HOME funds to cover CHDO operating costs
actually reduces that amount of funds that would otherwise be available
for projects. Consequently, while CHDO operating support funds are
necessary in many instances, HUD agrees with the commenter that it would
not be appropriate to include the use of CHDO operating costs as an
indicator in a system focused on measuring performance.

[Comment]{.underline} -- One comment indicated that the list of
indicators should not be increased without careful evaluation and input
from the working group.

[Response]{.underline} -- The working group has continued to provide
evaluation and input on the development and implementation of the
outcome performance measurement system.

[Comment]{.underline} -- Many comments suggested possible changes to the
indicators or additional indicators to be included to the proposed
outcome performance measurement system.

[Response]{.underline} -- HUD carefully considered each suggestion. Some
of the suggestions were incorporated into the framework, while others
reflected changes that were already planned for inclusion in the
re-engineering of IDIS. HUD believes that the indicators included in the
outcome performance measurement system published herein reflect most of
the activities undertaken by grantees. However, if it becomes apparent
that additional data elements are necessary, other indicators can be
added to the system at a later date.

[Comment]{.underline} -- Several comments questioned the difference
between International Building Code Energy (IBCE) Standards, and the
International Energy Conservation Code (IECC), and the inclusion of
Energy Star Standards as a subset of a larger code.

[Response]{.underline} -- Most states and local governments have adopted
one or more International Code Council (ICC) building codes. The ICC
codes have replaced other prior model codes, resulting in many different
building codes. HUD has determined that identifying only IBCE or IECC
and not identifying other possible codes would create incomplete data,
as well as confusion over which codes to use. Therefore, the data
elements for building energy codes have been deleted. In 2002, HUD
entered into a memorandum of understanding with the Environmental
Protection Agency (EPA) and the Department of Energy (DOE) to promote
the use of Energy Star in HUD's affordable housing programs. Therefore,
Energy Star will remain as a data element for energy conservation
activities for the housing indicator categories in the performance
measurement system.

[Comment]{.underline} -- There were comments about the use of the NAICS
industry classification codes and whether the codes would be available
in a drop-down format in IDIS.

[Response]{.underline} -- HUD has concluded that the large number of
NAICS classification codes will create a reporting burden for grantees
and businesses and therefore has deleted that data element.

III\. Environmental Impact

This notice does not direct, provide for assistance or loan and mortgage
insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this
notice is categorically excluded from environmental review under the
National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Dated: March 1, 2006.

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

Pamela H. Patenaude, Assistant Secretary for

Community Planning and Development

\[FR-4970-N-02\]