Editorial Note on Part 985
Editorial Note: Nomenclature changes to part 985 appear at 64 FR 67983, Dec. 3, 1999.

§ 985.209 Troubled small rural PHAs. ( a ) *Appeals* — ( 1 ) *HUD action.* HUD must review, consider, and provide a final written determination to a small rural PHA that appeals its designation as a troubled PHA.
( 2 ) *Deciding HUD official.* The HUD decision on the PHA appeal shall be made by a HUD official who has not been involved in and is not subordinate to any person who has been involved in the original determination to designate the PHA as a troubled PHA under the small rural PHA assessment.
( b ) *Corrective action agreement.* No later than 60 days after the date on which the PHA is designated a troubled PHA, the PHA and HUD will enter into a corrective action agreement (CAA) under which the PHA shall take actions to correct the deficiencies upon which the troubled PHA designation is based. The PHA must comply with HUD requirements for the submission of the CAA, including but not limited to the date by which the CAA must be submitted to HUD. The CAA must: ( 1 ) Have a term of one year, and shall be renewable at the option of HUD;
( 2 ) Specify goals to be achieved;
( 3 ) Identify obstacles to goal achievement and ways to eliminate or avoid them;
( 4 ) Identify resources that will be used or sought to achieve goals;
( 5 ) Provide, where feasible, for technical assistance to assist the PHA in curing its deficiencies;
( 6 ) Identify a PHA staff person with lead responsibility for completing each goal;
( 7 ) Identify key tasks to reach each goal;
( 8 ) Specify time frames for achievement of each goal, including intermediate time frames to complete each key task;
( 9 ) Provide for regular evaluation of progress toward improvement;
( 10 ) Provide for the reconsideration of the PHA's designation as a troubled PHA no less than annually, and provide for the termination of the CAA when HUD determines the PHA is no longer troubled;
( 11 ) Provide that in the event of substantial noncompliance by the PHA under the CAA, HUD may ( i ) contract with another PHA or a private entity to administer the HCV program; and
( ii ) withhold funds otherwise distributable to the troubled PHA;
( 12 ) Be signed by the PHA board of commissioners chairperson and by the PHA executive director. If the PHA is a unit of local government or a State, the CAA must be signed by the Section 8 program director and by the chief executive officer of the unit of government or his or her designee.
( c ) *Monitoring.* The PHA and HUD must monitor the PHA's implementation of its CAA to ensure performance targets are met.
( d ) *Annual small rural assessment.* A troubled PHA shall be subject to the small rural assessment on an annual basis.
( e ) *Use of administrative fee reserve prohibited.* Any PHA designated as troubled may not use any part of the administrative fee reserve for other housing purposes (*see* § 982.155(b) of this chapter).
( f ) *Upgrading poor performance rating.* HUD shall change a PHA's overall performance rating from troubled to standard or high performer if HUD determines that a change in the rating is warranted because of improved PHA performance and a standard or high designation on a subsequent small rural PHA assessment.
( g ) *Default under the Annual Contributions Contract (ACC).* HUD may determine that a PHA's failure to correct identified deficiencies resulting from its small rural PHA assessment or to execute and implement a CAA as required by HUD constitutes a default under the ACC.