36042 Federal Register / Vol. 65, No. 109 / Tuesday, June 6, 2000 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 902

[Docket No. FR–4497–C–06]

RIN 2577–AC08

Public Housing Assessment System

(PHAS): Technical Correction

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, and Office of the Director of

the Real Estate Assessment Center,

HUD.

ACTION: Technical correction.

SUMMARY: On January 11, 2000, HUD

published a final rule that made certain

amendments to the Public Housing

Assessment System regulations, issued

as final regulations by HUD on

September 1, 1998. This document

makes certain technical and editorial

corrections to the January 11, 2000, final

rule. Elsewhere in this edition of the

Federal Register, HUD is publishing a

notice concerning additional PHAS

transition assistance for certain PHAs.

DATES: Effective Date: February 10,

2000.

FOR FURTHER INFORMATION CONTACT: For

further information contact the Real

Estate Assessment Center (REAC),

Attention: Wanda Funk, U. S.

Department of Housing and Urban

Development, 1280 Maryland Avenue,

SW, Suite 800, Washington DC, 20024;

telephone Technical Assistance Center

at (888) 245–4860 (this is a toll free

number). Persons with hearing or

speech impairments may access that

number via TTY by calling the Federal

Information Relay Service at (800) 877–

8339. Additional information is

available from the REAC Internet Site,

http://www.hud.gov/reac.

SUPPLEMENTARY INFORMATION:

I. Background

On January 11, 2000 (65 FR 1712),

HUD issued a final rule that made

certain amendments to the Public

Housing Assessment System (PHAS)

regulations. The PHAS was

implemented by final regulations

published on September 1, 1998. The

amendments published to the PHAS

regulations on January 11, 2000,

followed a proposed rule published on

June 22, 1999, and the amendments

were prompted by both statutory and

administrative changes to the PHAS.

The Quality Housing and Work

Responsibility Act of 1998 (Pub.L. 105–

276, approved October 21, 1998)

(referred to as the ‘‘Public Housing

Reform Act’’) made certain amendments

to section 6(j) of the U.S. Housing Act

of 1937, which necessitated changes to

the PHAS regulations. Additionally,

HUD determined that certain changes

were needed to the regulations as a

result of the transition period to the new

PHAS that HUD provided following

issuance of the September 1, 1998, final

rule. The September 1, 1998 final rule

did not provide for immediate

implementation of PHAS, but rather

provided for a year’s transition period in

which HUD tested its PHAS systems,

provided advisory scores, and

continued discussions and meetings

with public housing agencies (PHAs)

and residents, and their respective

representatives about the PHAS. As a

result of this transition period, extended

by HUD at the request of PHAs, and

discussions and meetings which

continued well into the fall and winter

of 1999, HUD determined certain

changes were needed. The changes, both

statutory and regulatory were discussed

in the preambles to the June 22, 1999,

proposed rule, and the January 11, 2000,

final rule.

II. Technical Corrections

This document corrects certain errors

that appeared in the January 11, 2000

final rule. Three primary corrections are

made by this document:

• First, in § 902.43, HUD reinstates

‘‘vacant unit turnaround time’’ as a

Management Operations sub-indicator.

In the preamble to the January 11,

2000, final rule, HUD advised that it

was persuaded by public comment on

the proposed rule and discussions with

PHAs that assessing vacancy rate under

the Management Operations Indicator

was duplicative of assessing

‘‘occupancy loss’’ and ‘‘tenant

receivable outstanding’’ under the

Financial Condition Indicator. HUD

therefore agreed that the vacancy rate

sub-indicator under the Management

Operations Indicator would be removed.

(See discussion at 65 FR 1716). In

removing ‘‘vacancy rate’’ from § 902.43,

HUD inadvertently also removed

‘‘vacant unit turnaround time.’’ These

two components were combined

together as one sub-indicator under

PHAS (just as they had been under the

predecessor system—the Public Housing

Management Assessment Program

(PHMAP)). Vacant unit turnaround time

is a statutorily required indicator and is

not covered by any other sub-indicator

in either the Financial Condition

Indicator or the Management Operations

Indicator, and the removal of this subindicator was not part of the discussions

between HUD and the PHAs, nor was

vacant unit turnaround time raised by

public commenters on the June 22,

1999, proposed rule as an assessment

component found under more than one

PHAS Indicator (again, as was the case

with vacancy rate).

HUD is therefore reinstating this subindicator through this correction

document. In revised § 902.43, HUD

makes the vacant unit turnaround time

the first sub-indicator, and the

remaining sub-indicators are

redesignated accordingly. For the

convenience of the reader, the entire

section is republished, as corrected.

• Second, the Board of Review

process provided in § 902.69 is

applicable to appeal of PHAS scores,

and not just to appeal of troubled

designation or petition for removal of

troubled designation. This was made

clear in the preamble discussion at page

1728, third column, continuing on page

1729, first column. In this discussion, in

response to a comment from the public

that the appeal process did not allow for

reviewing of the scoring process itself,

and the process was too abbreviated,

HUD responded by referring to the

process in § 902.69, and noted that this

appeal process provides for referral to

the Board of Review.

HUD, therefore, revises the language

in § 902.69 to clarify that this process is

applicable to appeal of PHAS scores,

consistent with the discussion in the

preamble.

• Third, with the extension of

advisory scores to PHAs with fiscal

years ending March 31, 2000, HUD has

corrected this section to reflect

implementation of PHAS begins with

PHAs with fiscal years ending on and

after June 30, 2000, and to allow for

flexibility if further changes are

considered necessary that will not

require another correction or

amendment to the rule.

Other corrections made by this

document are as follows:

• In § 902.20, HUD removes in

paragraph (b)(2) the reference to the

assessment of vacant units under the

Management Operations Indicator. (See

65 FR 1741, first column.) In the January

11, 2000, final rule, HUD determined

that unit vacancy only would be

assessed by the occupancy loss subindicator under the Financial Condition

Indicator. Therefore this reference is

incorrect.

• In § 902.20, the regulatory reference

in paragraph (c) should be § 902.43(a),

not § 902.43(a)(5). (See 65 FR 1741, first

column.) HUD corrects this crossreference.

• In § 902.25, HUD replaces the word

‘‘latest’’ in paragraph (b)(2)(ii) which

appears before the term ‘‘census data’’

with the word ‘‘most recent.’’ (See 65 FR

1743, first column.) HUD believes that

Federal Register / Vol. 65, No. 109 / Tuesday, June 6, 2000 / Rules and Regulations 36043

the phrase ‘‘most recent’’ is a more clear

description of the type of census data

needed.

• In § 902.25, HUD clarifies in

paragraph (c)(3) that adjustments for

modernization work-in-progress are not

limited to units but encompass

modernization work-in-progress being

undertaken in other areas in a PHA’s

development, which areas are subject to

physical inspection by HUD. (See 65 FR

1744, first column.)

• In § 902.35, HUD corrects the

definition of ‘‘Tenant Receivable

Outstanding’’ to further clarify its

meaning.

• In § 902.43, the use of the term

‘‘unobligated’’ in the first sentence of

paragraph (a)(1) is incorrect. (See 65 FR

1745, third column.) The correct term

should be ‘‘unexpended.’’ HUD makes

this correction.

• In § 902.43, the regulatory reference

in paragraph (b)(1) should be to

§ 902.60(d), not 902.69(d). (See 65 FR

1746, middle column.) HUD corrects

this cross-reference.

• In § 902.45, HUD clarifies that a

PHA that receives less than 60 percent

of the maximum calculation for the

Capital Fund subindicator under PHAS

Indicator #3 (Management Operations)

is troubled with respect to program

assistance under the Capital Fund. (See

65 FR 1746, end of middle column, top

of third column.) This is clearly stated

in § 902.67(c)(2)(ii), but should also be

stated in § 902.45.

• In § 902.60, paragraph (e)(2) is

amended to clarify that a PHA’s failure

to submit a certification required under

the PHAS regulations or to submit yearend financial information will result in

a score of zero only for the PHAS

Indicator for which the certification or

financial information is required and

not received. Without this correction,

the rule indicates that the PHA would

receive a score of zero for all of the

PHAS Indicators which require

certifications, even if certifications are

received for some of them. (See 65 FR

1748, first column.)

This section is also amended to clarify

that HUD may not extend the reporting

deadline for audited financial

statements. OMB Circular A–133

provides that an audited financial

statement must be submitted within

nine months after an entity’s fiscal yearend. This deadline may not be extended

by HUD, and the revised language

clarifies this.

• In § 902.67, the regulatory reference

in paragraph (c)(2)(ii) should be to

§ 902.43(a), not § 902.43(a)(2). (See 65

FR 1749, first column.) HUD corrects

this cross-reference.

• In § 902.69, HUD replaces the term

‘‘final PHAS score’’ in the first sentence

of paragraph (c)(1)) with the term

‘‘overall PHAS score.’’ (See 65 FR 1750,

middle column.) As stated in

§ 902.63(c), a PHA’s overall PHAS score

becomes its final PHAS score after any

adjustments are made in accordance

with the regulatory provisions and

following the appeals process provided

in § 902.69.

• In § 902.77, the regulatory reference

in the second sentence of paragraph

(a)(1) should be § 902.79, not § 902.69.

(See 65 FR 1753, first column.) HUD

corrects this cross-reference.

In § 902.79, the reference in paragraph

(b)(1)(iv) to ‘‘paragraph (a) of this

section’’ is incorrect. (See 65 FR 1753,

third column.) The reference should be

to ‘‘paragraph (b)(4) of this section.’’

HUD corrects this reference.

III. Responses to Post-Final Rule

Questions

In addition to the regulatory changes

described above, other issues or

concerns were raised to HUD after

publication of the January 11, 2000,

final rule, as follows.

HUD was asked to correct the January

11, 2000, final rule to include a definite

period of time in which HUD must

respond to a request for an appeal. HUD

points out that § 902.69(e) provides that

HUD will make final decisions of

appeals within 30 days of receipt of an

appeal, and may extend this period for

an additional 30 days if further inquiry

is necessary. No correction is needed

since the rule does address this issue.

HUD was asked how a PHA

designated as troubled under PHMAP

and in receivership can obtain an

acceptable PHMAP rating to get out of

receivership since there are no more

PHMAP ratings. As noted in the

preamble to the first PHAS rule issued

in 1998, and discussed in other PHAS

notices and the 1999 rule, PHAS

Indicator #3 (Management Operations)

covers the majority of areas covered by

PHMAP. As noted in the PHAS

Transition Notice, published on October

21, 1999 (64 FR 56676), PHAs with

fiscal years ending September 30, 1999,

or December 31, 1999, will receive an

assessment score solely on the basis of

HUD’s assessment of the PHA’s

management operations in accordance

with 24 CFR part 902, subpart D of the

PHAS regulations (PHAS Indicator #3,

Management Operations). (See 64 FR

56677, middle column). As the October

21, 1999, notice provided, PHAs with

fiscal years ending on or after March 31,

2000, will receive a PHAS score; and

therefore, either an assessment score

under PHAS Indicator #3, for PHAs

with fiscal years ending September 30,

1999, or December 31, 1999, or a PHAS

score for PHAs with fiscal years ending

on or after March 31, 2000, take the

place of the PHMAP score. (As noted

earlier, and as discussed further below,

PHAS advisory scores are extended to

PHAs with fiscal years ending on March

31, 2000, and the October 21, 1999, and

December 16, 1999, PHAS Transition

Assistance Notices are revised by this

document.) HUD also was asked about

a statement in the preamble concerning

HUD’s discussions with GAO

concerning the GAO report on its

analysis of the PHAS. (See 65 FR 1713,

first column.) HUD acknowledges that

this preamble language requires

clarification. At the time the Conference

Report to the FY 2000 HUD

Appropriations Act was issued (October

13, 1999), GAO’s planned review of the

physical inspection process focused

only on HUD’s multifamily housing, not

public housing. Although, GAO

subsequently expanded the scope of its

review to include public housing, GAO

acknowledged that its analysis of

implementation of PHAS in public

housing and compilation of a report

would take several months. Postponing

implementation of PHAS until the GAO

report was completed would have

caused a significant delay. HUD advised

both GAO and Congressional staff before

publication of the January 11, 2000,

final rule that HUD would proceed with

its PHAS implementation plans. When

the GAO report is complete, HUD will

examine the GAO findings and make

any changes to the PHAS physical

inspection process that will refine and

improve this system.

IV. Related Document—Notice on

Additional Transition Assistance

HUD also was asked to provide

further transition assistance to certain

PHAs. Please see HUD’s notice

published elsewhere in this edition of

the Federal Register that addresses

PHAS transition assistance for certain

PHAs.

List of Subjects in 24 CFR Part 902

Administrative practice and

procedure, Public housing, Reporting

and recordkeeping requirements.

Accordingly, 24 CFR part 902 is

corrected by making the following

correcting amendments:

PART 902—PUBLIC HOUSING

ASSESSMENT SYSTEM

1. The authority citation for 24 CFR

part 902 continues to read as follows:

Authority: 42 U.S.C. 1437d(j), 42 U.S.C.

3535(d).

36044 Federal Register / Vol. 65, No. 109 / Tuesday, June 6, 2000 / Rules and Regulations

2. Revise § 902.5 to read as follows.

§ 902.5 Applicability.

(a) PHAs, RMCs, AMEs. (1) Scoring of

RMCs and AMEs. This part applies to

PHAs, Resident Management

Corporations (RMCs) and Alternate

Management Entities (AMEs), as

described in this section. As described

in this section, this part is also

applicable to RMCs that receive direct

funding from HUD in accordance with

section 20 of the 1937 Act (DF–RMCs).

(i) RMCs and DF–RMCs will be

assessed and issued their own numeric

scores under the PHAS based on the

public housing developments or

portions of public housing

developments that they manage and the

responsibilities they assume which can

be scored under PHAS. References in

this part to PHAs include RMCs and this

part is applicable to RMCs unless stated

otherwise. References in this part to

RMCs include DF–RMCs and this part is

applicable to DF–RMCs unless

otherwise stated.

(ii) AMEs are not issued PHAS scores.

The performance of the AME

contributes to the PHAS score of the

PHA or PHAs for which they assumed

management responsibilities.

(2) PHA ultimate responsible entity

under ACC, except where DF–RMC

assumes management operations. (i)

Because the PHA and not the RMC/AME

is ultimately responsible to HUD under

the ACC, the PHAS score of a PHA will

be based on all of the developments

covered by the ACC, including those

with management operations assumed

by an RMC or AME (including a court

ordered receivership agreement, if

applicable).

(ii) A PHA’s PHAS score will not be

based on developments managed by a

DF–RMC.

(b) Implementation of PHAS. The

regulations in this part are applicable to

PHAs with fiscal years ending on and

after June 30, 2000, unless HUD,

through Federal Register, notice revises

the implementation date to later date.

(1) For PHAs that are not issued

PHAS scores. Under certain

circumstances, PHAs may not be issued

PHAS scores. For these PHAs, in lieu of

a PHAS score, HUD will issue the

following:

(i) PHAS Advisory Score. A PHA will

be issued a PHAS advisory score for all

PHAS indicators—Indicators #1

(Physical), #2 (Financial), #3

(Management Operations), and #4

(Resident Service and Satisfaction). The

PHA must comply with the

requirements of this part so that HUD

may issue the advisory score. Physical

inspections required to be conducted by

PHAs under the Management

Operations Indicator will be conducted

using HUD uniform physical inspection

protocol, unless HUD provides, through

Federal Register notice, that PHAs may

use HUD’s Housing Quality Standards.

(ii) Management Assessment Score. A

PHA will receive an assessment score

on the basis of HUD’s assessment of the

PHA’s management operations in

accordance with subpart D of this part.

3. In § 902.20, revise paragraphs (b)(2)

introductory text and (c) to read as

follows:

§ 902.20 Physical condition assessment.

* * * * *

(b) * * *

(2) Only occupied units will be

inspected as dwelling units (except

units approved by HUD for nondwelling purposes, e.g., daycare or

meetings, which are inspected as

common areas). Vacant units that are

not under lease at the time of the

physical inspection will not be

inspected, but vacant units are assessed

under the Financial Condition Indicator

#2 (§ 902.35(b)(4)). The categories of

vacant units not under lease that are

exempted from physical inspection are

as follows:

* * * * *

(c) PHA physical inspection

requirement. The HUD-conducted

physical inspections required by this

part do not relieve the PHA of the

responsibility to inspect public housing

units as provided in section 6(f)(3) of

the Act (42 U.S.C. 1437d(f)(3)), and

§ 902.43(a).

* * * * *

4. In § 902.25, revise paragraphs

(b)(2)(ii), (c)(3) introductory text, and

(c)(3)(i) to read as follows:

§ 902.25 Physical condition scoring and

thresholds.

* * * * *

(b) * * *

(2) * * *

(ii) Neighborhood environment

applies to properties located where the

immediate surrounding neighborhood

(that is a majority of the population that

resides in the census tracts or census

block groups on all sides of the

development) has at least 51 percent of

families with incomes below the

poverty rate as documented by the most

recent census data.

* * * * *

(c) * * *

(3) Adjustments for modernization

work in progress. HUD may determine

that an occupied dwelling unit or other

areas of a PHA development, subject to

physical inspection under this subpart,

which are undergoing modernization

work in progress require an adjustment

to the physical condition score.

(i) An occupied dwelling unit or other

areas of a PHA development undergoing

modernization are subject to physical

inspection; the unit and other areas of

the PHA development are not exempt

from physical inspection. All elements

of the unit or of the other areas of the

PHA development that are subject to

inspection and are not undergoing

modernization at the time of the

inspection (even if modernization is

planned) will be subject to HUD’s

physical inspection protocol without

adjustment. For those elements of the

unit or of the development that are

undergoing modernization, deficiencies

will be noted in accordance with HUD’s

physical inspection protocol, but the

PHA may request adjustment of the

physical condition score as a result of

modernization work in progress.

* * * * *

5. In § 902.35, revise paragraph (b)(3)

to read as follows:

§ 902.35 Financial condition scoring and

thresholds.

* * * * *

(b) * * *

(3) Tenant Receivable Outstanding is

the average number of days tenant

receivables are outstanding and it is

calculated by dividing tenant accounts

receivable by Daily Tenant Revenue

(rental revenue/365).

* * * * *

6. Revise § 902.43 to read as follows:

§ 902.43 Management operations

performance standards.

(a) Management operations subindicators. The following sub-indicators

listed in this section will be used to

assess a PHA’s management operations.

The components and grades for each

sub-indicator are the same as those

provided in Appendix 1 to the PHAS

Notice on the Management Operations

Scoring Process, except as may be

otherwise noted in this subpart.

(1) Management sub-indicator #1—

Vacant Unit Turnaround Time. This

sub-indicator measures the PHA’s

efforts to reduce unit turnaround time

and assesses the adequacy of the PHA’s

system to track unit down time, make

ready time and lease up time.

(2) Management sub-indicator #2—

Capital Fund. This management subindicator examines the amount and

percentage of funds provided to the

PHA from the Capital Fund under

section 9(d) of the Act, which remain

unexpended by the PHA after three

years, the timeliness of fund obligation,

Federal Register / Vol. 65, No. 109 / Tuesday, June 6, 2000 / Rules and Regulations 36045

the adequacy of contract administration,

the quality of the physical work, and the

adequacy of budget controls. For

funding under the HOPE VI Program,

only components #3, #4, and #5 of this

sub-indicator are applicable. This

management sub-indicator is

automatically excluded if the PHA does

not have section 9(d) capital funding.

(3) Management sub-indicator #3—

Work Orders. This management subindicator examines the time it takes to

complete or abate emergency work

orders, the average number of days

nonemergency work orders were active,

and any progress a PHA has made

during the preceding three years to

reduce the period of time nonemergency

maintenance work orders were active.

Implicit in this management subindicator is the adequacy of the PHA’s

work order system in terms of how a

PHA accounts for and controls its work

orders, and its timeliness in preparing/

issuing work orders.

(4) Management sub-indicator #4—

PHA Annual Inspection of Units and

Systems. This management subindicator examines the percentage of

units and systems that a PHA inspects

on an annual basis in order to determine

short-term maintenance needs and longterm Capital Fund needs. This

management sub-indicator requires a

PHA’s inspection to utilize the HUD

uniform physical condition standards

set forth in subpart B of this part. All

occupied units are required to be

inspected.

(5) Management sub-indicator #5—

Security. (i) This management subindicator evaluates the PHA’s

performance in tracking crime related

problems in their developments;

reporting incidence of crime to local law

enforcement agencies; the adoption and

implementation, consistent with section

6(j)(1)(I) (42 U.S.C. 1437d(j)(1)(I)), of

applicant screening and resident

eviction policies and procedures, and

other anticrime strategies; coordination

with local government officials and

residents in the development on

implementation of such strategies; and

as applicable, PHA performance under

any HUD drug prevention/crime

reduction grants.

(ii) Paragraph (a) of this section

provides that the components and

grades for each sub-indicator are the

same as those for the corresponding

indicator provided in Appendix 1 to the

PHAS Notice on the Management

Operations Scoring Process, except as

may be otherwise noted. For Component

#1, Tracking and Reporting Crime

Related Problems, the following will be

used to describe a Grade of A: The PHA

Board, by resolution, has adopted

policies and the PHA has implemented

procedures and can document that it:

(A) Tracks crime and crime-related

problems in at least 90 percent of its

developments;

(B) Has a cooperative system for

tracking and reporting incidents of

crime to local police authorities to

improve law enforcement and crime

prevention; and

(C) Coordinates with local

government officials and its residents on

the implementation of anticrime

strategies.

(6) Management sub-indicator #6—

Economic Self-Sufficiency. The

economic self-sufficiency sub-indicator

measures the PHA’s efforts to

coordinate, promote or provide effective

programs and activities to promote the

economic self-sufficiency of residents.

For this sub-indicator, PHAs will be

assessed for all the programs that the

PHA has HUD funding to implement.

Also, PHAs will receive credit for

implementation of programs through

partnerships with non-PHA providers,

even if the programs are not funded by

HUD or the PHA.

(b) Reporting on performance under

the Management Operations Indicator.

(1) A PHA is required to submit

electronically a certification of its

performance under each of the

management operations sub-indicators

in accordance with § 902.60(d).

(2) If circumstances preclude a PHA

from reporting electronically, HUD will

consider granting short-term approval to

allow a PHA to submit its management

operations certification manually. A

PHA that seeks approval to submit its

certification manually must ensure that

REAC receives a request for manual

submission in writing two months prior

to the submission due date of its

Management Operations certification.

The written request must include the

reasons why the PHA cannot submit its

certification electronically. REAC will

respond to such a request and will

manually forward its determination in

writing to the PHA.

7. In § 902.45, paragraph (b) is revised

to read as follows:

§ 902.45 Management operations scoring

and thresholds.

* * * * *

(b) Thresholds. (1) In order to receive

a passing score under the Management

Operations Indicator, the PHA must

achieve a score of at least 18 points or

60 percent of the available points under

this PHAS Indicator #3. If the PHA fails

to receive a passing score on the

Management Operations Indicator, the

PHA shall be categorized as a

substandard management agency.

(2) A PHA that receives less than 60

percent of the maximum calculation for

the Capital Fund subindicator under

Management Operations Indicator, shall

be subject to the sanctions provided in

section 6(j)(4) of the Act (see

§ 902.67(c)(2)(ii).)

8. In § 902.60, paragraph (e)(2) is

revised to read as follows:

§ 902.60 Data collection.

* * * * *

(e) * * *

(2) If any certification or year-end

financial information, with the

exception of the PHA’s audited financial

statement, is not received within three

months after the due date, the PHA will

receive a presumptive rating of failure

for each PHAS Indicator for which the

certification or year-end financial

information is not received. The PHA’s

audited financial statement must be

received no later than 9 months after the

PHA’s fiscal year-end, in accordance

with OMB Circular A–133 (see

§ 902.33(c)). If the audited financial

statement is not received by that date,

the PHA will receive a presumptive

rating of failure for the PHAS Financial

Indicator. If the PHA receives a

presumptive rating failure for any PHAS

Indicator due to failure to submit a

certification or year-end financial

information by the due date, including

any extension of the due date, as

provided in this paragraph (except for

the audited financial statement for

which the due date is established by

OMB Circular A–133), the PHA shall be

designated as troubled or identified as

troubled with respect to the program for

assistance from the Capital Fund under

section 9(d) of the Act.

9. In § 902.67, revise paragraph

(c)(2)(ii) to read as follows:

§ 902.67 Score and designation status.

* * * * *

(c) * * *

(2) * * *

(ii) In accordance with section 6(j)(2)

of the Act, a PHA that receives less than

60 percent of the maximum calculation

for the Capital Fund sub-indicator under

PHAS Indicator #3 (Management

Operations, subpart D of this part; see

§ 902.43(a)) will be subject to the

sanctions, provided in section 6(j)(4), as

appropriate.

* * * * *

10. Revise § 902.69 to read as follows:

§ 902.69 PHA right of petition and appeal.

(a) Appeal of troubled designation

and petition for removal troubled

designation. A PHA may:

(1) Appeal its troubled designation

(including designation as troubled with

36046 Federal Register / Vol. 65, No. 109 / Tuesday, June 6, 2000 / Rules and Regulations

respect to its performance under the

Capital Fund subindicator as provided

in § 902.67(c)(2)); and

(2) Petition for removal of troubled

designation.

(b) Appeal of PHAS score. If a PHA

believes that an objectively verifiable

and material error (or errors) exists in

any of the scores for its PHAS

Indicators, which, if corrected, will

result in a significant change in the

PHA’s PHAS score and its designation

(i.e., as troubled, standard, or high

performer), the PHA may appeal its

PHAS score in accordance with the

procedures of paragraphs (c), (d) and (e)

of this section. A significant change in

a PHAS score is a change that would

cause the PHA’s PHAS score to increase,

resulting in a higher PHAS designation

for the PHA (i.e., from troubled

performer to standard performer, or

from standard performer to high

performer).

(c) Appeal and petition procedures.

(1) To appeal troubled designation or a

PHAS score, a PHA must submit a

request in writing to the Director of the

Real Estate Assessment Center that must

be received by REAC no later than 30

days following the issuance of the

overall PHAS score to the PHA. To

petition removal of troubled

designation, a PHA also must submit its

request in writing to the Director of the

Real Estate Assessment Center. The

written request must be received by

REAC no later than 30 days after HUD’s

decision to refuse to remove the PHA’s

troubled designation.

(2) An appeal of troubled designation

or petition for removal of troubled

designation must include the PHA’s

supporting documentation and reasons

for the appeal. An appeal of a PHAS

score must be accompanied by the

PHA’s reasonable evidence that an

objectively verifiable and material error

occurred. An appeal submitted to REAC

without appropriate documentation will

not be considered and will be returned

to the PHA.

(d) Consideration of appeal. (1)

Consideration of appeal of PHAS score.

Upon receipt of an appeal of a PHAS

score from a PHA, REAC will review the

PHA’s file and the evidence submitted

by the PHA to support that an error

occurred. If REAC determines that an

objectively verifiable and material error

has been documented by the PHA,

REAC will convene a Board of Review,

in accordance with the procedures of

paragraphs (d) and (e) of this section, to

evaluate the appeal and its merits for

purposes of determining whether a

reassessment of the PHA is warranted.

For appeal of PHAS scores, the Board of

Review may determine that REAC

should undertake a new inspection of

the property, and/or a reexamination of

the financial information, management

information, or resident information

(the components of the PHAS score),

depending upon which PHAS Indicator

the PHA believes was scored

erroneously and the type of evidence

submitted by the PHA to support its

position that an error occurred.

(2) Consideration of appeal of

troubled designation or refusal to

remove troubled designation. Upon

receipt of an appeal of a troubled

designation from a PHA, REAC will

convene a Board of Review (the Board)

to evaluate the appeal and its merits for

the purpose of determining whether a

reassessment of the PHA is warranted.

Board membership will be comprised of

a representative from REAC, from the

Office of Public and Indian Housing,

and from such other office or

representative as the Secretary may

designate (excluding, however,

representation from the Troubled

Agency Recovery Center). For purposes

of reassessment, REAC will schedule a

reinspection and/or acquire audit

services, as determined by the Board,

and a new score will be issued, if

appropriate. Decisions by the Board will

be reported to the PHA by the Assistant

Secretary for Public and Indian

Housing.

(e) Final appeal decisions. HUD will

make final decisions of appeals, made

under this section, within 30 days of

receipt of an appeal, and may extend

this period for an additional 30 days if

further inquiry is necessary. Failure by

a PHA to submit supporting

documentation with its request for

appeal, or within any additional period

granted by HUD is grounds for denial of

an appeal. Final appeal decisions will

be reported to the PHA by the Assistant

Secretary for Public and Indian

Housing.

11. In § 902.77, revise paragraph (a)(1)

to read as follows:

§ 902.77 Referral to the Departmental

Enforcement Center (DEC).

(a) Referral of Troubled PHA to the

DEC for failing to execute or meet MOA

requirements. (1) Failure of a troubled

PHA to execute or meet the

requirements of a MOA in accordance

with § 902.75 constitutes a substantial

default under § 902.79 and may result in

referral of the PHA to the DEC. The

TARC will recommend to the Assistant

Secretary for Public and Indian Housing

that a troubled performer PHA be

declared in substantial default. In

accordance with § § 902.79, the

Assistant Secretary shall notify the PHA

of the default and allow the PHA an

opportunity to cure the default. A PHA

shall be referred to the DEC if the PHA

fails to cure the default within the a

period not to exceed 30 days unless the

Assistant Secretary for Public and

Indian Housing determines that a longer

period is appropriate.

* * * * *

12. In § 902.79, revise paragraph

(b)(1)(iv) to read as follows:

§ 902.79 Substantial default.

* * * * *

(b) * * *

(1) * * *

(iv) Notification to the PHA of a

specific time period, to be not less than

10 calendar days, except in cases of

apparent fraud or other criminal

behavior, and/or under emergency

conditions as described in paragraph

(b)(4) of this section, nor more than 30

calendar days, during which the PHA

shall be required to demonstrate that the

determination or finding is not

substantively accurate; and

* * * * *

Dated: May 26, 2000.

Harold Lucas,

Assistant Secretary for Public and Indian

Housing.

Donald J. LaVoy,

Director, Real Estate Assessment Center.

[FR Doc. 00–14160 Filed 6–5–00; 8:45 am]

BILLING CODE 4210–33–P