39988 Federal Register / Vol. 65, No. 125 / Wednesday, June 28, 2000 / Notices

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

[Docket No. FR–4509–N–12]

Public Housing Assessment System

Physical Condition Scoring Process

AGENCY: Office of the Director of the

Real Estate Assessment Center, HUD.

ACTION: Notice.

SUMMARY: This notice provides

additional information to public

housing agencies and members of the

public about HUD’s process for issuing

scores under the Physical Condition

Indicator of the Public Housing

Assessment System (PHAS). This notice

is an update of the Physical Condition

Scoring Process notice that was

published on June 23, 1999. This notice

takes into consideration public

comment received on June 23, 1999

notice and reflects the changes made to

the PHAS regulations published on

January 11, 2000, with certain

corrections published on June 6, 2000.

The changes made to this notice are

discussed in the Supplementary

Information section of this notice.

FOR FURTHER INFORMATION CONTACT: For

further information contact Wanda

Funk, Real Estate Assessment Center,

Department of Housing and Urban

Development, 1280 Maryland Avenue,

SW, Suite 800, Washington, DC 20024;

telephone Technical Assistance Center

at 1–888–245–4860 (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:

Purpose of This Notice

The purpose of this notice is to

provide additional information about

the scoring process for PHAS Indicator

#1, Physical Condition. The purpose of

the Physical Condition assessment is to

ensure that public housing units are

decent, safe, sanitary and in good repair,

using HUD’s uniform physical condition

standards for the assessment. The

physical condition assessment under

the PHAS utilizes uniform physical

inspection procedures to determine

compliance with the uniform standards

and is an important indicator of a PHA’s

performance.

Of the total 100 points available for a

PHAS score, a PHA may receive up to

30 points under PHAS Indicator #1. The

physical condition score is included in

the aggregate PHAS score.

The information provided in this

notice was originally published on May

13, 1999 (64 FR 26166) and republished

on June 23, 1999 (64 FR 33650). HUD

solicited public comment on both the

May 13, 1999, and June 23, 1999,

notices. This Physical Condition

Scoring Process notice, published in

this edition of the Federal Register, has

been revised from the June 23, 1999,

notice, to reflect the public comments

received on the previous notices and to

reflect the changes made to the PHAS

regulations by final rule published on

January 11, 2000 (65 FR 1712).

This notice is different from the June

23, 1999 notice in the following

respects: some items and their

associated item weights in Appendix 1

(Item Weights and Criticality levels)

have been modified and terminology

has been changed for severity levels

from ‘‘Minor, Major and Severe’’ to

‘‘Level 1, Level 2 and Level 3’’

respectively. Additionally, the

Dictionary of Deficiency Definitions,

which was published as Appendix 2 to

the previous notices, is undergoing

further revision and will be published

subsequently in the Federal Register.

Appendix 3 to the June 23, 1999 notice,

which provided a sample physical

inspection summary report, is not a part

of this updated notice, and was not

intended to be permanent part of the

Physical Condition Scoring Notice.

The PHAS/REAC Physical Inspection

and the HQS Inspection

The PHAS physical inspection is

performed by HUD’s Real Estate

Assessment Center (REAC), and is also

referred to as the REAC physical

inspection. The REAC physical

inspection encompasses virtually

everything covered by the Housing

Quality Standards (HQS) inspection.

The REAC physical inspection,

however, is more objective and more

defined in identifying and classifying

deficiencies. While the HQS inspection

generates a reasonably subjective ‘‘pass/

fail’’ designation, the REAC inspection

generates much more comprehensive

results, such as:

• Physical inspection scores reported

at the property level;

• Area level scores for each of the five

REAC physical inspection areas; and

• Observations of deficiencies

recorded by the inspector electronically

at the time of the inspection.

The Physical Inspection Scoring

Process

1. Definitions

The following are the important

definitions of terms used in the physical

condition scoring process:

Score means a number between 0 and

100 that reflects the physical condition

of a property, inspectable area, or subarea:

• To record a health or safety

problem, a letter is added to the

property score (a, b, or c); and

• To note that smoke detectors are

inoperable or missing, an asterisk (*) is

added to the property score.

Inspectable area means any of the five

major components of the property,

which are:

• Site

• Building exteriors o Building

systems

• Common areas

• Dwelling units

Sub-area means an inspectable area

for one building. For example, if a

property has more than one building,

each inspectable area for each building

in the property is treated as a sub-area.

Inspectable items refer to walls,

kitchens, bathrooms, and other things to

be inspected in an inspectable area. The

number of inspectable items may vary

from 8 to 17 items for each area.

Weights are assigned to each item as

shown in Appendix 1 (Item Weights and

Criticality Levels).

Deficiencies refer to specific

problems, comparable to HQS, that can

be recorded for the inspectable items,

such as a hole in a wall or a damaged

refrigerator in the kitchen.

Criticality means one of five levels

that reflect the relative importance of

the deficiencies for an inspectable item.

Appendix 1 also lists all deficiencies

with their designated levels, which vary

from 1 to 5, with 5 as the most critical.

The deficiencies also have assigned

values used in scoring as follows:

Criticality Level Value

Critical ............................... 5 5.00

Very important .................. 4 3.00

Important ........................... 3 2.25

Contributes ....................... 2 1.25

Slight contribution ............. 1 0.50

Based on the importance of the

deficiency, reflected in its criticality

value, points are deducted from the

property score. For example, a clogged

drain in the kitchen is more critical than

a damaged surface on a counter top.

Therefore, more points will be deducted

for a clogged drain than for a damaged

surface.

Severity means one of three levels that

reflect the extent of damage associated

with each deficiency, with values

assigned as follows:

Severity level Value

3 ........................................................ 1.00

Federal Register / Vol. 65, No. 125 / Wednesday, June 28, 2000 / Notices 39989

Severity level Value

2 ........................................................ 0.50

1 ........................................................ 0.25

Appendix 1 shows the severity levels

that are possible for each deficiency.

Based on the severity of each deficiency,

the score is reduced. Points deducted

are calculated as the product of the item

weight and the values for criticality and

severity, as described below. For

specific definitions of each severity

level, see the REAC’s ‘‘Dictionary of

Deficiency Definitions,’’ which is

available from REAC’s Internet Site at

http://www.hud.gov/reac. Again, the

udpated version of the dictionary will

soon be posted on this website and

published subsequently in the Federal

Register as a separate notice.

Normalized area weights mean

weights used with area scores to create

property level scores. The weights are

adjusted to reflect the inspectable items

that are present.

2. Scoring Process Input

To generate accurate scores, it is

crucial to determine the appropriate

relative weights of the various

components of the inspection; that is,

which components are the most

important, the next most important, and

so on. To develop the scoring

methodology for the PHAS physical

inspection, HUD utilized information

provided by several knowledgeable

parties, including:

• Professionals experienced in

assessing the physical condition of

properties;

• Representatives from the housing

and public housing industries; and

• HUD professionals.

In an extensive series of meetings,

these parties gave HUD valuable advice

and comments on the relative weights

and values for inspectable areas, items,

criticality of deficiencies, and severity

levels of deficiencies.

3. Equity Principles

In addition to determining the

appropriate relative weights, HUD also

took into consideration several issues

concerning equity between properties:

Proportionality. The scoring

methodology includes an important

control, which does not allow any subarea scores to be negative. If a sub-area,

such as the building exterior for a given

building, has so many deficiencies that

the sub-area score is negative, the score

is set to zero. This control mechanism

ensures that no single building or

dwelling unit can affect the overall

score more than its proportionate share

of the whole.

Configuration of property. The scoring

methodology takes into account that

properties have different numbers of

units in buildings. To fairly score

properties with different numbers of

units in buildings, the area scores are

calculated for building exteriors and

systems by using weighted averages of

the sub-area scores, where the weights

are based on the number of units in each

building.

Differences between properties. The

scoring methodology also takes into

account that properties have different

features and amenities. To ensure that

the overall score reflects only items are

present to be inspected, weights to

calculate area and property scores are

adjusted depending on how many items

are there to be inspected.

4. Deficiency Definitions

During a physical inspection of a

property, the inspector looks for

deficiencies for each inspectable item

within the inspectable areas, such as the

walls (item) of a dwelling unit (area). A

specific criticality level is assigned to

each deficiency. The criticality level

reflects the importance of the deficiency

relative to all deficiencies for the item.

One of three severity levels is also

assigned based on the observed

condition.

The REAC’s updated version of the

‘‘Dictionary of Deficiency Definitions,’’

soon to be published, specifically

defines the three levels of severity: level

1 (minor), level 2 (major) and level 3

(severe).

5. Health and Safety Deficiencies

The REAC physical inspection

emphasizes health and safety (H&S)

deficiencies because of their crucial

importance to the well-being of

residents. H&S deficiencies can

substantially reduce the overall property

score. As noted earlier, the H&S

deficiencies are highlighted by adding a

letter to the numeric score. Letters to the

numeric score are added as follows:

• If there are no H&S deficiencies,

add a;

• If there are H&S deficiencies that

are not life-threatening (NLT), add b;

and

• If there are exigent H&S deficiencies

that are life threatening (LT), i.e., calling

for immediate attention or remedy—or

fire safety H&S deficiencies, add c.

Appendix 1 lists all H&S deficiencies

with an ‘‘LT’’ designation for exigent/

fire safety and ‘‘NLT’’ for non-life

threatening deficiencies.

To ensure prompt correction of H&S

deficiencies, the inspector gives the

property representative the list of every

observed exigent/fire safety H&S

deficiency before leaving the site. The

property representative acknowledges

receipt of the deficiency report by

signature. The inspector also transmits

the deficiency report to HUD not later

than the morning after completing the

inspection. HUD sends to all PHAs an

inspection report on the H&S

deficiencies recorded by the inspector.

These reports clearly show:

• The number of H&S deficiencies

(exigent/fire safety and non-life

threatening) that the inspector observed;

• All observed smoke detector

deficiencies; and

• A projection of the total number of

H&S problems that the inspector

potentially would see in an inspection

of all buildings and all units.

If there are smoke detector

deficiencies, the physical condition

score will include an asterisk. However,

problems with smoke detectors do not

currently affect the overall score. When

there is an asterisk indicating the

property has at least one smoke detector

deficiency, that part of the score may be

identified as ‘‘risk.’’ For example, ‘‘93a,

risk’’ for 93a* and ‘‘71c, risk’’ for 71c*.

There are six distinct letter grade

combinations: a, a*, b, b*, c and c*. For

example:

• A score of 90c* means that the

property contains at least one exigent/

fire safety H&S deficiency to be

corrected, including at least one smoke

detector deficiency, but is otherwise in

excellent condition;

• A score of 55a means that the

property is in poor condition, even

though there are no H&S deficiencies;

and

• A property in excellent physical

condition with no H&S deficiencies

would have a score of 90a to 100a.

6. Scoring Process Elements

The physical condition scoring

process is based on three elements

within a property:

• Inspectable areas;

• Inspectable items; and

• Observed deficiencies.

7. Scoring as Weighted Averages

The score for a property is the

weighted average of area scores, with

the area weights adjusted to take into

account how many of an area’s

inspectable items are actually present to

be inspected.

The area scores are calculated by

deriving weighted averages of sub-area

scores over buildings or dwelling units

as appropriate.

The sub-area scores are calculated by

deducting points for deficiencies, based

on criticality and severity levels. (Subarea scores may not be less than zero.)

39990 Federal Register / Vol. 65, No. 125 / Wednesday, June 28, 2000 / Notices

Points are also deducted for H&S

deficiencies.

8. Essential Weights and Levels

The process of scoring a property’s

physical condition depends on the

weights, levels, and associated values of

several quantities:

• Weights for inspectable areas (5

areas);

• Weights for inspectable items

within areas (8 to 17 per area);

• Criticality levels and their

associated values for the possible

deficiencies within items inspected;

• Severity levels and their associated

values for deficiencies; and

• Health and safety deductions

(exigent/fire safety and non-life

threatening) for site, buildings, and

dwelling units.

9. Normalized Area Weights

A property’s overall physical

condition score is a weighted average of

area scores. Approximate relative

weights appeared in the preamble to the

PHAS final rule, published on

September 1, 1998 (see 63 FR 46596,

pages 46598–46599):

Area

Weight

(in percent)

Site ................................................ 15

Building exterior ............................ 15

Building systems ........................... 20

Common areas ............................. 15

Dwelling units ............................... 35

These weights are assigned if all

inspectable items are present for each

area for each building and unit. All of

the inspectable items may not be

present in every inspectable area. When

items are missing in an area, the area

weights are modified to reflect the

missing items so they once again add up

to 100%. This is illustrated in Example

3 below where some inspectable items

are missing in several inspectable areas.

Although rare, it is possible that all of

the inspectable items are missing in one

inspectable area—the ‘‘common areas.’’

In this case, the weight of the ‘‘common

areas’’ would be 0% and its original

15% weight needs to be redistributed to

the other inspectable areas. The 15% is

redistributed by totaling the weights of

other inspectable areas (85%) and

dividing each weight by that amount

(0.85). The modified weights of 17.6%,

17.6%, 23.5%, 0%, and 41.2% for site,

building exterior, building systems,

common areas, and units, respectively

add up to 100%.

10. Site, Unit and Sub-Area Scores

These are the steps to arrive at site,

unit and sub-area scores for a site,

building, or unit:

Step 1: Calculate an ‘‘initial

proportionate score’’—the difference

between the possible points for the site,

a building sub-area, or a unit and the

deductions associated with the

deficiencies recorded. The number of

possible points is the total of the

inspectable item weights, ignoring the

H&S item, for the site, or a building subarea, or unit.

Step 2: Calculate the deduction for an

observed deficiency by multiplying the

relevant item weight by the criticality

value and by the severity value.

Step 3: In a similar manner, reduce

the scores for any health and safety

(H&S) deficiencies observed, including

those in the H&S item and those in other

non-H&S items. (The item weight for

deficiencies included in the H&S item is

equal to the largest weight among the

items present.) At this point, the control

to prevent negative scores is applied.

Thus, no one building or unit may affect

an area score more than its

proportionate share would justify.

Step 4: Normalize the resulting

proportionate scores to scores based on

100 points by dividing by the total of

weights of items present to be inspected,

other than the H&S item.

11. Area Scores

Within each area involving either

multiple buildings or units, the area

score is a weighted average of the

building sub-area scores or unit scores.

To calculate these weighted averages,

follow these guidelines:

Dwelling units: The area score is the

weighted average of sub-area scores for

each unit, weighted by the total of item

weights present to be inspected in each

unit.

Common areas: Like the dwelling unit

score, the area score for common areas

is the weighted average of sub-area

common area scores weighted by the

total weights for items inspected in the

common areas for each building. When

computing area scores for common

areas, there may be special

considerations when there are common

buildings. (The term common building

refers to any inspectable building that

contains no dwelling units.) All

common buildings are inspected. In

those cases where a sample is taken of

buildings with units, the effect of

common buildings on the common area

score should be reduced. This reduction

is accomplished by multiplying the

weights for common buildings by the

number of units in inspected buildings,

divided by the total number of units in

the property.

Building exteriors or building systems:

The area scores for building exteriors

and building systems are weighted

averages of sub-area scores. The weights

are the product of the total weights for

items, ignoring the H&S item, inspected

for each building exterior or systems

times the total number of units for each

building. (Note: the total number of

units is all units, not just units

inspected.) When computing area scores

for building exterior or building

systems, a number of adjustments are

made for common buildings without

units. In a manner identical to that for

common areas, if buildings with units

are sampled, the weights of common

building scores are reduced. Also for

weighting purposes, a common building

is assigned the average number of units

in all buildings, including all common

buildings and all buildings with units,

whether inspected or not. Finally, to

adjust for differences in size between

common buildings, a common

building’s weight is multiplied by the

total weight of items present to be

inspected for the building’s common

areas.

12. Overall Property Score

To calculate the overall property

score, the normalized area weights are

applied to the area scores.

13. Possible Points

Normalized area weights reflect both

the initial weights and the relative

weights between areas of inspectable

items actually present. For reporting

purposes, normalized weights are

presented as the maximum point

contributions for each of the five

inspectable areas. In the Physical

Inspection Report, sent to all PHAs, the

following items are listed:

• Normalized weights as the

‘‘possible points’’ by area;

• The area scores, taking into account

the points deducted for observed

deficiencies;

• The deductions for H&S for site,

buildings and units, where H&S

deductions for buildings are combined

for exteriors, systems and common

areas; and

• The overall property score.

The Physical Inspection Report allows

the PHA to see the magnitude of the

points lost by inspectable area, and the

impact on the score of the H&S

deficiencies.

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14. Examples of Physical Condition

Score Calculations

To illustrate how physical condition

scores are calculated, three examples are

provided below.

Example #1: Example #1 illustrates

how the score for a building exterior

sub-area is calculated based on the

following features:

#1a. Ignoring the H&S item, the other

seven items have a total weight of

100%, as shown in Appendix 1. If the

building had no fire escapes, an item

with a nominal weight of 16.0%, then

the total item weight for the remaining

non-H&S items would be 84%, which is

then the base (84.0 points) from which

deductions are made to create the

‘‘initial proportionate score’’ as

described, above, under Sub-Area

Scores.

#1b. Assume damaged vents were

found in the roof. The criticality level

for this deficiency is provided in

Appendix 1 as a 4, which has a value

of 3.00 as given, above, under

Definitions. If, based on the Dictionary

of Deficiency Definitions (Appendix 2 to

the previous notice), it is determined

that the damaged vents seen are level 1

deficiencies, then the amount of points

deducted is the item weight (16.0) times

the criticality value (3.00), times the

severity value (0.25), which equals 12.0

points.

#1c. If this is the only deficiency

observed, then the initial proportionate

score for this sub-area would be

84.0¥12.0 or 72.0 points.

#1d. Additional deficiencies or H&S

deficiencies (calculated in the same

manner) would further decrease the subarea score and if the score dropped

below zero, then it would be changed to

zero.

#1e. The initial proportionate sub-area

score is then normalized to a 100 point

basis by dividing by the total of the nonH&S item weights (0.84), which would

create the final score of (72.0)/

(0.84)=85.7

Example #2: Example #2 illustrates

how the score for an area is calculated

based on the following features:

#2a. Consider a property with 2

buildings with the following

characteristics:

• Building #1 (from Example #1,

above):

—10 units

—84.0% of the weight for the items that

were present in building exterior

—Building exterior score is 85.7 points

• Building #2:

—20 units

—100% of the weight for the items that

were present in building exterior

—Building exterior score is 69.1 points

#2b. The building exterior score for

the building exterior area is the

weighted average of the individual

scores. Each building exterior score is

weighted by the number of units and the

percent of the weight for items present

in the building exterior.

#2c. The scores for buildings #1 and

#2, above, are calculated using the

following formula: Building Exterior

Score=sum of [(Building score) times

(Building weight divided by the sum of

Building weights)]

• Building #1 weight: [(10

units)x(84.0% weight)]=8.4

• Building #2 weight: [(20 units)x(100%

weight)]=20

• Total weight=8.4 + 20, or 28.4

• Building exterior score=

(85.7 points)x(8.4/28.4)

+(69.1 points)x(20/28.4)

=25.3+48.7

=74.0

Example #3: Example #3 illustrates

how the score for a property is

calculated based on the following:

#3a. Consider a property with the

following characteristics:

• Site:

—Score: 90 points

—100% of weight of items present

—Nominal weight: 15%

• Building Exteriors (from example

#2, above):

—Score: 74 points

—92% of weight of items present

—Nominal weight: 15%

• Building Systems:

—Score: 70 points

—80% of weight of items present

—Nominal weight: 20%

• Common Areas:

—Score: 60 points

—30% of weight of items present

—Nominal weight: 15%

• Dwelling Units:

—Score: 80 points

—80% of weight of items present

—Nominal weight: 35%

#3b. First, adjust the area weights for

each area. Multiply the weight of items

present by the nominal weight for each

area and add the total:

• Site: 15x100%=15

• Building Exteriors: 15x92%=13.8

• Building Systems: 20x80%=16.0

• Common Areas: 15x30%=4.5

• Dwelling Units: 35x80%=28.0

• Total:=77.3

#3c. Adjust the area weights to

‘‘normalize’’ so that they add to 100.

Divide each adjusted area weight by the

total and multiply by 100 (this also

results in the maximum possible points

reported for each area):

• Site: (15/77.3)x100=19.4

• Building Exteriors: (13.8/

77.3)x100=17.9

• Building Systems: (16/77.3)x100=20.7

• Common Areas: (4.5/77.3)x100=5.8

• Dwelling Units: (28/77.3)x100=36.2

#3d. Multiply the new ‘‘normalized’’

weights by the area scores, above, divide

by 100, and add the results:

• Site: 19.4x90/100=17.5 points

• Building Exteriors: 17.9x74/100=13.2

points

• Building Systems: 20.7x70/100=14.5

points

• Common Areas: 5.8x60/100=3.5

points

• Dwelling Units: 36.2x80/100=29.0

points

• Total Property Score:=77.6 points

15. Computing the PHAS Overall

Physical Inspection Score

The physical inspection score for the

PHAS for a PHA is the weighted average

of the PHA’s individual project physical

inspection scores, where the weights are

the number of units in each project

divided by the total number of units in

all projects for the PHA.

Example:

Project 1 has a score of 60 and has 100

units

Project 2 has a score of 80 and has 900

units.

The overall PHAS score is computed

as follows:

Score

=[60×100/(100+900)] + [80×900/

(100+900)]

=6+72

=78

16. Accessibility Questions

For public housing developments for

which accessibility requirements are

applicable, the physical inspection will

include determining if: (1) There is a

wheelchair accessible route to and from

the main ground floor entrance of the

buildings inspected; (2) the main

entrance for every building inspected is

at least 32′′ wide, measured between the

door and the opposite door jamb; (3)

there is an accessible route to all

exterior common areas; and (4) for

multistory buildings that are inspected,

the interior hallways to all inspected

units and common areas are at least 36′′

wide. This item is not scored.

Dated: June 20, 2000.

Donald J. LaVoy,

Director, Real Estate Assessment Center.

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[FR Doc. 00–16153 Filed 6–27–00; 8:45 am]

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