[Federal Register Volume 65, Number 125 (Wednesday, June 28, 2000)]
[Notices]
[Pages 39988-40005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16153]



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Part III





Department of Housing and Urban Development





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Public Housing Assessment System Physical Condition Scoring Process; 
Notice

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

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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.

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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:
    <bullet> Physical inspection scores reported at the property level;
    <bullet> Area level scores for each of the five REAC physical 
inspection areas; and
    <bullet> 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 sub-area:
    <bullet> To record a health or safety problem, a letter is added to 
the property score (a, b, or c); and
    <bullet> 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:
    <bullet> Site
    <bullet> Building exteriors o Building systems
    <bullet> Common areas
    <bullet> 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

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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:
    <bullet> Professionals experienced in assessing the physical 
condition of properties;
    <bullet> Representatives from the housing and public housing 
industries; and
    <bullet> 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 sub-area 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:
    <bullet> If there are no H&S deficiencies, add a;
    <bullet> If there are H&S deficiencies that are not life-
threatening (NLT), add b; and
    <bullet> 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:
    <bullet> The number of H&S deficiencies (exigent/fire safety and 
non-life threatening) that the inspector observed;
    <bullet> All observed smoke detector deficiencies; and
    <bullet> 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:
    <bullet> 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;
    <bullet> A score of 55a means that the property is in poor 
condition, even though there are no H&S deficiencies; and
    <bullet> 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:
    <bullet> Inspectable areas;
    <bullet> Inspectable items; and
    <bullet> 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. (Sub-area 
scores may not be less than zero.)

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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:
    <bullet> Weights for inspectable areas (5 areas);
    <bullet> Weights for inspectable items within areas (8 to 17 per 
area);
    <bullet> Criticality levels and their associated values for the 
possible deficiencies within items inspected;
    <bullet> Severity levels and their associated values for 
deficiencies; and
    <bullet> 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):

------------------------------------------------------------------------
                                                                 Weight
                             Area                                 (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 sub-
area, 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:
    <bullet> Normalized weights as the ``possible points'' by area;
    <bullet> The area scores, taking into account the points deducted 
for observed deficiencies;
    <bullet> 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
    <bullet> 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 sub-area 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 non-H&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:
    <bullet> 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

    <bullet> 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)]

<bullet> Building #1 weight: [(10 units)x(84.0% weight)]=8.4
<bullet> Building #2 weight: [(20 units)x(100% weight)]=20
<bullet> Total weight=8.4 + 20, or 28.4
<bullet> 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:
    <bullet> Site:

--Score: 90 points
--100% of weight of items present
--Nominal weight: 15%

    <bullet> Building Exteriors (from example #2, above):

--Score: 74 points
--92% of weight of items present
--Nominal weight: 15%

    <bullet> Building Systems:

--Score: 70 points
--80% of weight of items present
--Nominal weight: 20%
    <bullet> Common Areas:

--Score: 60 points
--30% of weight of items present
--Nominal weight: 15%
    <bullet> 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:

<bullet> Site: 15x100%=15
<bullet> Building Exteriors: 15x92%=13.8
<bullet> Building Systems: 20x80%=16.0
<bullet> Common Areas: 15x30%=4.5
<bullet> Dwelling Units: 35x80%=28.0
<bullet> 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):

<bullet> Site: (15/77.3)x100=19.4
<bullet> Building Exteriors: (13.8/77.3)x100=17.9
<bullet> Building Systems: (16/77.3)x100=20.7
<bullet> Common Areas: (4.5/77.3)x100=5.8
<bullet> 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:
<bullet> Site: 19.4x90/100=17.5 points
<bullet> Building Exteriors: 17.9x74/100=13.2 points
<bullet> Building Systems: 20.7x70/100=14.5 points
<bullet> Common Areas: 5.8x60/100=3.5 points
<bullet> Dwelling Units: 36.2x80/100=29.0 points
<bullet> 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 x 100/(100+900)] + [80 x 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.
BILLING CODE 4210-01-P

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[FR Doc. 00-16153 Filed 6-27-00; 8:45 am]
BILLING CODE 4210-01-C