[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Proposed Rules]
[Pages 20358-20383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10956]




[[Page 20357]]


_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 901



Office of the Assistant Secretary for Public and Indian Housing: Public 
Housing Management Assessment Program; Proposed Rule

Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed 
Rules

[[Page 20358]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR PART 901

[Docket No. FR-3447-P-01]
RIN 2577-AB30


Office of the Assistant Secretary for Public and Indian Housing; 
Public Housing Management Assessment Program

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule proposes changes to the Public Housing Management 
Assessment Program (PHMAP). PHMAP provides policies and procedures to 
identify PHA management capabilities and deficiencies, and assists HUD 
State/Area Offices in accountability monitoring and risk management. 
PHMAP also establishes procedures for developing, negotiating and 
executing memoranda of agreement between HUD and troubled agencies and 
agencies troubled with respect to the program under section 14 that set 
forth targets, strategies, incentives and sanctions for improving 
performance. Procedures to follow with respect to housing administered 
by PHAs that substantially default on their management responsibilities 
are included in PHMAP. PHMAP applies to public housing agencies (PHAs) 
and resident management corporations (RMCs), and any other entities 
under contract to manage public housing, but does not apply to Indian 
housing authorities, nor to the Family Self-Sufficiency Program 
authorized under section 23.

DATES: Comment due date: July 5, 1996.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of General 
Counsel, Room 10278, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410. Communications should refer 
to the above docket number and title. A copy of each communication 
submitted will be available for public inspection and copying between 
7:30 a.m. and 5:30 p.m. weekdays at the above address. FAXED comments 
will not be accepted.

FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Deputy Assistant 
Secretary for Public and Assisted Housing Operations, Office of Public 
and Indian Housing, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410, telephone (202) 708-1380. A 
telecommunications device for hearing or speech impaired persons (TTY) 
is available at (202) 708-0850. (These are not toll-free telephone 
numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

    The proposed information collection requirements contained at 
Sec. 901.100 of this rule have been submitted to the Office of 
Management and Budget (OMB) for review, under section 3507(d) of the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
    (a) In accordance with 5 CFR 1320.5(a)(1)(iv), the Department is 
setting forth the following concerning the proposed collection of 
information:
    (1) Title of the information collection proposal:
    Public Housing Management Assessment Program (PHMAP)
    (2) Summary of the collection of information:
    PHAs shall be required to certify to seven indicators and one 
component because information regarding these indicators/ component is 
not presently reported to HUD by PHAs on any form. The use of Form HUD-
50072, rather than the preparation and submission of a full data 
report, was judged to be the least intrusive method of gathering the 
information.
    (3) Description of the need for the information and its proposed 
use:
    Section 502 of the National Affordable Housing Act of 1990 (NAHA) 
establishes seven specific indicators and directs the Secretary to 
develop no more than five other factors (indicators) deemed appropriate 
to assess the management performance of public housing agencies (PHAs) 
in all major areas of management operations. The designation of PHAs as 
troubled or as troubled with respect to the program under Section 14 
(mod-troubled) is based upon PHA performance under the indicators. The 
proposed information collection will be used by HUD to assess annually 
all PHAs at the beginning of the PHA fiscal year to allow the 
Department to fulfill this mandate of NAHA.
    (4) Description of the likely respondents, including the estimated 
number of likely respondents, and proposed frequency of response to the 
collection of information:
    Respondents will be PHAs. The estimated number of respondents is 
included in paragraph (5), immediately below. The proposed frequency of 
responses is once annually.
    (5) Estimate of the total reporting and recordkeeping burden that 
will result from the collection of information:

                                                Reporting Burden                                                
----------------------------------------------------------------------------------------------------------------
                                                                                                     Est. annual
                                                               Number of     Freq. of    Est. avg.      burden  
                          Reference                           respondents    response       time       response 
                                                                                          (hours)       (hrs.)  
----------------------------------------------------------------------------------------------------------------
1-99 Unit PHAs..............................................        1,608            1         2.25      3,618.0
100-499 Unit PHAs...........................................        1,274            1         2.45      3,121.3
500-1249 Unit PHAs..........................................          244            1         3.45        841.8
1250-3999 Unit PHAs.........................................          102            1         4.05        413.1
4000+ Unit PHAs.............................................           40            1         4.85        194.0
                                                             ---------------------------------------------------
    Total reporting burden..................................  ...........  ...........  ...........      8,188.2
----------------------------------------------------------------------------------------------------------------


                          Recordkeeping Burden                          
Recordkeepers................................................    3,268.0
Hours per recordkeeper.......................................        1.0
Total annual responses.......................................      327.0
                                                              ----------
    Total burden.............................................    8,515.2
                                                                        

    (b) In accordance with 5 CFR 1320.8(d)(1), the Department is 
soliciting comments from members of the public and affected agencies 
concerning the proposed collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;

[[Page 20359]]

    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposal. Comments must be 
received within sixty (60) days from the date of this proposal. 
Comments must refer to the proposal by name and docket number (FR-3447) 
and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and 
Budget, New Executive Office Building, Washington, DC 20503
      and
Reports Liaison Officer, Office of the Assistant Secretary for Public 
and Indian Housing, Department of Housing and Urban Development, 451--
7th Street, SW., Room 4244, Washington, DC 20410

II. Background

    The Public Housing Management Assessment Program (PHMAP) at 24 CFR 
part 901 has been established in accordance with section 502 of the 
National Affordable Housing Act (NAHA) (approved November 28, 1990, 
Pub. L. 101-625), as amended by the Departments of Veterans Affairs and 
Housing and Urban Development (HUD), and Independent Agencies 
Appropriations Act, 1992 (92 App. Act) (approved October 28, 1991, Pub. 
L. 102-139) and the Housing and Community Development Act of 1992 (HCDA 
1992) (Pub. L. 102-550, approved October 28, 1992). The need to 
identify and assist troubled PHAs and PHAs troubled with respect to 
section 14 (mod-troubled), and to provide for consistently high quality 
management of PHAs was statutorily recognized in section 502 of NAHA, 
which amended section 6(j) of the 1937 Act (42 U.S.C. 1437d(j)). 
Section 502 requires the Department to develop indicators to assess the 
management performance of PHAs. A PHA assessed as troubled or mod-
troubled must enter into a memorandum of agreement (MOA) with HUD that 
sets forth targets, strategies and incentives for improving its 
management performance, and provides for sanctions if improved 
performance does not result. Section 502 also provides that if a PHA 
substantially defaults upon its agreement or with respect to other 
covenants or conditions to which it is subject, the Department may 
solicit proposals from other public housing agencies and private 
housing management agents for the management of the housing 
administered by the defaulted PHA. Alternatively, following a default, 
the Department may petition the appropriate State or Federal court to 
appoint a receiver to manage the defaulted PHA. The Department may also 
require a defaulting PHA to make other acceptable arrangements for 
managing all or part of its operation in the best interests of the 
residents.
    A proposed rule to implement section 502 as the Public Housing 
Management Assessment Program (PHMAP) at 24 CFR part 901 was published 
in the Federal Register on April 17, 1991 (56 FR 15712), with a 60-day 
comment period. The Department received 114 comments on the PHMAP 
proposed rule.
    The 92 App. Act, passed after the publication of the pro-posed 
rule, amended NAHA section 502 in four ways: The number of factors that 
may be used to assess the management performance of PHAs is limited 
(seven indicators that must be used for assessment purposes were listed 
in section 502 of NAHA, and the Department was authorized by the 92 
App. Act amendments to develop five additional indicators as it deemed 
appropriate); the evaluation of PHAs must be administered flexibly to 
ensure that they are not penalized for circumstances beyond their 
control; the weights assigned to indicators must reflect the 
differences in management difficulty that result from physical 
condition and neighborhood environment; and the determination of a 
PHA's status as ``troubled with respect to the program under section 
14'' is to be based upon factors solely related to its ability to carry 
out that program. In a related 92 App. Act amendment to section 14 of 
the 1937 Act, the determination of whether a PHA is ``troubled with 
respect to the modernization program'' (the equivalent of mod-troubled) 
is to consider only the PHA's ability to carry out the modernization 
program effectively based upon the PHA's capacity to accomplish the 
physical work with decent quality; in a timely manner; under competent 
contract administration; and with adequate budget controls.
    An interim rule was published on January 17, 1992, (57 FR 2160) 
with a comment period of 120 days. After the publication of the PHMAP 
interim rule, a number of statutory changes to PHMAP were made by 
section 113 of HCDA 1992. Section 113(a) requires an on-site, 
independent assessment of a PHA that is designated as mod-troubled and/
or troubled. Paragraph (b) of this section provides for additional 
remedies upon the occurrence of a substantial default. The Department 
may, under section 113(c), make available, to housing managers 
appointed after a substantial default, the assistance necessary to 
remedy the substantial deterioration of living conditions in individual 
public housing developments or to remedy other related emergencies that 
endanger the health, safety and welfare of the residents. Annual 
reporting requirements to Congress that only affect the Department are 
the subject of section 113(d). Section 113(e) makes the management 
assessment provisions of PHMAP applicable to RMCs. The implementation 
of these sections is discussed below in this preamble under the 
heading, Summary Of Changes To The PHMAP Interim Rule.
    Subsequent to the statutory changes to PHMAP made by section 113 of 
HCDA 1992, the Department established a consultation group and held a 
series of meetings to review existing PHMAP procedures and the 
individual indicators. The group consisted of representatives of PHAs 
of all sizes from across the country with a wide range of PHMAP scores, 
public housing industry groups, private management firms, and HUD field 
staff. Resident groups were solicited for their recommendations as 
well. Revised indicators were field tested during the summer of 1994 at 
45 PHAs of all sizes throughout the country. The results of the field 
test were summarized and analyzed, which resulted in recommendations 
for changes to the indicators.
    The Department has determined that the revised PHMAP should be 
issued as a proposed rule due to the degree of changes to the 
individual indicators and the program itself. For example, three 
indicators have been eliminated, four indicators have been combined 
into two indicators, and other indicators have been completely 
rewritten. The proposed changes are the result of a number of 
considerations, including comments received on the interim rule, 
inquiries and additional comments received from the field and the 
regulated community, the field test conducted during the summer of 
1994, and the Department's experience in administering the program. By 
issuing a proposed rule, the Department is providing the public an 
additional opportunity to comment.

[[Page 20360]]

III. Regulatory Reinvention

    On March 4, 1995, President Clinton issued a memorandum to all 
Federal departments and agencies regarding regulatory reinvention. In 
response to this memorandum, the Department of Housing and Urban 
Development conducted a page-by-page review of its regulations to 
determine which can be eliminated, consolidated, or otherwise improved. 
HUD has determined that the regulations for PHMAP can be improved and 
streamlined by eliminating unnecessary provisions.
    Several provisions in the regulations repeat statutory language 
from the 1937 Act. It is unnecessary to maintain statutory requirements 
in the Code of Federal Regulations (CFR), since those requirements are 
otherwise fully accessible and binding. Furthermore, if regulations 
contain statutory language, HUD must amend the regulations whenever 
Congress amends the statute. Therefore, the new part 901 proposed here 
does not repeat any statutory language, but only implements 
requirements that are necessary to augment and implement fully section 
6(j) of the 1937 Act, which provides the statutory authority for PHMAP. 
This proposed rule further reinvents PHMAP by reducing the number of 
indicators from twelve to eight; eliminating the designation of 
subparts, which are unnecessary; and rewriting the entire remaining 
rule text to promote clarity.

IV. Summary of Changes to the PHMAP Interim Rule

    Only those portions of the current PHMAP regulation proposed for 
revisions are addressed below.

HCDA 1992 Section 113 Amendments

    The Department determined, in accordance with 24 CFR 10.1, that 
prior public notice and comment were unnecessary to implement 
paragraphs (a) and (c) of section 113, because these paragraphs involve 
the exercise of little or no discretion on the part of the Department. 
Section 113(d) applies only to the Department and does not require a 
rule. Sections 113 (b)(1) and (e) of HCDA 1992 do require elaboration 
of the statutory language, and are included in this proposed rule.
    HCDA 1992 section 113(e) requires the assessment of RMCs, and makes 
the provisions under paragraph (j)(2) of section 6 of the 1937 Act 
apply to RMCs as well as to PHAs. Paragraph (j)(2) contains provisions 
relating to: (1) Establishment of procedures for designating troubled 
PHAs; (2) commendation of exemplary PHAs; (3) PHA appeal of designation 
as a troubled agency; (4) agreements between HUD and troubled and/or 
mod-troubled PHAs; and (5) new provisions added by HCDA 1992 section 
113(a) that require independent assessments of PHAs that are designated 
troubled and/or mod-troubled.
    The Department proposes to implement section 113(e) by adding a 
definition of RMC to Sec. 901.5 that would refer to 24 CFR part 964, 
the regulation that provides for resident participation and management 
in public housing in accordance with section 20 of the 1937 Act. This 
proposed rule would provide for the management assessment of RMCs in a 
manner consistent with the regulatory framework established under 
section 20 and 24 CFR part 964 for RMC management of a development.
    The management assessment of an RMC will necessarily differ from 
that of a PHA. Because an RMC enters into a contract with a PHA to 
perform specific management functions on a development-by-development 
basis, and because the scope of the management that is undertaken 
varies, not every indicator that applies to a PHA would be applicable 
to each RMC. An additional significant feature of RMC management is 
that 24 CFR 964.225(d), entitled, Management contract, and 24 CFR 
964.225(h), entitled, Prohibited activities, provide that a PHA may 
enter into a management contract with a resident management 
corporation, but a PHA may not contract for assumption by the resident 
management corporation of the PHA's underlying responsibilities to the 
Department under the ACC.
    For this reason, the limited management responsibility of RMCs in 
terms of both: (1) The areas in which they perform management 
functions, and (2) the fact that the PHA remains ultimately responsible 
to HUD under the ACC, this proposed rule would implement the management 
assessment of RMCs as follows: Sec. 901.100, entitled, ``Data 
collection,'' would be amended to provide that when a PHA submits its 
PHMAP certification, it must identify developments managed by an RMC 
and the management functions undertaken by the RMC at those 
developments. The PHA would be responsible for obtaining from the RMC 
and submitting to HUD, along with its own certification, the PHMAP 
certification for the management functions undertaken by the RMC. For 
example, if an RMC were responsible for rent collection in a particular 
development, the PHA would be required to identify in its certification 
the development and management function performed by the RMC, and 
obtain from the RMC a certification of the percent of rents 
uncollected, which would be submitted to HUD along with the PHA's 
certification. Similarly, for those management functions undertaken by 
an RMC for which no certification is necessary (i.e., the data is 
already available to HUD, such as the indicator for modernization), the 
PHA would still be required to identify in its certification form this 
RMC-managed function and the development involved. The applicable 
indicators for the RMC would be scored by the Department, and the 
resulting grades would be transmitted to the PHA as a part of the 
State/Area Office notification. The PHA would be required to forward 
promptly the RMC's score.
    Section 901.105 of the rule, entitled ``Computing assessment 
score,'' requires no amendment to provide for the assessment of an 
RMC's management. Those indicators that would apply to an RMC, based on 
the management functions assumed by the RMC, would be graded just as 
they would for a PHA. However, because of the limited scope of 
management involved, an RMC would not receive an overall designation of 
high performer, standard, or troubled, but only a grade on each 
applicable indicator. In addition, because the PHA and not the RMC is 
ultimately responsible to the Department under the ACC, the PHA's score 
will be based on all of the developments covered by the ACC, including 
those with management functions assumed by an RMC. RMC-managed 
developments would, thus, be assessed to measure the RMC's performance 
on an indicator-by-indicator basis, and as a part of the PHA's overall 
performance. As discussed above, this result is necessary because of 
the limited nature of an RMC's management functions and the regulatory 
and contractual relationships among HUD, PHAs and RMCs. A new paragraph 
(c) is added to Sec. 901.100, Data collection, to provide for the 
assessment of RMCs.
    To apprise an RMC of its indicator grades, Sec. 901.120 would be 
amended to provide that the State/Area Office notification to the PHA 
would include the grades of the RMC, if any, and that the PHA must 
immediately notify the RMC, in writing, of its grades.
    Because an RMC would be assessed on an indicator-by-indicator 
basis, and would not receive an overall designation such as troubled, 
most of the provisions of section 6(j)(2) of the 1937 Act could not 
apply to RMCs, since most of those provisions (the establishment of 
procedures for designating troubled PHAs; appeals of designation as a 
troubled agency;

[[Page 20361]]

agreements between HUD and troubled PHAs; and, new provisions added by 
HCDA 1992 section 113(a) that require independent assessments of PHAs 
that are designated troubled) are triggered by a designation of 
troubled.
    One provision of section 6(j)(2) that is not dependent upon a 
designation of troubled and that may appropriately be applied to RMCs 
pertains to the commendation of exemplary PHAs. Even though RMCs would 
not receive an overall designation of high-performer, standard, or 
troubled, Sec. 901.130, Incentives, would be amended to permit an RMC 
that scored a grade of A on each of its indicators to receive a 
Certificate of Commendation from the Department as well as special 
public recognition.
    With respect to making the section 6(j)(2) provision for agreements 
between HUD and troubled PHAs applicable to RMCs, since an RMC would 
not be designated troubled, a memorandum of agreement under 
Sec. 901.140 would not be applicable. HUD has determined, however, that 
it would be appropriate to provide guidance for the improvement of an 
RMC's management functions, and that the proper tool under PHMAP for 
this purpose would be an improvement plan under Sec. 901.145. An 
improvement plan is negotiated to improve performance under those 
individual indicators that are the relevant measures of management 
performance for an RMC. Section 901.145 would be amended to permit the 
negotiation of an improvement plan that would include the RMC, the PHA, 
and the Department.

Application of PHMAP to Alternative Management Entities

    In addition to extending coverage to RMCs, this proposed rule would 
also extend PHMAP to apply to any other alternative management/PHA 
relationship, whether the alternative management entity (AME) is a 
receiver, private contractor, private manager, or any other entity that 
is under contract with a PHA, or that is otherwise duly appointed or 
contracted (for example, by court order or agency action), to manage 
all or part of a PHA's operations. It is just as necessary to assess 
the management performance of AMEs as it is to assess PHAs or RMCs, to 
follow the expressed policy of the 1937 Act, ``to remedy the unsafe and 
unsanitary housing conditions and the acute shortage of decent, safe, 
and sanitary dwellings for families of lower income''.
    AMEs would be assessed following the procedures used for PHAs or 
RMCs, depending upon the extent of the management responsibilities 
assumed. An AME that assumes all, or substantially all, of a PHA's 
management responsibilities (for example, under court order, or 
following a substantial default and pursuant to an award under a 
competitive proposal) would also assume the PHA's PHMAP 
responsibilities and would be assessed accordingly. An AME that was 
contracted to perform a limited number of management functions would be 
assessed following the procedure used for RMCs.
    Although the contractual relationship under the ACC is between the 
PHA and the Department, there may also be a contractual relationship 
between the AME and the PHA, or HUD and the AME. To ensure quality 
management in such contractual relationships, minimum performance 
criteria that relate to the PHMAP indicators, as applicable, should be 
included in the contract. Failure to meet the performance criteria 
would be a basis for termination of the contract. The provisions that 
explicitly address AMEs and establish their treatment under PHMAP as 
following the procedures for either PHAs or RMCs are found at 
Secs. 901.1 and 901.5.

Definitions--Sec. 901.5

    This portion of the regulation is revised to include new 
definitions and revised definitions as a result of the proposed 
revisions to the indicators. Definitions that no longer apply have been 
eliminated. Some definitions have been expanded to include instructions 
for calculation.

Indicators--Secs. 901.10-901.40

    As indicated in section III, ``Regulatory Reinvention,'' above, 
this rule would reduce the number of PHMAP indicators from twelve to 
eight. A proposed sample certification for these revised indicators is 
included as Appendix 3 of this preamble.

Indicator #1, Vacancy Percentage and Unit Turnaround

    The vacancy indicator and the unit turnaround indicator of the 
current part 901 have been combined in proposed indicator #1. The 
proposed indicator has two components. The first component (with a 
weight of  x 2) measures the vacancy rate and, if applicable, the 
progress a PHA has made in reducing the vacancy rate. The second 
component (with a weight of  x 1), to be used only when a PHA scores 
below a C on the first component, measures turnaround time. The 
assumption is that if vacancies are at a C level or above, the PHA does 
not have a problem with turning around vacant units.
    Because the vacancy rate is a clear manifestation of management 
effort and embodies the essence of a PHA's mission, it is weighted more 
heavily than the process-oriented unit turnaround component.
    The Department is proposing to use a single method to calculate the 
actual and adjusted vacancy rate. Instead of taking a ``snapshot'' 
picture of the vacancy rate at a certain date, or calculating an 
average over a thirty day period, the vacancy rate will be calculated 
by computing the ratio of vacancy days to unit days available over the 
fiscal year. The adjusted vacancy rate is computed the same way, but 
with eligible exemptions, such as vacancy days attributable to 
modernization. The Department believes this method to be the most 
accurate depiction of performance.
    If a PHA elects to certify to the reduction of the vacancy rate 
over the previous three years, the PHA shall retain justifying 
documentation to support its certification for HUD post review.
    For the calculation of the adjusted vacancy rate and turn-around 
time, the vacancy days for units in the following categories (fully 
defined in the rule at Sec. 901.10) shall be exempted:
    1. Vacant unit undergoing modernization.
    2. Vacant units in an approved demolition or disposition program.
    3. Vacant units that are documented to be uninhabitable for reasons 
beyond the PHA's control.
    4. Vacant units in which resident property has been abandoned, but 
only if State law requires the property to be left in the unit for some 
period of time, and only for the period stated in the law.
    5. Vacant units that have sustained casualty damage, but only until 
the insurance claim is adjusted, i.e., funds to repair the unit are 
received.
    6. Units that are used for non-dwelling purposes, dwelling units 
that are occupied by employees of the PHA, and units that are used for 
resident services.
    7. Vacant units required to remain vacant because of fire/ police 
investigations, coroner's seal, or court order.
    8. Units kept vacant because of code violations caused for reasons 
beyond the control of the PHA, rather than as a result of management 
and/or maintenance failures by the PHA.
    9. Units vacant for circumstances and actions beyond the PHA's 
control.

[[Page 20362]]

    Definitions for indicator #1 are as follows:
    1. Actual vacancy rate: This is the vacancy rate calculated without 
any adjustments. This is calculated by dividing the total number of 
vacancy days by the total number of unit days available for occupancy. 
The maximum number of vacancy days for any unit is the number of days 
in the year, regardless of the total amount of time the unit has been 
vacant. An example of this calculation for a hypothetical PHA with 100 
units available for occupancy follows. Unit days are calculated by 
taking the total number of units available for occupancy and 
multiplying by the number of days in the year.

Unit days available: 100 units x 365 days per year = 36,500 actual days 
available for occupancy

    Vacancy days are calculated by adding the total number of days 
vacant from all units that were vacant for any reason during the PHA's 
fiscal year. For example:

------------------------------------------------------------------------
                                                                  Days  
                                                                 vacant 
                  Unit and reason for vacancy                    during 
                                                                   FY   
------------------------------------------------------------------------
6  Move-out...................................................        21
10*  Down for modernization...................................       120
12*  Down for modernization...................................       140
15*  Down for modernization...................................       194
10   Lease up after modernization.............................        10
12   Lease up after modernization.............................        10
15   Lease up after modernization.............................        21
32   Transfer.................................................        15
81*  Fire.....................................................        35
81   Lease after insurance adjustment.........................        23
96   Move-out.................................................        15
41   Move-out.................................................        28
39   Move-out.................................................        40
57   Move-out.................................................        18
61*  Down for modernization...................................       230
22*  Down for modernization...................................        90
61   Lease up after modernization.............................        10
22   Lease up after modernization.............................         3
                                                               ---------
    Total Actual Vacancy Days.................................     1,023
------------------------------------------------------------------------

    The actual vacancy rate for the year is:
    [GRAPHIC] [TIFF OMITTED] TP06MY96.000
    
    The asterisks following the unit numbers denote vacancy days that 
can be exempted in computing the adjusted vacancy rate.
    2. Adjusted vacancy rate: This is the vacancy rate calculated after 
excluding the vacancy days that are exempted for any of the eligible 
reasons included here. The adjusted vacancy rate for the hypothetical 
100 unit PHA would be calculated as follows:

------------------------------------------------------------------------
                                                                Adjusted
                                                                  days  
                  Unit and reason for vacancy                    vacant 
                                                                 during 
                                                                   FY   
------------------------------------------------------------------------
 6  Move-out..................................................        21
10  Lease up after modernization..............................        10
12  Lease up after modernization..............................        10
15  Lease up after modernization..............................        21
32  Transfer..................................................        15
81  Lease after insurance adjustment..........................        23
96  Move-out..................................................        15
41  Move-out..................................................        28
39  Move-out..................................................        40
57  Move-out..................................................        18
61  Lease up after modernization..............................        10
22  Lease up after modernization..............................         3
                                                               ---------
    Total Vacancy Days, as Adjusted...........................       214
------------------------------------------------------------------------

    The PHA was permitted to exempt 809 of the vacancy days for 
eligible reasons. To calculate the adjusted rate, the 809 days are 
removed from the days vacant (numerator). The adjusted vacancy rate for 
the year is:
[GRAPHIC] [TIFF OMITTED] TP06MY96.001

    3. Reduced actual vacancy rate in the previous three years: this is 
a comparison of the vacancy rate in the PHMAP assessment year 
(immediate past fiscal year) to the vacancy rate during the first year 
of the previous three year period. In the case of the hypothetical PHA 
discussed earlier, the assumption is made that the actual vacancy rate 
during the first year of the three year period was 40 percentage 
points, compared to the assessment year with a 22 percentage point 
vacancy rate. This is a vacancy rate reduction of 18 percentage points, 
calculated as follows:

Percentage points vacancy rate in the earlier year, minus..........   40
Percentage points vacancy rate in the assessment year, equals......   22
                                                                    ----
Percentage points reduction in the vacancy rate....................   18
                                                                        

    4. Average unit turnaround time: the annual average of the total 
number of turnaround days between the move-out date and the date a new 
lease takes effect. Each time an individual unit is re-occupied (turned 
around) during the fiscal year, the turnaround days for that unit shall 
be counted in the turnaround time. Unlike vacancy days, which cannot 
exceed the number of days in the fiscal year, turnaround days include 
all the days between the last move-out and the date a new lease takes 
effect, including any turnaround days in prior fiscal years. Only units 
that are re-occupied during the fiscal year are included in the 
turnaround time calculation. An example of this calculation is as 
follows for a hypothetical PHA that had 15 units turned over in the 
assessment year:

------------------------------------------------------------------------
               Turnaround                                               
     Unit         days          Days exempted            Net  days      
------------------------------------------------------------------------
12                   100   80 (modernization       20                   
                            days).                                      
14                    10   ......do..............  10                   
31                    12   ......do..............  12                   
36                    96   86 (modernization       10                   
                            days).                                      
18                   413   ......do..............  413                  
 6                     4   ......do..............  4                    
41                    13   ......do..............  13                   
59                    74   60 (modernization       14                   
                            days).                                      

[[Page 20363]]

                                                                        
32                     2   ......do..............  2                    
96                    14   ......do..............  14                   
 2                    60   40 (fire damaged unit)  20                   
 4                    21   ......do..............  21                   
 6                     8   ......do..............  8                    
13                    29   ......do..............  29                   
22                    19   ......do..............  19                   
                                                  ----------------------
    Total Turnaround Days During the Fiscal Year   590                  
     (FY)                                                               
------------------------------------------------------------------------


    Annual average vacant unit turnaround time for the FY:
    [GRAPHIC] [TIFF OMITTED] TP06MY96.002
    
    5. Approved, funded, on-schedule annual modernization program: 
Includes any modernization program, funded under the Comprehensive 
Grant Program (CGP), the Comprehensive Improvement Assistance Program 
(CIAP), Vacancy Reduction Program (VRP), or any other source, if a PHA 
is in conformance with its current implementation schedule as approved 
by the PHA Board of Commissioners and/or HUD.
    6. Turnaround days: The days between the last move-out and the date 
a new lease takes effect, including any turnaround days in prior fiscal 
years.
    7. Vacancy day: A day when a unit is not under lease by an eligible 
low-income resident, unless the vacancy day is exempted for an eligible 
reason.
    8. Vacant unit: Is a dwelling unit that is not under lease to an 
eligible family. Units under lease for non-dwelling uses should not be 
included in the calculation of this indicator.
    9. Available unit: A dwelling unit (occupied or vacant) under the 
PHA's ACC.
    This proposed combined indicator has a weight of #2.

Indicator #2, Modernization

    (This indicator is automatically excluded if a PHA has no 
modernization program.)
    This proposed indicator was changed very little with the original 
five components remaining virtually the same. However, the weight 
values for component #1, expenditure of funds, and component #2, 
obligation of funds, have been changed so that greater emphasis is 
given to obligation of funds in relation to expenditure of funds. This 
is exactly the opposite of the current interim rule, where the emphasis 
is placed on expenditure of funds. This change recognizes the 
importance of getting projects under contract, while at the same time 
acknowledging that often it is necessary to hold back payments to 
contractors due to disputes over the quality of the work or materials.
    A new feature in component #1, expenditure of funds, and component 
#2, fund obligation, would require, for grade A, PHAs that are not on 
schedule to have self-executed a time extension within 30 calendar days 
after the expenditure or obligation deadline with the extension to be 
based on reasons outside of their control.
    For component #3, contract administration, and component #4, 
quality of the physical work, the number of possible grades has been 
reduced from six to three, the three being A, C and F. ``Significant 
findings'' for these two components will be redefined prior to the 
effective date of any changes to the PHMAP. Component #5, budget 
controls, has been changed to reflect the final CGP rule which permits 
agencies to move work items between approved CGP annual statements and 
the latest approved five-year action plan.
    This proposed indicator has a weight of x1.

Indicator #3, Rents Uncollected

    The method for calculating the amount of rents uncollected for this 
proposed indicator has been simplified to a basic ratio comparing the 
total amount of rents billed during the assessment year, to the amount 
of rent collected during the assessment year. In the current interim 
PHMAP rule, PHAs are instructed to include the accounts receivable owed 
at the beginning of the assessment year and to deduct the total amount 
of accounts receivable that have been written off during the year for 
residents no longer in possession. Both of these adjustments have been 
eliminated in the proposed indicator as not being directly relevant to 
rent billed and collected in the current assessment period.
    The percentage of rents uncollected refers to the proportion of 
current dwelling rent that was billed during the assessment year, but 
not collected during the assessment year. The calculation is made as of 
the close of business on the last business day of the fiscal year. 
``Current dwelling rent'' excludes retroactive rent charges (including 
those identified through the Tenant Integrity Program), maintenance 
charges, excess utility charges, late charges, and any other charges 
not specifically identified as dwelling rent.
    This proposed indicator has a weight of x1.5.

Indicator #4, Work Orders

    The current indicator #4, energy consumption, has been combined 
with the overall measurement of financial performance, which is now 
indicator #6.
    The new proposed indicator #4, work orders, continues to measure 
PHA performance in the handling of both emergency and non-emergency 
work orders, but under this proposed rule, the measurement will be in 
two components instead of one. The proposed indicator grade will be 
based on the average number of days it takes for a work order to be 
completed rather than the percentage of work orders outstanding at the 
end of a PHA's fiscal year.
    The Department believes that assessing the average amount of time 
it takes to complete work orders is more equitable. Consider the 
following scenario:
    Two PHAs have a fiscal year-end date of June 30, 1995. The first 
PHA has five work orders received on June 29, 1995, and did not 
complete them until July 2, 1995. The second PHA has five work orders 
received on January 1, 1995, and completed them on June 29, 1995. If 
both PHAs received the same amount of work orders, the second PHA would 
receive a higher grade under the current method of grading this 
indicator, even though it took the second PHA much longer to complete 
the work orders.
    The first component measures emergency work order performance; the 
second component measures the average amount of time it takes to 
complete non-emergency work orders.
    The proposed indicator includes more definitions and makes clear 
the Department's intention that all work orders should be tracked, 
except those exempted for modernization, issued to prepare a vacant 
unit for re-rental, and issued for the performance of cyclical 
maintenance. Implicit in this indicator 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. As 
such, the adequacy of a PHA's work order system will be part of the 
confirmatory review of this indicator.
    If a PHA elects to certify to the reduction in time it takes to 
complete work orders, the PHA shall retain justifying documentation to 
support its certification for HUD post review.
    This proposed indicator has a weight of x1.5.

Indicator #5, Inspection of Units and Systems

    This proposed indicator has undergone significant changes. Instead

[[Page 20364]]

of having four components, it now has only two, each with a weight of 
x1. Component #1 examines the percentage of occupied units, out of all 
of a PHA's units (except those permitted to be exempted), that the PHA 
inspects on an annual basis in order to determine short-term 
maintenance needs (for which work orders are issued) and long-term 
modernization needs (which are referred to and included in the PHA's 
comprehensive plan for modernization).
    Component #2 examines the effectiveness of a PHA's annual 
inspection of its major systems, as systems are defined herein, and the 
maintenance of those systems either as part of the inspection process, 
or through the issuance of a work order; or, if a work order is not 
issued, by inclusion in the PHA's comprehensive plan for modernization. 
While the current indicator assesses the repairs to units and systems, 
the new proposed indicator makes it clear that work orders that are 
generated as of result of components #1 and #2 are measured primarily 
under indicator #4, outstanding work orders, unless the repair is 
completed during the inspection or deferred to the modernization 
program.
    This proposed indicator also makes it clear that PHAs are expected 
to inspect to the standard specified in the local housing/occupancy 
code, as long as that code is at least equivalent to or exceeds Section 
8 Housing Quality Standards (HQS). Implicit in this indicator is the 
adequacy of the PHA's inspection program in terms of the quality of a 
PHA's inspections, and how a PHA tracks both inspections and needed 
repairs. As such, the adequacy of a PHA's inspection program will be 
part of the confirmatory review of this indicator.
    The Department has more clearly defined the units, both vacant and 
occupied, which may be exempted from an annual inspection.
    Units in the following categories (fully defined in the rule at 
Sec. 901.30) are exempted and not included in the calculation of the 
total number of units, and the number and percentage of units 
inspected. Systems that are a part of individual dwelling units that 
are exempted, or in part of buildings where all of the dwelling units 
in the building are exempted, are also exempted from the calculation of 
proposed indicator #5.
    1. Occupied units where the PHA has made two documented attempts to 
inspect.
    2. Vacant units undergoing modernization.
    3. Vacant units in an approved demolition or disposition program.
    4. Vacant units that are documented to be uninhabitable.
    5. Vacant units vacant for the full immediate past fiscal year that 
have been exempted under indicator #1 for any of the reasons for which 
exemptions are permitted under that indicator (except those units that 
are used for non-dwelling purposes or that are occupied by employees of 
the PHA and units that are used for resident services).
    This proposed indicator has a weight of x1.

Indicator #6, Financial Management

    This proposed indicator combines, in two components, indicator #4, 
energy consumption; and indicator #9, operating reserves. The first 
component assesses the amount of cash reserves in relation to total 
actual routine expenses. The second component is required only if a PHA 
scores below a grade C on component #1. The Department is offering two 
options for component #2. Option A compares energy and utility expenses 
to the average of those expenses computed on a three year rolling base; 
and option B measures whether or not a PHA has conducted an energy 
audit and implemented the improvements recommended as a result of the 
energy audit. PHAs with tenant-paid utilities in all their units will 
not be assessed on energy/utility consumption even if they score below 
a grade C in cash reserves. The rationale for measuring energy 
consumption only if a PHA scores below a grade C in the first component 
is that if a PHA is in good financial health, the Department can 
reasonably conclude that energy/utility usage is being well-managed.
    A PHA that has cash reserves equal to or greater than 10% of total 
actual routine expenses will be assessed only on the cash reserves 
component. This proposed component has a weight of x2.
    The proposed energy/utility component, option A, is substantially 
different from the current energy indicator in that it includes water 
and sewage usage, and the adjustment for the heating degree day (HDD) 
factor has been eliminated. The elimination of the HDD factor from the 
calculation of this component is in accordance with Notice PIH 94-81, 
dated November 18, 1994. On October 13, 1994, a final rule was 
published in the Federal Register that eliminated the application of 
the HDD factor for utility consumption. This rule will first affect 
PHAs with fiscal year ending December 31, 1995.
    As stated previously, option B for the energy/utility component 
assesses the conduct of an energy audit and the implementation of 
recommendations that resulted from the energy audit. The Department is 
particularly interested in receiving comments regarding the energy/
utility component to determine what the national preference is for this 
component. PHAs are asked to indicate whether they prefer option A; 
option B; or the choice of being able to use either option for their 
PHMAP certification and assessment.
    This proposed component has a weight of x1.
    A sample worksheet for computing component #1 is included as 
Appendix 1 of this preamble; and two sample worksheets for computing 
component #2 are included as Appendix 2 of this preamble.
    This proposed indicator has a weight of x1.

Indicator #7, Resident Involvement

    PHAs with 100 units or less shall not be assessed under this 
indicator. This indicator reflects the Department's new emphasis on 
Section 3 programs to encourage resident employment. As in the current 
resident initiatives indicator, this indicator assesses a PHA's efforts 
to involve residents to improve the community in which they live. If 
the PHA is participating in any HUD grants, such as the Tenant 
Opportunity Program, Youth Apprenticeship Program, etc., this component 
assesses a PHA's success in implementing these programs. This proposed 
indicator has a weight of x1.
    The Department believes that consumer satisfaction is critical in 
public housing, and is in the process of conducting a national study on 
the issue. The Department is also seriously considering including a 
component under this indicator that assesses consumer satisfaction. 
Therefore, HUD is especially interested in receiving comments regarding 
whether or not PHAs should be required to conduct resident surveys on a 
periodic basis, and whether such a survey should be standardized.

Indicator #8, Security

    It was HUD's intention that PHAs with 100 units or less not be 
assessed under this indicator, and this is stated in the text of the 
proposed rule, but HUD is specifically soliciting comments on whether 
this indicator should apply to such PHAs. Recognizing that many public 
housing communities are under siege by gangs, violent criminals and 
drug dealers who threaten the safety and welfare of decent, responsible 
residents, President Clinton has announced a ``One Strike'' policy in 
which people in public housing who engage in drug and other criminal 
activity will be barred from admittance to public housing or

[[Page 20365]]

evicted, as applicable. This policy is supported by a law recently 
passed by Congress entitled the Housing Opportunity Program Extension 
Act of 1996 (the Extension Act) (Pub. L. 104-120, approved March 28, 
1996). The Extension Act expands the statutory authority of PHAs to 
keep persons engaged in illegal activities out of public housing. In 
furtherance of President Clinton's policy and the Extension Act, the 
Department is adding a new indicator that assesses security. The 
security indicator will consider a PHA's ability to perform such 
activities as: Track crime-related problems in their developments; take 
action with local police authorities to improve law enforcement, lease 
enforcement and crime prevention; adopt and implement tough applicant 
screening and resident eviction policies and procedures; and meet goals 
under any HUD-funded drug prevention or crime reduction program. 
Although applicant screening and resident eviction policies and 
procedures must be tough, the proposed rule would require such actions 
to be appropriately taken. By using the term ``appropriately'' in the 
text of the rule, HUD intends to preserve PHAs' ability to act 
consistently with the provisions of 24 CFR 966.4(5)(i), Eviction for 
criminal activity--(i) PHA discretion to consider circumstances. This 
proposed indicator has a weight of x1.
    With respect to this proposed security indicator, HUD is 
particularly interested in comments regarding the desirability of 
holding PHAs responsible for demonstrating systems to take action with 
local police authorities to improve law enforcement, lease enforcement 
and crime prevention. HUD believes that such cooperative action is 
critical to residents' well-being, but some have expressed concern 
whether PHAs should be held accountable for obtaining cooperation from 
another party (the police). In addition, HUD specifically invites 
comments regarding the reasonability of the proposed component which 
rates PHAs based on the percentage of goals they have met in crime 
reduction-related programs.

Data Collection--Sec. 901.100

    The length of time a PHA has to submit its form HUD-50072, PHMAP 
Certification, to the State/Area Office has been reduced from 90 days 
to 45 days after the end of a PHA's fiscal year. This change has been 
made because many comments have stated that the overall PHMAP process 
takes too long. Under the current program, it could be a minimum of 
nine months before a PHA knows its final PHMAP score after going 
through the appeal process. The 45 day period is consistent with other 
reporting due date requirements, such as the submission of year-end 
financial statements and the submission of the CGP annual report. A PHA 
that does not submit its year-end reports in a timely manner may 
receive a grade of F for the applicable indicators. PHAs will no longer 
be allowed to submit past due reports in support of an appeal and 
expect the appeal to be granted. State/Area Offices will be required by 
the Department to complete the PHMAP assessments within an additional 
45 days, thereby reducing the overall time for the completion of a 
PHMAP assessment to 90 days after the end of a PHA's fiscal year.
    The reporting requirements for PHAs where management functions have 
been assumed by an RMC or other alternative management entity have been 
included in the regulation. A PHA's certification will be required to 
identify the development and management functions assumed by the RMC or 
AME, and the PHA will be required to obtain a certified questionnaire 
from the RMC or AME as to the management functions undertaken by the 
RMC or AME. The RMC's or AME's certification will be required to be 
approved by its executive director or chief executive officer of 
whatever title, and the PHA will be required to submit the RMC's or 
AME's certified questionnaire along with its own certification.
    Any alternative management/PHA relationship is assessed under the 
PHMAP, as discussed above in this preamble, whether the alternative 
management is an RMC, a receiver, private contractor, private manager, 
or any other entity that is under contract with a PHA to manage all or 
part of its operations.
    Guidance to PHAs regarding how to calculate each applicable 
indicator and component will be issued in a handbook and/or guidebook. 
Such issuances will coincide with the effective date of any changes to 
the PHMAP.

Computing Assessment Score--Sec. 901.105

Indicator and Component Weights

    The weights of some of the indicators have been reduced to simplify 
the computation of a PHA's assessment score. The total weights for each 
indicator are based on a ten-point scale, and the highest score a PHA 
can receive is 100. Indicators receive a higher weight primarily if 
they reflect a management aspect closely related to the key areas of 
the condition of PHA stock and delivery of services to PHA residents. 
On this basis, two indicators are given a weight of two: Vacancies and 
rents uncollected. Two indicators are given a weight of one and a half: 
Work orders and resident initiatives. The remaining indicators are 
given a weight of one: Modernization, inspection of units and systems, 
and financial management.
    The weight of each indicator and component (shown in brackets [] 
for components only) is as follows:

Indicator #1, vacancy percentage and unit turnaround.................x2
  Component #1, vacancy percentage and progress in reducing 
vacancies..........................................................[x2]
  Component #2, unit turnaround time...............................[x1]
Indicator #2, modernization..........................................x1
  Component #1, unexpended funds over three Federal fiscal years 
(FFYs) old.........................................................[x1]
  Component #2, timeliness of fund obligation......................[x2]
  Component #3, adequacy of contract administration................[x2]
  Component #4, quality of the physical work.......................[x3]
  Component #5, adequacy of budget controls........................[x1]
Indicator #3, rents uncollected....................................x1.5
Indicator #4, work orders..........................................x1.5
  Component #1, emergency work orders completed in 24 hours or 
less...............................................................[x1]
  Component #2, average number of days for non-emergency work 
orders to be completed.............................................[x2]
Indicator #5, annual inspection of units and systems.................x1
  Component #1, annual inspection of units.........................[x1]
  Component #2, annual inspection of systems.......................[x1]
Indicator #6, financial management...................................x1
  Component #1, cash reserves......................................[x2]
  Component #2, annual energy/utility consumption..................[x1]
Indicator #7, resident involvement...................................x1
  Component #1, resident involvement...............................[x1]
Indicator #8, security...............................................x1
Physical Condition and Neighborhood Environment
    The overall PHMAP score of a PHA will be adjusted by adding 
weighted points that reflect the differences in the difficulty of 
managing developments that result from the physical condition and/or 
the neighborhood environment of a PHA's developments.
    Section 502.(j)(1)(I) requires that (i) the Secretary shall 
administer the system of evaluating public housing agencies flexibly to 
ensure that such agencies are not penalized as a result of 
circumstances beyond their control; and (ii) reflect in the weights 
assigned to the various indicators the differences in the difficulty of 
managing individual projects that result from their physical

[[Page 20366]]

condition and neighborhood environment.
    The Department believes that the current PHMAP regulation contains 
substantial provisions to ensure that PHAs are not penalized for 
conditions beyond their control:
    1. A PHA may request a modification of any indicator and/or 
component to compensate for conditions beyond its control.
    2. A PHA may request the exclusion of an indicator and/or component 
for the same reason.
    3. Without requesting a modification, the current and proposed 
PHMAP regulation allows PHAs to modify the scoring calculations for 
certain indicators by exempting certain units.
    4. There is a two-stage appeal process available if the PHA fails 
to find relief under paragraphs one, two, and three, above.
    In view of these already substantial considerations which protect 
PHAs from being penalized for circumstances beyond their control, the 
Department is proposing to respond to item (ii), above (requiring the 
Department to reflect in the weights assigned to the various indicators 
the differences in the difficulty of managing individual developments 
that result from their physical condition and/or their neighborhood 
environment), in a way that will fully comply with the statutory 
language, but will not make PHMAP substantially more complicated, nor 
place inordinate administrative burdens on PHAs and HUD staff.
    The Department is proposing that the legislative provision 
(requiring the Department to reflect in the weights assigned to the 
various indicators the differences in the difficulty of managing 
individual developments that result from their physical condition and/
or their neighborhood environment) apply to the following three 
indicators only.
    1. Indicator #1, vacancy percentage and unit turnaround;
    2. Indicator #4, work orders; and
    3. Indicator #5, annual inspection and condition of units and 
systems.
    The definitions of physical condition and neighborhood environment 
are kept as simple as possible and meant to make it relatively easy for 
PHAs to document.
    1. Physical condition: Refers to units located in developments over 
ten years old that require major capital investment in order to meet 
minimum HQS standards or local codes, whichever is applicable.
    2. Neighborhood environment: Refers to units located within 
developments where the immediate surrounding neighborhood (that is a 
majority of the census tracts on all sides of the development) has at 
least 51% of families with incomes below the poverty rate as documented 
by the latest census data.
    Any PHA with 5% or more of its units subject to either or both of 
the above conditions shall, if they so choose, be issued a weighted 
PHMAP score, based solely upon the certification of the PHA, in 
addition to the regular PHMAP score. The additional weight shall be 
calculated as follows:

Percent of Units Subject to Physical Condition and/or                   
 Neighborhood Environment:                                        Extra 
                                                                 points 
    At least 5% but less than 10%.............................       0.5
    At least 10% but less than 20%............................        .6
    At least 20% but less than 30%............................        .7
    At least 30% but less than 40%............................        .8
    At least 40% but less than 50%............................        .9
    At least 50%..............................................       1.0
                                                                        

     These extra points will be added to the score (grade) of the 
indicator(s) to which these conditions may apply. A PHA is required to 
certify on form HUD-50072, PHMAP Certification, the extent to which the 
conditions apply, and to which of the indicators the extra scoring 
points should be added. For example, a PHA certifying that (after 
removing from consideration all units previously exempted) 15% of its 
units are subject to the physical conditions and/or neighborhood 
environment as defined above, would receive an additional .6 of a point 
for the score for indicator #1. If a PHA receives an unweighted score 
of D (5 points) for this indicator, the weighted score would be 5.6 
points. Indicator #1 has an overall weight of x2, therefore, the 
weighted score for the indicator would be 11.2, as opposed to the 
unweighted score of 10.
    Developments that have received comprehensive modernization within 
the past ten years are not eligible to receive additional weight for 
the physical condition factor. A PHA that receives a grade of A under 
indicators #4 and #5 (without additional points) may not claim the 
additional weight for indicator #1 since the physical condition of its 
developments is not applicable. None of the weighted indicators may 
have a score that is more than its total weighted points, including the 
additional point, or fraction thereof, awarded for weighting.
    PHAs would be expected to maintain supporting documentation to show 
how they arrived at the number and percentage of units out of their 
total inventory that are subject to additional weighting. If the basis 
were neighborhood environment, the PHA would have on file the 
appropriate maps showing the census tracts surrounding the 
development(s) in question with supporting census data showing the 
level of poverty. Units that fall into this category but which have 
already been removed from consideration for other reasons (permitted 
exemptions and modifications and/or exclusions) shall not be counted in 
this calculation. For example, a unit that has been removed from the 
adjusted vacancy calculation because it is undergoing modernization 
shall not also be counted as a unit subject to this provision. For the 
physical condition factor, a PHA would have to maintain documentation 
showing the age and condition of the units and the record of capital 
improvements, indicating that these particular units have not received 
comprehensive modernization. They would also have to document that in 
all cases, units that had been exempted for other reasons were not 
included in the calculation.

PHA Score and Status--Sec. 901.115

    This section has been revised to state that a PHA shall not be 
designated as a high performer if it scores below a grade of C for any 
indicator.
    A new provision, recommended by the Office of Management and Budget 
in the course of the review of this proposed rule in accordance with 
Executive Order 12866, would require each PHA to post a notice of its 
PHMAP score and status in appropriate conspicuous and accessible 
locations in its offices and in each of its developments within two 
weeks of receipt of the score and status. In addition, HUD would 
publish every PHA's score and status in the Federal Register.

State/Area Office Functions--Sec. 901.120

    Section 901.125, Regional Administrator functions, has been 
eliminated from this proposed rule as a result of the reorganization of 
the Department and the redelegation of authority to State/Area Offices. 
Applicable functions have been included in this portion of the 
regulation.
    This section will require a State/Area Office to notify a PHA of 
its PHMAP score and the grade of the RMC or AME (if any) assuming 
management functions at any of the PHA's developments, and will require 
a PHA to notify in writing, immediately upon receipt of the State/Area 
Office notification, the RMC or AME (if any) of the RMC/AME's grades.

[[Page 20367]]

PHA Right of Appeal--Sec. 901.125

    Former Regional Administrator functions that are applicable have 
been included in this portion of the regulation.

Incentives--Sec. 901.130

    All high- and standard-performing PHAs have been afforded 
substantial relief by the Department and this section of the regulation 
has been revised to reflect the available relief. This section also 
includes recognition of RMCs that receive a grade of A on each of the 
indicators for which they are assessed.

Memorandum of Agreement--Sec. 901.140

    The scope of the Memorandum of Agreement (MOA) may vary depending 
upon the extent of the problems present in the PHA, and now provides 
for the inclusion of other relevant areas identified as problematic, 
i.e., areas other than deficient PHMAP indicators. The Department 
believes that the use of one document to track troubled and mod-
troubled PHA progress is in the best interest of PHAs and the 
Department.
    Upon designation of a large PHA (1250 or more units under 
management) as troubled, the State/Area Office shall make a referral to 
HUD Headquarters for appropriate recovery intervention and the 
execution of an MOA by the Assistant Secretary for Public and Indian 
Housing.

Improvement Plan--Sec. 901.145

    The option of requiring RMCs or AMEs to develop an improvement plan 
is included in the regulation. As with a PHA, if an RMC or AME receives 
a D or E in any indicator, the State/Area Office may require an RMC or 
AME to develop an improvement plan. If an RMC or AME receives an F in 
any indicator, the State/Area Office shall require an RMC or AME to 
develop an improvement plan.

Resident Participation in Competitive Proposals and Resident Petitions, 
Secs. 901.220 and 901.225

    The statutory authority for the PHMAP is section 6(j) of the 1937 
Act. Section 113 of HCDA 1992 amends section 6(j)(3)(A) of the 1937 Act 
(42 U.S.C. 1437d(j)(3)(A)), which deals with the actions that may be 
taken upon the occurrence of a substantial default by a PHA.
    Section 113(b)(1) amends 1937 Act section 6(j)(3)(A)(i), which 
permits the Department to solicit competitive proposals from other PHAs 
and private housing management agents (which may be selected by 
existing residents) to manage the housing administered by a PHA in 
substantial default, by allowing residents the opportunity to 
participate in the selection process through administrative procedures 
established by the Department. These administrative procedures are 
being proposed in this rule.
    This proposed rule would provide in Sec. 901.220 that when a 
competitive proposal to manage the housing of a PHA in substantial 
default is solicited in a Request for Proposals (RFP), the PHA would be 
required to post a notice and a copy of the RFP on the premises of each 
housing development subject to new management under the RFP for the 
purposes of notifying affected residents. Residents would be required 
to notify HUD by the RFP's application due date of their interest in 
participating in the selection process. In order to participate, the 
total number of residents that notify HUD must equal at least five 
percent of the PHA's residents, or the notification of interest must be 
from an organization or organizations of residents whose membership 
must equal at least five percent of the PHA's residents. Because of the 
urgency that is appropriately present when the extraordinary measure of 
selecting new management for a PHA in substantial default must be 
taken, the Department has determined that this minimal five percent 
showing of resident concern is necessary to justify the additional 
selection procedures required by resident participation.
    If the required number of interested residents notify HUD, a 
minimum of one resident may be invited to serve as an advisory member 
on the evaluation panel that will review the applications in accordance 
with applicable procurement procedures. Resident advisory member(s) are 
subject to all applicable confidentiality and disclosure restrictions.
    Section 113(b)(5) allows the residents of a PHA designated as 
troubled to petition the Department to take any of the remedial actions 
listed under subparagraph 6(j)(3)(A) of the 1937 Act. The Department is 
required to respond to such petitions in a timely manner with a written 
description of the actions, if any, the Department plans to take, and, 
where applicable, explain why such actions differ from the course 
proposed by the residents. As with the procedure for permitting 
residents to participate in the selection of management agents, the 
proposed rule would require, at Sec. 901.225, that the petition has the 
support of at least five percent of the troubled PHA's residents.

Substantial Default and Intervention Procedures, Secs. 901.200--901.215

    This proposed rule adds language that would require the Department 
to take action regarding troubled PHAs or AMEs that have not improved 
their management performance over a specified period of time. The 
current PHMAP regulation has a wide variety of options for dealing with 
troubled PHAs subsequent to a finding of substantial default. What the 
current regulation does not have is a built-in time frame that would 
require the Department to make a finding of substantial breach or 
default, or request a court-ordered receivership. Therefore, under 
Sec. 901.200(c), the Department will be required to declare a troubled 
PHA or AME in substantial breach or default if a PHA does not show 
significant improvement (10 point increase) in its PHMAP score within 
one year. A PHA or AME will be notified of such action in accordance 
with Sec. 901.205(c).
    A PHA or AME may waive, in writing, receipt of explicit notice from 
HUD as to a finding of substantial default, and voluntarily consent to 
a determination of substantial default. The PHA or AME would concur on 
the existence of substantial default conditions which can be remedied 
by technical assistance. At that time, the Department would immediately 
proceed with interventions as provided in Sec. 901.210, including the 
provision of technical assistance necessary to address identified 
deficiencies. In such a case, the PHA or AME shall provide the 
Department with written assurances that all deficiencies will be 
addressed by the PHA or AME.
    The affect of this proposal would be that chronically troubled PHAs 
or AMEs would be subject to immediate intervention by the Department. 
Section 901.210(a) of the current PHMAP regulation gives a PHA an 
opportunity to initiate corrective action to resolve identified 
deficiencies. Section 901.210(c) of the current PHMAP rule requires a 
PHA to demonstrate (in no more than 30 days) that the Department's 
finding of substantial breach or default is incorrect. The burden of 
proof is placed upon the PHA. The rationale is that troubled PHAs have 
already had more than adequate time to implement corrective action, or 
will have at least one year from the time of initial troubled 
designation.
    This approach essentially uses the regulation that has been in 
place for years. The only difference is that the Department would be 
required to impose the existing standard. The only new performance 
standard rests upon the Department, not the PHA or AME.

[[Page 20368]]

    A new Sec. 901.235, Technical assistance, has been added to address 
situations where a substantial default is likely to occur if 
deficiencies are not addressed, and to ensure that a PHA or AME that 
has just been removed from troubled status will not become troubled 
again within a two year period.

Request for Comments

    The Department recognizes that PHMAP scores should not be 
interpreted as the sole determinant of housing agency performance. 
While PHMAP is an important yardstick to measure PHA performance, it 
should not be the sole driving force behind PHA actions. Sometimes a 
PHA should do the ``right'' thing and receive a lower PHMAP score. For 
example, a PHA decides to demolish nonviable units rather than to 
program these nonviable units for modernization in quest of a better 
PHMAP score. When a PHA makes the ``right'' decision, it should be 
commended, not punished. Therefore, the Department is particularly 
interested in receiving comments concerning ways in which PHAs can 
receive positive recognition within the context of this regulation for 
making the right decision.

Appendix 1.--Sample Worksheet--Indicator #6, Cash And Operating Expenses
[Analysis of available cash, examination of operating expenses/available
                                  cash]                                 
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
PHA Name:                                                        FYE    
                                                                        
 To estimate cash available at fiscal year end for routine              
                  operating expenditures.                               
Current Assets                                                          
    1. Balance of Cash and Investment Accounts at fiscal                
     year end. Do not include the balance of cash accounts              
     that are restricted to a specific purpose and are,                 
     therefore, not available for routine operating                     
     expenditure purposes (e.g., modernization accounts,                
     security deposit accounts, escrow accounts, homebuyer              
     reserves, replacement reserves, etc.).                             
        (a) General Fund Account 1111.1....................             
        (b) Petty Cash, Account 1117.......................             
        (c) Investments, Account 1162......................             
        (d) Other (describe)...............................             
    2. Add Accounts Receivable and Advances that are due                
     for the period covered and can be collected within the             
     next 30 days.                                                      
        (a) Tenants/homebuyers.............................             
        (b) HUD Contributions receivable for Operating                  
         Subsidy...........................................             
        (c) Interfund accounts receivable due from other                
         ACCs..............................................             
        (d) Other Receivables (describe)...................             
    3. Total Current Assets (add items 1 and 2)............             
Current Liabilities                                                     
    4. Liabilities payable within 30 days after fiscal                  
     period ends.                                                       
        (a) Vendors/contractors, Account 2111..............             
        (b) Payroll deductions and contributions, Account               
         2117..............................................             
        (c) Amounts due to HUD for subsidy adjustment,                  
         residual receipts, Account 2118...................             
        (d) Accrued Expenses (e.g., utilities, payroll,                 
         PILOT)............................................             
        (c) Interfund accounts payable due to other ACCs...             
        (d) Other current obligations (describe)...........             
    5. Total Current Liabilities (Add items 4(a) through                
     4(d)).................................................             
    6. Available Cash (Deficiency) (Line 3 Minus Line 5)...             
    7. Total Routine Expenses (Line 520, form HUD-52599)...             
    8. Cash Reserves divided by Total Actual Routine                    
     Expenses (Line 6 divided by Line 7)...................             
------------------------------------------------------------------------


 Appendix 2.--Sample Worksheet--Indicator #6, Energy/Utility Consumption
                                Option A                                
  [Annual energy/utility consumption, as compared to the average of the 
                 three years' rolling base consumption]                 
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
PHA:                                                             FYE    
                                                                        
    1. Total energy/utility cost in fiscal year for which               
     adjustment is requested (form HUD-52722B, line 13,                 
     column 3):............................................    $        
    2. Costs of estimated energy/utility consumption at                 
     average rate for appropriate PHA fiscal year (form HUD-            
     52722B, line 17, column 3):...........................    $        
    3. Costs of actual energy/utility consumption divided               
     by costs of estimated energy/utility consumption (line             
     1 divided by line 2):.................................    $        
    4. Subtract 1.00 from line 3 and multiply the remainder             
     by 100 to calculate the percentage of increase or                  
     decrease. For example:................................            %
        If line 3 equals .95, then .95 minus 1.00 equals -              
         .05  x  100 = a 5% decrease; or...................             
        If line 3 equals 1.15, then 1.15 minus 1.00 equals              
         .15  x  100 = a 15% increase .....................             
------------------------------------------------------------------------
Source: Most recent form HUD-52722B, Adjustment for Utility Consumption 
  and Rates.                                                            


       Sample Worksheet--Indicator #6, Energy Consumption Option B      
          [Energy audit and implementation of recommendations]          
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
PHA:                                                             FYE    
                                                                        
                           Grade                               Response 
                                                                        
Grade A: The PHA has completed its energy audit and has                 
 implemented all of the recommendations determined to be                
 cost effective.                                                        
Grade C: The PHA has completed its energy audit and is in               
 the process of implementing all of the recommendations.                
Grade F: The PHA has not completed its energy audit, or has             
 not implemented all of the recommendations.                            
------------------------------------------------------------------------
Source: PHA's energy audit and/or maintenance plan.                     


[[Page 20369]]



                 Appendix 3.--Public Housing Management Assessment Program (PHMAP) Certification                
[Instructions: A PHA/RMC/AME's responses to this certification form must be the PHA/RMC/AME's actual data; e.g.,
prior to any adjustments for modifications and/or exclusion requests to the indicators. Round percentages to the
                                          nearest two decimal points.]                                          
                                                                                                                
                                                                                                                
PHA/RMC/AME Name:                                                                                               
For FY Ending:                                                                                                  
Submission Date:                                                                                                
Indicator 1: Vacancy rate and unit turnaround                                                                   
                                                                                                                
                                                                                  Units                         
                                                                                               Days             
                                                                                                           Rate 
    Actual vacancy total....................................................  /           /           /        %
    Vacancy exemptions......................................................  /           /           /         
    Adjusted vacancy total..................................................  /           /           /        %


    Percent reduction of actual vacancies over prior three              
     years (enter percent or N/A)..........................            %
PHA/RMC/AME shall respond to the question, below, if it                 
 scored below a grade of C on the vacancy component                     
    Average number of calendar days for vacant unit to be               
     prepared for re-rental and for a new lease to take                 
     effect (unit turnaround)..............................             
Additional percentage points for the percent of units                   
 subject to physical condition and/or neighborhood                      
 environment (enter .5; .6; .7; .8; .9; or 1 or N/A).......            %
Indicator 3: Rents uncollected                                          
    Rents billed...........................................    $        
    Rents collected........................................    $        
    Rents uncollected......................................    $        
    Balance of rents uncollected as a percentage of total               
     rents to be collected.................................            %
Indicator 4: Work orders                                                
    Percent of emergency items corrected/abated within 24               
     hours.................................................            %
    Average number of calendar days for non-emergency work              
     orders to be completed................................             
    Average number of days PHA/RMC/AME has reduced the time             
     it takes to complete non-emergency work orders over                
     the past three years (enter average number of days or              
     N/A)..................................................             
Additional percentage points for the percent of units                   
 subject to physical condition and/or neighborhood                      
 environment (enter .5; .6; .7; .8; .9; or 1 or N/A).......            %
Indicator 5: Annual inspection of units and systems                     
    Percent of units inspected annually using standards                 
     that were at least equivalent to HQS..................            %
    Percent of units meeting HQS...........................            %
    PHA/RMC/AME completed all repairs where necessary for               
     code compliance either during the inspection, issued               
     work orders for the repairs, or referred the                       
     deficiency to the current year's or next year's                    
     modernization program (enter Yes or No)...............             
    Percent of buildings and sites, according to the                    
     maintenance plan, where major systems were inspected..            %
Additional percentage points for the percent of units                   
 subject to physical condition and/or neighborhood                      
 environment (enter .5; .6; .7; .8; .9; or 1 or N/A).......            %
Indicator 6: Financial management                                       
    PHA/RMC/AME has cash reserves of $3 million or more                 
     (enter Yes or No).....................................    $        
If the answer is Yes, proceed to indicator #7; if the                   
 answer is No, continue with the next question                          
    Percent of cash reserves to total actual routine                    
     expenditures..........................................            %
PHA/RMC/AME shall respond to the questions, below, if it                
 scored below a grade of C on the cash reserves component;              
 however, PHA/RMC/AME with tenant-paid utilities in all                 
 their units will not be assessed on energy/utility                     
 consumption even if they score below a grade of C on the               
 cash reserve component                                                 
    PHA/RMC/AME has completed its energy audit and has                  
     implemented all of the recommendations that were cost              
     effective (enter Yes or No)...........................             
If the answer is Yes, proceed to indicator #7; if the                   
 answer is No, continue with the next question                          
    PHA/RMC/AME has completed its energy audit and is in                
     the process of implementing all of the recommendations             
     that were cost effective (enter Yes or No)............             
If the answer is Yes, proceed to indicator #7; if the                   
 answer is No, continue with the next question                          
    PHA/RMC/AME has completed its energy audit (enter Yes               
     or No)................................................             
If the answer is No, proceed to indicator #7                            
    PHA/RMC/AME has completed its energy audit, but has not             
     implemented all of the recommendations that were cost              
     effective (enter Yes).................................             
Indicator 7: Resident involvement (applies only to PHAs                 
 with 100 units or less)                                                
    PHA Board, by resolution, has adopted a Section 3                   
     program (enter Yes or No).............................             
    PHA/RMC/AME staff monitors progress and issues reports              
     concerning progress under the program (enter Yes or                
     No)...................................................             
    At each family development site where a resident                    
     council exists, there has been a development-wide                  
     election of resident council board members/officers                
     (enter Yes or No).....................................             
    At each family development site where a resident                    
     council does not exist, the PHA/AME during the past                
     year has encouraged development-wide elections of                  
     resident board members/officers (enter Yes or No or N/             
     A)....................................................             
    PHA Board, by resolution, has adopted mechanisms to                 
     ensure that residents have ample opportunity for input             
     into planning and goal setting for ongoing management              
     issues, including capital improvement programs (enter              
     Yes or No)............................................             
    PHA Board has invited residents to participate in                   
     planning for capital improvement programs (enter Yes               
     or No or N/A).........................................             
    If the PHA/RMC/AME has any special resident initiative              
     program(s), the percent of goals being met under the               
     implementation plan for any and all programs (enter                
     percent)..............................................            %
Indicator 8: Security                                                   
    PHA/RMC/AME has a mechanism for tracking crime related              
     problems (enter Yes or No)............................             
    PHA/RMC/AME can demonstrate a system for taking action              
     with local police authorities to improve law                       
     enforcement, lease enforcement and crime prevention                
     (enter Yes or No).....................................             
    PHA Board, by resolution, has adopted policies that                 
     screen out public housing applicants with a history of             
     criminal activity involving crimes to persons or                   
     property and/or other criminal acts that would                     
     adversely affect the health, safety or welfare of                  
     other residents (enter Yes or No).....................             

[[Page 20370]]

                                                                        
    PHA/RMC/AME has implemented procedures and can document             
     that it appropriately screens out and denies admission             
     to public housing applicants with a history of                     
     criminal activity involving crimes to persons or                   
     property and/or other criminal acts that would                     
     adversely affect the health, safety or welfare of                  
     other residents (enter Yes or No).....................             
    PHA Board, by resolution, has adopted policies that                 
     appropriately evict a public housing resident who                  
     engages in any criminal activity that threatens the                
     health, safety, or right to peaceful enjoyment of the              
     premises by other residents; engages in any drug-                  
     related criminal activity (as defined at section 6(l)              
     of the 1937 Act [42 U.S.C. 1437d(l)]) on or off the                
     PHA's property; or who the PHA has reasonable cause to             
     believe abuses alcohol in such a way that may                      
     interfere with the health, safety, or right to                     
     peaceful enjoyment of the premises by other residents              
     (enter Yes or No).....................................             
    PHA/RMC/AME has implemented procedures and can document             
     that it appropriately evicts a public housing resident             
     who engages in any criminal activity that threatens                
     the health, safety, or right to peaceful enjoyment of              
     the premises by other residents; engages in any drug-              
     related criminal activity (as defined at section 6(l)              
     of the 1937 Act [42 U.S.C. 1437d(l)]) on or off the                
     PHA's property; or who the PHA has reasonable cause to             
     believe abuses alcohol in such a way that may                      
     interfere with the health, safety, or right to                     
     peaceful enjoyment of the premises by other residents              
     (enter Yes or No).....................................             
    If the PHA/RMC/AME has any special drug prevention                  
     program or crime reduction program funded by any HUD               
     funds, the percent of goals being met under the                    
     implementation plan for any and all programs (enter                
     percent)..............................................            %



V. Other Matters

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk at the above address.

Regulatory Planning and Review

    This proposed rule has been reviewed in accordance with Executive 
Order 12866, issued by the President on September 30, 1993 (58 FR 
51735, October 4, 1993). Any changes to the proposed rule resulting 
from this review are available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk.

Regulatory Flexibility Act

    The Secretary in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so 
doing certifies that this proposed rule would not have a significant 
economic impact on a substantial number of small entities. The rule 
establishes management assessment criteria for PHAs. HUD does not 
anticipate a significant economic impact on a substantial number of 
small entities, since the proposed rule establishes management 
assessment criteria which will be utilized by State/Area Offices for 
monitoring purposes and the provision of technical assistance to PHAs.

Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this proposed rule will not have substantial direct 
effects on States or their political subdivisions, or the relationship 
between the Federal government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
The proposed rule is intended to promote good management practices by 
including, in HUD's relationship with PHAs, continuing review of PHAs' 
compliance with already existing requirements. In addition, the 
proposed rule carries out, as unobtrusively as possible, a Federal 
statutory mandate. The proposed rule does not create any new 
significant requirements of its own. As a result, the proposed rule is 
not subject to review under the Order.

Family Impact

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this proposed rule does 
not have potential for significant impact on family formation, 
maintenance, and general well-being, and, thus, is not subject to 
review under the Order. The proposed rule involves requirements for 
management assessment of PHAs. Any effect on the family would be 
indirect. To the extent families in public housing will be affected, 
the impact of the proposed rule's requirements is expected to be a 
positive one.

List of Subjects in 24 CFR Part 901

    Administrative practice and procedures, Public housing, Reporting 
and recordkeeping requirements.

    Accordingly, part 901 of title 24 of the Code of Federal 
Regulations is proposed to be revised as follows:

PART 901--PUBLIC HOUSING MANAGEMENT ASSESSMENT PROGRAM

Sec.
901.1  Purpose and applicability.
901.5  Definitions.
901.10  Indicator #1, vacancy rate and unit turnaround time.
901.15  Indicator #2, modernization.
901.20  Indicator #3, rents uncollected.
901.25  Indicator #4, work orders.
901.30  Indicator #5, annual inspection of units and systems.
901.35  Indicator #6, financial management.
901.40  Indicator #7, resident involvement.
901.45  Indicator #8, security.
901.100  Data collection.
901.105  Computing assessment score.
901.110  PHA request for exclusion or modification of an indicator 
or component.
901.115  PHA score and status.
901.120  State/Area Office functions.
901.125  PHA right of appeal.
901.130  Incentives.
901.135  Memorandum of Agreement.
901.140  Removal from troubled status and mod-troubled status.
901.145  Improvement Plan.
901.150  PHAs troubled with respect to the program under section 14 
(mod-troubled PHAs).
901.155  PHMAP public record.
901.200  Events or conditions that constitute substantial default.
901.205  Notice and response.
901.210  Interventions.
901.215  Contracting and funding.
901.220  Resident participation in competitive proposals to manage 
the housing of a PHA.
901.225  Resident petitions for remedial action.
901.230  Receivership.
901.235  Technical assistance.

    Authority: 42 U.S.C. 1437d(j) and 3535(d).


Sec. 901.1   Purpose and applicability.

    (a) Purpose. This part establishes the Public Housing Management 
Assessment Program (PHMAP) to implement and augment section 6(j) of the 
1937 Act (42 U.S.C. 1437d). PHMAP provides policies and procedures to 
identify public housing agency (PHA), resident management corporation 
(RMC), and alternative management entity (AME) management capabilities 
and deficiencies, recognize high-performing PHAs, designate criteria 
for defining troubled PHAs and PHAs that are troubled with respect to 
the program under section 14 (Public Housing Modernization Program), 
and improve

[[Page 20371]]

the management practices of troubled PHAs and mod-troubled PHAs.
    (b) Applicability.
    (1) The provisions of this part apply to PHAs and RMCs as noted in 
the sections of this part.
    (2) When a PHA's management functions have been assumed by an AME:
    (i) If the AME assumes only a portion of the PHA's management 
functions, the provisions of this part that apply to RMCs apply to the 
AME; or
    (ii) If the AME assumes all, or substantially all, of the PHA's 
management functions, the provisions of this part that apply to PHAs 
apply to the AME.
    (3) To ensure quality management results from a contract between an 
AME and a PHA, or between an AME and HUD, minimum performance criteria 
that relate to the PHMAP indicators, as applicable, should be included 
in such contract. Failure to meet the performance criteria would be a 
basis for termination of the contract. However, even in the absence of 
explicit contractual provisions, this part applies to AMEs in 
accordance with paragraph (b)(2) of this section.


Sec. 901.5   Definitions.

    Actual vacancy rate is the vacancy rate calculated without any 
adjustments. It is calculated by dividing the total number of vacancy 
days in the fiscal year by the total number of unit days available in 
the fiscal year.
    Adjusted vacancy rate is the vacancy rate calculated after 
excluding the vacancy days that are exempted for any of the eligible 
reasons. It is calculated by dividing the total number of adjusted 
vacancy days in the fiscal year by the total number of unit days 
available in the fiscal year.
    Alternative management entity (AME) is a receiver, private 
contractor, private manager, or any other entity that is under contract 
with a PHA, or that is otherwise duly appointed or contracted (for 
example, by court order or agency action), to manage all or part of a 
PHA's operations. Depending upon the scope of PHA management functions 
assumed by the AME, in accordance with Sec. 901.1(b)(2), the AME is 
treated as a PHA or an RMC for purposes of this part and, as 
appropriate, the terms PHA and RMC include AME.
    Annual average is an average computed from data from a PHA's 
immediate past fiscal year for applicable indicators.
    Approved demolition and/or disposition program exists when a PHA's 
application for demolition and/or disposition of low-rent public 
housing units has received written approval from HUD.
    Approved funded, on-schedule annual modernization program includes 
any modernization program, funded out of the Comprehensive Grant 
Program (CGP), the Comprehensive Improvement Assistance Program (CIAP), 
the Vacancy Reduction Program (VRP), the Hope VI Program, or any other 
source, if a PHA is in conformance with its current implementation 
schedule as approved by the PHA Board of Commissioners and/or HUD.
    Assistant Secretary means the Assistant Secretary for Public and 
Indian Housing of the Department.
    Available unit is a dwelling unit (occupied or vacant) under a 
PHA's Annual Contributions Contract.
    Average turnaround time is the annual average of the total number 
of turnaround days between the move-out date (whenever that occurred, 
including in some previous fiscal year) and the date a new lease takes 
effect. Each time an individual unit is re-occupied (turned around) 
during the fiscal year, the turnaround days for that unit shall be 
counted in the turnaround time. Average turnaround time is calculated 
by dividing the total turnaround days for all units re-occupied during 
the fiscal year by the total number of units re-occupied during the 
immediate past fiscal year.
    Cash reserves is cash available at the end of an annual reporting 
period after all necessary expenses of a PHA/development have been paid 
or funds have been set-aside for such payment. The cash reserve 
computation takes into consideration both short-term accounts 
receivable and accounts payable.
    Confirmatory review is an on-site review for the purposes of State/
Area Office verification of the performance level of a PHA, the 
accuracy of the data certified to by a PHA, and the accuracy of the 
data derived from State/Area Office files.
    Correct means to improve performance in an indicator to a level of 
grade ``C'' or better.
    Current dwelling rent charged refers to the resident dwelling rent 
charges reflected in the monthly rent roll(s), and excludes retroactive 
rent charges, maintenance charges, excess utility charges, late 
charges, and any other charges not specifically identified as dwelling 
rent.
    Cyclical work orders are work orders issued for the performance of 
routine maintenance work that is done in the same way at regular 
intervals. Examples of cyclical work include, but are not limited to, 
mopping hallways; picking up litter; cleaning a trash compactor; 
changing light bulbs in an entryway; etc. (Cyclical work orders should 
not be confused with preventive maintenance work orders.)
    Deficiency means any grade below ``C'' in an indicator or 
component.
    Emergency means physical work items that pose an immediate threat 
to life, health, safety, or property, or that are related to fire 
safety.
    Emergency status abated means that an emergency work order is 
either fully completed, or the emergency condition is temporarily 
eliminated and no longer poses an immediate threat. If the work cannot 
be completed, emergency status can be abated by transferring the 
resident away from the emergency situation.
    Emergency work order is a work order, from any source, that 
involves a circumstance that poses an immediate threat to life, health, 
safety or property, or that is related to fire safety.
    HQS means Housing Quality Standards as set forth at 24 CFR 882.109 
and amended by the Lead-Based Paint regulation at 24 CFR part 35.
    Indicators means the major categories of PHA management functions 
that are examined under this program for assessment purposes. The list 
of individual indicators and the way they are graded is provided in 
Secs. 901.10 through 901.45.
    Local occupancy/housing codes are the minimum standards for human 
occupancy, if any, as defined by the local ordinance(s) of the 
jurisdiction in which the housing is located.
    Major systems include, but are not limited to, structural/building 
envelopes which include roofing, walls, windows, hardware, flashings 
and caulking; mechanical systems which include heating, ventilation, 
air conditioning, plumbing, drainage, underground utilities (gas, 
electrical and water), and fuel storage tanks; electrical systems which 
include underground systems, above ground systems, elevators, emergency 
generators, door bells, electronic security devices, fire alarms, smoke 
alarms, outdoor lighting, and indoor lighting (halls, stairwells, 
public areas and exit signs); and transformers.
    Memorandum of Agreement (MOA) is a binding contractual agreement 
between a PHA and HUD, required for each PHA designated as troubled 
and/or mod-troubled. The MOA sets forth target dates, strategies and 
incentives for improving management performance; and provides sanctions 
if performance does not result.
    Non-emergency work order is any work order that covers a situation 
that is not an immediate threat to life,

[[Page 20372]]

health, safety, or property, or that is unrelated to fire safety.
    Percentage of emergency work orders completed within 24 hours is 
the ratio of emergency work orders completed in 24 hours to the total 
number of emergency work orders. The formula for calculating this ratio 
is: total emergency work orders completed (or emergency status abated) 
in 24 hours or less, divided by the total number of emergency work 
orders.
    Percentage of rents uncollected is the proportion of current 
dwelling rent that was billed during the assessment year, but not 
collected during the assessment year. The calculation is made as of the 
close of business on the last business day of the fiscal year. It is 
calculated by subtracting the total dwelling rent collected in the 
immediate past fiscal year from the total dwelling rent billed in the 
immediate past fiscal year to determine the amount of rents 
uncollected; and dividing the amount of rents uncollected by the total 
dwelling rent billed.
    PHA means a public housing agency. As appropriate in accordance 
with Sec. 901.1(b)(2), PHA also includes AME.
    PHA-generated work order is any work order that is issued in 
response to a request from within the PHA administration.
    Preventive maintenance program is a program under which certain 
maintenance procedures are systematically performed at regular 
intervals to prevent premature deterioration of buildings and systems. 
The program is developed and regularly updated by the PHA, and fully 
documents what work is to be performed and at what intervals. The 
program includes a system for tracking the performance of preventive 
maintenance work.
    Preventive maintenance work order is any work done on a regularly 
scheduled basis in order to prevent deterioration or breakdowns in 
individual units or major systems.
    Reduced actual vacancy rate in the previous three years is a 
comparison of the vacancy rate in the PHMAP assessment year (the 
immediate past fiscal year) to the vacancy rate in the first year of 
the previous three year period. It is calculated by subtracting the 
vacancy rate in the assessment year from the vacancy rate in the 
earlier year.
    Reduced the average time it took to complete work orders over the 
previous three years is a comparison of the average time it took to 
complete work orders in the PHMAP assessment year (the immediate past 
fiscal year) to the average time it took to complete work orders in the 
first year of the previous three year period. It is calculated by 
subtracting the average time it took to complete work orders in the 
PHMAP assessment year from the average time it took to complete work 
orders in the earlier year.
    Rents uncollected means unpaid resident dwelling rent for residents 
in possession.
    Resident-generated work order is a work order issued by a PHA in 
response to a request from a lease holder or family member of a lease 
holder.
    Resident management corporation (RMC) means the entity that 
proposes to enter into, or that enters into, a management contract with 
a PHA in accordance with 24 CFR 964.120. As appropriate in accordance 
with Sec. 901.1(b)(2), RMC also includes AME.
    Routine operating expenses are all expenses which are normal, 
recurring fiscal year expenditures. Routine expenses exclude those 
expenditures that are not normal fiscal year expenditures and those 
that clearly represent work of such a substantial nature that the 
expense is clearly not a routine occurrence.
    Standards equivalent to HQS are housing/occupancy inspection 
standards that are equal to HUD's Section 8 HQS.
    Substantial default means a PHA is determined by the Department to 
be in violation of statutory, regulatory or contractual provisions or 
requirements, whether or not these violations would constitute a 
substantial default or a substantial breach under explicit provisions 
of the relevant Annual Contributions Contract or a Memorandum of 
Agreement.
    Turnaround days are the days between the last move-out and the date 
a new lease takes effect, including any turnaround days in prior fiscal 
years.
    Vacancy day is a day when a unit is not under lease by an eligible 
low-income resident, unless the vacancy day is exempted for an eligible 
reason.
    Vacant unit is a dwelling unit that is not under lease to an 
eligible family. Units under lease for police substations, social 
service providers, etc., are treated the same as units under lease to 
eligible families.
    Vacant unit turnaround work order is a work order issued that 
directs a vacant unit to be made ready to lease to a new resident and 
reflects all work items to prepare the unit for occupancy.
    Vacant unit undergoing modernization is a vacant unit in an 
otherwise viable development, as defined in 24 CFR 970.6, when the 
development is undergoing modernization that includes work that is 
necessary to reoccupy the vacant unit, and in which either: The vacant 
unit is under construction (i.e., the construction contract has been 
awarded or force account work has started); or the treatment of the 
vacant unit is included in a HUD-approved modernization budget (e.g., 
an approved Annual Statement for the Comprehensive Grant Program (CGP) 
or Comprehensive Improvement Assistance Program (CIAP) budget), but the 
time period for placing the vacant units under construction has not yet 
expired. The PHA must place the vacant units under construction within 
two Federal fiscal years (FFYs) after the FFY in which the 
modernization funds are approved. In addition, the following apply when 
computing time periods for a vacant unit undergoing modernization:
    (1) If a unit is vacant prior to being included in the construction 
budget of an approved funded on-schedule annual modernization plan, 
those vacancy days that had accumulated prior to the unit being 
included in the construction budget of an annual modernization plan 
must be included as non-exempted vacancy days in the calculation.
    (2) The calculation of turnaround time for newly modernized units 
starts when the unit is turned over to the PHA from the contractor and 
ends when the lease is effective for the new or returning resident. 
Thus, the total turnaround time would be the sum of the pre-
modernization vacancy time, and the post-modernization vacancy time.
    (3) Unit-by-unit documentation, showing when a vacant unit was 
included in the construction budget of a modernization plan, when it 
was released to the PHA by the contractor, and when a new lease is 
effective for the new or returning resident, must be maintained by the 
PHA.
    (4) Units remaining vacant more than two FFYs after the FFY in 
which the modernization funds are approved, may no longer be exempted 
from the calculation of the adjusted vacancy rate if the construction 
contract has not been let. These units may be exempted again, but only 
after a contract is let.
    Work order is a directive, containing one or more tasks issued to a 
PHA employee or contractor to perform one or more tasks on PHA 
property. This directive describes the location and the type of work to 
be performed; the date and time of receipt; date and time issued to the 
person or entity performing the work; the date and time the work is 
satisfactorily completed; the parts used to complete the repairs and 
the cost of the parts; whether the damage was caused by the resident; 
and the charges to the resident for resident-

[[Page 20373]]

caused damage. The work order is entered into a log which indicates at 
all times the status of all work orders as to type (emergency, routine, 
etc.), when issued, and when completed.
    Work order completed during the immediate past fiscal year is any 
work order that is completed during the PHA's fiscal year regardless of 
when it may have been received.
    Work order deferred for modernization is any work order that is 
combined with similar work orders and completed within the current 
PHMAP assessment year, or will be completed in the following year, 
under the PHA's modernization program or other PHA capital improvements 
program.


Sec. 901.10  Indicator #1, vacancy rate and unit turnaround time.

    This indicator examines the vacancy rate, a PHA's progress in 
reducing vacancies, and unit turnaround time. This indicator has a 
weight of x2.
    (a) For the calculation of the adjusted vacancy rate and turnaround 
time, the vacancy days for units in the following categories shall be 
exempted:
    (1) Vacant unit undergoing modernization.
    (2) Vacant units in an approved demolition or disposition program 
(not applicable to vacant unit turnaround).
    (3) Vacant units that are documented to be uninhabitable for 
reasons beyond the PHA's control:
    (i) Due to high/unsafe levels of hazardous/toxic material (e.g., 
lead-based paint or asbestos);
    (ii) By order of the local health department or directive of the 
Environmental Protection Agency, where the conditions causing the order 
are beyond the control of the PHA; and
    (iii) That are structurally unsound (e.g., buildings damaged by 
shrinking/swelling subsoil or similar situations, or as a result of 
natural disasters).
    (4) Vacant units in which resident property has been abandoned, but 
only if State law requires the property to be left in the unit for some 
period of time, and only for the period stated in the law.
    (5) Vacant units that have sustained casualty damage, but only 
until the insurance claim is adjusted, i.e., funds to repair the unit 
are received.
    (6) Units that are used for non-dwelling purposes and dwelling 
units that are occupied by employees of the PHA and units that are used 
for resident services.
    (7) Vacant units required to remain vacant because of fire/police 
investigations, coroner's seal, or court order.
    (8) Units kept vacant because of code violations caused for reasons 
beyond the control of the PHA, rather than as a result of management 
and/or maintenance failures by the PHA.
    (9) Units vacant for circumstances and actions beyond the PHA's 
control that prevent the PHA from being able to occupy, sell, demolish, 
rehabilitate, reconstruct, consolidate, or modernize vacant units. Such 
circumstances and actions may include:
    (i) Litigation, such as a court order or settlement agreement that 
is legally enforceable. For example, units that are being held vacant 
as part of a court-ordered or HUD-approved desegregation effort would 
be exempted.
    (ii) Federal or, when not preempted by Federal requirements, State 
law of general applicability or their implementing regulations. This 
category does not include units vacant only because they do not meet 
minimum standards established, for example, in housing and building 
codes.
    (iii) Changing market conditions. For example, small PHAs that are 
located in areas experiencing population loss or economic dislocations 
may face a lack of demand in the foreseeable future, even after 
aggressive marketing and outreach measures by the PHA have been 
undertaken. Documentation of marketing efforts must be maintained by 
the PHA.
    (iv) Natural disasters.
    (v) Insufficient funding for otherwise approvable applications made 
for CIAP funds (only PHAs with less than 250 units are eligible to 
apply and compete for CIAP funds). This definition will cease to be 
used if CIAP is replaced by a formula grant.
    (vi) Pending resolution of insurance claims or settlements. The 
period between a casualty loss and the receipt of funds from an insurer 
to cover the loss in whole or in part.
    (b) Component #1, vacancy percentage and progress in reducing 
vacancies. A PHA may choose whether to use actual or adjusted vacancy 
rate. This component has a weight of x2.
    (1) Grade A: The PHA is in one of the following categories:
    (i) An actual vacancy rate of 3% or less; or
    (ii) An adjusted vacancy rate of 2% or less.
    (2) Grade B: The PHA is in one of the following categories:
    (i) An actual vacancy rate of greater than 3% and less than or 
equal to 5%; or
    (ii) An adjusted vacancy rate of greater than 2%, but less than or 
equal to 3%.
    (3) Grade C: The PHA is in one of the following categories:
    (i) An actual vacancy rate of greater than 5% and less than or 
equal to 7%; or
    (ii) An adjusted vacancy rate of greater than 3% and less than or 
equal to 4%; or
    (iii) The PHA has reduced its actual vacancy rate by at least 15 
percentage points over the past three years and has an adjusted vacancy 
rate of greater than 4% and less than or equal to 5%.
    (4) Grade D: The PHA is in one of the following categories:
    (i) An actual vacancy rate of greater than 7% and less than or 
equal to 9%;
    (ii) An adjusted vacancy rate of greater than 4% and less than or 
equal to 5%; or
    (iii) The PHA has reduced its actual vacancy rate by at least 10 
percentage points over the past three years and has an adjusted vacancy 
rate of greater than 5% and less than or equal to 6%.
    (5) Grade E: The PHA is in one of the following categories:
    (i) An actual vacancy rate of greater than 9% and less than or 
equal to 10%; or
    (ii) An adjusted annual vacancy rate of greater than 5% and less 
than or equal to 6%; or
    (iii) The PHA has reduced its actual vacancy rate by at least five 
percentage points over the past three years and has an adjusted vacancy 
rate of greater than 6% and less than or equal to 7%.
    (6) Grade F: The PHA is in one of the following categories:
    (i) An actual vacancy rate of greater than 10%; or
    (ii) An adjusted annual vacancy rate of greater than 6%.
    (c) Component #2, unit turnaround time. This component is to be 
completed only by PHAs scoring below a grade C on component #1. This 
component has a weight of x1.
    (1) Grade A: The average number of calendar days between the time 
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's immediate past fiscal year, is less than or 
equal to 20 calendar days.
    (2) Grade B: The average number of calendar days between the time 
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's immediate past fiscal year, is greater than 
20 calendar days and less than or equal to 25 calendar days.
    (3) Grade C: The average number of calendar days between the time 
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's immediate past fiscal year, is greater than 
25 calendar days and less than or equal to 30 calendar days.
    (4) Grade D: The average number of calendar days between the time 
when a

[[Page 20374]]

unit is vacated and a new lease takes effect for units re-occupied 
during the PHA's immediate past fiscal year, is greater than 30 
calendar days and less than or equal to 40 calendar days.
    (5) Grade E: The average number of calendar days between the time 
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's immediate past fiscal year, is greater than 
40 calendar days and less than or equal to 50 calendar days.
    (6) Grade F: The average number of calendar days between the time 
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's immediate past fiscal year, is greater than 
50 calendar days.


Sec. 901.15  Indicator #2, modernization.

    This indicator is automatically excluded if a PHA does not have a 
modernization program. This indicator examines the amount of unexpended 
funds over three years old, the timeliness of fund obligation, the 
adequacy of contract administration, the quality of the physical work, 
and the adequacy of budget controls. It applies to both the 
Comprehensive Grant Program (CGP) and the Comprehensive Improvement 
Assistance Program (CIAP). This indicator has a weight of x1.
    (a) Component #1, unexpended funds over three Federal Fiscal Years 
(FFYs) Old. This component has a weight of x1.
    (1) Grade A: The PHA has no unexpended funds over three FFYs old, 
or is able to demonstrate one of the following:
    (i) The unexpended funds are leftover funds and will be recaptured 
after audit; or
    (ii) The HUD-approved original implementation schedule allows 
longer than three FFYs to expend all funds; or
    (iii) The PHA has self-executed a time extension within 30 calendar 
days after the expenditure deadline and the extension is based on valid 
reasons outside of the PHA's control, such as litigation, material 
shortages, or other institutional delay.
    (2) Grade F: The PHA has unexpended funds over three FFYs old and 
is unable to demonstrate any of the above three conditions; or the PHA 
requests HUD approval of a time extension based on reasons within the 
PHA's control.
    (b) Component #2, timeliness of fund obligation. This component has 
a weight of x2.
    (1) Grade A: The PHA has no unobligated funds over two FFYs old or 
is able to demonstrate one of the following:
    (i) The HUD-approved original implementation schedule allows longer 
than two FFYs to obligate all funds; or
    (ii) The PHA has self-executed a time extension within 30 calendar 
days after the obligation deadline and the extension is based on valid 
reasons outside of the PHA's control, such as litigation, material 
shortages, or other institutional delay.
    (2) Grade F: The PHA has unobligated funds over two FFYs old and is 
unable to demonstrate any of the above two conditions; or the PHA 
requests HUD approval of a time extension based on reasons within the 
PHA's control.
    (c) Component #3, adequacy of contract administration. This 
component has a weight of x1.5.
    (1) Grade A: Based on HUD's latest on-site inspection and/or audit, 
there were no significant findings related to contract administration 
or the PHA has corrected all such findings.
    (2) Grade C: Based on HUD's latest on-site inspection and/or audit, 
there were significant findings related to contract administration and 
the PHA is in the process of correcting all such findings.
    (3) Grade F: Based on HUD's latest on-site inspection and/or audit, 
there were significant findings related to contract administration and 
the PHA has failed to initiate corrective actions for all such findings 
or those actions which have been initiated have not resulted in 
progress toward remedying all of the findings.
    (d) Component #4, quality of the physical work. This component has 
a weight of x3.
    (1) Grade A: Based on HUD's latest on-site inspection, there were 
no significant findings related to the quality of the physical work or 
the PHA has corrected all such findings.
    (2) Grade C: Based on HUD's latest on-site inspection, there were 
significant monitoring findings related to the quality of the physical 
work and the PHA is in the process of correcting all such findings.
    (3) Grade F: Based on HUD's latest on-site inspection, there were 
significant monitoring findings related to the quality of the physical 
work and the PHA has failed to initiate corrective actions for all such 
findings or those actions which have been initiated have not resulted 
in progress toward remedying all of the findings.
    (e) Component #5, adequacy of budget controls. This component has a 
weight of x1.
    (1) Grade A: The CGP PHA has expended modernization funds only on 
work items in HUD-approved CGP Annual Statements/Five-Year Action Plan 
or has obtained prior HUD approval for required budget revisions. The 
CIAP PHA has expended modernization funds only on work items in HUD-
approved CIAP budgets, or within the HUD-established threshold for CIAP 
budget revisions, or has obtained prior HUD approval for required 
budget revisions.
    (2) Grade F: The CGP PHA has expended modernization funds on work 
items that were not in HUD-approved CGP Annual Statements/Five-Year 
Action Plan and did not obtain prior HUD approval for required budget 
revisions. The CIAP PHA has expended modernization funds on work items 
that were not in HUD-approved CIAP budgets, or within the HUD-
established threshold for CIAP budget revisions, and did not obtain 
prior HUD approval for required budget revisions.


Sec. 901.20  Indicator #3, rents uncollected.

    This indicator examines the PHA's ability to collect rent by 
measuring the percentage of dwelling rent it failed to collect during 
its immediate past fiscal year. This indicator has a weight of x1.5.
    (a) Grade A: Percent of rents uncollected in the immediate past 
fiscal year is less than or equal to 2% of total rents billed.
    (b) Grade B: The percent of rents uncollected in the immediate past 
fiscal year is greater than 2% and less than or equal to 4% of total 
rents billed.
    (c) Grade C: The percent of rents uncollected in the immediate past 
fiscal year is greater than 4% and less than or equal to 6% of total 
rents billed.
    (d) Grade D: The percent of rents uncollected in the immediate past 
fiscal year is greater than 6% and less than or equal to 8% of total 
rents billed.
    (e) Grade E: The percent of rents uncollected in the immediate past 
fiscal year is greater than 8% and less than or equal to 10% of total 
rents billed.
    (f) Grade F: The percent of rents uncollected in the immediate past 
fiscal year is greater than 10% of total rents billed.


Sec. 901.25  Indicator #4, work orders.

    This indicator examines the average number of days it takes for a 
work order to be completed, and any progress a PHA has made during the 
preceding three years to reduce the period of time required to complete 
maintenance work orders. This indicator has a weight of x1.5.
    (a) Component #1, emergency work orders completed within 24 hours 
or less. This component has a weight of x1.
    (1) Grade A: At least 99% of emergency work orders were completed 
or the emergency was abated within 24

[[Page 20375]]

hours or less during the PHA's immediate past fiscal year.
    (2) Grade B: At least 98% of emergency work orders were completed 
or the emergency was abated within 24 hours or less during the PHA's 
immediate past fiscal year.
    (3) Grade C: At least 97% of emergency work orders were completed 
or the emergency was abated within 24 hours or less during the PHA's 
immediate past fiscal year.
    (4) Grade D: At least 96% of emergency work orders were completed 
or the emergency was abated within 24 hours or less during the PHA's 
immediate past fiscal year.
    (5) Grade E: At least 95% of emergency work orders were completed 
or the emergency was abated within 24 hours or less during the PHA's 
immediate past fiscal year.
    (6) Grade F: Less than 95% of emergency work orders were completed 
or the emergency was abated within 24 hours or less during the PHA's 
immediate past fiscal year.
    (b) Component #2, average number of days for non-emergency work 
orders to be completed. All work orders should be tracked, except non-
emergency work orders exempted for modernization, issued to prepare a 
vacant unit for re-rental, or issued for the performance of cyclical 
maintenance. This component has a weight of x2.
    (1) Grade A: All non-emergency work orders are completed within an 
average of 25 calendar days.
    (2) Grade B: All non-emergency work orders are completed within an 
average of greater than 25 calendar days and less than or equal to 30 
calendar days.
    (3) Grade C: The PHA is in one of the following categories:
    (i) All non-emergency work orders are completed within an average 
of greater than 30 calendar days and less than or equal to 40 calendar 
days; or
    (ii) The PHA has reduced the average time it takes to complete non-
emergency work orders over the past three years by at least 30 days.
    (4) Grade D: The PHA is in one of the following categories:
    (i) All non-emergency work orders are completed within an average 
of greater than 40 calendar days and less than or equal to 50 calendar 
days; or
    (ii) The PHA has reduced the average time it takes to complete non-
emergency work orders over the past three years by at least 20 days.
    (5) Grade E: The PHA is in one of the following categories:
    (i) All non-emergency work orders are completed within an average 
of greater than 50 calendar days and less than or equal to 60 calendar 
days; or
    (ii) The PHA has reduced the average time it takes to complete non-
emergency work orders over the past three years by at least 10 days.
    (6) Grade F: All non-emergency work orders are completed within an 
average of greater than 60 calendar days.


Sec. 901.30  Indicator #5, annual inspection of units and systems.

    This indicator examines the percentage of units that a PHA inspects 
on an annual basis in order to determine short-term maintenance needs 
and long-term modernization needs. This indicator has a weight of x1.
    (a) Units in the following categories are exempted and not included 
in the calculation of the total number of units, and the number and 
percentage of units inspected. Systems that are a part of individual 
dwelling units that are exempted, or a part of a building where all of 
the dwelling units in the building are exempted, are also exempted from 
the calculation of this indicator:
    (1) Occupied units where the PHA has made two documented attempts 
to inspect, but only if the PHA can document that appropriate legal 
action (up to and including eviction of the legal or illegal 
occupant(s)), has been taken under provisions of the lease to ensure 
that the unit can be subsequently inspected.
    (2) Vacant unit undergoing modernization.
    (3) Vacant units in an approved demolition or disposition program.
    (4) Vacant units that are documented to be uninhabitable:
    (i) Due to high/unsafe levels of hazardous/toxic material (e.g., 
lead-based paint or asbestos);
    (ii) By order of the local health department or directive of the 
Environmental Protection Agency, where the conditions causing the order 
are beyond the control of the PHA; and
    (iii) That are structurally unsound (e.g., buildings damaged by 
shrinking/swelling subsoil or similar situations).
    (5) Units vacant for the full immediate past fiscal year that have 
been exempted under indicator #1, at Sec. 901.10, for any of the 
reasons for which exemptions are permitted under that indicator (except 
those units that are used for non-dwelling purposes or that are 
occupied by employees of the PHA and units that are used for resident 
services).
    (b) Component #1, annual inspection of units. This component refers 
to an inspection using either the local housing/occupancy code, or HUD 
HQS if there is no local code or the local code is less stringent that 
HQS. This component has a weight of x1.
    (1) Grade A: The PHA inspected 100% of its units and, if repairs 
were necessary for code compliance, either completed the repairs during 
the inspection; issued work orders for the repairs; or referred the 
deficiency to the current year's or next year's modernization program.
    (2) Grade B: The PHA inspected less than 100% but at least 97% of 
its units and, if repairs were necessary for code compliance, either 
completed the repairs during the inspection; issued work orders for the 
repairs; or referred the deficiency to the current year's or next 
year's modernization program.
    (3) Grade C: The PHA inspected less than 97% but at least 95% of 
its units and, if repairs were necessary for code compliance, either 
completed the repairs during the inspection; issued work orders for the 
repairs; or referred the deficiency to the current year's or next 
year's modernization program.
    (4) Grade D: The PHA inspected less than 95% but at least 93% of 
its units and, if repairs were necessary for code compliance, either 
completed the repairs during the inspection; issued work orders for the 
repairs; or referred the deficiency to the current year's or next 
year's modernization program.
    (5) Grade E: The PHA inspected less than 93% but at least 90% of 
its units and, if repairs were necessary for code compliance, either 
completed the repairs during the inspection; issued work orders for the 
repairs; or referred the deficiency to the current year's or next 
year's modernization program.
    (6) Grade F: The PHA has failed to inspect at least 90% of its 
units; or failed to correct deficiencies during the inspection or issue 
work orders for the repairs; or failed to refer deficiencies to the 
current year's or next year's modernization plan.
    (c) Component #2, annual inspection of systems. This component 
examines the inspection of buildings and sites according to the PHA's 
maintenance plan, including performing the required maintenance on 
structures and systems in accordance with manufacturer's specifications 
and established local/PHA standards, or issuing work orders for future 
maintenance/repairs, or including identified deficiencies in the 
Comprehensive Modernization Plan. This component has a weight of x1.
    (1) Grade A: At 100% of its buildings and sites, according to its 
maintenance plan, the PHA inspected all major systems.
    (2) Grade B: At a minimum of 90% but less than 100% of its 
buildings and sites, according to its maintenance plan, the PHA 
inspected all major systems.
    (3) Grade C: At a minimum of 80% but less than 90% of its buildings 
and

[[Page 20376]]

sites, according to its maintenance plan, the PHA inspected all major 
systems.
    (4) Grade D: At a minimum of 70% but less than 80% of its buildings 
and sites, according to its maintenance plan, the PHA inspected all 
major systems.
    (5) Grade E: At least 60% but less than 70% of its buildings and 
sites, according to its maintenance plan, the PHA inspected all major 
systems.
    (6) Grade F: The PHA failed to inspect at lease 60% of its 
buildings and sites, all major systems, as defined herein, and perform 
the required maintenance on these systems in accordance with 
manufacturers specifications and established local/PHA standards, or 
issue work orders for future maintenance/repairs, or include identified 
deficiencies in the Comprehensive Modernization Plan.


Sec. 901.35  Indicator #6, financial management.

    This indicator examines the amount of cash reserves and, for PHAs 
scoring below a grade C on cash reserves, energy/utility consumption. 
This indicator has a weight of x1.
    (a) Component #1, cash reserves. This component has a weight of x2.
    (1) Grade A: Cash reserves are greater than or equal to 15% of 
total actual routine expenditures, or the PHA has cash reserves of $3 
million or more.
    (2) Grade B: Cash reserves are greater than or equal to 12.5%, but 
less than 15% of total actual routine expenditures.
    (3) Grade C: Cash reserves are greater than or equal to 10%, but 
less than 12.5% of total actual routine expenditures.
    (4) Grade D: Cash reserves are greater than or equal to 7.5%, but 
less than 10% of total actual routine expenditures.
    (5) Grade E: Cash reserves are greater than or equal to 5%, but 
less than 7.5% of total actual routine expenditures.
    (6) Grade F: Cash reserves are less than 5% of total actual routine 
expenditures.
    (b) Component #2, energy/utility consumption. Either option A or 
option B of this component is to be completed only by PHAs that score 
below a grade C on component #1. Regardless of a PHA's score on 
component #1, it will not be scored on component #2 if all its units 
have tenant paid utilities. Annual energy/utility consumption includes 
water and sewage usage. This component has a weight of x1.
    (1) Option A, Annual Energy/Utility Consumption.--(i) Grade A: 
Annual energy/utility consumption, as compared to the average of the 
three years' rolling base consumption, has not increased.
    (ii) Grade B: Annual energy/utility consumption, as compared to the 
average of the three years' rolling base consumption, has not increased 
by more than 3%.
    (iii) Grade C: Annual energy/utility consumption, as compared to 
the average of the three years' rolling base consumption, has increased 
by more than 3% and less than or equal to 5%.
    (iv) Grade D: Annual energy/utility consumption, as compared to the 
average of the three years' rolling base consumption, has increased by 
more than 5% and less than or equal to 7%.
    (v) Grade E: Annual energy/utility consumption, as compared to the 
average of the three years' rolling base consumption, has increased by 
more than 7% and less than or equal to 9%.
    (vi) Grade F: Annual energy/utility consumption, as compared to the 
average of the three years' rolling base consumption, has increased by 
more than 9%.
    (2) Component #2, option B, energy consumption.--(i) Grade A: The 
PHA has completed its energy audit and has implemented all of the 
recommendations that were cost effective.
    (ii) Grade C: The PHA has completed its energy audit and is in the 
process of implementing all of the recommendations that were cost 
effective.
    (iii) Grade F: The PHA has not completed its energy audit, or has 
not implemented all of the recommendations that were cost effective.


Sec. 901.40  Indicator #7, resident involvement.

    This indicator examines the PHA's efforts to encourage partnerships 
with residents and the local community that help improve management 
operations at the PHA; to encourage programs that develop self-
sufficiency, individual responsibility and community involvement among 
residents; and, if applicable, PHA performance under any special HUD 
grant(s). PHAs with 100 units or less will not be assessed under this 
indicator. This indicator has a weight of x1.
    (a) Grade A: The PHA meets each of the following criteria:
    (1) The PHA Board, by resolution, has adopted a Section 3 program 
and the PHA staff monitors progress under the program and issues 
reports concerning progress under the program.
    (2) The PHA has documentation that at each PHA family development 
site where a resident council exists, there has been a development-wide 
election of resident council board members and/or officers, and where 
no resident council exists, the PHA has encouraged the formation of 
such a council.
    (3) The PHA Board has, through resolution, adopted mechanisms to 
ensure that residents have ample opportunity for input into planning 
and goal setting for ongoing management issues, as well as for capital 
improvements programs such as the Comprehensive Grant Program and the 
Comprehensive Improvement Assistance Program.
    (4) If the PHA has any special resident initiative program, such as 
a Technical Assistance Grant (TAG), the Tenant Opportunity Program 
(TOP), Family Investment Center (FIC), Youth Sports (YS), Youth 
Apprenticeship Program (YAP), or Family Self-Sufficiency (FSS), the PHA 
can document that it is meeting at least 90% of its goals under the 
implementation plan for any and all of these programs.
    (b) Grade C: The PHA meets each of the following criteria:
    (1) The PHA Board, by resolution, has adopted a Section 3 program.
    (2) At each PHA family development site where a resident council 
does not exist, the PHA during the assessment year has encouraged 
development-wide elections of resident council board members and/or 
officers.
    (3) The PHA Board has invited residents to participate in planning 
for capital improvements.
    (4) If the PHA has any special resident initiative program, such as 
TAG, TOP, FIC, YS, YAP, or FSS, the PHA can document that it is meeting 
at least 60% of its goals under the implementation plan for any and all 
of these programs.
    (c) Grade F: The PHA fails to meet any one of the following 
criteria:
    (1) The PHA Board, by resolution, has adopted a Section 3 program.
    (2) At each PHA family development site where a resident council 
does not exist, the PHA during the assessment year has encouraged 
development-wide elections of resident council board members and/or 
officers.
    (3) The PHA Board has invited residents to participate in planning 
for capital improvements.
    (4) If the PHA has any special resident initiative program, such as 
TAG, TOP, FIC, YS, YAP, or FSS, the PHA can document that it is meeting 
at least 60% of its goals under the implementation plan for any and all 
of these programs.


Sec. 901.45  Indicator #8, security.

    This indicator evaluates the PHAs performance in tracking crime-
related problems in their developments, cooperating with local law 
enforcement and local courts, the adoption and

[[Page 20377]]

implementation of tough applicant screening and resident eviction 
policies and procedures, and, as applicable, PHA performance under any 
special HUD grant(s). PHAs with 100 units or less will not be assessed 
under this indicator. This indicator has a weight of x1.
    (a) Grade A: The PHA meets the following criteria:
    (1) The PHA has a mechanism (such as the logging of serious 
incidents in its various developments) for tracking crime related 
problems and can demonstrate a system for taking action with local 
police authorities to improve law enforcement, lease enforcement and 
crime prevention.
    (2) The PHA Board, by resolution, has adopted policies and the PHA 
has implemented procedures and can document that it appropriately 
screens out and denies admission to a public housing applicant who:
    (i) Has a recent history of criminal activity involving crimes to 
persons or property and/or other criminal acts that would adversely 
affect the health, safety or welfare of other residents;
    (ii) Was evicted, because of drug-related criminal activity, from 
housing assisted under the U.S. Housing Act of 1937 within three years 
of the projected date of admission, unless the applicant has 
successfully completed, since the eviction, a rehabilitation program 
approved by the public housing agency;
    (iii) The PHA determines is illegally using a controlled substance; 
or
    (iv) The PHA has reasonable cause to believe abuses alcohol in a 
way that may interfere with the health, safety, or right to peaceful 
enjoyment of the premises by other residents.
    (3) The PHA Board, by resolution, has adopted policies and the PHA 
has implemented procedures and can document that it appropriately 
evicts a public housing resident who:
    (i) Engages in any criminal activity that threatens the health, 
safety, or right to peaceful enjoyment of the premises by other 
residents;
    (ii) Engages in any drug-related criminal activity (as defined at 
section 6(l) of the 1937 Act (42 U.S.C. 1437d(l)) on or off the PHA's 
property; or
    (iii) The PHA has reasonable cause to believe abuses alcohol in 
such a way that may interfere with the health, safety, or right to 
peaceful enjoyment of the premises by other residents.
    (4) If the PHA has any special drug prevention program or crime 
reduction program funded by any HUD funds, the PHA can document that it 
is meeting at least 90% of its goals under the implementation plan for 
any and all of these programs.
    (b) Grade C: The PHA meets the following criteria:
    (1) The PHA can demonstrate a system for taking action with local 
police authorities to improve law enforcement, lease enforcement and 
crime prevention.
    (2) The PHA Board, by resolution, has adopted policies but cannot 
document results in appropriately screening out and denying admission 
to a public housing applicant who:
    (i) Has a recent history of criminal activity involving crimes to 
persons or property and/or other criminal acts that would adversely 
affect the health, safety or welfare of other residents;
    (ii) Was evicted, because of drug-related criminal activity, from 
housing assisted under the U.S. Housing Act of 1937 (42 U.S.C. 1437 et 
seq.) within three years of the projected date of admission, unless the 
applicant has successfully completed, since the eviction, a 
rehabilitation program approved by the public housing agency;
    (iii) The PHA determines is illegally using a controlled substance; 
or
    (iv) The PHA has reasonable cause to believe abuses alcohol in a 
way that may interfere with the health, safety, or right to peaceful 
enjoyment of the premises by other residents.
    (3) The PHA Board, by resolution, has adopted policies but cannot 
document results in appropriately evicting a public housing resident 
who:
    (i) Engages in any criminal activity that threatens the health, 
safety, or right to peaceful enjoyment of the premises by other 
residents;
    (ii) Engages in any drug-related criminal activity (as defined at 
section 6(l) of the 1937 Act (42 U.S.C. 1437d(l)) on or off the PHA's 
property; or
    (iii) The PHA has reasonable cause to believe abuses alcohol in a 
way that may interfere with the health, safety, or right to peaceful 
enjoyment of the premises by other residents.
    (4) If the PHA has any special drug prevention program or crime 
reduction program funded by any HUD funds, the PHA can document that it 
is meeting at least 60% of its goals under the implementation plan for 
any and all of these programs.
    (c) Grade F: The PHA meets any one the following criteria:
    (1) The PHA is not cooperating with local police authorities in an 
effort to provide safe and secure environments in its public housing 
developments.
    (2) The PHA has not adopted policies or procedures that result in 
screening out and denying admission to a public housing applicant who:
    (i) Has a recent history of criminal activity involving crimes to 
persons or property and/or other criminal acts that would adversely 
affect the health, safety or welfare of other residents;
    (ii) Was evicted, because of drug-related criminal activity, from 
housing assisted under the U.S. Housing Act of 1937 within three years 
of the projected date of admission, unless the applicant has 
successfully completed, since the eviction, a rehabilitation program 
approved by the public housing agency;
    (iii) The PHA determines is illegally using a controlled substance; 
or
    (iv) The PHA has reasonable cause to believe abuses alcohol in a 
way that may interfere with the health, safety, or right to peaceful 
enjoyment of the premises by other residents.
    (3) The PHA has not adopted policies or procedures that document 
results in the eviction of a public housing resident who:
    (i) Engages in any criminal activity that threatens the health, 
safety, or right to peaceful enjoyment of the premises by other 
residents;
    (ii) Engages in any drug-related criminal activity (as defined in 
section 6(l) of the 1937 Act (42 U.S.C. 1437d(l))) on or off the PHA's 
property; or
    (iii) The PHA has reasonable cause to believe abuses alcohol in a 
way that may interfere with the health, safety, or right to peaceful 
enjoyment of the premises by other residents.
    (4) If the PHA has any special drug prevention program or crime 
reduction program funded by any HUD funds, the PHA does not have a 
system for documenting or cannot document that it is meeting 60% or 
more of its goals under the implementation plan for any and all of 
these programs.


Sec. 901.100  Data collection.

    (a) Information on some of the indicators will be derived by the 
State/Area Office from existing reporting and data forms.
    (b) A PHA shall provide certification as to data on indicators not 
collected according to paragraph (a) of this section, by submitting a 
certified questionnaire within 45 calendar days after the end of the 
fiscal year covered by the certification:
    (1) The certification shall be approved by PHA Board resolution, 
and signed and attested to by the Executive Director.
    (2) PHAs shall maintain documentation for three years verifying all 
certified indicators for HUD on-site review.
    (3) A PHA may include in its certification, rather than through an 
exclusion or modification request, any information bearing on the 
accuracy or completeness of the data being used by

[[Page 20378]]

HUD in grading an indicator. HUD will consider this assertion in 
grading the affected indicator.
    (4) If a PHA does not submit its certification, or submits its 
certification late, appropriate sanctions may be imposed, including a 
presumptive rating of failure in all of the PHMAP indicators, which may 
result in troubled or mod-troubled designations.
    (5) A PHA's certification will be post-reviewed by HUD during the 
next on-site review, but is subject to verification at any time. 
Appropriate sanctions for intentional false certification will be 
imposed, including suspension or debarment of the signatories, the loss 
of high performer designation, a lower grade for individual indicators 
and a lower PHMAP total weighted score.
    (c) For those developments of a PHA where management functions have 
been assumed by an RMC, the PHA's certification shall identify the 
development and the management functions assumed by the RMC. The PHA 
shall obtain a certified questionnaire from the RMC as to the 
management functions undertaken by the RMC. The PHA shall submit the 
RMC's certified questionnaire along with its own. The RMC's 
certification shall be approved by its Executive Director or Chief 
Executive Officer of whatever title.


Sec. 901.105  Computing assessment score.

    (a) Grades within indicators and components have the following 
point values:
    (1) Grade A = 10.0 points;
    (2) Grade B = 8.5 points;
    (3) Grade C = 7.0 points;
    (4) Grade D = 5.0 points;
    (5) Grade E = 3.0 point; and
    (6) Grade F = 0.0 points.
    (b) If indicators or components are designated as having additional 
weight (e.g., x1.5 or x2), the points in each grade will be multiplied 
times the additional weight.
    (c) Indicators will be graded individually. Components within an 
indicator will be graded individually, and then will be used to 
determine a single grade for the indicator, by dividing the total 
number of component points by the total number of component weights and 
rounding off to two decimal places. The total number of component 
weights for this purpose includes a one for components that are 
unweighted (i.e., they are weighted x1, rather than x1.5 or x2).
    (d) Adjustment for physical condition and neighborhood environment. 
The overall PHMAP score will be adjusted by adding weighted points that 
reflect the weight to be given to the differences in the difficulty of 
managing developments that result from physical condition and 
neighborhood environment:
    (1) Weighting shall apply to the following three indicators only:
    (i) Indicator #1, vacancy rate and unit turnaround;
    (ii) Indicator #4, work orders; and
    (iii) Indicator #5, annual inspection and condition of units and 
systems.
    (2) Definitions of physical condition and neighborhood environment 
are:
    (i) Physical condition: refers to units located in developments 
over ten years old that require major capital investment in order to 
meet minimum HQS standards or local codes, whichever is applicable. 
This excludes developments that have been comprehensively modernized.
    (ii) Neighborhood environment: refers to units located within 
developments where the immediate surrounding neighborhood (that is a 
majority of the census tracts on all sides of the development) has at 
least 51% of families with incomes below the poverty rate as documented 
by the latest census data.
    (3) Any PHA with 5% or more of its units subject to either or both 
of the above conditions shall, if they so choose, be issued a weighted 
PHMAP score in addition to the regular score based solely upon the 
certification of the PHA. The weighted score shall be calculated as 
follows:

                                                                        
                                                                        
                                                                        
Percent of units subject to physical condition and/or extra             
 neighborhood environment:                                        Extra 
                                                                  points
At least 5% but less than 10%..................................       .5
At least 10% but less than 20%.................................       .6
At least 20% but less than 30%.................................       .7
At least 30% but less than 40%.................................       .8
At least 40% but less than 50%.................................       .9
At least 50%...................................................      1.0
                                                                        

    (i) These extra points will be added to the score (grade) of the 
indicator(s) to which these conditions may apply. A PHA is required to 
certify on form HUD-50072, PHMAP Certification, the extent to which the 
conditions apply, and to which of the indicators the extra scoring 
points should be added.
    (ii) Developments that have received comprehensive modernization 
within the past ten years are not eligible for a weighted score for the 
physical condition factor.
    (iii) A PHA that receives a grade of A under indicators #4 and #5 
may not claim the additional weight for indicator #1 since the physical 
condition of its developments is not applicable.
    (iv) None of the weighted indicators may have a score that is more 
than its total weighted points, including the additional point, or 
fraction thereof, awarded for weighting.
    (4) PHAs shall maintain supporting documentation to show how they 
arrived at the number and percentage of units out of their total 
inventory that are subject to weighting.
    (i) If the basis was neighborhood environment, the PHA shall have 
on file the appropriate maps showing the census tracts surrounding the 
development(s) in question with supporting census data showing the 
level of poverty. Units that fall into this category but which have 
already been removed from consideration for other reasons (permitted 
exemptions and modifications and/or exclusions) shall not be counted in 
this calculation.
    (ii) For the physical condition factor, a PHA would have to 
maintain documentation showing the age and condition of the units and 
the record of capital improvements, indicating that these particular 
units have not received modernization funds.
    (iii) PHAs shall also document that in all cases, units that were 
exempted for other reasons were not included in the calculation.


Sec. 901.110  PHA request for exclusion or modification of an indicator 
or component.

    (a) A PHA shall have the right to request the exclusion or 
modification of any indicator or component in its management 
assessment, thereby excluding or modifying the impact of those 
indicator's or component's grades in its PHMAP total weighted score.
    (b) Exclusion and modification requests shall be submitted by a PHA 
at the time of its PHMAP certification submission to the State/Area 
Office along with supporting documentary justification, rather than 
during the appeal process.
    (c) Requests for exclusions and modifications that do not include 
supporting documentary justification will not be considered.
    (d) Indicator #2, modernization, shall be automatically excluded by 
the State/Area Office if a PHA does not have an open modernization 
program.
    (e) Indicator #7, resident involvement, shall be automatically 
excluded by the State/Area Office for PHAs with 100 or fewer units.


Sec. 901.115  PHA score and status.

    (a) PHAs that achieve a total weighted score of 90% or greater may 
be designated high performers. A PHA shall not be designated as a high 
performer if it scores below a grade of

[[Page 20379]]

C for any indicator. High performers will be afforded incentives that 
include substantial relief from reporting and other requirements, as 
described in Sec. 901.130.
    (b) PHAs that achieve a total weighted score of 90% or greater on 
indicator #2, modernization, may be designated mod-high performers.
    (c) PHAs that achieve a total weighted score of less than 90% but 
not less than 60% may be designated standard. Standard performers will 
be afforded incentives that include substantial relief from reporting 
and other requirements, as described in Sec. 901.130.
    (d) PHAs that achieve a total weighted score of less than 60% may 
be designated as troubled.
    (e) PHAs with more than 100 units that achieve a total weighted 
score of less than 60% on indicator (2), modernization, may be 
designated as troubled with respect to the program under section 14.
    (f) Each PHA must post a notice of its PHMAP score and status in 
appropriate conspicuous and accessible locations in its offices and in 
each of its developments within two weeks of receipt of the score and 
status. In addition, HUD will publish every PHA's score and status in 
the Federal Register.
    (g) Even though a PHA has satisfied all of the indicators for high 
or standard performer designation, the State/Area Office may reinstate 
any review as necessary to address the particular deficiencies, deny or 
rescind incentives or high performer status, as described in paragraphs 
(a) and (b) of this section in the case of a PHA that:
    (1) Is operating under a special agreement with HUD;
    (2) Is involved in litigation that bears directly upon the 
management of a PHA;
    (3) Is operating under a court order;
    (4) Demonstrates substantial evidence of fraud or misconduct, 
including evidence that the PHA's certification of indicators is not 
supported by the facts, resulting from such sources as routine reports 
and reviews, an Office of Inspector General investigation/audit, or an 
investigation by any appropriate legal authority; or
    (5) Demonstrates substantial noncompliance in one or more areas 
(including areas not assessed by the PHMAP). Areas of substantial 
noncompliance include, but are not limited to, noncompliance with 
statutes (e.g., Fair Housing and Equal Opportunity statutes); 
regulations (e.g., 24 CFR part 85); or the Annual Contributions 
Contract (ACC) (e.g., the ACC, form HUD-53012A, Section 4, Mission of 
the PHA). Substantial noncompliance would cast doubt on the PHA's 
capacity to preserve and protect its public housing developments and 
operate them consistent with Federal law and regulations.
    (h) When a State/Area Office Public Housing Director acts for any 
of the reasons stated in paragraph (e) of this section, the State/Area 
Office will send written notification to the PHA with a specific 
explanation of the reasons. An information copy will be forwarded to 
the Assistant Secretary for Public and Indian Housing.
    (i) A PHA may appeal denial of high performer status in accordance 
with Sec. 901.125.


Sec. 901.120  State/Area Office functions.

    (a) The State/Area Office will assess each PHA within its 
jurisdiction on an annual basis:
    (1) The State/Area Office will make determinations for high-
performing, standard, troubled PHAs, and troubled PHAs with respect to 
the program under section 14 (mod-troubled) in accordance with a PHA's 
PHMAP weighted score.
    (2) The State/Area Office will also make determinations for 
exclusion and modification requests.
    (b) Each State/Area Office will notify each PHA of the PHA's grade 
and the grade of the RMC (if any) assuming management functions at any 
of the PHA's developments, in each indicator, the PHA's management 
assessment total weighted score and status, and if applicable, its 
handicapped score; any determinations concerning exclusion and 
modification requests; and any deadline date by which appeals must be 
received. PHA notification may include offers of pertinent technical 
assistance in problem areas, suggestions for means of improving problem 
areas, and areas of relief and incentives as a result of high performer 
status. The PHA must notify the RMC (if any) in writing, immediately 
upon receipt of the State/Area Office notification, of the RMC's 
grades.
    (c) An on-site confirmatory review may be conducted of a PHA by the 
State/Area Office. The purpose of the on-site confirmatory review is to 
verify those indicators for which a PHA provides certification, as well 
as the accuracy of the information received in the State/Area Office 
pertaining to the remaining indicators.
    (1) If, in an exceptional circumstance, a confirmatory review is 
conducted after the State/Area Office issues the initial notification 
letter, the State/Area Office should explain the results of the 
confirmatory review in writing, correct the PHAs total weighted score, 
if appropriate, and reissue the initial notification letter to the PHA.
    (2) The State/Area Office shall conduct a confirmatory review of a 
PHA prior to the removal of troubled or mod-troubled designation.
    (d) Determinations on appeals and on petitions to remove troubled 
or mod-troubled status will be made by the State/Area Office.
    (e) Determinations of intentional false certifications will be made 
by the State/Area Office.
    (f) The State/Area Office may deny or rescind a PHA's status as a 
standard or high performer, in accordance with Sec. 901.115(e), so that 
it will not be entitled to any of the areas of relief and incentives.
    (g) The State/Area Office will maintain PHMAP files for public 
inspection in accordance with Sec. 901.155.


Sec. 901.125  PHA right of appeal.

    (a) A PHA has the right to appeal its PHMAP score to the State/Area 
Office, including a troubled designation or designation as troubled 
with respect to the program under section 14. A PHA may appeal its 
management assessment rating on the basis of data errors, the denial of 
exclusion or modification requests when their denial affects a PHA's 
total weighted score, or a determination of intentional false 
certification:
    (1) A PHA may appeal its management assessment rating to the State/
Area Office only for the reasons stated in paragraph (a) of this 
section:
    (i) A PHA may not appeal its PHMAP score to the State/Area Office 
unless it has submitted its certification to the State/Area Office.
    (ii) A PHA may not appeal its PHMAP score to the State/Area Office 
if the reason the PHA received a deficient grade in any indicator or 
component was due to the fact the PHA did not submit a required report 
in a timely manner.
    (2) The appeal shall be submitted to the State/Area Office and 
shall include supporting documentary justification of the reasons for 
the appeal.
    (3) The State/Area Office will make determinations on initial 
appeals and will transmit the determination of the appeal to the PHA in 
a notification letter that will also include the date and place for 
submitting any further appeal.
    (4) Appeals submitted to the State/Area Office without appropriate 
documentation will not be considered and will be returned to the PHA.
    (5) A PHA may not appeal its PHMAP score if the reason the PHA 
received a deficient grade in any indicator or

[[Page 20380]]

component was due to the fact that the PHA did not submit a required 
report(s) in a timely manner.
    (6) Appeals of rescission of high performer designation shall be 
made directly to the Assistant Secretary for Public and Indian Housing.
    (b) A PHA may appeal the denial of an initial appeal by the State/
Area Office to the Assistant Secretary for Public and Indian Housing, 
including initial appeals denying high performer designation, 
designation as troubled or designation as troubled with respect to the 
program under section 14, the denial of an appeal of a determination of 
intentional false certification, and the rescission of high performer 
designation. A PHA may appeal its management assessment rating on the 
basis of data errors, the denial of exclusion or modification requests 
when their denial affects a PHA's total weighted score, or a 
determination of intentional false certification.
    (1) A PHA may appeal its management assessment rating to the 
Assistant Secretary for Public and Indian Housing only for the reasons 
stated in paragraph (b) of this section.
    (2) A PHA may not appeal its PHMAP score to the Assistant Secretary 
unless it has submitted its certification to the State/Area Office.
    (3) Appeals submitted to the Assistant Secretary for Public and 
Indian Housing without appropriate documentation will not be considered 
and will be returned to the PHA.
    (c) A PHA has the right to appeal any refusal of a petition in 
accordance with Sec. 901.140 to remove designation of troubled or 
troubled with respect to the program under section 14 to the Assistant 
Secretary for Public and Indian Housing.
    (d) The date and place by which any appeal must be submitted will 
be specified in the letter from the State/Area Office notifying the PHA 
of any determination or action. For example, the State/Area Office 
initial notification letter or denial of initial appeal letter will 
specify the date and place by which appeals must be received. The date 
specified will be the 15th calendar day after the letter is mailed, not 
counting the day the letter is mailed. If the 15th day falls on a 
weekend or holiday, the date specified will be the next day that is not 
on a weekend or a holiday. Any appeal not received by the specified 
time and place will not be considered.


Sec. 901.130  Incentives.

    (a) A PHA that is designated high performer or standard performer 
will be relieved of specific HUD requirements, effective upon 
notification of high or standard performer designation.
    (b) A PHA shall not be designated a mod-high performer and be 
entitled to the applicable incentives unless it has been designated an 
overall high performer.
    (c) High-performing PHAs and RMCs that receive a grade of ``A'' on 
each of the indicators for which they are assessed will receive a 
Certificate of Commendation from the Department as well as special 
public recognition.
    (d) Representatives of high-performing PHAs may be requested to 
serve on Departmental working groups that will advise the Department in 
such areas as troubled PHAs and performance standards for all PHAs.
    (e) Relief from any standard procedural requirements does not mean 
that a PHA is relieved from compliance with the provisions of Federal 
law and regulations or other handbook requirements. For example, 
although a high or standard performer may be relieved of requirements 
for prior HUD approval for certain types of contracts for services, it 
must still comply with all other Federal and State requirements that 
remain in effect, such as those for competitive bidding or competitive 
negotiation (see 24 CFR 85.36):
    (1) PHAs will still be subject to regular Independent Auditor (IA) 
audits.
    (2) Office of Inspector General (OIG) audits or investigations will 
continue to be conducted as circumstances may warrant.
    (f) The State/Area Office will have discretion to subject a PHA to 
any requirement that would otherwise be omitted under the specified 
relief, in accordance with Sec. 901.115(e).


Sec. 901.135  Memorandum of agreement.

    (a) After consulting the independent assessment team and reviewing 
the report identified in section 6(j)2(b) of the 1937 Act, a Memorandum 
of Agreement (MOA), a binding contractual agreement between HUD and a 
PHA, shall be required for each PHA designated as troubled and mod-
troubled. The scope of the MOA may vary depending upon the extent of 
the problems present in the PHA, but shall include:
    (1) Baseline data, which should be raw data but may be the PHA's 
score in each of the indicators identified as a problem, or other 
relevant areas identified as problematic;
    (2) Annual and quarterly performance targets, which may be the 
attainment of a higher grade within an indicator that is a problem, or 
the description of a goal to be achieved, for example, the reduction of 
rents uncollected to 6% or less by the end of the MOA annual period;
    (3) Strategies to be used by the PHA in achieving the performance 
targets within the time period of the MOA;
    (4) Technical assistance to the PHA provided or facilitated by the 
Department, for example, the training of PHA employees in specific 
management areas or assistance in the resolution of outstanding HUD 
monitoring findings;
    (5) The PHA's commitment to take all actions within its control to 
achieve the targets;
    (6) Incentives for meeting such targets, such as the removal of 
troubled or mod-troubled designation, fewer conditions placed on 
grants, and Departmental recognition for the most improved PHAs;
    (7) The consequences of failing to meet the targets, including such 
sanctions as the imposition of budgetary limitations, declaration of 
substantial default and subsequent actions, limited denial of 
participation, suspension, debarment, or the imposition of operating 
funding and modernization thresholds; and
    (8) A description of the involvement of local public and private 
entities, including PHA resident leaders, in carrying out the agreement 
and rectifying the PHA's problems. A PHA shall have primary 
responsibility for obtaining active local public and private entity 
participation, including the involvement of public housing resident 
leaders, in assisting PHA improvement efforts. Local public and private 
entity participation should be premised upon the participant's 
knowledge of the PHA, ability to contribute technical expertise with 
regard to the PHA's specific problem areas and authority to make 
preliminary/tentative commitments of support, financial or otherwise.
    (b) A MOA shall be executed by:
    (1) The PHA Board Chairperson and accompanied by a Board 
resolution, or a receiver or other AME acting in lieu of the PHA Board;
    (2) The PHA Executive Director, or a receiver- or other AME-
designated Chief Executive Officer;
    (3) The Director, State/Area Office of Public Housing; and
    (4) The appointing authorities of the Board of Commissioners, 
unless exempted by the State/Area Office.
    (c) The Department encourages the inclusion of the resident 
leadership in MOA negotiations and the execution of the MOA.
    (d) Upon designation of a large PHA (1250 or more units under 
management) as troubled, the State/Area Office shall make a referral to 
HUD Headquarters for appropriate recovery intervention and

[[Page 20381]]

the execution of an MOA by the Assistant Secretary of Public and Indian 
Housing.
    (e) A PHA will monitor MOA implementation to ensure that 
performance targets are met in terms of quantity, timeliness and 
quality.
    (f) A PHA will be removed from troubled status upon a determination 
by the State/Area Office that the PHA's assessment reflects an 
improvement to a level sufficient to remove the PHA from troubled 
status, or mod-troubled, i.e., a total weighted management assessment 
score of 60% or more.


Sec. 901.140  Removal from troubled status and mod-troubled status.

    (a) A PHA has the right to petition the State/Area Office for the 
removal of a designation as troubled or mod-troubled.
    (b) A PHA may appeal any refusal to remove troubled and mod-
troubled designation to the Assistant Secretary for Public and Indian 
Housing in accordance with Sec. 901.125.
    (c) The State/Area Office shall conduct a confirmatory review of a 
PHA prior to the removal of troubled or mod-troubled designation.


Sec. 901.145  Improvement Plan.

    (a) After receipt of the State/Area Office notification letter in 
accordance with Sec. 901.120(b) or receipt of a final resolution of an 
appeal in accordance with Sec. 901.125 or, in the case of an RMC, 
notification of its indicator grades from a PHA, a PHA or RMC shall 
correct any deficiency indicated in its management assessment within 90 
calendar days.
    (b) A PHA shall notify the State/Area Office of its action to 
correct a deficiency. A PHA shall also forward to the State/Area Office 
an RMC's report of its action to correct a deficiency.
    (c) If the State/Area Office determines that a PHA or RMC has not 
corrected a deficiency as required within 90 calendar days after 
receipt of its final notification letter, the State/Area Office may 
require a PHA, or a RMC through the PHA, to prepare and submit to the 
State/Area Office an Improvement Plan within an additional 30 calendar 
days:
    (1) The State/Area Office shall require a PHA or RMC to submit an 
Improvement Plan, which includes the information stated in paragraph 
(d) of this section, for each indicator that a PHA or RMC scored a 
grade ``F''.
    (2) The State/Area Office may require, on a risk management basis, 
a PHA or RMC to submit an Improvement Plan, which includes the 
information stated in paragraph (d) of this section, for each indicator 
that a PHA scored a grade D or E, as well as other performance and/or 
compliance deficiencies as may be identified as a result of an on-site 
review of the PHA's operations.
    (d) An Improvement Plan shall:
    (1) Identify baseline data, which should be raw data but may be the 
PHA's score in each of the indicators identified as a problem in a 
PHA's or RMC's management assessment, or other relevant areas 
identified as problematic;
    (2) Describe the procedures that will be followed to correct each 
deficiency; and
    (3) Provide a timetable for the correction of each deficiency.
    (e) The State/Area Office will approve or deny a PHA's or RMC's 
Improvement Plan, and notify the PHA of its decision. A PHA must notify 
the RMC in writing, immediately upon receipt of the State/Area Office 
notification, of the State/Area Office approval or denial of the RMC's 
Improvement Plan.
    (f) An Improvement Plan that is not approved will be returned to 
the PHA with recommendations from the State/Area Office for revising 
the Improvement Plan to obtain approval. A revised Improvement Plan 
shall be resubmitted by the PHA or RMC within 30 calendar days of its 
receipt of the State/Area Office recommendations.
    (g) If a PHA or RMC fails to submit an acceptable Improvement Plan, 
or to correct deficiencies within the time specified in an Improvement 
Plan or such extensions as may be granted by HUD, the State/Area Office 
will notify the PHA of its or the RMC's noncompliance. The PHA, or the 
RMC through the PHA, will provide HUD its reasons for lack of progress 
in submitting or carrying out the Improvement Plan within 30 calendar 
days of its receipt of the noncompliance notification. HUD will advise 
the PHA as to the acceptability of its reasons for lack of progress 
and, if unacceptable, will notify the PHA that it will be subject to 
sanctions provided for in the Annual Contributions Contract and HUD 
regulations.


Sec. 901.150  PHAs troubled with respect to the program under section 
14 (mod-troubled PHAs).

    (a) PHAs that achieve a total weighted score of less than 60% on 
indicator (2), modernization, may be designated as mod-troubled.
    (b) PHAs designated as mod-troubled may be subject, under the 
Comprehensive Grant Program, to a reduction of formula allocation or 
other sanctions (24 CFR part 968, subpart C) or under the Comprehensive 
Improvement Assistance Program to disapproval of new funding or other 
sanctions (24 CFR part 968, subpart B).


Sec. 901.155  PHMAP public record.

    The State/Area Office will maintain PHMAP files, including 
certifications, the records of exclusion and modification requests, 
appeals, and designations of status based on physical condition and 
neighborhood environment, as open records, available for public 
inspection for three years in accordance with any procedures 
established by the Field Office to minimize disruption of normal office 
operations.


Sec. 901.200  Events or conditions that constitute substantial default.

    (a) The Department may determine that events have occurred or that 
conditions exist that constitute a substantial default if a PHA is 
determined to be in violation of Federal statutes, including but not 
limited to, the 1937 Act, or in violation of regulations implementing 
such statutory requirements, whether or not such violations would 
constitute a substantial breach or default under provisions of the 
relevant Annual Contributions Contract (ACC).
    (b) The Department may determine that a PHA's failure to satisfy 
the terms of a Memorandum of Agreement entered into in accordance with 
Sec. 901.135 of this part, or to make reasonable progress to meet time 
frames included in a Memorandum of Agreement, are events or conditions 
that constitute a substantial default.
    (c) The Department shall determine that a PHA that has been 
designated as troubled and does not show significant improvement (10 
point increase) in its PHMAP score within one year are events or 
conditions that constitute a substantial default:
    (1) A PHA shall be notified of such a determination in accordance 
with Sec. 901.205(c).
    (2) A PHA may waive, in writing, receipt of explicit notice from 
the Department as to a finding of substantial default, and voluntarily 
consent to a determination of substantial default. The PHA must concur 
on the existence of substantial default conditions which can be 
remedied by technical assistance, and the PHA shall provide the 
Department with written assurances that all deficiencies will be 
addressed by the PHA. The Department will then immediately proceed with 
interventions as provided in Sec. 901.210.
    (d) The Department may declare a substantial breach or default 
under the ACC, in accordance with its terms and conditions.

[[Page 20382]]

    (e) The Department may determine that the events or conditions 
constituting a substantial default are limited to a portion of a PHA's 
public housing operations, designated either by program, by operational 
area, or by development(s).


Sec. 901.205  Notice and response.

    (a) If information from an annual assessment, as described in 
Sec. 901.100, a management review or audit, or any other credible 
source indicates that there may exist events or conditions constituting 
a substantial breach or default, the Department shall advise a PHA of 
such information. The Department is authorized to protect the 
confidentiality of the source(s) of such information in appropriate 
cases. Before taking further action, except in cases of apparent fraud 
or criminality, and/or in cases where emergency conditions exist posing 
an imminent threat to the life, health, or safety of residents, the 
Department shall afford the PHA a timely opportunity to initiate 
corrective action, including the remedies and procedures available to 
PHAs designated as ``troubled PHAs,'' or to demonstrate that the 
information is incorrect.
    (b) In any situation determined to be an emergency, or in any case 
where the events or conditions precipitating the intervention are 
determined to be the result of criminal or fraudulent activity, the 
Assistant Secretary is authorized to intercede to protect the 
residents' and the Department's interests by causing the proposed 
interventions to be implemented without further appeals or delays.
    (c) Upon a determination or finding that events have occurred or 
that conditions exist that constitute a substantial default, the 
Assistant Secretary shall provide written notification of such 
determination or finding to the affected PHA. Written notification 
shall include, but need not necessarily be limited to:
    (1) Identification of the specific covenants, conditions, and/or 
agreements under which the PHA is determined to be in non-compliance;
    (2) Identification of the specific events, occurrences, or 
conditions that constitute the determined noncompliance;
    (3) Citation of the communications and opportunities to effect 
remedies afforded pursuant to paragraph (a) of this section;
    (4) 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 (a) 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
    (5) Notification to the PHA that, absent a satisfactory response in 
accordance with paragraph (d) of this section, the Department will take 
control of the PHA, using any or all of the interventions specified in 
Sec. 901.210, and determined to be appropriate to remedy the 
noncompliance, citing Sec. 901.210, and any additional authority for 
such action.
    (d) Upon receipt of the notification described in paragraph (c) of 
this section, the PHA must demonstrate, within the time period 
permitted in the notification, factual error in the Department's 
description of events, occurrences, or conditions, or show that the 
events, occurrences, or conditions do not constitute noncompliance with 
the statute, regulation, or covenants or conditions to which the PHA is 
cited in the notification.


Sec. 901.210  Interventions.

    (a) Interventions under this part (including an assumption of 
operating responsibilities) may be limited to one or more of a PHA's 
specific operational areas (e.g., maintenance, modernization, 
occupancy, or financial management or to a single development or a 
group of developments). Under this limited intervention procedure, the 
Department could select, or participate in the selection of, an AME to 
assume management responsibility for a specific development, a group of 
developments in a geographical area, or a specific operational area, 
while permitting the PHA to retain responsibility for all programs, 
operational areas, and developments not so designated.
    (b) Upon determining that a substantial default exists under this 
part, the Department may initiate any interventions deemed necessary to 
maintain decent, safe, and sanitary dwellings for residents. Such 
intervention may include:
    (1) Providing technical assistance for existing PHA management 
staff;
    (2) Selecting or participating in the selection of an AME to 
provide technical assistance or other services up to and including 
contract management of all or any part of the public housing 
developments administered by a PHA;
    (3) Assuming possession and operational responsibility for all or 
any part of the public housing administered by a PHA; and
    (4) The provision of intervention and assistance necessary to 
remedy emergency conditions.
    (c) HUD may take the actions described in this part sequentially or 
simultaneously in any combination.


Sec. 901.215  Contracting and funding.

    (a) Upon a declaration of substantial default or breach, and 
subsequent assumption of possession and operational responsibility, the 
Department may enter into agreements, arrangements, and/or contracts 
for or on behalf of a PHA, or to act as the PHA, and to expend or 
authorize expenditure of PHA funds, irrespective of the source of such 
funds, to remedy the events or conditions constituting the substantial 
default.
    (b) In entering into contracts or other agreements for or on behalf 
of a PHA, the Department shall comply with requirements for competitive 
procurement consistent with 24 CFR 85.36, except that, upon 
determination of public exigency or emergency that will not permit a 
delay, the Department can enter into contracts or agreements on a non-
competitive basis, consistent with the standards of 24 CFR 85.36(d)(4).


Sec. 901.220  Resident participation in competitive proposals to manage 
the housing of a PHA.

    (a) When a competitive proposal to manage the housing of a PHA in 
substantial default is solicited in a Request for Proposals (RFP) 
pursuant to section 6(j)(3)(A)(i) of the 37 Act, the RFP, in addition 
to publishing the selection criteria, will:
    (1) Include a requirement for residents to notify the Department if 
they want to be involved in the selection process; and
    (2) Include a requirement for the PHA that is the subject of the 
RFP to post a notice and a copy of the RFP in a prominent location on 
the premises of each housing development that would be subject to the 
management chosen under the RFP, for the purposes of notifying affected 
residents that
    (i) Invites residents to participate in the selection process; and
    (ii) Provides information, to be specified in the RFP, on how to 
notify the Department of their interest.
    (b) Residents must notify the Department by the RFP's application 
due date of their interest in participating in the selection process. 
In order to participate, the total number of residents that notify the 
Department must equal at least five percent of the residents, or the 
notification of interest must be from an organization or

[[Page 20383]]

organizations of residents whose membership must equal at least five 
percent of the PHA's residents.
    (c) If the required percentage of residents notify the Department, 
a minimum of one resident may be invited to serve as an advisory member 
on the evaluation panel that will review the applications in accordance 
with applicable procurement procedures. Resident advisory members are 
subject to all applicable confidentiality and disclosure restrictions.


Sec. 901.225  Resident petitions for remedial action.

    The total number of residents that petition the Department to take 
remedial action pursuant to sections 6(j)(3)(A)(i) through (iv) of the 
1937 Act must equal at least five percent of the residents, or the 
petition must be from an organization or organizations of residents 
whose membership must equal at least five percent of the PHA's 
residents.


Sec. 901.230  Receivership.

    (a) Upon a determination that a substantial default has occurred 
and without regard to the availability of alternate remedies, the 
Department may petition the court for the appointment of a receiver to 
conduct the affairs of the PHA in a manner consistent with statutory, 
regulatory, and contractual obligations of the PHA and in accordance 
with such additional terms and conditions that the court may provide. 
The court shall have authority to grant appropriate temporary or 
preliminary relief pending final disposition of any petition by HUD.
    (b) The appointment of a receiver pursuant to this section may be 
terminated upon the petition to the court by the PHA, the receiver, or 
the Department, and upon a finding by the court that the circumstances 
or conditions that constituted substantial default by the PHA no longer 
exist and that the operations of the PHA will be conducted in 
accordance with applicable statutes and regulations, and contractual 
covenants and conditions to which the PHA and its public housing 
programs are subject.


Sec. 901.235  Technical assistance.

    (a) The Department may provide technical assistance to a PHA that 
is in substantial default.
    (b) The Department may provide technical assistance to a troubled 
or non-troubled PHA if the assistance will enable the PHA to achieve 
satisfactory performance on any PHMAP indicator. The Department may 
provide such assistance if a PHA demonstrates a commitment to undertake 
improvements appropriate with the given circumstances, and executes an 
Improvement Plan in accordance with Sec. 901.145.
    (c) The Department may provide technical assistance to a PHA if 
without abatement of prevailing or chronic conditions, the PHA can be 
projected to be designated as troubled by its next PHMAP assessment.
    (d) The Department may provide technical assistance to a PHA that 
is in substantial default of the Annual Contributions Contract.
    (e) The Department may provide technical assistance to a PHA whose 
troubled designation has been removed and where such assistance is 
necessary to prevent the PHA from being designated as troubled within 
the next two years.

    Date: February 26, 1996.
Kevin E. Marchman,
Acting Assistant Secretary for Public and Indian Housing.
[FR Doc. 96-10956 Filed 5-3-96; 8:45 am]
BILLING CODE 4210-33-P