20358 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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 § 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

Reference Number of

respondents

Freq. of

response

Est. avg.

time (hours)

Est. annual

burden

response

(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;
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 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.
20360 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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 modtroubled.

The Department proposes to

implement section 113(e) by adding a

definition of RMC to § 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: § 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. RMCmanaged developments would, thus, be

assessed to measure the RMC’s

performance on an indicator-byindicator 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 § 901.100,

Data collection, to provide for the

assessment of RMCs.

To apprise an RMC of its indicator

grades, § 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;
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 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 highperformer, standard, or troubled,

§ 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 § 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 § 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

§§ 901.1 and 901.5.

Definitions—§ 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—§§ 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 ×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 ×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

§ 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 nondwelling 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.
20362 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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×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:

Unit and reason for vacancy

Days

vacant

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

Unit and reason for vacancy

Days

vacant

during

FY

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:

1 023

36 500

03 ,

, . total actual vacancy

ys under the ACC

 days

 actual da = (an actual vacancy rate of 3%)

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:

Unit and reason for vacancy

Adjusted

days

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

Unit and reason for vacancy

Adjusted

days

vacant

during

FY

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:

1 023 809 214

36 500

,

,

− = =.0059 (an adjusted vacancy rate of .6%)

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 reoccupied 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:

Unit

Turnaround

days

Days exempted Net

days

12 100 80 (modernization

days).

20

14 10 ......do ...................... 10

31 12 ......do ...................... 12

36 96 86 (modernization

days).

10

18 413 ......do ...................... 413

6 4 ......do ...................... 4

41 13 ......do ...................... 13

59 74 60 (modernization

days).

14
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 20363

Unit

Turnaround

days

Days exempted Net

days

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 (FY)

590

Annual average vacant unit

turnaround time for the FY:

190 total turnaround days

 during the FY

 units re-occupied

during the FY

15 = 12 7. days

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 lowincome 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 nonemergency 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
20364 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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 longterm 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 § 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 tenantpaid 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
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 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—§ 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—

§ 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
20366 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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—§ 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—§ 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.
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 20367

PHA Right of Appeal—§ 901.125

Former Regional Administrator

functions that are applicable have been

included in this portion of the

regulation.

Incentives—§ 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—§ 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—§ 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,

§§ 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

§ 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 § 901.225, that the

petition has the support of at least five

percent of the troubled PHA’s residents.

Substantial Default and Intervention

Procedures, §§ 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

§ 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 § 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 § 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.
20368 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

A new § 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 × 100 = a 5% decrease; or.

If line 3 equals 1.15, then 1.15 minus 1.00 equals .15 × 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.
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 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) .................................................................................................................................................
20370 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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).

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

§ 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

§ 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 §§ 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,
20372 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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

§ 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

§ 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 lowincome 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 premodernization 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-
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 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.

§ 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., leadbased 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 nondwelling 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 courtordered 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
20374 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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.

§ 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 onsite 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 onsite 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.

§ 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.

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

§ 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 longterm 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., leadbased 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 § 901.10, for any

of the reasons for which exemptions are

permitted under that indicator (except

those units that are used for nondwelling 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
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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.

§ 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.

§ 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.

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

§ 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
20378 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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 postreviewed by HUD during the next onsite 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.

§ 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.

§ 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.

§ 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
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules 20379

C for any indicator. High performers

will be afforded incentives that include

substantial relief from reporting and

other requirements, as described in

§ 901.130.

(b) PHAs that achieve a total weighted

score of 90% or greater on indicator #2,

modernization, may be designated modhigh 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 § 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

§ 901.125.

§ 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 modtroubled designation.

(d) Determinations on appeals and on

petitions to remove troubled or modtroubled 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

§ 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

§ 901.155.

§ 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
20380 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

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

§ 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.

§ 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 highperforming 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 § 901.115(e).

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

§ 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 modtroubled.

(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 § 901.125.

(c) The State/Area Office shall

conduct a confirmatory review of a PHA

prior to the removal of troubled or modtroubled designation.

§ 901.145 Improvement Plan.

(a) After receipt of the State/Area

Office notification letter in accordance

with § 901.120(b) or receipt of a final

resolution of an appeal in accordance

with § 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.

§ 901.150 PHAs troubled with respect to

the program under section 14 (modtroubled 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).

§ 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.

§ 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 § 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

§ 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 § 901.210.

(d) The Department may declare a

substantial breach or default under the

ACC, in accordance with its terms and

conditions.
20382 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Proposed Rules

(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).

§ 901.205 Notice and response.

(a) If information from an annual

assessment, as described in § 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 § 901.210,

and determined to be appropriate to

remedy the noncompliance, citing

§ 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.

§ 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.

§ 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).

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

§ 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.

§ 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.

§ 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

§ 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