49588 Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Notices 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–5227–N–01] 

Public Housing Assessment System 

(PHAS): Asset Management Transition 

Year Information and Uniform 

Financial Reporting Standards (UFRS) 

Information 

AGENCY: Office of the Assistant 

Secretary for Public and Indian 

Housing, HUD. 

ACTION: Notice. 

SUMMARY: This notice provides certain 

information related to scoring and 

submission requirements for public 

housing agencies (PHAs) under the 

Public Housing Assessment System 

(PHAS) for PHA fiscal years ending June 

30, 2008, September 30, 2008, December 

31, 2008, and March 31, 2009. These 

fiscal years coincide with the first year 

of project-based budgeting and 

accounting under asset management, 

also known as the ‘‘transition year.’’ 

Much of the information contained in 

this Federal Register notice was 

presented in PIH Notice 2008–18, 

Information on Upcoming Rulemaking 

Associated with the Public Housing 

Assessment System as a Result of the 

Conversion to Asset Management, dated 

March 27, 2008. That information is 

reiterated in this notice in order to 

inform the broader public of these 

actions. 

This notice also provides information 

related to the current Uniform Financial 

Reporting Standards (UFRS) for PHAs 

with fiscal years ending June 30, 2008, 

September 30, 2008, December 31, 2008, 

and March 31, 2009. This notice 

provides that HUD, on a one-time basis, 

will not enforce the regulatory 60-day 

deadline for reporting unaudited 

financial condition information for most 

PHAs. 

FOR FURTHER INFORMATION CONTACT: 

Contact the Office of Public and Indian 

Housing, Real Estate Assessment Center 

(REAC), Attention: Wanda Funk, 

Department of Housing and Urban 

Development, Office of Public and 

Indian Housing, Real Estate Assessment 

Center (REAC), 550 12th Street, SW., 

Suite 100, Washington, DC 20410; 

telephone REAC Technical Assistance 

Center at 888–245–4860 (this is a toll 

free number). Persons with hearing or 

speech impairments may access this 

number through TTY by calling the tollfree Federal Information Relay Service 

at 800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Background on PHAS 

PHAS was established by a final rule 

published on September 1, 1998 (63 FR 

46596). Prior to 1998, a PHA was 

evaluated by HUD with respect only to 

its management operations. PHAS 

expanded assessment of a PHA to four 

key areas of a PHA’s operations: (1) The 

physical condition of the PHA’s 

properties; (2) the PHA’s financial 

condition; (3) the PHA’s management 

operations submitted as a selfcertification; and (4) the residents’ 

service and satisfaction assessment 

(through a resident survey). 

Under the current PHAS and on the 

basis of these four indicators, a PHA 

receives a composite score that 

represents a single score for a PHA’s 

entire operation and a corresponding 

performance designation. PHAs that are 

designated high performers receive 

public recognition, relief from specific 

HUD requirements, and may qualify for 

bonus funding pursuant to applicable 

program regulations. PHAs that are 

designated standard and substandard 

performers may be required to take 

corrective action to remedy identified 

deficiencies. PHAs that are designated 

troubled performers are subject to 

remedial action. 

By final rule published on January 11, 

2000 (65 FR 1712), HUD amended the 

PHAS regulations and implemented 

certain statutory changes resulting from 

enactment of the Quality Housing and 

Work Responsibility Act of 1998 (Pub. 

L. 105–276, October 21, 1998). 

B. Public Housing Operating Fund 

Program 

The regulations governing the Public 

Housing Operating Fund program are of 

key relevance to the proper operation of 

PHAs and consequently to PHAS. 

Operating funds are made available to a 

PHA for the operation and management 

of public housing, and therefore, the 

regulations applicable to a PHA’s 

operation and management of public 

housing must be considered in any 

changes proposed to PHAS. The 

regulations for the Public Housing 

Operating Fund Program are found at 24 

CFR part 990, and were published on 

September 19, 2005 (70 FR 54983), 

followed by a correction published on 

October 24, 2005 (70 FR 61366), and 

became effective on November 18, 2005. 

Subpart H of the part 990 regulations 

(§§ 990.255 to 990.290), as revised by 

the September 2005 rule, establishes the 

requirements regarding asset 

management. Under § 990.260(a), PHAs 

that own and operate 250 or more 

dwelling rental units must operate using 

an asset management model consistent 

with the subpart H regulations. PHAs 

with fewer than 250 dwelling rental 

units may elect to transition to asset 

management, but are not required to do 

so, except for PHAs eligible for a 

discontinuation of reduction of 

operating subsidy, i.e., ‘‘stop-loss’’ 

agencies (see PIH Notice 2007–16 dated 

June 18, 2007 for more information on 

stop-loss). In addition, section 225 of 

Title II of Division K of the Consolidated 

Appropriations Act, 2008, Public Law 

110–161 (approved December 26, 2007), 

states that PHAs that own and operate 

400 or fewer public housing units may 

elect to be exempt from any asset 

management requirement for Calendar 

Year (CY) 2008, with the exception of 

PHAs that are seeking a discontinuance 

of a reduction of operating subsidy, i.e., 

stop-loss. 

PHAs with more than 400 public 

housing units in CY 2008, PHAs with 

250 or more public housing units 

thereafter, and PHAs that elect to 

transition to asset management are 

required to implement project-based 

management, project-based budgeting, 

and project-based accounting. All 

project-based components are defined in 

the regulations at 24 CFR part 990, 

subpart H, and are essential components 

of asset management. 

II. Transition Year Changes to the 

Current PHAS 

The transition year includes those 

PHAs with fiscal years ending June 30, 

2008, September 30, 2008, December 31, 

2008, and March 31, 2009. This notice 

also applies to Moving-to-Work PHAs 

that are not specifically exempted from 

a PHAS assessment in their grant 

agreements. 

A. Overall PHAS Score 

During the transition year, PHAs will 

not be issued a new overall PHAS score. 

HUD will not issue any overall PHAS 

scores under the proposed PHAS until 

a final rule is effective. 

During the transition year, PHAs will 

not be required to submit their 

management operations information and 

will not be required to submit Resident 

Assessment Sub-System (RASS) 

information, including the 

implementation and follow-up plans. 

However, PHAs will be required to 

submit their unaudited financial 

condition information and audited 

financial information, if applicable, in 

accordance with 24 CFR part 5, subpart 

H. 

A troubled PHA and/or Capital Fund 

Program troubled PHA that believes it 

would no longer be designated as 

troubled if a new PHAS assessment had 

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Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Notices 49589 

been completed may petition for the 

removal of troubled designation in 

accordance with 24 CFR 902.69 at any 

time after its fiscal year end. 

B. Physical Condition Inspections 

Physical condition inspections will be 

conducted for certain PHAs during the 

transition year in accordance with 

existing protocols. For PHAs that 

receive a passing score on the physical 

condition indicator under 24 CFR 

902.25(e)(2), the score will be 

considered advisory. However, for PHAs 

that score less than a passing physical 

condition score under § 902.25(e)(2), the 

score shall be considered for the 

physical condition portion alone, as 

HUD will not be calculating an overall 

PHAS score for PHAs in their transition 

year, and HUD may take action 

accordingly. In such cases, where 

appropriate, HUD will give inspected 

PHAs in their transition year credit for 

the physical condition and 

neighborhood environment factor. The 

physical condition of projects is of 

utmost importance to HUD, and 

providing safe, decent, sanitary housing, 

and housing in good repair is the 

primary responsibility of PHAs. 

Physical condition inspections of 

projects will be conducted on the same 

schedule as past inspections, and 

conducted, if applicable, in the quarter 

prior to a PHA’s fiscal year end. These 

physical condition inspection scores for 

projects on a 100 point scale will be 

available in Secure Systems, through the 

Integrated Assessment Sub-system 

(NASS). Physical condition inspection 

scores for projects on a 30 point scale 

will be available in Secure Systems, 

through NASS, beginning September 30, 

2008. 

PHAs will continue to be able to 

request a technical review or database 

adjustment for their physical condition 

inspections during the transition year in 

accordance with the current PHAS 

regulations. 

C. Financial Condition Information 

Submission 

1. Unaudited Financial Condition 

Information Submission 

During the transition year, in 

accordance with 24 CFR part 5, subpart 

H, PHAs are still required to submit 

their unaudited financial information 

and audited financial information, if 

applicable. Although an overall PHAS 

score will not be issued during the 

transition year, HUD will still be 

reviewing the unaudited financial 

condition submission. HUD may take 

appropriate action based on the 

submission. 

For low-rent, low-rent combined (lowrent and section 8 units), and section 8 

only PHAs with fiscal years ending June 

30, 2008, HUD, on a one-time basis, will 

not enforce the regulatory 2-month 

deadline for reporting unaudited 

financial condition information. Instead, 

HUD will accept, without penalty (see 

§ 902.60(e)(2) for the penalty provision), 

these reports within a 3-month time 

frame. Thus, these PHAs will have 3 

months from the release of the software 

for the Financial Data Schedule (FDS) 

under asset management to submit their 

unaudited financial condition 

information. Notification of the FDS 

software release date and the 

submission due date will be posted on 

HUD’s Financial Assessment of Public 

Housing Agencies (FASS PH) Web site 

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

products/prodpha.cfm. 

For low-rent and low-rent combined 

PHAs with fiscal years ending 

September 30, 2008, December 31, 2008, 

and March 31, 2009, HUD, on a onetime basis, will not enforce the 

regulatory 2-month deadline for 

reporting unaudited financial condition 

information. These PHAs will have 3 

months after their fiscal year end dates 

to submit their unaudited financial 

condition information. 

For section 8 only PHAs with fiscal 

years ending September 30, 2008, 

December 31, 2008, and March 31, 2009, 

HUD will enforce the regulatory 2- 

month deadline for reporting unaudited 

financial condition submissions. These 

PHAs will submit their unaudited 

financial condition information within 2 

months after their fiscal year ends. 

2. Audited Financial Condition 

Information Submission 

All PHAs will submit their audited 

financial information, if applicable, 

within 9 months after their fiscal year 

end dates in accordance with 24 CFR 

part 5, subpart H. 

D. Management Operations Certification 

PHAs with fiscal years ending June 

30, 2008, September 30, 2008, December 

31, 2008, and March 31, 2009, will not 

be required to submit their management 

operations certification. 

E. Resident Surveys 

During the transition year, resident 

service and satisfaction surveys will be 

conducted only for PHAs with fiscal 

years ending June 30, 2008, for 

informational purposes. These PHAs 

will not be issued resident survey 

scores, implementation plan scores, 

follow-up plan scores, or resident 

indicator scores. They will not be 

required to submit and certify to their 

implementation plans, and will not be 

required to develop follow-up plans and 

certify that they have done so. Resident 

survey response information will be 

available in Secure Systems, through the 

Resident Assessment Sub-System 

(RASS). 

III. Transition Year Changes to the 

Uniform Financial Reporting Standards 

(UFRS) 

This notice provides that HUD, on a 

one-time basis, will not enforce the 

regulatory 2-month deadline for 

reporting unaudited financial condition 

information for most PHAs under 24 

CFR part 5, subpart H, UFRS. For lowrent, low-rent combined, and section 8 

only PHAs with fiscal year end June 30, 

2008, HUD will accept, without penalty, 

these reports within a 3-month time 

frame. Thus, these PHAs will have 3 

months from the release of the new FDS 

asset management software to submit 

their unaudited financial condition 

information. For low-rent and low-rent 

combined PHAs with fiscal years ending 

September 30, 2008, December 31, 2008, 

and March 31, 2009, HUD will accept, 

without penalty, unaudited financial 

information within a 3-month time 

frame. 

For section 8 only PHAs with fiscal 

years ending September 30, 2008, 

December 31, 2008, and March 31, 2009, 

HUD will enforce the regulatory 2- 

month deadline for reporting unaudited 

financial condition submissions. These 

section 8 only PHAs shall continue to 

submit the unaudited financial 

information within 2 months of their 

fiscal year end, in accordance with 24 

CFR part 5, subpart H. 

V. Environmental Review 

This notice provides operating 

instructions and procedures in 

connection with activities under a 

Federal Register document that has 

previously been subject to a required 

environmental review. Accordingly, 

under 24 CFR 50.19(c)(4), this Notice is 

categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.). 

Dated: August 7, 2008. 

Paula O. Blunt, 

General Deputy Assistant Secretary for Public 

and Indian Housing. 

[FR Doc. E8–18751 Filed 8–20–08; 8:45 am] 

BILLING CODE 4210–67–P 

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