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

SUMMARY: This rule proposes changes to the Public Housing Management

Assessment Program (PHMAP). PHMAP provides policies and procedures to

identify PHA management capabilities and deficiencies, and assists HUD

State/Area Offices in accountability monitoring and risk management.

PHMAP also establishes procedures for developing, negotiating and

executing memoranda of agreement between HUD and troubled agencies and

agencies troubled with respect to the program under section 14 that set

forth targets, strategies, incentives and sanctions for improving

performance. Procedures to follow with respect to housing administered

by PHAs that substantially default on their management responsibilities

are included in PHMAP. PHMAP applies to public housing agencies (PHAs)

and resident management corporations (RMCs), and any other entities

under contract to manage public housing, but does not apply to Indian

housing authorities, nor to the Family Self-Sufficiency Program

authorized under section 23.

DATES: Comment due date: July 5, 1996.

ADDRESSES: Interested persons are invited to submit comments regarding

this proposed rule to the Rules Docket Clerk, Office of General

Counsel, Room 10278, Department of Housing and Urban Development, 451

Seventh Street, SW., Washington, DC 20410. Communications should refer

to the above docket number and title. A copy of each communication

submitted will be available for public inspection and copying between

7:30 a.m. and 5:30 p.m. weekdays at the above address. FAXED comments

will not be accepted.

FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Deputy Assistant

Secretary for Public and Assisted Housing Operations, Office of Public

and Indian Housing, Department of Housing and Urban Development, 451

Seventh Street, SW., Washington, DC 20410, telephone (202) 708-1380. A

telecommunications device for hearing or speech impaired persons (TTY)

is available at (202) 708-0850. (These are not toll-free telephone

numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

The proposed information collection requirements contained at

Sec. 901.100 of this rule have been submitted to the Office of

Management and Budget (OMB) for review, under section 3507(d) of the

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

(a) In accordance with 5 CFR 1320.5(a)(1)(iv), the Department is

setting forth the following concerning the proposed collection of

information:

(1) Title of the information collection proposal:

Public Housing Management Assessment Program (PHMAP)

(2) Summary of the collection of information:

PHAs shall be required to certify to seven indicators and one

component because information regarding these indicators/ component is

not presently reported to HUD by PHAs on any form. The use of Form HUD-

50072, rather than the preparation and submission of a full data

report, was judged to be the least intrusive method of gathering the

information.

(3) Description of the need for the information and its proposed

use:

Section 502 of the National Affordable Housing Act of 1990 (NAHA)

establishes seven specific indicators and directs the Secretary to

develop no more than five other factors (indicators) deemed appropriate

to assess the management performance of public housing agencies (PHAs)

in all major areas of management operations. The designation of PHAs as

troubled or as troubled with respect to the program under Section 14

(mod-troubled) is based upon PHA performance under the indicators. The

proposed information collection will be used by HUD to assess annually

all PHAs at the beginning of the PHA fiscal year to allow the

Department to fulfill this mandate of NAHA.

(4) Description of the likely respondents, including the estimated

number of likely respondents, and proposed frequency of response to the

collection of information:

Respondents will be PHAs. The estimated number of respondents is

included in paragraph (5), immediately below. The proposed frequency of

responses is once annually.

(5) Estimate of the total reporting and recordkeeping burden that

will result from the collection of information:

Reporting Burden

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

Est. annual

Number of Freq. of Est. avg. burden

Reference respondents response time response

(hours) (hrs.)

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

1-99 Unit PHAs.............................................. 1,608 1 2.25 3,618.0

100-499 Unit PHAs........................................... 1,274 1 2.45 3,121.3

500-1249 Unit PHAs.......................................... 244 1 3.45 841.8

1250-3999 Unit PHAs......................................... 102 1 4.05 413.1

4000+ Unit PHAs............................................. 40 1 4.85 194.0

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

Total reporting burden.................................. ........... ........... ........... 8,188.2

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

Recordkeeping Burden

Recordkeepers................................................ 3,268.0

Hours per recordkeeper....................................... 1.0

Total annual responses....................................... 327.0

----------

Total burden............................................. 8,515.2

(b) In accordance with 5 CFR 1320.8(d)(1), the Department is

soliciting comments from members of the public and affected agencies

concerning the proposed collection of information to:

(1) Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

(2) Evaluate the accuracy of the agency's estimate of the burden of

the proposed collection of information;

[[Page 20359]]

(3) Enhance the quality, utility, and clarity of the information to

be collected; and

(4) Minimize the burden of the collection of information on those

who are to respond; including through the use of appropriate automated

collection techniques or other forms of information technology, e.g.,

permitting electronic submission of responses.

Interested persons are invited to submit comments regarding the

information collection requirements in this proposal. Comments must be

received within sixty (60) days from the date of this proposal.

Comments must refer to the proposal by name and docket number (FR-3447)

and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and

Budget, New Executive Office Building, Washington, DC 20503

and

Reports Liaison Officer, Office of the Assistant Secretary for Public

and Indian Housing, Department of Housing and Urban Development, 451--

7th Street, SW., Room 4244, Washington, DC 20410

II. Background

The Public Housing Management Assessment Program (PHMAP) at 24 CFR

part 901 has been established in accordance with section 502 of the

National Affordable Housing Act (NAHA) (approved November 28, 1990,

Pub. L. 101-625), as amended by the Departments of Veterans Affairs and

Housing and Urban Development (HUD), and Independent Agencies

Appropriations Act, 1992 (92 App. Act) (approved October 28, 1991, Pub.

L. 102-139) and the Housing and Community Development Act of 1992 (HCDA

1992) (Pub. L. 102-550, approved October 28, 1992). The need to

identify and assist troubled PHAs and PHAs troubled with respect to

section 14 (mod-troubled), and to provide for consistently high quality

management of PHAs was statutorily recognized in section 502 of NAHA,

which amended section 6(j) of the 1937 Act (42 U.S.C. 1437d(j)).

Section 502 requires the Department to develop indicators to assess the

management performance of PHAs. A PHA assessed as troubled or mod-

troubled must enter into a memorandum of agreement (MOA) with HUD that

sets forth targets, strategies and incentives for improving its

management performance, and provides for sanctions if improved

performance does not result. Section 502 also provides that if a PHA

substantially defaults upon its agreement or with respect to other

covenants or conditions to which it is subject, the Department may

solicit proposals from other public housing agencies and private

housing management agents for the management of the housing

administered by the defaulted PHA. Alternatively, following a default,

the Department may petition the appropriate State or Federal court to

appoint a receiver to manage the defaulted PHA. The Department may also

require a defaulting PHA to make other acceptable arrangements for

managing all or part of its operation in the best interests of the

residents.

A proposed rule to implement section 502 as the Public Housing

Management Assessment Program (PHMAP) at 24 CFR part 901 was published

in the Federal Register on April 17, 1991 (56 FR 15712), with a 60-day

comment period. The Department received 114 comments on the PHMAP

proposed rule.

The 92 App. Act, passed after the publication of the pro-posed

rule, amended NAHA section 502 in four ways: The number of factors that

may be used to assess the management performance of PHAs is limited

(seven indicators that must be used for assessment purposes were listed

in section 502 of NAHA, and the Department was authorized by the 92

App. Act amendments to develop five additional indicators as it deemed

appropriate); the evaluation of PHAs must be administered flexibly to

ensure that they are not penalized for circumstances beyond their

control; the weights assigned to indicators must reflect the

differences in management difficulty that result from physical

condition and neighborhood environment; and the determination of a

PHA's status as ``troubled with respect to the program under section

14'' is to be based upon factors solely related to its ability to carry

out that program. In a related 92 App. Act amendment to section 14 of

the 1937 Act, the determination of whether a PHA is ``troubled with

respect to the modernization program'' (the equivalent of mod-troubled)

is to consider only the PHA's ability to carry out the modernization

program effectively based upon the PHA's capacity to accomplish the

physical work with decent quality; in a timely manner; under competent

contract administration; and with adequate budget controls.

An interim rule was published on January 17, 1992, (57 FR 2160)

with a comment period of 120 days. After the publication of the PHMAP

interim rule, a number of statutory changes to PHMAP were made by

section 113 of HCDA 1992. Section 113(a) requires an on-site,

independent assessment of a PHA that is designated as mod-troubled and/

or troubled. Paragraph (b) of this section provides for additional

remedies upon the occurrence of a substantial default. The Department

may, under section 113(c), make available, to housing managers

appointed after a substantial default, the assistance necessary to

remedy the substantial deterioration of living conditions in individual

public housing developments or to remedy other related emergencies that

endanger the health, safety and welfare of the residents. Annual

reporting requirements to Congress that only affect the Department are

the subject of section 113(d). Section 113(e) makes the management

assessment provisions of PHMAP applicable to RMCs. The implementation

of these sections is discussed below in this preamble under the

heading, Summary Of Changes To The PHMAP Interim Rule.

Subsequent to the statutory changes to PHMAP made by section 113 of

HCDA 1992, the Department established a consultation group and held a

series of meetings to review existing PHMAP procedures and the

individual indicators. The group consisted of representatives of PHAs

of all sizes from across the country with a wide range of PHMAP scores,

public housing industry groups, private management firms, and HUD field

staff. Resident groups were solicited for their recommendations as

well. Revised indicators were field tested during the summer of 1994 at

45 PHAs of all sizes throughout the country. The results of the field

test were summarized and analyzed, which resulted in recommendations

for changes to the indicators.

The Department has determined that the revised PHMAP should be

issued as a proposed rule due to the degree of changes to the

individual indicators and the program itself. For example, three

indicators have been eliminated, four indicators have been combined

into two indicators, and other indicators have been completely

rewritten. The proposed changes are the result of a number of

considerations, including comments received on the interim rule,

inquiries and additional comments received from the field and the

regulated community, the field test conducted during the summer of

1994, and the Department's experience in administering the program. By

issuing a proposed rule, the Department is providing the public an

additional opportunity to comment.

[[Page 20360]]

III. Regulatory Reinvention

On March 4, 1995, President Clinton issued a memorandum to all

Federal departments and agencies regarding regulatory reinvention. In

response to this memorandum, the Department of Housing and Urban

Development conducted a page-by-page review of its regulations to

determine which can be eliminated, consolidated, or otherwise improved.

HUD has determined that the regulations for PHMAP can be improved and

streamlined by eliminating unnecessary provisions.

Several provisions in the regulations repeat statutory language

from the 1937 Act. It is unnecessary to maintain statutory requirements

in the Code of Federal Regulations (CFR), since those requirements are

otherwise fully accessible and binding. Furthermore, if regulations

contain statutory language, HUD must amend the regulations whenever

Congress amends the statute. Therefore, the new part 901 proposed here

does not repeat any statutory language, but only implements

requirements that are necessary to augment and implement fully section

6(j) of the 1937 Act, which provides the statutory authority for PHMAP.

This proposed rule further reinvents PHMAP by reducing the number of

indicators from twelve to eight; eliminating the designation of

subparts, which are unnecessary; and rewriting the entire remaining

rule text to promote clarity.

IV. Summary of Changes to the PHMAP Interim Rule

Only those portions of the current PHMAP regulation proposed for

revisions are addressed below.

HCDA 1992 Section 113 Amendments

The Department determined, in accordance with 24 CFR 10.1, that

prior public notice and comment were unnecessary to implement

paragraphs (a) and (c) of section 113, because these paragraphs involve

the exercise of little or no discretion on the part of the Department.

Section 113(d) applies only to the Department and does not require a

rule. Sections 113 (b)(1) and (e) of HCDA 1992 do require elaboration

of the statutory language, and are included in this proposed rule.

HCDA 1992 section 113(e) requires the assessment of RMCs, and makes

the provisions under paragraph (j)(2) of section 6 of the 1937 Act

apply to RMCs as well as to PHAs. Paragraph (j)(2) contains provisions

relating to: (1) Establishment of procedures for designating troubled

PHAs; (2) commendation of exemplary PHAs; (3) PHA appeal of designation

as a troubled agency; (4) agreements between HUD and troubled and/or

mod-troubled PHAs; and (5) new provisions added by HCDA 1992 section

113(a) that require independent assessments of PHAs that are designated

troubled and/or mod-troubled.

The Department proposes to implement section 113(e) by adding a

definition of RMC to Sec. 901.5 that would refer to 24 CFR part 964,

the regulation that provides for resident participation and management

in public housing in accordance with section 20 of the 1937 Act. This

proposed rule would provide for the management assessment of RMCs in a

manner consistent with the regulatory framework established under

section 20 and 24 CFR part 964 for RMC management of a development.

The management assessment of an RMC will necessarily differ from

that of a PHA. Because an RMC enters into a contract with a PHA to

perform specific management functions on a development-by-development

basis, and because the scope of the management that is undertaken

varies, not every indicator that applies to a PHA would be applicable

to each RMC. An additional significant feature of RMC management is

that 24 CFR 964.225(d), entitled, Management contract, and 24 CFR

964.225(h), entitled, Prohibited activities, provide that a PHA may

enter into a management contract with a resident management

corporation, but a PHA may not contract for assumption by the resident

management corporation of the PHA's underlying responsibilities to the

Department under the ACC.

For this reason, the limited management responsibility of RMCs in

terms of both: (1) The areas in which they perform management

functions, and (2) the fact that the PHA remains ultimately responsible

to HUD under the ACC, this proposed rule would implement the management

assessment of RMCs as follows: Sec. 901.100, entitled, ``Data

collection,'' would be amended to provide that when a PHA submits its

PHMAP certification, it must identify developments managed by an RMC

and the management functions undertaken by the RMC at those

developments. The PHA would be responsible for obtaining from the RMC

and submitting to HUD, along with its own certification, the PHMAP

certification for the management functions undertaken by the RMC. For

example, if an RMC were responsible for rent collection in a particular

development, the PHA would be required to identify in its certification

the development and management function performed by the RMC, and

obtain from the RMC a certification of the percent of rents

uncollected, which would be submitted to HUD along with the PHA's

certification. Similarly, for those management functions undertaken by

an RMC for which no certification is necessary (i.e., the data is

already available to HUD, such as the indicator for modernization), the

PHA would still be required to identify in its certification form this

RMC-managed function and the development involved. The applicable

indicators for the RMC would be scored by the Department, and the

resulting grades would be transmitted to the PHA as a part of the

State/Area Office notification. The PHA would be required to forward

promptly the RMC's score.

Section 901.105 of the rule, entitled ``Computing assessment

score,'' requires no amendment to provide for the assessment of an

RMC's management. Those indicators that would apply to an RMC, based on

the management functions assumed by the RMC, would be graded just as

they would for a PHA. However, because of the limited scope of

management involved, an RMC would not receive an overall designation of

high performer, standard, or troubled, but only a grade on each

applicable indicator. In addition, because the PHA and not the RMC is

ultimately responsible to the Department under the ACC, the PHA's score

will be based on all of the developments covered by the ACC, including

those with management functions assumed by an RMC. RMC-managed

developments would, thus, be assessed to measure the RMC's performance

on an indicator-by-indicator basis, and as a part of the PHA's overall

performance. As discussed above, this result is necessary because of

the limited nature of an RMC's management functions and the regulatory

and contractual relationships among HUD, PHAs and RMCs. A new paragraph

(c) is added to Sec. 901.100, Data collection, to provide for the

assessment of RMCs.

To apprise an RMC of its indicator grades, Sec. 901.120 would be

amended to provide that the State/Area Office notification to the PHA

would include the grades of the RMC, if any, and that the PHA must

immediately notify the RMC, in writing, of its grades.

Because an RMC would be assessed on an indicator-by-indicator

basis, and would not receive an overall designation such as troubled,

most of the provisions of section 6(j)(2) of the 1937 Act could not

apply to RMCs, since most of those provisions (the establishment of

procedures for designating troubled PHAs; appeals of designation as a

troubled agency;

[[Page 20361]]

agreements between HUD and troubled PHAs; and, new provisions added by

HCDA 1992 section 113(a) that require independent assessments of PHAs

that are designated troubled) are triggered by a designation of

troubled.

One provision of section 6(j)(2) that is not dependent upon a

designation of troubled and that may appropriately be applied to RMCs

pertains to the commendation of exemplary PHAs. Even though RMCs would

not receive an overall designation of high-performer, standard, or

troubled, Sec. 901.130, Incentives, would be amended to permit an RMC

that scored a grade of A on each of its indicators to receive a

Certificate of Commendation from the Department as well as special

public recognition.

With respect to making the section 6(j)(2) provision for agreements

between HUD and troubled PHAs applicable to RMCs, since an RMC would

not be designated troubled, a memorandum of agreement under

Sec. 901.140 would not be applicable. HUD has determined, however, that

it would be appropriate to provide guidance for the improvement of an

RMC's management functions, and that the proper tool under PHMAP for

this purpose would be an improvement plan under Sec. 901.145. An

improvement plan is negotiated to improve performance under those

individual indicators that are the relevant measures of management

performance for an RMC. Section 901.145 would be amended to permit the

negotiation of an improvement plan that would include the RMC, the PHA,

and the Department.

Application of PHMAP to Alternative Management Entities

In addition to extending coverage to RMCs, this proposed rule would

also extend PHMAP to apply to any other alternative management/PHA

relationship, whether the alternative management entity (AME) is a

receiver, private contractor, private manager, or any other entity that

is under contract with a PHA, or that is otherwise duly appointed or

contracted (for example, by court order or agency action), to manage

all or part of a PHA's operations. It is just as necessary to assess

the management performance of AMEs as it is to assess PHAs or RMCs, to

follow the expressed policy of the 1937 Act, ``to remedy the unsafe and

unsanitary housing conditions and the acute shortage of decent, safe,

and sanitary dwellings for families of lower income''.

AMEs would be assessed following the procedures used for PHAs or

RMCs, depending upon the extent of the management responsibilities

assumed. An AME that assumes all, or substantially all, of a PHA's

management responsibilities (for example, under court order, or

following a substantial default and pursuant to an award under a

competitive proposal) would also assume the PHA's PHMAP

responsibilities and would be assessed accordingly. An AME that was

contracted to perform a limited number of management functions would be

assessed following the procedure used for RMCs.

Although the contractual relationship under the ACC is between the

PHA and the Department, there may also be a contractual relationship

between the AME and the PHA, or HUD and the AME. To ensure quality

management in such contractual relationships, minimum performance

criteria that relate to the PHMAP indicators, as applicable, should be

included in the contract. Failure to meet the performance criteria

would be a basis for termination of the contract. The provisions that

explicitly address AMEs and establish their treatment under PHMAP as

following the procedures for either PHAs or RMCs are found at

Secs. 901.1 and 901.5.

Definitions--Sec. 901.5

This portion of the regulation is revised to include new

definitions and revised definitions as a result of the proposed

revisions to the indicators. Definitions that no longer apply have been

eliminated. Some definitions have been expanded to include instructions

for calculation.

Indicators--Secs. 901.10-901.40

As indicated in section III, ``Regulatory Reinvention,'' above,

this rule would reduce the number of PHMAP indicators from twelve to

eight. A proposed sample certification for these revised indicators is

included as Appendix 3 of this preamble.

Indicator #1, Vacancy Percentage and Unit Turnaround

The vacancy indicator and the unit turnaround indicator of the

current part 901 have been combined in proposed indicator #1. The

proposed indicator has two components. The first component (with a

weight of x 2) measures the vacancy rate and, if applicable, the

progress a PHA has made in reducing the vacancy rate. The second

component (with a weight of x 1), to be used only when a PHA scores

below a C on the first component, measures turnaround time. The

assumption is that if vacancies are at a C level or above, the PHA does

not have a problem with turning around vacant units.

Because the vacancy rate is a clear manifestation of management

effort and embodies the essence of a PHA's mission, it is weighted more

heavily than the process-oriented unit turnaround component.

The Department is proposing to use a single method to calculate the

actual and adjusted vacancy rate. Instead of taking a ``snapshot''

picture of the vacancy rate at a certain date, or calculating an

average over a thirty day period, the vacancy rate will be calculated

by computing the ratio of vacancy days to unit days available over the

fiscal year. The adjusted vacancy rate is computed the same way, but

with eligible exemptions, such as vacancy days attributable to

modernization. The Department believes this method to be the most

accurate depiction of performance.

If a PHA elects to certify to the reduction of the vacancy rate

over the previous three years, the PHA shall retain justifying

documentation to support its certification for HUD post review.

For the calculation of the adjusted vacancy rate and turn-around

time, the vacancy days for units in the following categories (fully

defined in the rule at Sec. 901.10) shall be exempted:

1. Vacant unit undergoing modernization.

2. Vacant units in an approved demolition or disposition program.

3. Vacant units that are documented to be uninhabitable for reasons

beyond the PHA's control.

4. Vacant units in which resident property has been abandoned, but

only if State law requires the property to be left in the unit for some

period of time, and only for the period stated in the law.

5. Vacant units that have sustained casualty damage, but only until

the insurance claim is adjusted, i.e., funds to repair the unit are

received.

6. Units that are used for non-dwelling purposes, dwelling units

that are occupied by employees of the PHA, and units that are used for

resident services.

7. Vacant units required to remain vacant because of fire/ police

investigations, coroner's seal, or court order.

8. Units kept vacant because of code violations caused for reasons

beyond the control of the PHA, rather than as a result of management

and/or maintenance failures by the PHA.

9. Units vacant for circumstances and actions beyond the PHA's

control.

[[Page 20362]]

Definitions for indicator #1 are as follows:

1. Actual vacancy rate: This is the vacancy rate calculated without

any adjustments. This is calculated by dividing the total number of

vacancy days by the total number of unit days available for occupancy.

The maximum number of vacancy days for any unit is the number of days

in the year, regardless of the total amount of time the unit has been

vacant. An example of this calculation for a hypothetical PHA with 100

units available for occupancy follows. Unit days are calculated by

taking the total number of units available for occupancy and

multiplying by the number of days in the year.

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

available for occupancy

Vacancy days are calculated by adding the total number of days

vacant from all units that were vacant for any reason during the PHA's

fiscal year. For example:

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

Days

vacant

Unit and reason for vacancy during

FY

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

6 Move-out................................................... 21

10* Down for modernization................................... 120

12* Down for modernization................................... 140

15* Down for modernization................................... 194

10 Lease up after modernization............................. 10

12 Lease up after modernization............................. 10

15 Lease up after modernization............................. 21

32 Transfer................................................. 15

81* Fire..................................................... 35

81 Lease after insurance adjustment......................... 23

96 Move-out................................................. 15

41 Move-out................................................. 28

39 Move-out................................................. 40

57 Move-out................................................. 18

61* Down for modernization................................... 230

22* Down for modernization................................... 90

61 Lease up after modernization............................. 10

22 Lease up after modernization............................. 3

---------

Total Actual Vacancy Days................................. 1,023

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

The actual vacancy rate for the year is:

[GRAPHIC] [TIFF OMITTED] TP06MY96.000

The asterisks following the unit numbers denote vacancy days that

can be exempted in computing the adjusted vacancy rate.

2. Adjusted vacancy rate: This is the vacancy rate calculated after

excluding the vacancy days that are exempted for any of the eligible

reasons included here. The adjusted vacancy rate for the hypothetical

100 unit PHA would be calculated as follows:

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

Adjusted

days

Unit and reason for vacancy vacant

during

FY

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

6 Move-out.................................................. 21

10 Lease up after modernization.............................. 10

12 Lease up after modernization.............................. 10

15 Lease up after modernization.............................. 21

32 Transfer.................................................. 15

81 Lease after insurance adjustment.......................... 23

96 Move-out.................................................. 15

41 Move-out.................................................. 28

39 Move-out.................................................. 40

57 Move-out.................................................. 18

61 Lease up after modernization.............................. 10

22 Lease up after modernization.............................. 3

---------

Total Vacancy Days, as Adjusted........................... 214

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

The PHA was permitted to exempt 809 of the vacancy days for

eligible reasons. To calculate the adjusted rate, the 809 days are

removed from the days vacant (numerator). The adjusted vacancy rate for

the year is:

[GRAPHIC] [TIFF OMITTED] TP06MY96.001

3. Reduced actual vacancy rate in the previous three years: this is

a comparison of the vacancy rate in the PHMAP assessment year

(immediate past fiscal year) to the vacancy rate during the first year

of the previous three year period. In the case of the hypothetical PHA

discussed earlier, the assumption is made that the actual vacancy rate

during the first year of the three year period was 40 percentage

points, compared to the assessment year with a 22 percentage point

vacancy rate. This is a vacancy rate reduction of 18 percentage points,

calculated as follows:

Percentage points vacancy rate in the earlier year, minus.......... 40

Percentage points vacancy rate in the assessment year, equals...... 22

----

Percentage points reduction in the vacancy rate.................... 18

4. Average unit turnaround time: the annual average of the total

number of turnaround days between the move-out date and the date a new

lease takes effect. Each time an individual unit is re-occupied (turned

around) during the fiscal year, the turnaround days for that unit shall

be counted in the turnaround time. Unlike vacancy days, which cannot

exceed the number of days in the fiscal year, turnaround days include

all the days between the last move-out and the date a new lease takes

effect, including any turnaround days in prior fiscal years. Only units

that are re-occupied during the fiscal year are included in the

turnaround time calculation. An example of this calculation is as

follows for a hypothetical PHA that had 15 units turned over in the

assessment year:

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

Turnaround

Unit days Days exempted Net days

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

12 100 80 (modernization 20

days).

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

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

36 96 86 (modernization 10

days).

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

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

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

59 74 60 (modernization 14

days).

[[Page 20363]]

32 2 ......do.............. 2

96 14 ......do.............. 14

2 60 40 (fire damaged unit) 20

4 21 ......do.............. 21

6 8 ......do.............. 8

13 29 ......do.............. 29

22 19 ......do.............. 19

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

Total Turnaround Days During the Fiscal Year 590

(FY)

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

Annual average vacant unit turnaround time for the FY:

[GRAPHIC] [TIFF OMITTED] TP06MY96.002

5. Approved, funded, on-schedule annual modernization program:

Includes any modernization program, funded under the Comprehensive

Grant Program (CGP), the Comprehensive Improvement Assistance Program

(CIAP), Vacancy Reduction Program (VRP), or any other source, if a PHA

is in conformance with its current implementation schedule as approved

by the PHA Board of Commissioners and/or HUD.

6. Turnaround days: The days between the last move-out and the date

a new lease takes effect, including any turnaround days in prior fiscal

years.

7. Vacancy day: A day when a unit is not under lease by an eligible

low-income resident, unless the vacancy day is exempted for an eligible

reason.

8. Vacant unit: Is a dwelling unit that is not under lease to an

eligible family. Units under lease for non-dwelling uses should not be

included in the calculation of this indicator.

9. Available unit: A dwelling unit (occupied or vacant) under the

PHA's ACC.

This proposed combined indicator has a weight of #2.

Indicator #2, Modernization

(This indicator is automatically excluded if a PHA has no

modernization program.)

This proposed indicator was changed very little with the original

five components remaining virtually the same. However, the weight

values for component #1, expenditure of funds, and component #2,

obligation of funds, have been changed so that greater emphasis is

given to obligation of funds in relation to expenditure of funds. This

is exactly the opposite of the current interim rule, where the emphasis

is placed on expenditure of funds. This change recognizes the

importance of getting projects under contract, while at the same time

acknowledging that often it is necessary to hold back payments to

contractors due to disputes over the quality of the work or materials.

A new feature in component #1, expenditure of funds, and component

#2, fund obligation, would require, for grade A, PHAs that are not on

schedule to have self-executed a time extension within 30 calendar days

after the expenditure or obligation deadline with the extension to be

based on reasons outside of their control.

For component #3, contract administration, and component #4,

quality of the physical work, the number of possible grades has been

reduced from six to three, the three being A, C and F. ``Significant

findings'' for these two components will be redefined prior to the

effective date of any changes to the PHMAP. Component #5, budget

controls, has been changed to reflect the final CGP rule which permits

agencies to move work items between approved CGP annual statements and

the latest approved five-year action plan.

This proposed indicator has a weight of x1.

Indicator #3, Rents Uncollected

The method for calculating the amount of rents uncollected for this

proposed indicator has been simplified to a basic ratio comparing the

total amount of rents billed during the assessment year, to the amount

of rent collected during the assessment year. In the current interim

PHMAP rule, PHAs are instructed to include the accounts receivable owed

at the beginning of the assessment year and to deduct the total amount

of accounts receivable that have been written off during the year for

residents no longer in possession. Both of these adjustments have been

eliminated in the proposed indicator as not being directly relevant to

rent billed and collected in the current assessment period.

The percentage of rents uncollected refers to the proportion of

current dwelling rent that was billed during the assessment year, but

not collected during the assessment year. The calculation is made as of

the close of business on the last business day of the fiscal year.

``Current dwelling rent'' excludes retroactive rent charges (including

those identified through the Tenant Integrity Program), maintenance

charges, excess utility charges, late charges, and any other charges

not specifically identified as dwelling rent.

This proposed indicator has a weight of x1.5.

Indicator #4, Work Orders

The current indicator #4, energy consumption, has been combined

with the overall measurement of financial performance, which is now

indicator #6.

The new proposed indicator #4, work orders, continues to measure

PHA performance in the handling of both emergency and non-emergency

work orders, but under this proposed rule, the measurement will be in

two components instead of one. The proposed indicator grade will be

based on the average number of days it takes for a work order to be

completed rather than the percentage of work orders outstanding at the

end of a PHA's fiscal year.

The Department believes that assessing the average amount of time

it takes to complete work orders is more equitable. Consider the

following scenario:

Two PHAs have a fiscal year-end date of June 30, 1995. The first

PHA has five work orders received on June 29, 1995, and did not

complete them until July 2, 1995. The second PHA has five work orders

received on January 1, 1995, and completed them on June 29, 1995. If

both PHAs received the same amount of work orders, the second PHA would

receive a higher grade under the current method of grading this

indicator, even though it took the second PHA much longer to complete

the work orders.

The first component measures emergency work order performance; the

second component measures the average amount of time it takes to

complete non-emergency work orders.

The proposed indicator includes more definitions and makes clear

the Department's intention that all work orders should be tracked,

except those exempted for modernization, issued to prepare a vacant

unit for re-rental, and issued for the performance of cyclical

maintenance. Implicit in this indicator is the adequacy of the PHA's

work order system in terms of how a PHA accounts for and controls its

work orders, and its timeliness in preparing/issuing work orders. As

such, the adequacy of a PHA's work order system will be part of the

confirmatory review of this indicator.

If a PHA elects to certify to the reduction in time it takes to

complete work orders, the PHA shall retain justifying documentation to

support its certification for HUD post review.

This proposed indicator has a weight of x1.5.

Indicator #5, Inspection of Units and Systems

This proposed indicator has undergone significant changes. Instead

[[Page 20364]]

of having four components, it now has only two, each with a weight of

x1. Component #1 examines the percentage of occupied units, out of all

of a PHA's units (except those permitted to be exempted), that the PHA

inspects on an annual basis in order to determine short-term

maintenance needs (for which work orders are issued) and long-term

modernization needs (which are referred to and included in the PHA's

comprehensive plan for modernization).

Component #2 examines the effectiveness of a PHA's annual

inspection of its major systems, as systems are defined herein, and the

maintenance of those systems either as part of the inspection process,

or through the issuance of a work order; or, if a work order is not

issued, by inclusion in the PHA's comprehensive plan for modernization.

While the current indicator assesses the repairs to units and systems,

the new proposed indicator makes it clear that work orders that are

generated as of result of components #1 and #2 are measured primarily

under indicator #4, outstanding work orders, unless the repair is

completed during the inspection or deferred to the modernization

program.

This proposed indicator also makes it clear that PHAs are expected

to inspect to the standard specified in the local housing/occupancy

code, as long as that code is at least equivalent to or exceeds Section

8 Housing Quality Standards (HQS). Implicit in this indicator is the

adequacy of the PHA's inspection program in terms of the quality of a

PHA's inspections, and how a PHA tracks both inspections and needed

repairs. As such, the adequacy of a PHA's inspection program will be

part of the confirmatory review of this indicator.

The Department has more clearly defined the units, both vacant and

occupied, which may be exempted from an annual inspection.

Units in the following categories (fully defined in the rule at

Sec. 901.30) are exempted and not included in the calculation of the

total number of units, and the number and percentage of units

inspected. Systems that are a part of individual dwelling units that

are exempted, or in part of buildings where all of the dwelling units

in the building are exempted, are also exempted from the calculation of

proposed indicator #5.

1. Occupied units where the PHA has made two documented attempts to

inspect.

2. Vacant units undergoing modernization.

3. Vacant units in an approved demolition or disposition program.

4. Vacant units that are documented to be uninhabitable.

5. Vacant units vacant for the full immediate past fiscal year that

have been exempted under indicator #1 for any of the reasons for which

exemptions are permitted under that indicator (except those units that

are used for non-dwelling purposes or that are occupied by employees of

the PHA and units that are used for resident services).

This proposed indicator has a weight of x1.

Indicator #6, Financial Management

This proposed indicator combines, in two components, indicator #4,

energy consumption; and indicator #9, operating reserves. The first

component assesses the amount of cash reserves in relation to total

actual routine expenses. The second component is required only if a PHA

scores below a grade C on component #1. The Department is offering two

options for component #2. Option A compares energy and utility expenses

to the average of those expenses computed on a three year rolling base;

and option B measures whether or not a PHA has conducted an energy

audit and implemented the improvements recommended as a result of the

energy audit. PHAs with tenant-paid utilities in all their units will

not be assessed on energy/utility consumption even if they score below

a grade C in cash reserves. The rationale for measuring energy

consumption only if a PHA scores below a grade C in the first component

is that if a PHA is in good financial health, the Department can

reasonably conclude that energy/utility usage is being well-managed.

A PHA that has cash reserves equal to or greater than 10% of total

actual routine expenses will be assessed only on the cash reserves

component. This proposed component has a weight of x2.

The proposed energy/utility component, option A, is substantially

different from the current energy indicator in that it includes water

and sewage usage, and the adjustment for the heating degree day (HDD)

factor has been eliminated. The elimination of the HDD factor from the

calculation of this component is in accordance with Notice PIH 94-81,

dated November 18, 1994. On October 13, 1994, a final rule was

published in the Federal Register that eliminated the application of

the HDD factor for utility consumption. This rule will first affect

PHAs with fiscal year ending December 31, 1995.

As stated previously, option B for the energy/utility component

assesses the conduct of an energy audit and the implementation of

recommendations that resulted from the energy audit. The Department is

particularly interested in receiving comments regarding the energy/

utility component to determine what the national preference is for this

component. PHAs are asked to indicate whether they prefer option A;

option B; or the choice of being able to use either option for their

PHMAP certification and assessment.

This proposed component has a weight of x1.

A sample worksheet for computing component #1 is included as

Appendix 1 of this preamble; and two sample worksheets for computing

component #2 are included as Appendix 2 of this preamble.

This proposed indicator has a weight of x1.

Indicator #7, Resident Involvement

PHAs with 100 units or less shall not be assessed under this

indicator. This indicator reflects the Department's new emphasis on

Section 3 programs to encourage resident employment. As in the current

resident initiatives indicator, this indicator assesses a PHA's efforts

to involve residents to improve the community in which they live. If

the PHA is participating in any HUD grants, such as the Tenant

Opportunity Program, Youth Apprenticeship Program, etc., this component

assesses a PHA's success in implementing these programs. This proposed

indicator has a weight of x1.

The Department believes that consumer satisfaction is critical in

public housing, and is in the process of conducting a national study on

the issue. The Department is also seriously considering including a

component under this indicator that assesses consumer satisfaction.

Therefore, HUD is especially interested in receiving comments regarding

whether or not PHAs should be required to conduct resident surveys on a

periodic basis, and whether such a survey should be standardized.

Indicator #8, Security

It was HUD's intention that PHAs with 100 units or less not be

assessed under this indicator, and this is stated in the text of the

proposed rule, but HUD is specifically soliciting comments on whether

this indicator should apply to such PHAs. Recognizing that many public

housing communities are under siege by gangs, violent criminals and

drug dealers who threaten the safety and welfare of decent, responsible

residents, President Clinton has announced a ``One Strike'' policy in

which people in public housing who engage in drug and other criminal

activity will be barred from admittance to public housing or

[[Page 20365]]

evicted, as applicable. This policy is supported by a law recently

passed by Congress entitled the Housing Opportunity Program Extension

Act of 1996 (the Extension Act) (Pub. L. 104-120, approved March 28,

1996). The Extension Act expands the statutory authority of PHAs to

keep persons engaged in illegal activities out of public housing. In

furtherance of President Clinton's policy and the Extension Act, the

Department is adding a new indicator that assesses security. The

security indicator will consider a PHA's ability to perform such

activities as: Track crime-related problems in their developments; take

action with local police authorities to improve law enforcement, lease

enforcement and crime prevention; adopt and implement tough applicant

screening and resident eviction policies and procedures; and meet goals

under any HUD-funded drug prevention or crime reduction program.

Although applicant screening and resident eviction policies and

procedures must be tough, the proposed rule would require such actions

to be appropriately taken. By using the term ``appropriately'' in the

text of the rule, HUD intends to preserve PHAs' ability to act

consistently with the provisions of 24 CFR 966.4(5)(i), Eviction for

criminal activity--(i) PHA discretion to consider circumstances. This

proposed indicator has a weight of x1.

With respect to this proposed security indicator, HUD is

particularly interested in comments regarding the desirability of

holding PHAs responsible for demonstrating systems to take action with

local police authorities to improve law enforcement, lease enforcement

and crime prevention. HUD believes that such cooperative action is

critical to residents' well-being, but some have expressed concern

whether PHAs should be held accountable for obtaining cooperation from

another party (the police). In addition, HUD specifically invites

comments regarding the reasonability of the proposed component which

rates PHAs based on the percentage of goals they have met in crime

reduction-related programs.

Data Collection--Sec. 901.100

The length of time a PHA has to submit its form HUD-50072, PHMAP

Certification, to the State/Area Office has been reduced from 90 days

to 45 days after the end of a PHA's fiscal year. This change has been

made because many comments have stated that the overall PHMAP process

takes too long. Under the current program, it could be a minimum of

nine months before a PHA knows its final PHMAP score after going

through the appeal process. The 45 day period is consistent with other

reporting due date requirements, such as the submission of year-end

financial statements and the submission of the CGP annual report. A PHA

that does not submit its year-end reports in a timely manner may

receive a grade of F for the applicable indicators. PHAs will no longer

be allowed to submit past due reports in support of an appeal and

expect the appeal to be granted. State/Area Offices will be required by

the Department to complete the PHMAP assessments within an additional

45 days, thereby reducing the overall time for the completion of a

PHMAP assessment to 90 days after the end of a PHA's fiscal year.

The reporting requirements for PHAs where management functions have

been assumed by an RMC or other alternative management entity have been

included in the regulation. A PHA's certification will be required to

identify the development and management functions assumed by the RMC or

AME, and the PHA will be required to obtain a certified questionnaire

from the RMC or AME as to the management functions undertaken by the

RMC or AME. The RMC's or AME's certification will be required to be

approved by its executive director or chief executive officer of

whatever title, and the PHA will be required to submit the RMC's or

AME's certified questionnaire along with its own certification.

Any alternative management/PHA relationship is assessed under the

PHMAP, as discussed above in this preamble, whether the alternative

management is an RMC, a receiver, private contractor, private manager,

or any other entity that is under contract with a PHA to manage all or

part of its operations.

Guidance to PHAs regarding how to calculate each applicable

indicator and component will be issued in a handbook and/or guidebook.

Such issuances will coincide with the effective date of any changes to

the PHMAP.

Computing Assessment Score--Sec. 901.105

Indicator and Component Weights

The weights of some of the indicators have been reduced to simplify

the computation of a PHA's assessment score. The total weights for each

indicator are based on a ten-point scale, and the highest score a PHA

can receive is 100. Indicators receive a higher weight primarily if

they reflect a management aspect closely related to the key areas of

the condition of PHA stock and delivery of services to PHA residents.

On this basis, two indicators are given a weight of two: Vacancies and

rents uncollected. Two indicators are given a weight of one and a half:

Work orders and resident initiatives. The remaining indicators are

given a weight of one: Modernization, inspection of units and systems,

and financial management.

The weight of each indicator and component (shown in brackets []

for components only) is as follows:

Indicator #1, vacancy percentage and unit turnaround.................x2

Component #1, vacancy percentage and progress in reducing

vacancies..........................................................[x2]

Component #2, unit turnaround time...............................[x1]

Indicator #2, modernization..........................................x1

Component #1, unexpended funds over three Federal fiscal years

(FFYs) old.........................................................[x1]

Component #2, timeliness of fund obligation......................[x2]

Component #3, adequacy of contract administration................[x2]

Component #4, quality of the physical work.......................[x3]

Component #5, adequacy of budget controls........................[x1]

Indicator #3, rents uncollected....................................x1.5

Indicator #4, work orders..........................................x1.5

Component #1, emergency work orders completed in 24 hours or

less...............................................................[x1]

Component #2, average number of days for non-emergency work

orders to be completed.............................................[x2]

Indicator #5, annual inspection of units and systems.................x1

Component #1, annual inspection of units.........................[x1]

Component #2, annual inspection of systems.......................[x1]

Indicator #6, financial management...................................x1

Component #1, cash reserves......................................[x2]

Component #2, annual energy/utility consumption..................[x1]

Indicator #7, resident involvement...................................x1

Component #1, resident involvement...............................[x1]

Indicator #8, security...............................................x1

Physical Condition and Neighborhood Environment

The overall PHMAP score of a PHA will be adjusted by adding

weighted points that reflect the differences in the difficulty of

managing developments that result from the physical condition and/or

the neighborhood environment of a PHA's developments.

Section 502.(j)(1)(I) requires that (i) the Secretary shall

administer the system of evaluating public housing agencies flexibly to

ensure that such agencies are not penalized as a result of

circumstances beyond their control; and (ii) reflect in the weights

assigned to the various indicators the differences in the difficulty of

managing individual projects that result from their physical

[[Page 20366]]

condition and neighborhood environment.

The Department believes that the current PHMAP regulation contains

substantial provisions to ensure that PHAs are not penalized for

conditions beyond their control:

1. A PHA may request a modification of any indicator and/or

component to compensate for conditions beyond its control.

2. A PHA may request the exclusion of an indicator and/or component

for the same reason.

3. Without requesting a modification, the current and proposed

PHMAP regulation allows PHAs to modify the scoring calculations for

certain indicators by exempting certain units.

4. There is a two-stage appeal process available if the PHA fails

to find relief under paragraphs one, two, and three, above.

In view of these already substantial considerations which protect

PHAs from being penalized for circumstances beyond their control, the

Department is proposing to respond to item (ii), above (requiring the

Department to reflect in the weights assigned to the various indicators

the differences in the difficulty of managing individual developments

that result from their physical condition and/or their neighborhood

environment), in a way that will fully comply with the statutory

language, but will not make PHMAP substantially more complicated, nor

place inordinate administrative burdens on PHAs and HUD staff.

The Department is proposing that the legislative provision

(requiring the Department to reflect in the weights assigned to the

various indicators the differences in the difficulty of managing

individual developments that result from their physical condition and/

or their neighborhood environment) apply to the following three

indicators only.

1. Indicator #1, vacancy percentage and unit turnaround;

2. Indicator #4, work orders; and

3. Indicator #5, annual inspection and condition of units and

systems.

The definitions of physical condition and neighborhood environment

are kept as simple as possible and meant to make it relatively easy for

PHAs to document.

1. Physical condition: Refers to units located in developments over

ten years old that require major capital investment in order to meet

minimum HQS standards or local codes, whichever is applicable.

2. Neighborhood environment: Refers to units located within

developments where the immediate surrounding neighborhood (that is a

majority of the census tracts on all sides of the development) has at

least 51% of families with incomes below the poverty rate as documented

by the latest census data.

Any PHA with 5% or more of its units subject to either or both of

the above conditions shall, if they so choose, be issued a weighted

PHMAP score, based solely upon the certification of the PHA, in

addition to the regular PHMAP score. The additional weight shall be

calculated as follows:

Percent of Units Subject to Physical Condition and/or

Neighborhood Environment: Extra

points

At least 5% but less than 10%............................. 0.5

At least 10% but less than 20%............................ .6

At least 20% but less than 30%............................ .7

At least 30% but less than 40%............................ .8

At least 40% but less than 50%............................ .9

At least 50%.............................................. 1.0

These extra points will be added to the score (grade) of the

indicator(s) to which these conditions may apply. A PHA is required to

certify on form HUD-50072, PHMAP Certification, the extent to which the

conditions apply, and to which of the indicators the extra scoring

points should be added. For example, a PHA certifying that (after

removing from consideration all units previously exempted) 15% of its

units are subject to the physical conditions and/or neighborhood

environment as defined above, would receive an additional .6 of a point

for the score for indicator #1. If a PHA receives an unweighted score

of D (5 points) for this indicator, the weighted score would be 5.6

points. Indicator #1 has an overall weight of x2, therefore, the

weighted score for the indicator would be 11.2, as opposed to the

unweighted score of 10.

Developments that have received comprehensive modernization within

the past ten years are not eligible to receive additional weight for

the physical condition factor. A PHA that receives a grade of A under

indicators #4 and #5 (without additional points) may not claim the

additional weight for indicator #1 since the physical condition of its

developments is not applicable. None of the weighted indicators may

have a score that is more than its total weighted points, including the

additional point, or fraction thereof, awarded for weighting.

PHAs would be expected to maintain supporting documentation to show

how they arrived at the number and percentage of units out of their

total inventory that are subject to additional weighting. If the basis

were neighborhood environment, the PHA would have on file the

appropriate maps showing the census tracts surrounding the

development(s) in question with supporting census data showing the

level of poverty. Units that fall into this category but which have

already been removed from consideration for other reasons (permitted

exemptions and modifications and/or exclusions) shall not be counted in

this calculation. For example, a unit that has been removed from the

adjusted vacancy calculation because it is undergoing modernization

shall not also be counted as a unit subject to this provision. For the

physical condition factor, a PHA would have to maintain documentation

showing the age and condition of the units and the record of capital

improvements, indicating that these particular units have not received

comprehensive modernization. They would also have to document that in

all cases, units that had been exempted for other reasons were not

included in the calculation.

PHA Score and Status--Sec. 901.115

This section has been revised to state that a PHA shall not be

designated as a high performer if it scores below a grade of C for any

indicator.

A new provision, recommended by the Office of Management and Budget

in the course of the review of this proposed rule in accordance with

Executive Order 12866, would require each PHA to post a notice of its

PHMAP score and status in appropriate conspicuous and accessible

locations in its offices and in each of its developments within two

weeks of receipt of the score and status. In addition, HUD would

publish every PHA's score and status in the Federal Register.

State/Area Office Functions--Sec. 901.120

Section 901.125, Regional Administrator functions, has been

eliminated from this proposed rule as a result of the reorganization of

the Department and the redelegation of authority to State/Area Offices.

Applicable functions have been included in this portion of the

regulation.

This section will require a State/Area Office to notify a PHA of

its PHMAP score and the grade of the RMC or AME (if any) assuming

management functions at any of the PHA's developments, and will require

a PHA to notify in writing, immediately upon receipt of the State/Area

Office notification, the RMC or AME (if any) of the RMC/AME's grades.

[[Page 20367]]

PHA Right of Appeal--Sec. 901.125

Former Regional Administrator functions that are applicable have

been included in this portion of the regulation.

Incentives--Sec. 901.130

All high- and standard-performing PHAs have been afforded

substantial relief by the Department and this section of the regulation

has been revised to reflect the available relief. This section also

includes recognition of RMCs that receive a grade of A on each of the

indicators for which they are assessed.

Memorandum of Agreement--Sec. 901.140

The scope of the Memorandum of Agreement (MOA) may vary depending

upon the extent of the problems present in the PHA, and now provides

for the inclusion of other relevant areas identified as problematic,

i.e., areas other than deficient PHMAP indicators. The Department

believes that the use of one document to track troubled and mod-

troubled PHA progress is in the best interest of PHAs and the

Department.

Upon designation of a large PHA (1250 or more units under

management) as troubled, the State/Area Office shall make a referral to

HUD Headquarters for appropriate recovery intervention and the

execution of an MOA by the Assistant Secretary for Public and Indian

Housing.

Improvement Plan--Sec. 901.145

The option of requiring RMCs or AMEs to develop an improvement plan

is included in the regulation. As with a PHA, if an RMC or AME receives

a D or E in any indicator, the State/Area Office may require an RMC or

AME to develop an improvement plan. If an RMC or AME receives an F in

any indicator, the State/Area Office shall require an RMC or AME to

develop an improvement plan.

Resident Participation in Competitive Proposals and Resident Petitions,

Secs. 901.220 and 901.225

The statutory authority for the PHMAP is section 6(j) of the 1937

Act. Section 113 of HCDA 1992 amends section 6(j)(3)(A) of the 1937 Act

(42 U.S.C. 1437d(j)(3)(A)), which deals with the actions that may be

taken upon the occurrence of a substantial default by a PHA.

Section 113(b)(1) amends 1937 Act section 6(j)(3)(A)(i), which

permits the Department to solicit competitive proposals from other PHAs

and private housing management agents (which may be selected by

existing residents) to manage the housing administered by a PHA in

substantial default, by allowing residents the opportunity to

participate in the selection process through administrative procedures

established by the Department. These administrative procedures are

being proposed in this rule.

This proposed rule would provide in Sec. 901.220 that when a

competitive proposal to manage the housing of a PHA in substantial

default is solicited in a Request for Proposals (RFP), the PHA would be

required to post a notice and a copy of the RFP on the premises of each

housing development subject to new management under the RFP for the

purposes of notifying affected residents. Residents would be required

to notify HUD by the RFP's application due date of their interest in

participating in the selection process. In order to participate, the

total number of residents that notify HUD must equal at least five

percent of the PHA's residents, or the notification of interest must be

from an organization or organizations of residents whose membership

must equal at least five percent of the PHA's residents. Because of the

urgency that is appropriately present when the extraordinary measure of

selecting new management for a PHA in substantial default must be

taken, the Department has determined that this minimal five percent

showing of resident concern is necessary to justify the additional

selection procedures required by resident participation.

If the required number of interested residents notify HUD, a

minimum of one resident may be invited to serve as an advisory member

on the evaluation panel that will review the applications in accordance

with applicable procurement procedures. Resident advisory member(s) are

subject to all applicable confidentiality and disclosure restrictions.

Section 113(b)(5) allows the residents of a PHA designated as

troubled to petition the Department to take any of the remedial actions

listed under subparagraph 6(j)(3)(A) of the 1937 Act. The Department is

required to respond to such petitions in a timely manner with a written

description of the actions, if any, the Department plans to take, and,

where applicable, explain why such actions differ from the course

proposed by the residents. As with the procedure for permitting

residents to participate in the selection of management agents, the

proposed rule would require, at Sec. 901.225, that the petition has the

support of at least five percent of the troubled PHA's residents.

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

This proposed rule adds language that would require the Department

to take action regarding troubled PHAs or AMEs that have not improved

their management performance over a specified period of time. The

current PHMAP regulation has a wide variety of options for dealing with

troubled PHAs subsequent to a finding of substantial default. What the

current regulation does not have is a built-in time frame that would

require the Department to make a finding of substantial breach or

default, or request a court-ordered receivership. Therefore, under

Sec. 901.200(c), the Department will be required to declare a troubled

PHA or AME in substantial breach or default if a PHA does not show

significant improvement (10 point increase) in its PHMAP score within

one year. A PHA or AME will be notified of such action in accordance

with Sec. 901.205(c).

A PHA or AME may waive, in writing, receipt of explicit notice from

HUD as to a finding of substantial default, and voluntarily consent to

a determination of substantial default. The PHA or AME would concur on

the existence of substantial default conditions which can be remedied

by technical assistance. At that time, the Department would immediately

proceed with interventions as provided in Sec. 901.210, including the

provision of technical assistance necessary to address identified

deficiencies. In such a case, the PHA or AME shall provide the

Department with written assurances that all deficiencies will be

addressed by the PHA or AME.

The affect of this proposal would be that chronically troubled PHAs

or AMEs would be subject to immediate intervention by the Department.

Section 901.210(a) of the current PHMAP regulation gives a PHA an

opportunity to initiate corrective action to resolve identified

deficiencies. Section 901.210(c) of the current PHMAP rule requires a

PHA to demonstrate (in no more than 30 days) that the Department's

finding of substantial breach or default is incorrect. The burden of

proof is placed upon the PHA. The rationale is that troubled PHAs have

already had more than adequate time to implement corrective action, or

will have at least one year from the time of initial troubled

designation.

This approach essentially uses the regulation that has been in

place for years. The only difference is that the Department would be

required to impose the existing standard. The only new performance

standard rests upon the Department, not the PHA or AME.

[[Page 20368]]

A new Sec. 901.235, Technical assistance, has been added to address

situations where a substantial default is likely to occur if

deficiencies are not addressed, and to ensure that a PHA or AME that

has just been removed from troubled status will not become troubled

again within a two year period.

Request for Comments

The Department recognizes that PHMAP scores should not be

interpreted as the sole determinant of housing agency performance.

While PHMAP is an important yardstick to measure PHA performance, it

should not be the sole driving force behind PHA actions. Sometimes a

PHA should do the ``right'' thing and receive a lower PHMAP score. For

example, a PHA decides to demolish nonviable units rather than to

program these nonviable units for modernization in quest of a better

PHMAP score. When a PHA makes the ``right'' decision, it should be

commended, not punished. Therefore, the Department is particularly

interested in receiving comments concerning ways in which PHAs can

receive positive recognition within the context of this regulation for

making the right decision.

Appendix 1.--Sample Worksheet--Indicator #6, Cash And Operating Expenses

[Analysis of available cash, examination of operating expenses/available

cash]

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

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

PHA Name: FYE

To estimate cash available at fiscal year end for routine

operating expenditures.

Current Assets

1. Balance of Cash and Investment Accounts at fiscal

year end. Do not include the balance of cash accounts

that are restricted to a specific purpose and are,

therefore, not available for routine operating

expenditure purposes (e.g., modernization accounts,

security deposit accounts, escrow accounts, homebuyer

reserves, replacement reserves, etc.).

(a) General Fund Account 1111.1....................

(b) Petty Cash, Account 1117.......................

(c) Investments, Account 1162......................

(d) Other (describe)...............................

2. Add Accounts Receivable and Advances that are due

for the period covered and can be collected within the

next 30 days.

(a) Tenants/homebuyers.............................

(b) HUD Contributions receivable for Operating

Subsidy...........................................

(c) Interfund accounts receivable due from other

ACCs..............................................

(d) Other Receivables (describe)...................

3. Total Current Assets (add items 1 and 2)............

Current Liabilities

4. Liabilities payable within 30 days after fiscal

period ends.

(a) Vendors/contractors, Account 2111..............

(b) Payroll deductions and contributions, Account

2117..............................................

(c) Amounts due to HUD for subsidy adjustment,

residual receipts, Account 2118...................

(d) Accrued Expenses (e.g., utilities, payroll,

PILOT)............................................

(c) Interfund accounts payable due to other ACCs...

(d) Other current obligations (describe)...........

5. Total Current Liabilities (Add items 4(a) through

4(d)).................................................

6. Available Cash (Deficiency) (Line 3 Minus Line 5)...

7. Total Routine Expenses (Line 520, form HUD-52599)...

8. Cash Reserves divided by Total Actual Routine

Expenses (Line 6 divided by Line 7)...................

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

Appendix 2.--Sample Worksheet--Indicator #6, Energy/Utility Consumption

Option A

[Annual energy/utility consumption, as compared to the average of the

three years' rolling base consumption]

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

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

PHA: FYE

1. Total energy/utility cost in fiscal year for which

adjustment is requested (form HUD-52722B, line 13,

column 3):............................................ $

2. Costs of estimated energy/utility consumption at

average rate for appropriate PHA fiscal year (form HUD-

52722B, line 17, column 3):........................... $

3. Costs of actual energy/utility consumption divided

by costs of estimated energy/utility consumption (line

1 divided by line 2):................................. $

4. Subtract 1.00 from line 3 and multiply the remainder

by 100 to calculate the percentage of increase or

decrease. For example:................................ %

If line 3 equals .95, then .95 minus 1.00 equals -

.05 x 100 = a 5% decrease; or...................

If line 3 equals 1.15, then 1.15 minus 1.00 equals

.15 x 100 = a 15% increase .....................

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

Source: Most recent form HUD-52722B, Adjustment for Utility Consumption

and Rates.

Sample Worksheet--Indicator #6, Energy Consumption Option B

[Energy audit and implementation of recommendations]

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

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

PHA: FYE

Grade Response

Grade A: The PHA has completed its energy audit and has

implemented all of the recommendations determined to be

cost effective.

Grade C: The PHA has completed its energy audit and is in

the process of implementing all of the recommendations.

Grade F: The PHA has not completed its energy audit, or has

not implemented all of the recommendations.

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

Source: PHA's energy audit and/or maintenance plan.

[[Page 20369]]

Appendix 3.--Public Housing Management Assessment Program (PHMAP) Certification

[Instructions: A PHA/RMC/AME's responses to this certification form must be the PHA/RMC/AME's actual data; e.g.,

prior to any adjustments for modifications and/or exclusion requests to the indicators. Round percentages to the

nearest two decimal points.]

PHA/RMC/AME Name:

For FY Ending:

Submission Date:

Indicator 1: Vacancy rate and unit turnaround

Units

Days

Rate

Actual vacancy total.................................................... / / / %

Vacancy exemptions...................................................... / / /

Adjusted vacancy total.................................................. / / / %

Percent reduction of actual vacancies over prior three

years (enter percent or N/A).......................... %

PHA/RMC/AME shall respond to the question, below, if it

scored below a grade of C on the vacancy component

Average number of calendar days for vacant unit to be

prepared for re-rental and for a new lease to take

effect (unit turnaround)..............................

Additional percentage points for the percent of units

subject to physical condition and/or neighborhood

environment (enter .5; .6; .7; .8; .9; or 1 or N/A)....... %

Indicator 3: Rents uncollected

Rents billed........................................... $

Rents collected........................................ $

Rents uncollected...................................... $

Balance of rents uncollected as a percentage of total

rents to be collected................................. %

Indicator 4: Work orders

Percent of emergency items corrected/abated within 24

hours................................................. %

Average number of calendar days for non-emergency work

orders to be completed................................

Average number of days PHA/RMC/AME has reduced the time

it takes to complete non-emergency work orders over

the past three years (enter average number of days or

N/A)..................................................

Additional percentage points for the percent of units

subject to physical condition and/or neighborhood

environment (enter .5; .6; .7; .8; .9; or 1 or N/A)....... %

Indicator 5: Annual inspection of units and systems

Percent of units inspected annually using standards

that were at least equivalent to HQS.................. %

Percent of units meeting HQS........................... %

PHA/RMC/AME completed all repairs where necessary for

code compliance either during the inspection, issued

work orders for the repairs, or referred the

deficiency to the current year's or next year's

modernization program (enter Yes or No)...............

Percent of buildings and sites, according to the

maintenance plan, where major systems were inspected.. %

Additional percentage points for the percent of units

subject to physical condition and/or neighborhood

environment (enter .5; .6; .7; .8; .9; or 1 or N/A)....... %

Indicator 6: Financial management

PHA/RMC/AME has cash reserves of $3 million or more

(enter Yes or No)..................................... $

If the answer is Yes, proceed to indicator #7; if the

answer is No, continue with the next question

Percent of cash reserves to total actual routine

expenditures.......................................... %

PHA/RMC/AME shall respond to the questions, below, if it

scored below a grade of C on the cash reserves component;

however, PHA/RMC/AME with tenant-paid utilities in all

their units will not be assessed on energy/utility

consumption even if they score below a grade of C on the

cash reserve component

PHA/RMC/AME has completed its energy audit and has

implemented all of the recommendations that were cost

effective (enter Yes or No)...........................

If the answer is Yes, proceed to indicator #7; if the

answer is No, continue with the next question

PHA/RMC/AME has completed its energy audit and is in

the process of implementing all of the recommendations

that were cost effective (enter Yes or No)............

If the answer is Yes, proceed to indicator #7; if the

answer is No, continue with the next question

PHA/RMC/AME has completed its energy audit (enter Yes

or No)................................................

If the answer is No, proceed to indicator #7

PHA/RMC/AME has completed its energy audit, but has not

implemented all of the recommendations that were cost

effective (enter Yes).................................

Indicator 7: Resident involvement (applies only to PHAs

with 100 units or less)

PHA Board, by resolution, has adopted a Section 3

program (enter Yes or No).............................

PHA/RMC/AME staff monitors progress and issues reports

concerning progress under the program (enter Yes or

No)...................................................

At each family development site where a resident

council exists, there has been a development-wide

election of resident council board members/officers

(enter Yes or No).....................................

At each family development site where a resident

council does not exist, the PHA/AME during the past

year has encouraged development-wide elections of

resident board members/officers (enter Yes or No or N/

A)....................................................

PHA Board, by resolution, has adopted mechanisms to

ensure that residents have ample opportunity for input

into planning and goal setting for ongoing management

issues, including capital improvement programs (enter

Yes or No)............................................

PHA Board has invited residents to participate in

planning for capital improvement programs (enter Yes

or No or N/A).........................................

If the PHA/RMC/AME has any special resident initiative

program(s), the percent of goals being met under the

implementation plan for any and all programs (enter

percent).............................................. %

Indicator 8: Security

PHA/RMC/AME has a mechanism for tracking crime related

problems (enter Yes or No)............................

PHA/RMC/AME can demonstrate a system for taking action

with local police authorities to improve law

enforcement, lease enforcement and crime prevention

(enter Yes or No).....................................

PHA Board, by resolution, has adopted policies that

screen out public housing applicants with a history of

criminal activity involving crimes to persons or

property and/or other criminal acts that would

adversely affect the health, safety or welfare of

other residents (enter Yes or No).....................

[[Page 20370]]

PHA/RMC/AME has implemented procedures and can document

that it appropriately screens out and denies admission

to public housing applicants with a history of

criminal activity involving crimes to persons or

property and/or other criminal acts that would

adversely affect the health, safety or welfare of

other residents (enter Yes or No).....................

PHA Board, by resolution, has adopted policies that

appropriately evict a public housing resident who

engages in any criminal activity that threatens the

health, safety, or right to peaceful enjoyment of the

premises by other residents; engages in any drug-

related criminal activity (as defined at section 6(l)

of the 1937 Act [42 U.S.C. 1437d(l)]) on or off the

PHA's property; or who the PHA has reasonable cause to

believe abuses alcohol in such a way that may

interfere with the health, safety, or right to

peaceful enjoyment of the premises by other residents

(enter Yes or No).....................................

PHA/RMC/AME has implemented procedures and can document

that it appropriately evicts a public housing resident

who engages in any criminal activity that threatens

the health, safety, or right to peaceful enjoyment of

the premises by other residents; engages in any drug-

related criminal activity (as defined at section 6(l)

of the 1937 Act [42 U.S.C. 1437d(l)]) on or off the

PHA's property; or who the PHA has reasonable cause to

believe abuses alcohol in such a way that may

interfere with the health, safety, or right to

peaceful enjoyment of the premises by other residents

(enter Yes or No).....................................

If the PHA/RMC/AME has any special drug prevention

program or crime reduction program funded by any HUD

funds, the percent of goals being met under the

implementation plan for any and all programs (enter

percent).............................................. %

V. Other Matters

Environmental Impact

A Finding of No Significant Impact with respect to the environment

has been made in accordance with HUD regulations at 24 CFR part 50,

which implement section 102(2)(C) of the National Environmental Policy

Act of 1969. The Finding of No Significant Impact is available for

public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the

Office of the Rules Docket Clerk at the above address.

Regulatory Planning and Review

This proposed rule has been reviewed in accordance with Executive

Order 12866, issued by the President on September 30, 1993 (58 FR

51735, October 4, 1993). Any changes to the proposed rule resulting

from this review are available for public inspection between 7:30 a.m.

and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk.

Regulatory Flexibility Act

The Secretary in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so

doing certifies that this proposed rule would not have a significant

economic impact on a substantial number of small entities. The rule

establishes management assessment criteria for PHAs. HUD does not

anticipate a significant economic impact on a substantial number of

small entities, since the proposed rule establishes management

assessment criteria which will be utilized by State/Area Offices for

monitoring purposes and the provision of technical assistance to PHAs.

Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this proposed rule will not have substantial direct

effects on States or their political subdivisions, or the relationship

between the Federal government and the States, or on the distribution

of power and responsibilities among the various levels of government.

The proposed rule is intended to promote good management practices by

including, in HUD's relationship with PHAs, continuing review of PHAs'

compliance with already existing requirements. In addition, the

proposed rule carries out, as unobtrusively as possible, a Federal

statutory mandate. The proposed rule does not create any new

significant requirements of its own. As a result, the proposed rule is

not subject to review under the Order.

Family Impact

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this proposed rule does

not have potential for significant impact on family formation,

maintenance, and general well-being, and, thus, is not subject to

review under the Order. The proposed rule involves requirements for

management assessment of PHAs. Any effect on the family would be

indirect. To the extent families in public housing will be affected,

the impact of the proposed rule's requirements is expected to be a

positive one.

List of Subjects in 24 CFR Part 901

Administrative practice and procedures, Public housing, Reporting

and recordkeeping requirements.

Accordingly, part 901 of title 24 of the Code of Federal

Regulations is proposed to be revised as follows:

PART 901--PUBLIC HOUSING MANAGEMENT ASSESSMENT PROGRAM

Sec.

901.1 Purpose and applicability.

901.5 Definitions.

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

901.15 Indicator #2, modernization.

901.20 Indicator #3, rents uncollected.

901.25 Indicator #4, work orders.

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

901.35 Indicator #6, financial management.

901.40 Indicator #7, resident involvement.

901.45 Indicator #8, security.

901.100 Data collection.

901.105 Computing assessment score.

901.110 PHA request for exclusion or modification of an indicator

or component.

901.115 PHA score and status.

901.120 State/Area Office functions.

901.125 PHA right of appeal.

901.130 Incentives.

901.135 Memorandum of Agreement.

901.140 Removal from troubled status and mod-troubled status.

901.145 Improvement Plan.

901.150 PHAs troubled with respect to the program under section 14

(mod-troubled PHAs).

901.155 PHMAP public record.

901.200 Events or conditions that constitute substantial default.

901.205 Notice and response.

901.210 Interventions.

901.215 Contracting and funding.

901.220 Resident participation in competitive proposals to manage

the housing of a PHA.

901.225 Resident petitions for remedial action.

901.230 Receivership.

901.235 Technical assistance.

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

Sec. 901.1 Purpose and applicability.

(a) Purpose. This part establishes the Public Housing Management

Assessment Program (PHMAP) to implement and augment section 6(j) of the

1937 Act (42 U.S.C. 1437d). PHMAP provides policies and procedures to

identify public housing agency (PHA), resident management corporation

(RMC), and alternative management entity (AME) management capabilities

and deficiencies, recognize high-performing PHAs, designate criteria

for defining troubled PHAs and PHAs that are troubled with respect to

the program under section 14 (Public Housing Modernization Program),

and improve

[[Page 20371]]

the management practices of troubled PHAs and mod-troubled PHAs.

(b) Applicability.

(1) The provisions of this part apply to PHAs and RMCs as noted in

the sections of this part.

(2) When a PHA's management functions have been assumed by an AME:

(i) If the AME assumes only a portion of the PHA's management

functions, the provisions of this part that apply to RMCs apply to the

AME; or

(ii) If the AME assumes all, or substantially all, of the PHA's

management functions, the provisions of this part that apply to PHAs

apply to the AME.

(3) To ensure quality management results from a contract between an

AME and a PHA, or between an AME and HUD, minimum performance criteria

that relate to the PHMAP indicators, as applicable, should be included

in such contract. Failure to meet the performance criteria would be a

basis for termination of the contract. However, even in the absence of

explicit contractual provisions, this part applies to AMEs in

accordance with paragraph (b)(2) of this section.

Sec. 901.5 Definitions.

Actual vacancy rate is the vacancy rate calculated without any

adjustments. It is calculated by dividing the total number of vacancy

days in the fiscal year by the total number of unit days available in

the fiscal year.

Adjusted vacancy rate is the vacancy rate calculated after

excluding the vacancy days that are exempted for any of the eligible

reasons. It is calculated by dividing the total number of adjusted

vacancy days in the fiscal year by the total number of unit days

available in the fiscal year.

Alternative management entity (AME) is a receiver, private

contractor, private manager, or any other entity that is under contract

with a PHA, or that is otherwise duly appointed or contracted (for

example, by court order or agency action), to manage all or part of a

PHA's operations. Depending upon the scope of PHA management functions

assumed by the AME, in accordance with Sec. 901.1(b)(2), the AME is

treated as a PHA or an RMC for purposes of this part and, as

appropriate, the terms PHA and RMC include AME.

Annual average is an average computed from data from a PHA's

immediate past fiscal year for applicable indicators.

Approved demolition and/or disposition program exists when a PHA's

application for demolition and/or disposition of low-rent public

housing units has received written approval from HUD.

Approved funded, on-schedule annual modernization program includes

any modernization program, funded out of the Comprehensive Grant

Program (CGP), the Comprehensive Improvement Assistance Program (CIAP),

the Vacancy Reduction Program (VRP), the Hope VI Program, or any other

source, if a PHA is in conformance with its current implementation

schedule as approved by the PHA Board of Commissioners and/or HUD.

Assistant Secretary means the Assistant Secretary for Public and

Indian Housing of the Department.

Available unit is a dwelling unit (occupied or vacant) under a

PHA's Annual Contributions Contract.

Average turnaround time is the annual average of the total number

of turnaround days between the move-out date (whenever that occurred,

including in some previous fiscal year) and the date a new lease takes

effect. Each time an individual unit is re-occupied (turned around)

during the fiscal year, the turnaround days for that unit shall be

counted in the turnaround time. Average turnaround time is calculated

by dividing the total turnaround days for all units re-occupied during

the fiscal year by the total number of units re-occupied during the

immediate past fiscal year.

Cash reserves is cash available at the end of an annual reporting

period after all necessary expenses of a PHA/development have been paid

or funds have been set-aside for such payment. The cash reserve

computation takes into consideration both short-term accounts

receivable and accounts payable.

Confirmatory review is an on-site review for the purposes of State/

Area Office verification of the performance level of a PHA, the

accuracy of the data certified to by a PHA, and the accuracy of the

data derived from State/Area Office files.

Correct means to improve performance in an indicator to a level of

grade ``C'' or better.

Current dwelling rent charged refers to the resident dwelling rent

charges reflected in the monthly rent roll(s), and excludes retroactive

rent charges, maintenance charges, excess utility charges, late

charges, and any other charges not specifically identified as dwelling

rent.

Cyclical work orders are work orders issued for the performance of

routine maintenance work that is done in the same way at regular

intervals. Examples of cyclical work include, but are not limited to,

mopping hallways; picking up litter; cleaning a trash compactor;

changing light bulbs in an entryway; etc. (Cyclical work orders should

not be confused with preventive maintenance work orders.)

Deficiency means any grade below ``C'' in an indicator or

component.

Emergency means physical work items that pose an immediate threat

to life, health, safety, or property, or that are related to fire

safety.

Emergency status abated means that an emergency work order is

either fully completed, or the emergency condition is temporarily

eliminated and no longer poses an immediate threat. If the work cannot

be completed, emergency status can be abated by transferring the

resident away from the emergency situation.

Emergency work order is a work order, from any source, that

involves a circumstance that poses an immediate threat to life, health,

safety or property, or that is related to fire safety.

HQS means Housing Quality Standards as set forth at 24 CFR 882.109

and amended by the Lead-Based Paint regulation at 24 CFR part 35.

Indicators means the major categories of PHA management functions

that are examined under this program for assessment purposes. The list

of individual indicators and the way they are graded is provided in

Secs. 901.10 through 901.45.

Local occupancy/housing codes are the minimum standards for human

occupancy, if any, as defined by the local ordinance(s) of the

jurisdiction in which the housing is located.

Major systems include, but are not limited to, structural/building

envelopes which include roofing, walls, windows, hardware, flashings

and caulking; mechanical systems which include heating, ventilation,

air conditioning, plumbing, drainage, underground utilities (gas,

electrical and water), and fuel storage tanks; electrical systems which

include underground systems, above ground systems, elevators, emergency

generators, door bells, electronic security devices, fire alarms, smoke

alarms, outdoor lighting, and indoor lighting (halls, stairwells,

public areas and exit signs); and transformers.

Memorandum of Agreement (MOA) is a binding contractual agreement

between a PHA and HUD, required for each PHA designated as troubled

and/or mod-troubled. The MOA sets forth target dates, strategies and

incentives for improving management performance; and provides sanctions

if performance does not result.

Non-emergency work order is any work order that covers a situation

that is not an immediate threat to life,

[[Page 20372]]

health, safety, or property, or that is unrelated to fire safety.

Percentage of emergency work orders completed within 24 hours is

the ratio of emergency work orders completed in 24 hours to the total

number of emergency work orders. The formula for calculating this ratio

is: total emergency work orders completed (or emergency status abated)

in 24 hours or less, divided by the total number of emergency work

orders.

Percentage of rents uncollected is the proportion of current

dwelling rent that was billed during the assessment year, but not

collected during the assessment year. The calculation is made as of the

close of business on the last business day of the fiscal year. It is

calculated by subtracting the total dwelling rent collected in the

immediate past fiscal year from the total dwelling rent billed in the

immediate past fiscal year to determine the amount of rents

uncollected; and dividing the amount of rents uncollected by the total

dwelling rent billed.

PHA means a public housing agency. As appropriate in accordance

with Sec. 901.1(b)(2), PHA also includes AME.

PHA-generated work order is any work order that is issued in

response to a request from within the PHA administration.

Preventive maintenance program is a program under which certain

maintenance procedures are systematically performed at regular

intervals to prevent premature deterioration of buildings and systems.

The program is developed and regularly updated by the PHA, and fully

documents what work is to be performed and at what intervals. The

program includes a system for tracking the performance of preventive

maintenance work.

Preventive maintenance work order is any work done on a regularly

scheduled basis in order to prevent deterioration or breakdowns in

individual units or major systems.

Reduced actual vacancy rate in the previous three years is a

comparison of the vacancy rate in the PHMAP assessment year (the

immediate past fiscal year) to the vacancy rate in the first year of

the previous three year period. It is calculated by subtracting the

vacancy rate in the assessment year from the vacancy rate in the

earlier year.

Reduced the average time it took to complete work orders over the

previous three years is a comparison of the average time it took to

complete work orders in the PHMAP assessment year (the immediate past

fiscal year) to the average time it took to complete work orders in the

first year of the previous three year period. It is calculated by

subtracting the average time it took to complete work orders in the

PHMAP assessment year from the average time it took to complete work

orders in the earlier year.

Rents uncollected means unpaid resident dwelling rent for residents

in possession.

Resident-generated work order is a work order issued by a PHA in

response to a request from a lease holder or family member of a lease

holder.

Resident management corporation (RMC) means the entity that

proposes to enter into, or that enters into, a management contract with

a PHA in accordance with 24 CFR 964.120. As appropriate in accordance

with Sec. 901.1(b)(2), RMC also includes AME.

Routine operating expenses are all expenses which are normal,

recurring fiscal year expenditures. Routine expenses exclude those

expenditures that are not normal fiscal year expenditures and those

that clearly represent work of such a substantial nature that the

expense is clearly not a routine occurrence.

Standards equivalent to HQS are housing/occupancy inspection

standards that are equal to HUD's Section 8 HQS.

Substantial default means a PHA is determined by the Department to

be in violation of statutory, regulatory or contractual provisions or

requirements, whether or not these violations would constitute a

substantial default or a substantial breach under explicit provisions

of the relevant Annual Contributions Contract or a Memorandum of

Agreement.

Turnaround days are the days between the last move-out and the date

a new lease takes effect, including any turnaround days in prior fiscal

years.

Vacancy day is a day when a unit is not under lease by an eligible

low-income resident, unless the vacancy day is exempted for an eligible

reason.

Vacant unit is a dwelling unit that is not under lease to an

eligible family. Units under lease for police substations, social

service providers, etc., are treated the same as units under lease to

eligible families.

Vacant unit turnaround work order is a work order issued that

directs a vacant unit to be made ready to lease to a new resident and

reflects all work items to prepare the unit for occupancy.

Vacant unit undergoing modernization is a vacant unit in an

otherwise viable development, as defined in 24 CFR 970.6, when the

development is undergoing modernization that includes work that is

necessary to reoccupy the vacant unit, and in which either: The vacant

unit is under construction (i.e., the construction contract has been

awarded or force account work has started); or the treatment of the

vacant unit is included in a HUD-approved modernization budget (e.g.,

an approved Annual Statement for the Comprehensive Grant Program (CGP)

or Comprehensive Improvement Assistance Program (CIAP) budget), but the

time period for placing the vacant units under construction has not yet

expired. The PHA must place the vacant units under construction within

two Federal fiscal years (FFYs) after the FFY in which the

modernization funds are approved. In addition, the following apply when

computing time periods for a vacant unit undergoing modernization:

(1) If a unit is vacant prior to being included in the construction

budget of an approved funded on-schedule annual modernization plan,

those vacancy days that had accumulated prior to the unit being

included in the construction budget of an annual modernization plan

must be included as non-exempted vacancy days in the calculation.

(2) The calculation of turnaround time for newly modernized units

starts when the unit is turned over to the PHA from the contractor and

ends when the lease is effective for the new or returning resident.

Thus, the total turnaround time would be the sum of the pre-

modernization vacancy time, and the post-modernization vacancy time.

(3) Unit-by-unit documentation, showing when a vacant unit was

included in the construction budget of a modernization plan, when it

was released to the PHA by the contractor, and when a new lease is

effective for the new or returning resident, must be maintained by the

PHA.

(4) Units remaining vacant more than two FFYs after the FFY in

which the modernization funds are approved, may no longer be exempted

from the calculation of the adjusted vacancy rate if the construction

contract has not been let. These units may be exempted again, but only

after a contract is let.

Work order is a directive, containing one or more tasks issued to a

PHA employee or contractor to perform one or more tasks on PHA

property. This directive describes the location and the type of work to

be performed; the date and time of receipt; date and time issued to the

person or entity performing the work; the date and time the work is

satisfactorily completed; the parts used to complete the repairs and

the cost of the parts; whether the damage was caused by the resident;

and the charges to the resident for resident-

[[Page 20373]]

caused damage. The work order is entered into a log which indicates at

all times the status of all work orders as to type (emergency, routine,

etc.), when issued, and when completed.

Work order completed during the immediate past fiscal year is any

work order that is completed during the PHA's fiscal year regardless of

when it may have been received.

Work order deferred for modernization is any work order that is

combined with similar work orders and completed within the current

PHMAP assessment year, or will be completed in the following year,

under the PHA's modernization program or other PHA capital improvements

program.

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

This indicator examines the vacancy rate, a PHA's progress in

reducing vacancies, and unit turnaround time. This indicator has a

weight of x2.

(a) For the calculation of the adjusted vacancy rate and turnaround

time, the vacancy days for units in the following categories shall be

exempted:

(1) Vacant unit undergoing modernization.

(2) Vacant units in an approved demolition or disposition program

(not applicable to vacant unit turnaround).

(3) Vacant units that are documented to be uninhabitable for

reasons beyond the PHA's control:

(i) Due to high/unsafe levels of hazardous/toxic material (e.g.,

lead-based paint or asbestos);

(ii) By order of the local health department or directive of the

Environmental Protection Agency, where the conditions causing the order

are beyond the control of the PHA; and

(iii) That are structurally unsound (e.g., buildings damaged by

shrinking/swelling subsoil or similar situations, or as a result of

natural disasters).

(4) Vacant units in which resident property has been abandoned, but

only if State law requires the property to be left in the unit for some

period of time, and only for the period stated in the law.

(5) Vacant units that have sustained casualty damage, but only

until the insurance claim is adjusted, i.e., funds to repair the unit

are received.

(6) Units that are used for non-dwelling purposes and dwelling

units that are occupied by employees of the PHA and units that are used

for resident services.

(7) Vacant units required to remain vacant because of fire/police

investigations, coroner's seal, or court order.

(8) Units kept vacant because of code violations caused for reasons

beyond the control of the PHA, rather than as a result of management

and/or maintenance failures by the PHA.

(9) Units vacant for circumstances and actions beyond the PHA's

control that prevent the PHA from being able to occupy, sell, demolish,

rehabilitate, reconstruct, consolidate, or modernize vacant units. Such

circumstances and actions may include:

(i) Litigation, such as a court order or settlement agreement that

is legally enforceable. For example, units that are being held vacant

as part of a court-ordered or HUD-approved desegregation effort would

be exempted.

(ii) Federal or, when not preempted by Federal requirements, State

law of general applicability or their implementing regulations. This

category does not include units vacant only because they do not meet

minimum standards established, for example, in housing and building

codes.

(iii) Changing market conditions. For example, small PHAs that are

located in areas experiencing population loss or economic dislocations

may face a lack of demand in the foreseeable future, even after

aggressive marketing and outreach measures by the PHA have been

undertaken. Documentation of marketing efforts must be maintained by

the PHA.

(iv) Natural disasters.

(v) Insufficient funding for otherwise approvable applications made

for CIAP funds (only PHAs with less than 250 units are eligible to

apply and compete for CIAP funds). This definition will cease to be

used if CIAP is replaced by a formula grant.

(vi) Pending resolution of insurance claims or settlements. The

period between a casualty loss and the receipt of funds from an insurer

to cover the loss in whole or in part.

(b) Component #1, vacancy percentage and progress in reducing

vacancies. A PHA may choose whether to use actual or adjusted vacancy

rate. This component has a weight of x2.

(1) Grade A: The PHA is in one of the following categories:

(i) An actual vacancy rate of 3% or less; or

(ii) An adjusted vacancy rate of 2% or less.

(2) Grade B: The PHA is in one of the following categories:

(i) An actual vacancy rate of greater than 3% and less than or

equal to 5%; or

(ii) An adjusted vacancy rate of greater than 2%, but less than or

equal to 3%.

(3) Grade C: The PHA is in one of the following categories:

(i) An actual vacancy rate of greater than 5% and less than or

equal to 7%; or

(ii) An adjusted vacancy rate of greater than 3% and less than or

equal to 4%; or

(iii) The PHA has reduced its actual vacancy rate by at least 15

percentage points over the past three years and has an adjusted vacancy

rate of greater than 4% and less than or equal to 5%.

(4) Grade D: The PHA is in one of the following categories:

(i) An actual vacancy rate of greater than 7% and less than or

equal to 9%;

(ii) An adjusted vacancy rate of greater than 4% and less than or

equal to 5%; or

(iii) The PHA has reduced its actual vacancy rate by at least 10

percentage points over the past three years and has an adjusted vacancy

rate of greater than 5% and less than or equal to 6%.

(5) Grade E: The PHA is in one of the following categories:

(i) An actual vacancy rate of greater than 9% and less than or

equal to 10%; or

(ii) An adjusted annual vacancy rate of greater than 5% and less

than or equal to 6%; or

(iii) The PHA has reduced its actual vacancy rate by at least five

percentage points over the past three years and has an adjusted vacancy

rate of greater than 6% and less than or equal to 7%.

(6) Grade F: The PHA is in one of the following categories:

(i) An actual vacancy rate of greater than 10%; or

(ii) An adjusted annual vacancy rate of greater than 6%.

(c) Component #2, unit turnaround time. This component is to be

completed only by PHAs scoring below a grade C on component #1. This

component has a weight of x1.

(1) Grade A: The average number of calendar days between the time

when a unit is vacated and a new lease takes effect for units re-

occupied during the PHA's immediate past fiscal year, is less than or

equal to 20 calendar days.

(2) Grade B: The average number of calendar days between the time

when a unit is vacated and a new lease takes effect for units re-

occupied during the PHA's immediate past fiscal year, is greater than

20 calendar days and less than or equal to 25 calendar days.

(3) Grade C: The average number of calendar days between the time

when a unit is vacated and a new lease takes effect for units re-

occupied during the PHA's immediate past fiscal year, is greater than

25 calendar days and less than or equal to 30 calendar days.

(4) Grade D: The average number of calendar days between the time

when a

[[Page 20374]]

unit is vacated and a new lease takes effect for units re-occupied

during the PHA's immediate past fiscal year, is greater than 30

calendar days and less than or equal to 40 calendar days.

(5) Grade E: The average number of calendar days between the time

when a unit is vacated and a new lease takes effect for units re-

occupied during the PHA's immediate past fiscal year, is greater than

40 calendar days and less than or equal to 50 calendar days.

(6) Grade F: The average number of calendar days between the time

when a unit is vacated and a new lease takes effect for units re-

occupied during the PHA's immediate past fiscal year, is greater than

50 calendar days.

Sec. 901.15 Indicator #2, modernization.

This indicator is automatically excluded if a PHA does not have a

modernization program. This indicator examines the amount of unexpended

funds over three years old, the timeliness of fund obligation, the

adequacy of contract administration, the quality of the physical work,

and the adequacy of budget controls. It applies to both the

Comprehensive Grant Program (CGP) and the Comprehensive Improvement

Assistance Program (CIAP). This indicator has a weight of x1.

(a) Component #1, unexpended funds over three Federal Fiscal Years

(FFYs) Old. This component has a weight of x1.

(1) Grade A: The PHA has no unexpended funds over three FFYs old,

or is able to demonstrate one of the following:

(i) The unexpended funds are leftover funds and will be recaptured

after audit; or

(ii) The HUD-approved original implementation schedule allows

longer than three FFYs to expend all funds; or

(iii) The PHA has self-executed a time extension within 30 calendar

days after the expenditure deadline and the extension is based on valid

reasons outside of the PHA's control, such as litigation, material

shortages, or other institutional delay.

(2) Grade F: The PHA has unexpended funds over three FFYs old and

is unable to demonstrate any of the above three conditions; or the PHA

requests HUD approval of a time extension based on reasons within the

PHA's control.

(b) Component #2, timeliness of fund obligation. This component has

a weight of x2.

(1) Grade A: The PHA has no unobligated funds over two FFYs old or

is able to demonstrate one of the following:

(i) The HUD-approved original implementation schedule allows longer

than two FFYs to obligate all funds; or

(ii) The PHA has self-executed a time extension within 30 calendar

days after the obligation deadline and the extension is based on valid

reasons outside of the PHA's control, such as litigation, material

shortages, or other institutional delay.

(2) Grade F: The PHA has unobligated funds over two FFYs old and is

unable to demonstrate any of the above two conditions; or the PHA

requests HUD approval of a time extension based on reasons within the

PHA's control.

(c) Component #3, adequacy of contract administration. This

component has a weight of x1.5.

(1) Grade A: Based on HUD's latest on-site inspection and/or audit,

there were no significant findings related to contract administration

or the PHA has corrected all such findings.

(2) Grade C: Based on HUD's latest on-site inspection and/or audit,

there were significant findings related to contract administration and

the PHA is in the process of correcting all such findings.

(3) Grade F: Based on HUD's latest on-site inspection and/or audit,

there were significant findings related to contract administration and

the PHA has failed to initiate corrective actions for all such findings

or those actions which have been initiated have not resulted in

progress toward remedying all of the findings.

(d) Component #4, quality of the physical work. This component has

a weight of x3.

(1) Grade A: Based on HUD's latest on-site inspection, there were

no significant findings related to the quality of the physical work or

the PHA has corrected all such findings.

(2) Grade C: Based on HUD's latest on-site inspection, there were

significant monitoring findings related to the quality of the physical

work and the PHA is in the process of correcting all such findings.

(3) Grade F: Based on HUD's latest on-site inspection, there were

significant monitoring findings related to the quality of the physical

work and the PHA has failed to initiate corrective actions for all such

findings or those actions which have been initiated have not resulted

in progress toward remedying all of the findings.

(e) Component #5, adequacy of budget controls. This component has a

weight of x1.

(1) Grade A: The CGP PHA has expended modernization funds only on

work items in HUD-approved CGP Annual Statements/Five-Year Action Plan

or has obtained prior HUD approval for required budget revisions. The

CIAP PHA has expended modernization funds only on work items in HUD-

approved CIAP budgets, or within the HUD-established threshold for CIAP

budget revisions, or has obtained prior HUD approval for required

budget revisions.

(2) Grade F: The CGP PHA has expended modernization funds on work

items that were not in HUD-approved CGP Annual Statements/Five-Year

Action Plan and did not obtain prior HUD approval for required budget

revisions. The CIAP PHA has expended modernization funds on work items

that were not in HUD-approved CIAP budgets, or within the HUD-

established threshold for CIAP budget revisions, and did not obtain

prior HUD approval for required budget revisions.

Sec. 901.20 Indicator #3, rents uncollected.

This indicator examines the PHA's ability to collect rent by

measuring the percentage of dwelling rent it failed to collect during

its immediate past fiscal year. This indicator has a weight of x1.5.

(a) Grade A: Percent of rents uncollected in the immediate past

fiscal year is less than or equal to 2% of total rents billed.

(b) Grade B: The percent of rents uncollected in the immediate past

fiscal year is greater than 2% and less than or equal to 4% of total

rents billed.

(c) Grade C: The percent of rents uncollected in the immediate past

fiscal year is greater than 4% and less than or equal to 6% of total

rents billed.

(d) Grade D: The percent of rents uncollected in the immediate past

fiscal year is greater than 6% and less than or equal to 8% of total

rents billed.

(e) Grade E: The percent of rents uncollected in the immediate past

fiscal year is greater than 8% and less than or equal to 10% of total

rents billed.

(f) Grade F: The percent of rents uncollected in the immediate past

fiscal year is greater than 10% of total rents billed.

Sec. 901.25 Indicator #4, work orders.

This indicator examines the average number of days it takes for a

work order to be completed, and any progress a PHA has made during the

preceding three years to reduce the period of time required to complete

maintenance work orders. This indicator has a weight of x1.5.

(a) Component #1, emergency work orders completed within 24 hours

or less. This component has a weight of x1.

(1) Grade A: At least 99% of emergency work orders were completed

or the emergency was abated within 24

[[Page 20375]]

hours or less during the PHA's immediate past fiscal year.

(2) Grade B: At least 98% of emergency work orders were completed

or the emergency was abated within 24 hours or less during the PHA's

immediate past fiscal year.

(3) Grade C: At least 97% of emergency work orders were completed

or the emergency was abated within 24 hours or less during the PHA's

immediate past fiscal year.

(4) Grade D: At least 96% of emergency work orders were completed

or the emergency was abated within 24 hours or less during the PHA's

immediate past fiscal year.

(5) Grade E: At least 95% of emergency work orders were completed

or the emergency was abated within 24 hours or less during the PHA's

immediate past fiscal year.

(6) Grade F: Less than 95% of emergency work orders were completed

or the emergency was abated within 24 hours or less during the PHA's

immediate past fiscal year.

(b) Component #2, average number of days for non-emergency work

orders to be completed. All work orders should be tracked, except non-

emergency work orders exempted for modernization, issued to prepare a

vacant unit for re-rental, or issued for the performance of cyclical

maintenance. This component has a weight of x2.

(1) Grade A: All non-emergency work orders are completed within an

average of 25 calendar days.

(2) Grade B: All non-emergency work orders are completed within an

average of greater than 25 calendar days and less than or equal to 30

calendar days.

(3) Grade C: The PHA is in one of the following categories:

(i) All non-emergency work orders are completed within an average

of greater than 30 calendar days and less than or equal to 40 calendar

days; or

(ii) The PHA has reduced the average time it takes to complete non-

emergency work orders over the past three years by at least 30 days.

(4) Grade D: The PHA is in one of the following categories:

(i) All non-emergency work orders are completed within an average

of greater than 40 calendar days and less than or equal to 50 calendar

days; or

(ii) The PHA has reduced the average time it takes to complete non-

emergency work orders over the past three years by at least 20 days.

(5) Grade E: The PHA is in one of the following categories:

(i) All non-emergency work orders are completed within an average

of greater than 50 calendar days and less than or equal to 60 calendar

days; or

(ii) The PHA has reduced the average time it takes to complete non-

emergency work orders over the past three years by at least 10 days.

(6) Grade F: All non-emergency work orders are completed within an

average of greater than 60 calendar days.

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

This indicator examines the percentage of units that a PHA inspects

on an annual basis in order to determine short-term maintenance needs

and long-term modernization needs. This indicator has a weight of x1.

(a) Units in the following categories are exempted and not included

in the calculation of the total number of units, and the number and

percentage of units inspected. Systems that are a part of individual

dwelling units that are exempted, or a part of a building where all of

the dwelling units in the building are exempted, are also exempted from

the calculation of this indicator:

(1) Occupied units where the PHA has made two documented attempts

to inspect, but only if the PHA can document that appropriate legal

action (up to and including eviction of the legal or illegal

occupant(s)), has been taken under provisions of the lease to ensure

that the unit can be subsequently inspected.

(2) Vacant unit undergoing modernization.

(3) Vacant units in an approved demolition or disposition program.

(4) Vacant units that are documented to be uninhabitable:

(i) Due to high/unsafe levels of hazardous/toxic material (e.g.,

lead-based paint or asbestos);

(ii) By order of the local health department or directive of the

Environmental Protection Agency, where the conditions causing the order

are beyond the control of the PHA; and

(iii) That are structurally unsound (e.g., buildings damaged by

shrinking/swelling subsoil or similar situations).

(5) Units vacant for the full immediate past fiscal year that have

been exempted under indicator #1, at Sec. 901.10, for any of the

reasons for which exemptions are permitted under that indicator (except

those units that are used for non-dwelling purposes or that are

occupied by employees of the PHA and units that are used for resident

services).

(b) Component #1, annual inspection of units. This component refers

to an inspection using either the local housing/occupancy code, or HUD

HQS if there is no local code or the local code is less stringent that

HQS. This component has a weight of x1.

(1) Grade A: The PHA inspected 100% of its units and, if repairs

were necessary for code compliance, either completed the repairs during

the inspection; issued work orders for the repairs; or referred the

deficiency to the current year's or next year's modernization program.

(2) Grade B: The PHA inspected less than 100% but at least 97% of

its units and, if repairs were necessary for code compliance, either

completed the repairs during the inspection; issued work orders for the

repairs; or referred the deficiency to the current year's or next

year's modernization program.

(3) Grade C: The PHA inspected less than 97% but at least 95% of

its units and, if repairs were necessary for code compliance, either

completed the repairs during the inspection; issued work orders for the

repairs; or referred the deficiency to the current year's or next

year's modernization program.

(4) Grade D: The PHA inspected less than 95% but at least 93% of

its units and, if repairs were necessary for code compliance, either

completed the repairs during the inspection; issued work orders for the

repairs; or referred the deficiency to the current year's or next

year's modernization program.

(5) Grade E: The PHA inspected less than 93% but at least 90% of

its units and, if repairs were necessary for code compliance, either

completed the repairs during the inspection; issued work orders for the

repairs; or referred the deficiency to the current year's or next

year's modernization program.

(6) Grade F: The PHA has failed to inspect at least 90% of its

units; or failed to correct deficiencies during the inspection or issue

work orders for the repairs; or failed to refer deficiencies to the

current year's or next year's modernization plan.

(c) Component #2, annual inspection of systems. This component

examines the inspection of buildings and sites according to the PHA's

maintenance plan, including performing the required maintenance on

structures and systems in accordance with manufacturer's specifications

and established local/PHA standards, or issuing work orders for future

maintenance/repairs, or including identified deficiencies in the

Comprehensive Modernization Plan. This component has a weight of x1.

(1) Grade A: At 100% of its buildings and sites, according to its

maintenance plan, the PHA inspected all major systems.

(2) Grade B: At a minimum of 90% but less than 100% of its

buildings and sites, according to its maintenance plan, the PHA

inspected all major systems.

(3) Grade C: At a minimum of 80% but less than 90% of its buildings

and

[[Page 20376]]

sites, according to its maintenance plan, the PHA inspected all major

systems.

(4) Grade D: At a minimum of 70% but less than 80% of its buildings

and sites, according to its maintenance plan, the PHA inspected all

major systems.

(5) Grade E: At least 60% but less than 70% of its buildings and

sites, according to its maintenance plan, the PHA inspected all major

systems.

(6) Grade F: The PHA failed to inspect at lease 60% of its

buildings and sites, all major systems, as defined herein, and perform

the required maintenance on these systems in accordance with

manufacturers specifications and established local/PHA standards, or

issue work orders for future maintenance/repairs, or include identified

deficiencies in the Comprehensive Modernization Plan.

Sec. 901.35 Indicator #6, financial management.

This indicator examines the amount of cash reserves and, for PHAs

scoring below a grade C on cash reserves, energy/utility consumption.

This indicator has a weight of x1.

(a) Component #1, cash reserves. This component has a weight of x2.

(1) Grade A: Cash reserves are greater than or equal to 15% of

total actual routine expenditures, or the PHA has cash reserves of $3

million or more.

(2) Grade B: Cash reserves are greater than or equal to 12.5%, but

less than 15% of total actual routine expenditures.

(3) Grade C: Cash reserves are greater than or equal to 10%, but

less than 12.5% of total actual routine expenditures.

(4) Grade D: Cash reserves are greater than or equal to 7.5%, but

less than 10% of total actual routine expenditures.

(5) Grade E: Cash reserves are greater than or equal to 5%, but

less than 7.5% of total actual routine expenditures.

(6) Grade F: Cash reserves are less than 5% of total actual routine

expenditures.

(b) Component #2, energy/utility consumption. Either option A or

option B of this component is to be completed only by PHAs that score

below a grade C on component #1. Regardless of a PHA's score on

component #1, it will not be scored on component #2 if all its units

have tenant paid utilities. Annual energy/utility consumption includes

water and sewage usage. This component has a weight of x1.

(1) Option A, Annual Energy/Utility Consumption.--(i) Grade A:

Annual energy/utility consumption, as compared to the average of the

three years' rolling base consumption, has not increased.

(ii) Grade B: Annual energy/utility consumption, as compared to the

average of the three years' rolling base consumption, has not increased

by more than 3%.

(iii) Grade C: Annual energy/utility consumption, as compared to

the average of the three years' rolling base consumption, has increased

by more than 3% and less than or equal to 5%.

(iv) Grade D: Annual energy/utility consumption, as compared to the

average of the three years' rolling base consumption, has increased by

more than 5% and less than or equal to 7%.

(v) Grade E: Annual energy/utility consumption, as compared to the

average of the three years' rolling base consumption, has increased by

more than 7% and less than or equal to 9%.

(vi) Grade F: Annual energy/utility consumption, as compared to the

average of the three years' rolling base consumption, has increased by

more than 9%.

(2) Component #2, option B, energy consumption.--(i) Grade A: The

PHA has completed its energy audit and has implemented all of the

recommendations that were cost effective.

(ii) Grade C: The PHA has completed its energy audit and is in the

process of implementing all of the recommendations that were cost

effective.

(iii) Grade F: The PHA has not completed its energy audit, or has

not implemented all of the recommendations that were cost effective.

Sec. 901.40 Indicator #7, resident involvement.

This indicator examines the PHA's efforts to encourage partnerships

with residents and the local community that help improve management

operations at the PHA; to encourage programs that develop self-

sufficiency, individual responsibility and community involvement among

residents; and, if applicable, PHA performance under any special HUD

grant(s). PHAs with 100 units or less will not be assessed under this

indicator. This indicator has a weight of x1.

(a) Grade A: The PHA meets each of the following criteria:

(1) The PHA Board, by resolution, has adopted a Section 3 program

and the PHA staff monitors progress under the program and issues

reports concerning progress under the program.

(2) The PHA has documentation that at each PHA family development

site where a resident council exists, there has been a development-wide

election of resident council board members and/or officers, and where

no resident council exists, the PHA has encouraged the formation of

such a council.

(3) The PHA Board has, through resolution, adopted mechanisms to

ensure that residents have ample opportunity for input into planning

and goal setting for ongoing management issues, as well as for capital

improvements programs such as the Comprehensive Grant Program and the

Comprehensive Improvement Assistance Program.

(4) If the PHA has any special resident initiative program, such as

a Technical Assistance Grant (TAG), the Tenant Opportunity Program

(TOP), Family Investment Center (FIC), Youth Sports (YS), Youth

Apprenticeship Program (YAP), or Family Self-Sufficiency (FSS), the PHA

can document that it is meeting at least 90% of its goals under the

implementation plan for any and all of these programs.

(b) Grade C: The PHA meets each of the following criteria:

(1) The PHA Board, by resolution, has adopted a Section 3 program.

(2) At each PHA family development site where a resident council

does not exist, the PHA during the assessment year has encouraged

development-wide elections of resident council board members and/or

officers.

(3) The PHA Board has invited residents to participate in planning

for capital improvements.

(4) If the PHA has any special resident initiative program, such as

TAG, TOP, FIC, YS, YAP, or FSS, the PHA can document that it is meeting

at least 60% of its goals under the implementation plan for any and all

of these programs.

(c) Grade F: The PHA fails to meet any one of the following

criteria:

(1) The PHA Board, by resolution, has adopted a Section 3 program.

(2) At each PHA family development site where a resident council

does not exist, the PHA during the assessment year has encouraged

development-wide elections of resident council board members and/or

officers.

(3) The PHA Board has invited residents to participate in planning

for capital improvements.

(4) If the PHA has any special resident initiative program, such as

TAG, TOP, FIC, YS, YAP, or FSS, the PHA can document that it is meeting

at least 60% of its goals under the implementation plan for any and all

of these programs.

Sec. 901.45 Indicator #8, security.

This indicator evaluates the PHAs performance in tracking crime-

related problems in their developments, cooperating with local law

enforcement and local courts, the adoption and

[[Page 20377]]

implementation of tough applicant screening and resident eviction

policies and procedures, and, as applicable, PHA performance under any

special HUD grant(s). PHAs with 100 units or less will not be assessed

under this indicator. This indicator has a weight of x1.

(a) Grade A: The PHA meets the following criteria:

(1) The PHA has a mechanism (such as the logging of serious

incidents in its various developments) for tracking crime related

problems and can demonstrate a system for taking action with local

police authorities to improve law enforcement, lease enforcement and

crime prevention.

(2) The PHA Board, by resolution, has adopted policies and the PHA

has implemented procedures and can document that it appropriately

screens out and denies admission to a public housing applicant who:

(i) Has a recent history of criminal activity involving crimes to

persons or property and/or other criminal acts that would adversely

affect the health, safety or welfare of other residents;

(ii) Was evicted, because of drug-related criminal activity, from

housing assisted under the U.S. Housing Act of 1937 within three years

of the projected date of admission, unless the applicant has

successfully completed, since the eviction, a rehabilitation program

approved by the public housing agency;

(iii) The PHA determines is illegally using a controlled substance;

or

(iv) The PHA has reasonable cause to believe abuses alcohol in a

way that may interfere with the health, safety, or right to peaceful

enjoyment of the premises by other residents.

(3) The PHA Board, by resolution, has adopted policies and the PHA

has implemented procedures and can document that it appropriately

evicts a public housing resident who:

(i) Engages in any criminal activity that threatens the health,

safety, or right to peaceful enjoyment of the premises by other

residents;

(ii) Engages in any drug-related criminal activity (as defined at

section 6(l) of the 1937 Act (42 U.S.C. 1437d(l)) on or off the PHA's

property; or

(iii) The PHA has reasonable cause to believe abuses alcohol in

such a way that may interfere with the health, safety, or right to

peaceful enjoyment of the premises by other residents.

(4) If the PHA has any special drug prevention program or crime

reduction program funded by any HUD funds, the PHA can document that it

is meeting at least 90% of its goals under the implementation plan for

any and all of these programs.

(b) Grade C: The PHA meets the following criteria:

(1) The PHA can demonstrate a system for taking action with local

police authorities to improve law enforcement, lease enforcement and

crime prevention.

(2) The PHA Board, by resolution, has adopted policies but cannot

document results in appropriately screening out and denying admission

to a public housing applicant who:

(i) Has a recent history of criminal activity involving crimes to

persons or property and/or other criminal acts that would adversely

affect the health, safety or welfare of other residents;

(ii) Was evicted, because of drug-related criminal activity, from

housing assisted under the U.S. Housing Act of 1937 (42 U.S.C. 1437 et

seq.) within three years of the projected date of admission, unless the

applicant has successfully completed, since the eviction, a

rehabilitation program approved by the public housing agency;

(iii) The PHA determines is illegally using a controlled substance;

or

(iv) The PHA has reasonable cause to believe abuses alcohol in a

way that may interfere with the health, safety, or right to peaceful

enjoyment of the premises by other residents.

(3) The PHA Board, by resolution, has adopted policies but cannot

document results in appropriately evicting a public housing resident

who:

(i) Engages in any criminal activity that threatens the health,

safety, or right to peaceful enjoyment of the premises by other

residents;

(ii) Engages in any drug-related criminal activity (as defined at

section 6(l) of the 1937 Act (42 U.S.C. 1437d(l)) on or off the PHA's

property; or

(iii) The PHA has reasonable cause to believe abuses alcohol in a

way that may interfere with the health, safety, or right to peaceful

enjoyment of the premises by other residents.

(4) If the PHA has any special drug prevention program or crime

reduction program funded by any HUD funds, the PHA can document that it

is meeting at least 60% of its goals under the implementation plan for

any and all of these programs.

(c) Grade F: The PHA meets any one the following criteria:

(1) The PHA is not cooperating with local police authorities in an

effort to provide safe and secure environments in its public housing

developments.

(2) The PHA has not adopted policies or procedures that result in

screening out and denying admission to a public housing applicant who:

(i) Has a recent history of criminal activity involving crimes to

persons or property and/or other criminal acts that would adversely

affect the health, safety or welfare of other residents;

(ii) Was evicted, because of drug-related criminal activity, from

housing assisted under the U.S. Housing Act of 1937 within three years

of the projected date of admission, unless the applicant has

successfully completed, since the eviction, a rehabilitation program

approved by the public housing agency;

(iii) The PHA determines is illegally using a controlled substance;

or

(iv) The PHA has reasonable cause to believe abuses alcohol in a

way that may interfere with the health, safety, or right to peaceful

enjoyment of the premises by other residents.

(3) The PHA has not adopted policies or procedures that document

results in the eviction of a public housing resident who:

(i) Engages in any criminal activity that threatens the health,

safety, or right to peaceful enjoyment of the premises by other

residents;

(ii) Engages in any drug-related criminal activity (as defined in

section 6(l) of the 1937 Act (42 U.S.C. 1437d(l))) on or off the PHA's

property; or

(iii) The PHA has reasonable cause to believe abuses alcohol in a

way that may interfere with the health, safety, or right to peaceful

enjoyment of the premises by other residents.

(4) If the PHA has any special drug prevention program or crime

reduction program funded by any HUD funds, the PHA does not have a

system for documenting or cannot document that it is meeting 60% or

more of its goals under the implementation plan for any and all of

these programs.

Sec. 901.100 Data collection.

(a) Information on some of the indicators will be derived by the

State/Area Office from existing reporting and data forms.

(b) A PHA shall provide certification as to data on indicators not

collected according to paragraph (a) of this section, by submitting a

certified questionnaire within 45 calendar days after the end of the

fiscal year covered by the certification:

(1) The certification shall be approved by PHA Board resolution,

and signed and attested to by the Executive Director.

(2) PHAs shall maintain documentation for three years verifying all

certified indicators for HUD on-site review.

(3) A PHA may include in its certification, rather than through an

exclusion or modification request, any information bearing on the

accuracy or completeness of the data being used by

[[Page 20378]]

HUD in grading an indicator. HUD will consider this assertion in

grading the affected indicator.

(4) If a PHA does not submit its certification, or submits its

certification late, appropriate sanctions may be imposed, including a

presumptive rating of failure in all of the PHMAP indicators, which may

result in troubled or mod-troubled designations.

(5) A PHA's certification will be post-reviewed by HUD during the

next on-site review, but is subject to verification at any time.

Appropriate sanctions for intentional false certification will be

imposed, including suspension or debarment of the signatories, the loss

of high performer designation, a lower grade for individual indicators

and a lower PHMAP total weighted score.

(c) For those developments of a PHA where management functions have

been assumed by an RMC, the PHA's certification shall identify the

development and the management functions assumed by the RMC. The PHA

shall obtain a certified questionnaire from the RMC as to the

management functions undertaken by the RMC. The PHA shall submit the

RMC's certified questionnaire along with its own. The RMC's

certification shall be approved by its Executive Director or Chief

Executive Officer of whatever title.

Sec. 901.105 Computing assessment score.

(a) Grades within indicators and components have the following

point values:

(1) Grade A = 10.0 points;

(2) Grade B = 8.5 points;

(3) Grade C = 7.0 points;

(4) Grade D = 5.0 points;

(5) Grade E = 3.0 point; and

(6) Grade F = 0.0 points.

(b) If indicators or components are designated as having additional

weight (e.g., x1.5 or x2), the points in each grade will be multiplied

times the additional weight.

(c) Indicators will be graded individually. Components within an

indicator will be graded individually, and then will be used to

determine a single grade for the indicator, by dividing the total

number of component points by the total number of component weights and

rounding off to two decimal places. The total number of component

weights for this purpose includes a one for components that are

unweighted (i.e., they are weighted x1, rather than x1.5 or x2).

(d) Adjustment for physical condition and neighborhood environment.

The overall PHMAP score will be adjusted by adding weighted points that

reflect the weight to be given to the differences in the difficulty of

managing developments that result from physical condition and

neighborhood environment:

(1) Weighting shall apply to the following three indicators only:

(i) Indicator #1, vacancy rate and unit turnaround;

(ii) Indicator #4, work orders; and

(iii) Indicator #5, annual inspection and condition of units and

systems.

(2) Definitions of physical condition and neighborhood environment

are:

(i) Physical condition: refers to units located in developments

over ten years old that require major capital investment in order to

meet minimum HQS standards or local codes, whichever is applicable.

This excludes developments that have been comprehensively modernized.

(ii) Neighborhood environment: refers to units located within

developments where the immediate surrounding neighborhood (that is a

majority of the census tracts on all sides of the development) has at

least 51% of families with incomes below the poverty rate as documented

by the latest census data.

(3) Any PHA with 5% or more of its units subject to either or both

of the above conditions shall, if they so choose, be issued a weighted

PHMAP score in addition to the regular score based solely upon the

certification of the PHA. The weighted score shall be calculated as

follows:

Percent of units subject to physical condition and/or extra

neighborhood environment: Extra

points

At least 5% but less than 10%.................................. .5

At least 10% but less than 20%................................. .6

At least 20% but less than 30%................................. .7

At least 30% but less than 40%................................. .8

At least 40% but less than 50%................................. .9

At least 50%................................................... 1.0

(i) These extra points will be added to the score (grade) of the

indicator(s) to which these conditions may apply. A PHA is required to

certify on form HUD-50072, PHMAP Certification, the extent to which the

conditions apply, and to which of the indicators the extra scoring

points should be added.

(ii) Developments that have received comprehensive modernization

within the past ten years are not eligible for a weighted score for the

physical condition factor.

(iii) A PHA that receives a grade of A under indicators #4 and #5

may not claim the additional weight for indicator #1 since the physical

condition of its developments is not applicable.

(iv) None of the weighted indicators may have a score that is more

than its total weighted points, including the additional point, or

fraction thereof, awarded for weighting.

(4) PHAs shall maintain supporting documentation to show how they

arrived at the number and percentage of units out of their total

inventory that are subject to weighting.

(i) If the basis was neighborhood environment, the PHA shall have

on file the appropriate maps showing the census tracts surrounding the

development(s) in question with supporting census data showing the

level of poverty. Units that fall into this category but which have

already been removed from consideration for other reasons (permitted

exemptions and modifications and/or exclusions) shall not be counted in

this calculation.

(ii) For the physical condition factor, a PHA would have to

maintain documentation showing the age and condition of the units and

the record of capital improvements, indicating that these particular

units have not received modernization funds.

(iii) PHAs shall also document that in all cases, units that were

exempted for other reasons were not included in the calculation.

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

or component.

(a) A PHA shall have the right to request the exclusion or

modification of any indicator or component in its management

assessment, thereby excluding or modifying the impact of those

indicator's or component's grades in its PHMAP total weighted score.

(b) Exclusion and modification requests shall be submitted by a PHA

at the time of its PHMAP certification submission to the State/Area

Office along with supporting documentary justification, rather than

during the appeal process.

(c) Requests for exclusions and modifications that do not include

supporting documentary justification will not be considered.

(d) Indicator #2, modernization, shall be automatically excluded by

the State/Area Office if a PHA does not have an open modernization

program.

(e) Indicator #7, resident involvement, shall be automatically

excluded by the State/Area Office for PHAs with 100 or fewer units.

Sec. 901.115 PHA score and status.

(a) PHAs that achieve a total weighted score of 90% or greater may

be designated high performers. A PHA shall not be designated as a high

performer if it scores below a grade of

[[Page 20379]]

C for any indicator. High performers will be afforded incentives that

include substantial relief from reporting and other requirements, as

described in Sec. 901.130.

(b) PHAs that achieve a total weighted score of 90% or greater on

indicator #2, modernization, may be designated mod-high performers.

(c) PHAs that achieve a total weighted score of less than 90% but

not less than 60% may be designated standard. Standard performers will

be afforded incentives that include substantial relief from reporting

and other requirements, as described in Sec. 901.130.

(d) PHAs that achieve a total weighted score of less than 60% may

be designated as troubled.

(e) PHAs with more than 100 units that achieve a total weighted

score of less than 60% on indicator (2), modernization, may be

designated as troubled with respect to the program under section 14.

(f) Each PHA must post a notice of its PHMAP score and status in

appropriate conspicuous and accessible locations in its offices and in

each of its developments within two weeks of receipt of the score and

status. In addition, HUD will publish every PHA's score and status in

the Federal Register.

(g) Even though a PHA has satisfied all of the indicators for high

or standard performer designation, the State/Area Office may reinstate

any review as necessary to address the particular deficiencies, deny or

rescind incentives or high performer status, as described in paragraphs

(a) and (b) of this section in the case of a PHA that:

(1) Is operating under a special agreement with HUD;

(2) Is involved in litigation that bears directly upon the

management of a PHA;

(3) Is operating under a court order;

(4) Demonstrates substantial evidence of fraud or misconduct,

including evidence that the PHA's certification of indicators is not

supported by the facts, resulting from such sources as routine reports

and reviews, an Office of Inspector General investigation/audit, or an

investigation by any appropriate legal authority; or

(5) Demonstrates substantial noncompliance in one or more areas

(including areas not assessed by the PHMAP). Areas of substantial

noncompliance include, but are not limited to, noncompliance with

statutes (e.g., Fair Housing and Equal Opportunity statutes);

regulations (e.g., 24 CFR part 85); or the Annual Contributions

Contract (ACC) (e.g., the ACC, form HUD-53012A, Section 4, Mission of

the PHA). Substantial noncompliance would cast doubt on the PHA's

capacity to preserve and protect its public housing developments and

operate them consistent with Federal law and regulations.

(h) When a State/Area Office Public Housing Director acts for any

of the reasons stated in paragraph (e) of this section, the State/Area

Office will send written notification to the PHA with a specific

explanation of the reasons. An information copy will be forwarded to

the Assistant Secretary for Public and Indian Housing.

(i) A PHA may appeal denial of high performer status in accordance

with Sec. 901.125.

Sec. 901.120 State/Area Office functions.

(a) The State/Area Office will assess each PHA within its

jurisdiction on an annual basis:

(1) The State/Area Office will make determinations for high-

performing, standard, troubled PHAs, and troubled PHAs with respect to

the program under section 14 (mod-troubled) in accordance with a PHA's

PHMAP weighted score.

(2) The State/Area Office will also make determinations for

exclusion and modification requests.

(b) Each State/Area Office will notify each PHA of the PHA's grade

and the grade of the RMC (if any) assuming management functions at any

of the PHA's developments, in each indicator, the PHA's management

assessment total weighted score and status, and if applicable, its

handicapped score; any determinations concerning exclusion and

modification requests; and any deadline date by which appeals must be

received. PHA notification may include offers of pertinent technical

assistance in problem areas, suggestions for means of improving problem

areas, and areas of relief and incentives as a result of high performer

status. The PHA must notify the RMC (if any) in writing, immediately

upon receipt of the State/Area Office notification, of the RMC's

grades.

(c) An on-site confirmatory review may be conducted of a PHA by the

State/Area Office. The purpose of the on-site confirmatory review is to

verify those indicators for which a PHA provides certification, as well

as the accuracy of the information received in the State/Area Office

pertaining to the remaining indicators.

(1) If, in an exceptional circumstance, a confirmatory review is

conducted after the State/Area Office issues the initial notification

letter, the State/Area Office should explain the results of the

confirmatory review in writing, correct the PHAs total weighted score,

if appropriate, and reissue the initial notification letter to the PHA.

(2) The State/Area Office shall conduct a confirmatory review of a

PHA prior to the removal of troubled or mod-troubled designation.

(d) Determinations on appeals and on petitions to remove troubled

or mod-troubled status will be made by the State/Area Office.

(e) Determinations of intentional false certifications will be made

by the State/Area Office.

(f) The State/Area Office may deny or rescind a PHA's status as a

standard or high performer, in accordance with Sec. 901.115(e), so that

it will not be entitled to any of the areas of relief and incentives.

(g) The State/Area Office will maintain PHMAP files for public

inspection in accordance with Sec. 901.155.

Sec. 901.125 PHA right of appeal.

(a) A PHA has the right to appeal its PHMAP score to the State/Area

Office, including a troubled designation or designation as troubled

with respect to the program under section 14. A PHA may appeal its

management assessment rating on the basis of data errors, the denial of

exclusion or modification requests when their denial affects a PHA's

total weighted score, or a determination of intentional false

certification:

(1) A PHA may appeal its management assessment rating to the State/

Area Office only for the reasons stated in paragraph (a) of this

section:

(i) A PHA may not appeal its PHMAP score to the State/Area Office

unless it has submitted its certification to the State/Area Office.

(ii) A PHA may not appeal its PHMAP score to the State/Area Office

if the reason the PHA received a deficient grade in any indicator or

component was due to the fact the PHA did not submit a required report

in a timely manner.

(2) The appeal shall be submitted to the State/Area Office and

shall include supporting documentary justification of the reasons for

the appeal.

(3) The State/Area Office will make determinations on initial

appeals and will transmit the determination of the appeal to the PHA in

a notification letter that will also include the date and place for

submitting any further appeal.

(4) Appeals submitted to the State/Area Office without appropriate

documentation will not be considered and will be returned to the PHA.

(5) A PHA may not appeal its PHMAP score if the reason the PHA

received a deficient grade in any indicator or

[[Page 20380]]

component was due to the fact that the PHA did not submit a required

report(s) in a timely manner.

(6) Appeals of rescission of high performer designation shall be

made directly to the Assistant Secretary for Public and Indian Housing.

(b) A PHA may appeal the denial of an initial appeal by the State/

Area Office to the Assistant Secretary for Public and Indian Housing,

including initial appeals denying high performer designation,

designation as troubled or designation as troubled with respect to the

program under section 14, the

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