Section 8 Rental Voucher and Certificate Programs Section 8 Management Assessment Program (SEMAP)

Part II

Department of Housing and Urban Development

_______________________________________________________________________

24 CFR Part 985

Section 8 Rental Voucher and Certificate Programs and Management

Assessment Program (SEMAP); Proposed Rule

Proposed Rules

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 985

[Docket No. FR-3986-P-01]

RIN 2577-AB60

Section 8 Rental Voucher and Certificate Programs Section 8

Management Assessment Program (SEMAP)

AGENCY: Office of the Assistant Secretary for Public and Indian

Housing, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish the Section 8 Management

Assessment Program (SEMAP) to objectively measure public housing agency

(HA) performance in key Section 8 tenant-based assistance program

areas. SEMAP would enable HUD to ensure program integrity and

accountability by identifying HA management capabilities and

deficiencies and by improving risk assessment to effectively target

monitoring and program assistance. HAs could use the SEMAP performance

analysis to assess their own program operations.

DATES: Comment due date: January 31, 1997.

ADDRESSES: Interested persons are invited to submit comments regarding

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

Clerk, room 10276, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410-0500. Comments should refer to

the above docket number and title. Facsimile (FAX) comments are not

acceptable. A copy of each communication submitted will be available

for public inspection and copying during regular business hours (7:30

a.m. to 5:30 p.m. Eastern time) at the above address.

, room 10276, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410-0500. Comments should refer to

the above docket number and title. Facsimile (FAX) comments are not

acceptable. A copy of each communication submitted will be available

for public inspection and copying during regular business hours (7:30

a.m. to 5:30 p.m. Eastern time) at the above address.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Director, Operations

Division, Office of Rental Assistance, Public and Indian Housing,

Department of Housing and Urban Development, Room 4220, 451 Seventh

Street, SW, Washington, DC 20410, telephone (202) 708-0477. Hearing or

speech impaired individuals may call HUD's TTY number (202) 708-4594 or

1-800-877-8399 (Federal Information Relay Service TTY). (Other than the

``800'' number, these are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Purpose

This proposed rule provides an objective system for HUD to measure

HA performance in administering the Section 8 tenant-based assistance

programs, and to identify HA management capabilities and deficiencies

using criteria that are key to effective program administration. This

proposed rule does not apply to Indian housing authority (IHA)

administration of these programs. Performance of IHA administration of

the Section 8 programs is assessed using the HUD Office of Native

American Programs Risk Assessment and Determination for Allocation of

Resources (RADAR) instrument. RADAR will incorporate the SEMAP

performance indicators. The proposed rule does not cover the Section 8

moderate rehabilitation program; however, the Department expects that

in most cases an HA's performance under the tenant-based programs will

reflect its performance under the moderate rehabilitation program as

well. The proposed rule provides procedures for addressing problem

areas and poor performance through corrective action plans and follow-

up monitoring

rule does not cover the Section 8

moderate rehabilitation program; however, the Department expects that

in most cases an HA's performance under the tenant-based programs will

reflect its performance under the moderate rehabilitation program as

well. The proposed rule provides procedures for addressing problem

areas and poor performance through corrective action plans and follow-

up monitoring.

At a time of diminishing HUD staffing resources, use of SEMAP will

enable the Department to improve its risk assessment and to effectively

target monitoring and program assistance to housing agencies that need

most improvement and that pose the greatest risk.

The proposed rule describes 15 performance indicators that will be

used to assess HA performance; the annual HA SEMAP certification and

HUD review process; HUD scoring procedures and procedures for

designating high, standard and troubled performers; and requirements

for corrective action plans and strategies for improving performance.

While the Department plans to use SEMAP as its fundamental means of

measuring HA Section 8 performance, SEMAP will be used in conjunction

with independent auditor (IA) audit reports, fair housing and equal

opportunity compliance reviews, HUD reviews of financial documents, on-

site reviews, housing quality standards (HQS) reviews, participant

complaints, and other pertinent information to assess ultimately an

HA's overall performance under the Annual Contributions Contract (ACC).

II. Discussion

A. Performance Indicators

nction

with independent auditor (IA) audit reports, fair housing and equal

opportunity compliance reviews, HUD reviews of financial documents, on-

site reviews, housing quality standards (HQS) reviews, participant

complaints, and other pertinent information to assess ultimately an

HA's overall performance under the Annual Contributions Contract (ACC).

II. Discussion

A. Performance Indicators

Overview

Section 985.3 lists 15 SEMAP performance indicators which are key

to effective and cost efficient program administration. The indicators

were chosen first and foremost to ensure that the Section 8 programs

consistently operate to meet the intended result of helping eligible

families afford decent rental units at a reasonable subsidy cost (i.e.,

to assist ``the right families in the right units at the right cost'').

In addition, certain indicators measure whether rental assistance is

delivered effectively (e.g., time from request for lease approval to

HQS inspection, lease-up, deconcentration) and whether the HA advances

the critical goal of family self-sufficiency (FSS) (e.g., FSS

enrollment, welfare to work).

The Department considered including an indicator which would show

whether families admitted to the program have incomes below the income

limits, but all information HUD has indicates that there are almost no

admissions of families with incomes over the income limits. Adding this

as a SEMAP indicator would have very little useful purpose, since

virtually all HAs are in full compliance with the requirement. The

Department requires 100 percent reporting of all income and rent

determinations, and monitoring income eligibility is built into the

Multifamily Tenant Characteristics System (MTCS). MTCS is the

Department's national data base on participants and rental units in the

Section 8 rental certificate, rental voucher, and moderate

rehabilitation programs and in the Public and Indian Housing programs.

There is a SEMAP indicator on HA verification of family income

determinations, and monitoring income eligibility is built into the

Multifamily Tenant Characteristics System (MTCS). MTCS is the

Department's national data base on participants and rental units in the

Section 8 rental certificate, rental voucher, and moderate

rehabilitation programs and in the Public and Indian Housing programs.

There is a SEMAP indicator on HA verification of family income.

The Department also considered including indicators on financial

management, but concluded that existing procedures for HUD review of

budgets, requisitions and year-end financial statements and the annual

independent audit already provide for sufficient HUD oversight of the

financial management area.

Remarks on Particular Indicators

The ratings for the annual reexaminations indicator and the annual

HQS inspections indicator at Secs. 985.3(d) and 985.3(i), indicate that

annual reexaminations and HQS inspections may not be more than 2 months

overdue. This 2 month allowance is provided only to accommodate a

possible lag in the HA's electronic reporting of the annual

reexamination or the annual HQS inspection on Form HUD-50058, and to

allow the processing of the data into the MTCS. The Form HUD-50058 data

are used to measure performance under this indicator. The 2 month

allowance provided here for rating purposes does not mean that any

delay in completing

annual reexaminations and HQS inspections is ever permitted.

The indicator at Sec. 985.3(j) for HQS quality control inspections

shows whether an HA supervisor or other qualified person reinspects a

random sample of at least 5 percent of completed HQS inspections. A

small HA with only 1 or 2 employees may arrange with a nearby HA to

have a qualified HQS inspector perform the required quality control

inspections.

The indicator at Sec. 985.3(l), for lease-up shows whether the HA

executes assistance contracts on behalf of eligible families for the

number of units that has been under budget for at least one year

ast 5 percent of completed HQS inspections. A

small HA with only 1 or 2 employees may arrange with a nearby HA to

have a qualified HQS inspector perform the required quality control

inspections.

The indicator at Sec. 985.3(l), for lease-up shows whether the HA

executes assistance contracts on behalf of eligible families for the

number of units that has been under budget for at least one year. In

the event that the Congress continues hold-back requirements on

turnover of rental vouchers and certificates in future fiscal years

when SEMAP is implemented, HUD plans to waive the SEMAP regulation

concerning ratings under this indicator and to instead provide that the

number of units under contract would be divided by the number of units

budgeted for the last HA fiscal year reduced by a HUD-determined

percentage of the number of units budgeted to determine the lease-up

rate for rating purposes.

The ratings under the lease-up indicator are based on the

assumption that an HA uses all available annual contributions in

determining the total number of units budgeted. In the event the HUD

State or Area Office (hereafter referred to as HUD Office) approves an

HA budget that budgets fewer units than could be supported with

available annual contributions due to limited HA management capacity,

and as a result the rating on the indicator as determined under

Sec. 985.3(l)(3) is overstated, the HUD Office may decrease the points

it assigns for the lease-up indicator to adjust for the approved

``under-budgeting''.

The indicator at Sec. 985.3(m) for FSS enrollment applies only to

HAs with mandatory FSS programs (i.e., HAs that received FY 1992 FSS

incentive award Section 8 funding or that received FY 1993 and later

year Section 8 funding (excluding renewal funding)).

The deconcentration indicator at Sec. 985.3(n) applies only to HAs

with jurisdiction in metropolitan areas

approved

``under-budgeting''.

The indicator at Sec. 985.3(m) for FSS enrollment applies only to

HAs with mandatory FSS programs (i.e., HAs that received FY 1992 FSS

incentive award Section 8 funding or that received FY 1993 and later

year Section 8 funding (excluding renewal funding)).

The deconcentration indicator at Sec. 985.3(n) applies only to HAs

with jurisdiction in metropolitan areas. This indicator compares the

dispersal of Section 8 families with children throughout a metropolitan

area to the dispersal of FMR-priced units throughout the metropolitan

area. FMR-priced units are standard quality housing units, excluding

zero- and one-bedroom units, that rent at or below the FMR as

determined using 1990 Census data and FMRs. The indicator measures

whether Section 8 families with children are at least as dispersed

throughout the area as are the FMR-priced units, both within the HA's

area of jurisdiction and within the entire metropolitan area. The

Department does not intend that the SEMAP indicator for deconcentration

should cause any metropolitan HA to directly or indirectly reduce a

family's opportunity to select among available units. HUD intends that,

by including the dispersal of Section 8 families with children

throughout metropolitan areas as a measure of performance, HAs will be

encouraged to provide more outreach to owners in all areas of their

respective jurisdictions and more counseling and transportation

assistance to motivate and increase housing choice on the part of

families.

Future Implementation of Welfare-to-Work Indicator

The welfare-to-work indicator at Sec. 985.3(o) shows whether the HA

helps assisted families move from welfare to work by measuring the

percent of welfare families who move from welfare to work during the

course of a year. This indicator will be implemented in SEMAP beginning

in federal fiscal year 1999, to allow HAs sufficient time to build

capacity and coordinate social services to achieve the performance

objective

ator at Sec. 985.3(o) shows whether the HA

helps assisted families move from welfare to work by measuring the

percent of welfare families who move from welfare to work during the

course of a year. This indicator will be implemented in SEMAP beginning

in federal fiscal year 1999, to allow HAs sufficient time to build

capacity and coordinate social services to achieve the performance

objective. This means the welfare-to-work indicator will first be used

for HAs with an HA fiscal year end of September 30, 1998, and then will

be applied for all subsequent annual SEMAP reviews.

Solicitation of Specific Comment on Particular Indicators

The Department specifically invites comment on whether the proposed

fair market rent (FMR) limit/payment standards indicator and the annual

reexaminations indicator should be retained as SEMAP indicators in a

final rule. The FMR limit/payment standards indicator and the annual

reexaminations indicator would show whether the HA complies with key

program requirements that directly affect whether the correct housing

assistance payments (HAPs) and family shares are paid. The Department,

however, has some concern about the appropriateness of their placement

in a management assessment program that is primarily intended to be

outcome oriented rather than compliance oriented. In short, all HAs

should be fully performing on these indicators.

The Department also specifically invites comment on whether SEMAP

ought to include performance indicators on rent burden, portability,

timeliness of HAPs to owners, or any other key area. A rent burden

indicator could set a standard that would encourage HAs to ensure that

needy families do not spend a disproportionate share of income toward

rent. For example, the Department considered including a performance

indicator that not more than 20 percent of rental voucher program

participants pay more than 40 percent of adjusted monthly income for

rent

owners, or any other key area. A rent burden

indicator could set a standard that would encourage HAs to ensure that

needy families do not spend a disproportionate share of income toward

rent. For example, the Department considered including a performance

indicator that not more than 20 percent of rental voucher program

participants pay more than 40 percent of adjusted monthly income for

rent. However, the Department recognizes that there has never been any

articulated federal standard concerning rent burden in the rental

voucher program, and that HAs have only limited control over a family's

choice to assume a greater rent burden than the traditional 30 percent

of annual adjusted income. Also, 40th percentile FMRs, and potentially

lower payment standards, may place increased pressure on families to

choose to pay more than 40 percent of income for rent, particularly if

the families want to choose housing outside areas of low income

concentration.

The Department is considering adding, and requests comment on, a

SEMAP indicator to measure an HA's performance in: (1) Analyzing

computer matching results that HUD supplies to HAs from the

Department's Tenant Eligibility Verification System (TEVS), and (2)

taking appropriate administrative actions. Those actions will help

ensure integrity in rental assistance programs. TEVS processes data

from the computer matching of social security and supplemental security

income data and Federal tax return data (i.e., Form W-2 and Form 1099

data) shown on files of the Social Security Administration and the

Internal Revenue Service, with family-reported income data that HAs

submit electronically to the Multifamily Tenant Characteristics System

(MTCS). See 60 FR 21548; May 2, 1995 and 61 FR 37804; July 19, 1996 for

more detail. Housing agencies will be asked to resolve income

discrepancies reported by TEVS and to track the amount of money

recovered

s of the Social Security Administration and the

Internal Revenue Service, with family-reported income data that HAs

submit electronically to the Multifamily Tenant Characteristics System

(MTCS). See 60 FR 21548; May 2, 1995 and 61 FR 37804; July 19, 1996 for

more detail. Housing agencies will be asked to resolve income

discrepancies reported by TEVS and to track the amount of money

recovered.

During Fiscal Year 1996 HUD implemented a computer matching project

involving social security and supplemental security income for HAs

serviced by HUD's Great Plains, Rocky Mountains, Pacific/Hawaii and

Northwest/Alaska offices. HUD anticipates that the social security and

supplemental security income matching will be operational nationwide by

March 1997. The Federal tax return data matching is now in a pilot

testing stage. Therefore, it is premature to propose a specific SEMAP

indicator at this time. The Department, however, expects that HA

actions to analyze matching results and to take appropriate

administrative

actions will become an important indicator of HA performance at some

time during the next two years. The Department anticipates providing a

maximum of 10 points for this indicator.

The Department is considering adding an indicator that would

measure whether the HA adequately explains to rental voucher and

certificate holders how portability works, and whether the initial HA

promptly reimburses the receiving HA in accordance with established

portability billing and payment deadlines.

Effort to Minimize New Recordkeeping

A key consideration in determining the 15 SEMAP indicators was

whether the Department can measure performance under the indicators

using readily available data, without imposing substantial new or undue

recordkeeping burdens on HAs

the initial HA

promptly reimburses the receiving HA in accordance with established

portability billing and payment deadlines.

Effort to Minimize New Recordkeeping

A key consideration in determining the 15 SEMAP indicators was

whether the Department can measure performance under the indicators

using readily available data, without imposing substantial new or undue

recordkeeping burdens on HAs. Under the proposed SEMAP indicators, an

HA that is not already doing so will need to begin maintaining

documentation of the time from receipt of request for lease approval to

HQS inspection, and of its 5 percent HQS quality control inspections.

For all other SEMAP indicators, the Department expects that HAs already

keep records that will demonstrate performance in conformity with

longstanding program requirements.

B. Program Operation

The basic SEMAP procedures have been modeled on the Public Housing

Management Assessment Program (PHMAP) required by section 6(j) of the

U.S. Housing Act of 1937 (42 U.S.C. 1437d(j)). While SEMAP is not

required by law, HUD has determined that a management assessment

program for Section 8 tenant-based assistance similar to PHMAP can

improve the Department's oversight of the Section 8 programs and help

HUD to target monitoring and assistance to programs that pose the

greatest risk and to HAs needing most improvement.

1. SEMAP Certification

Section 985.101 requires an HA administering a Section 8 tenant-

based assistance program to submit annually a SEMAP certification form

within 45 days after the beginning of its fiscal year. The

certification form requires short answers from HAs concerning HA

performance under the 15 SEMAP indicators and assures HUD that HA

responses are accurate and that there is no evidence of seriously

deficient performance. A proposed SEMAP certification form is attached

as Appendix 1 to this proposed rule. The HA board of commissioners

approves, and the board chairperson and HA executive director sign, the

certification.

2

hort answers from HAs concerning HA

performance under the 15 SEMAP indicators and assures HUD that HA

responses are accurate and that there is no evidence of seriously

deficient performance. A proposed SEMAP certification form is attached

as Appendix 1 to this proposed rule. The HA board of commissioners

approves, and the board chairperson and HA executive director sign, the

certification.

2. SEMAP Score and Overall Performance Rating

HUD Assessment and Verification of SEMAP Certification

Upon receipt of the annual HA SEMAP certification, the HUD Office

will independently assess each HA's performance under SEMAP using

family data reported by HAs on Forms HUD-50058 and HUD-50058-FSS and

maintained in the HUD MTCS, annual audit reports, and other available

information to verify the HA responses. The HUD Office may also conduct

an on-site confirmatory review to verify an HA certification under any

indicator. Based upon this HUD review and verification, the HUD Office

will prepare a SEMAP profile for each HA, assigning a rating for each

SEMAP indicator in accordance with the regulation.

Determination of SEMAP Score and Overall Performance Rating

The HUD Office will sum its ratings for the individual indicators

and divide by the potential maximum number of points to arrive at an

overall HA SEMAP score. HAs with SEMAP scores of at least 90 percent

will receive an overall performance rating of high performer; HAs with

SEMAP scores of 60 to 89 percent will receive an overall performance

rating of standard; and HAs with scores of less than 60 percent will

receive an overall performance rating of troubled. The HUD Office may

modify an HA's overall performance rating (of high performer or

standard) when warranted by circumstances that have bearing on the

SEMAP indicators such as adverse litigation, fair housing and equal

opportunity compliance concerns, fraud or misconduct, audit findings,

or substantial noncompliance with program requirements

receive an overall performance rating of troubled. The HUD Office may

modify an HA's overall performance rating (of high performer or

standard) when warranted by circumstances that have bearing on the

SEMAP indicators such as adverse litigation, fair housing and equal

opportunity compliance concerns, fraud or misconduct, audit findings,

or substantial noncompliance with program requirements. HUD will

provide the HA a written explanation of any modified overall

performance rating.

HUD Notification to HA of SEMAP Ratings

Within 45 days of receipt of the HA's certification, the HUD Office

will complete an HA SEMAP profile and will notify the HA in writing of

its rating on each SEMAP indicator, the HA's overall SEMAP score and

its overall performance rating (high performer, standard, or troubled).

The HUD notification letter will identify and require correction of any

program management deficiencies within 45 days.

3. Required Actions for SEMAP Deficiencies

Section 985.106 requires that the HA improve its Section 8 program

management for any SEMAP indicator that is rated zero (a ``SEMAP

deficiency''), and must send HUD a written report of the corrective

action taken on the SEMAP deficiency within 45 days of receipt of its

SEMAP ratings from HUD. If an HA fails to correct SEMAP deficiencies as

required, HUD will require that the HA prepare and submit a written

corrective action plan for the deficiency within 30 days.

HUD must, under Sec. 985.107, review on-site any HA that is

assigned an overall performance rating of troubled. HUD will issue a

written report of its on-site review findings and recommendations. Upon

receipt of the HUD report, the HA must write a corrective action plan

and submit it to HUD for approval. Both the HA and HUD must monitor

implementation of a corrective action plan to ensure targets for

improved performance are met

n-site any HA that is

assigned an overall performance rating of troubled. HUD will issue a

written report of its on-site review findings and recommendations. Upon

receipt of the HUD report, the HA must write a corrective action plan

and submit it to HUD for approval. Both the HA and HUD must monitor

implementation of a corrective action plan to ensure targets for

improved performance are met.

Any HA assigned an overall performance rating of troubled may not

use any part of the administrative fee reserve for other housing

purposes (see 24 CFR 982.155(b)). In these cases, the HUD Office may

require use of the administrative fee reserve for specific

administrative improvements in areas where administration is found

deficient.

4. HAs Under the Jurisdiction of More than One HUD Office

For any HA with jurisdiction under the jurisdiction of more than

one HUD Office (e.g, a state agency), the HUD Office with the greatest

amount of funding obligated under ACCs will assume all responsibility

for administration of SEMAP for the HA.

C. Default Under ACC

An HA's failure to correct identified SEMAP deficiencies or to

prepare and implement a corrective action plan required by HUD may

constitute a default under the ACC as determined by HUD. The ACC

provides for HUD notice of a determination of default to the HA and

authorizes HUD to take possession of all or any HA property, rights, or

interests in connection with a program if HUD determines that the HA

has failed to comply with obligations under the ACC, including

compliance with any final SEMAP regulation, or with obligations under a

HAP contract.

III. Findings and Certifications

Paperwork Reduction Act Statement

The proposed information collection requirements contained at

Secs. 985.101,

985.106 and 985.107 of this proposed 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).

, or with obligations under a

HAP contract.

III. Findings and Certifications

Paperwork Reduction Act Statement

The proposed information collection requirements contained at

Secs. 985.101,

985.106 and 985.107 of this proposed 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: Section 8

Management Assessment Program (SEMAP)

(2) Summary of the collection of information:

A proposed SEMAP certification form is attached as Appendix 1 to

this proposed rule. The corrective action plan is a written plan

prepared by an HA to address program management deficiencies or

findings identified by HUD through remote monitoring or on-site review

that will bring the HA to an acceptable level of performance. Through

the report of corrective action, an HA describes how it corrected any

SEMAP deficiency (indicator rating of zero).

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

use:

HUD has determined that a management assessment program for Section

8 tenant-based assistance, similar to the Public Housing Management

Assessment Program (PHMAP) and including SEMAP certifications,

corrective action plans, and reports of corrective actions, can improve

the Department's oversight of the Section 8 programs and help HUD to

target monitoring and program assistance to public housing agency (HA)

programs needing most improvement and posing the greatest risk.

HUD will use the HA's SEMAP certification, together with otherwise

available data, to assess HA management capabilities and deficiencies,

and to assign an overall performance rating to each HA administering

Section 8 tenant-based assistance

ms and help HUD to

target monitoring and program assistance to public housing agency (HA)

programs needing most improvement and posing the greatest risk.

HUD will use the HA's SEMAP certification, together with otherwise

available data, to assess HA management capabilities and deficiencies,

and to assign an overall performance rating to each HA administering

Section 8 tenant-based assistance. HUD will rate an HA on each SEMAP

indicator, and will complete an HA SEMAP profile identifying any

program management deficiencies and assigning an overall performance

rating. An HA's written report of correction of a SEMAP deficiency will

be used as documentation that the HA has taken action to address

identified program weaknesses. Where HUD assigns an overall performance

rating of troubled, the HA's corrective action plan will be used to

monitor the HA's progress on program improvements.

(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:

Section 8.--Management Assessment Program

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

Responses Total

Information collection Number of per annual Hours per Total hours Regulatory

respondents respondent responses response reference

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

SEMAP Certification.......... 2,670 1 2,670 \1\ 5-6 14,500 985.101

Corrective Action Plan....... 260 1 260 10 2,600 985.107(c)

Report on Correction of SEMAP 670 1 670 2 1,340 985.106

Deficiency

l Hours per Total hours Regulatory

respondents respondent responses response reference

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

SEMAP Certification.......... 2,670 1 2,670 \1\ 5-6 14,500 985.101

Corrective Action Plan....... 260 1 260 10 2,600 985.107(c)

Report on Correction of SEMAP 670 1 670 2 1,340 985.106

Deficiency.

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

Total Annual Burden.... ........... ........... ........... ........... 18,440 ................

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

\1\ 1,150 metropolitan HAs will require an extra hour to write narrative on actions to broaden metropolitan area-

wide housing choice.

(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;

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

be collected; and

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.

In accordance with 5 U.S.C. 605(b) (the Regulatory Flexibility

Act), the undersigned hereby certifies that this proposed rule does not

have a significant economic impact on a substantial number of small

entities. The proposed rule establishes management assessment criteria

for HAs. 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 HAs.

Unfunded Mandates Reform Act

The Secretary has reviewed this proposed rule before publication

and by

approving it certifies, in accordance with the Unfunded Mandates Reform

Act of 1995 (2 U.S.C. 1532), that this proposed rule does not impose a

Federal mandate that will result in the expenditure by State, local,

and tribal governments, in the aggregate, or by the private sector, of

$100 million or more in any one year.

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 HAs, continuing review of HAs'

compliance with already existing requirements

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 HAs, continuing review of HAs'

compliance with already existing requirements. 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 HAs. Any effect on the family would be

indirect. To the extent families in public housing will be affected,

the impact of the rule's requirements is expected to be a positive one.

Catalog

The catalog of Federal Domestic Assistance numbers are 14.855 and

14.857.

List of Subjects in 24 CFR Part 985

Grant programs--housing and community development, Housing, Rent

subsidies, Reporting and recordkeeping requirements.

Accordingly, 24 CFR, chapter IX is proposed to be amended by adding

a new part 985 to read as follows:

PART 985--SECTION 8 MANAGEMENT ASSESSMENT PROGRAM (SEMAP)

Subpart A--General

Sec.

985.1 Purpose and applicability.

985.2 Definitions.

985.3 Indicators, HUD verification methods and ratings.

Subpart B--Program Operation

nt, Housing, Rent

subsidies, Reporting and recordkeeping requirements.

Accordingly, 24 CFR, chapter IX is proposed to be amended by adding

a new part 985 to read as follows:

PART 985--SECTION 8 MANAGEMENT ASSESSMENT PROGRAM (SEMAP)

Subpart A--General

Sec.

985.1 Purpose and applicability.

985.2 Definitions.

985.3 Indicators, HUD verification methods and ratings.

Subpart B--Program Operation

985.101 SEMAP certification.

985.102 SEMAP profile.

985.103 SEMAP score and overall performance rating.

985.104 HA right of appeal of overall rating.

985.105 HUD Office SEMAP responsibilities.

985.106 Required actions for SEMAP deficiencies.

985.107 Required actions for HA with troubled performance rating.

985.108 SEMAP records.

985.109 Default under the Annual Contributions Contract (ACC).

Authority: 42 U.S.C. 1437a, 1437c, 1437f, and 3535(d).

Subpart A--General

Sec. 985.1 Purpose and applicability.

(a) Purpose. The Section 8 Management Assessment Program (SEMAP) is

designed to assess whether the Section 8 tenant-based assistance

programs operate to help eligible families afford decent rental units

at a reasonable subsidy cost. SEMAP also establishes an objective

system for HUD to measure HA performance in key Section 8 program areas

to enable the Department to ensure program integrity and

accountability. SEMAP provides procedures for HUD to identify HA

management capabilities and deficiencies in order to target monitoring

and program assistance more effectively. HAs can use the SEMAP

performance analysis to assess and improve their own program

operations.

for HUD to measure HA performance in key Section 8 program areas

to enable the Department to ensure program integrity and

accountability. SEMAP provides procedures for HUD to identify HA

management capabilities and deficiencies in order to target monitoring

and program assistance more effectively. HAs can use the SEMAP

performance analysis to assess and improve their own program

operations.

(b) Applicability. This rule applies to HA administration of the

tenant-based Section 8 rental voucher and rental certificate programs

(24 CFR part 982), the project-based component of the certificate

program (24 CFR part 983), and enrollment of Section 8 participants

under the family self-sufficiency program (FSS) (24 part CFR 984). This

rule does not apply to Indian housing authority (IHA) administration of

these programs. Performance of IHA administration of the Section 8

programs is assessed using the HUD Office of Native American Programs

Risk Assessment and Determination for Allocation of Resources

instrument. SEMAP does not cover the Section 8 moderate rehabilitation

program (24 CFR part 882, subparts D and E).

Sec. 985.2 Definitions.

(a) The terms Department, Fair Market Rent, HUD, Secretary, and

Section 8, as used in this part, are defined in 24 CFR 5.100.

(b) The definitions in 24 CFR 982.4 apply to this part. As used in

this part:

Corrective action plan means a HUD-required written plan to address

HA program management deficiencies or findings identified by HUD

through remote monitoring or on-site review that will bring the HA to

an acceptable level of performance.

HA means a Housing Agency, excluding an IHA.

HUD office means a HUD State or Area Office unless otherwise

specified.

MTCS means Multifamily Tenant Characteristics System. MTCS is the

Department's national data base on participants and rental units in the

Section 8 rental certificate, rental voucher, and moderate

rehabilitation programs and in the Public and Indian Housing programs

formance.

HA means a Housing Agency, excluding an IHA.

HUD office means a HUD State or Area Office unless otherwise

specified.

MTCS means Multifamily Tenant Characteristics System. MTCS is the

Department's national data base on participants and rental units in the

Section 8 rental certificate, rental voucher, and moderate

rehabilitation programs and in the Public and Indian Housing programs.

MTCSupport means HUD's automated system to provide summary reports

of Section 8 participant data collected and maintained in HUD's MTCS.

Performance indicator means a standard set for a key area of

Section 8 program management against which the HA's performance is

measured to show whether the HA administers the program properly and

effectively. (See Sec. 985.3.)

SEMAP certification means the HA's annual certification to HUD, on

the form prescribed by HUD, concerning its performance in key Section 8

program areas.

SEMAP deficiency means any rating of 0 points on a SEMAP

performance indicator.

SEMAP profile means a summary prepared by the HUD Office of an HA's

ratings on each SEMAP indicator, its overall SEMAP score, and its

overall performance rating (high performer, standard, troubled).

Sec. 985.3 Indicators, HUD verification methods and ratings.

This section states the performance indicators that are used to

assess HA Section 8 management. The HUD Office will use the

verification method identified for each indicator in reviewing the

accuracy of an HA's annual SEMAP certification. The HUD Office will

prepare a SEMAP profile for each HA assigning a rating for each

indicator as shown. If the HUD verification method for the indicator

relies on data in MTCSupport and HUD determines those data are

insufficient to verify the HA's certification on the indicator due to

the HA's failure to

adequately report family data, the HUD Office shall assign a zero

rating for the indicator:

HUD Office will

prepare a SEMAP profile for each HA assigning a rating for each

indicator as shown. If the HUD verification method for the indicator

relies on data in MTCSupport and HUD determines those data are

insufficient to verify the HA's certification on the indicator due to

the HA's failure to

adequately report family data, the HUD Office shall assign a zero

rating for the indicator:

(a) Selection from the Waiting List. (1) This indicator shows

whether the HA has written admission policies in its administrative

plan and whether the HA follows these policies when selecting

applicants for admission from the waiting list. (24 CFR 982.54(d)(1)

and 982.204(a)).

(2) HUD verification method: The latest independent auditor (IA)

annual audit report.

(3) Rating: (i) The latest IA audit report states that: The HA has

written admission policies in its administrative plan and, based on

random samples of applicants and admissions, documentation in the

tenant files shows that families were selected from the waiting list

for admission in accordance with these policies and met the selection

criteria that determined their places on the waiting list and their

order of admission. 10 points.

(ii) The latest IA audit report does not support the statement in

paragraph (a)(3)(i) of this section. 0 points.

(b) Rent reasonableness. (1) This indicator shows whether the HA

has and implements a written methodology to determine and document for

each unit leased that, at the time of initial leasing and at least

annually during an assisted tenancy, the rent to owner is reasonable

based on current rents for comparable unassisted units. The HA's system

must take into consideration the location, size, type, quality, age and

amenities of the unit to be leased in determining comparability and the

reasonable rent.

(2) HUD verification method: The latest IA annual audit report.

initial leasing and at least

annually during an assisted tenancy, the rent to owner is reasonable

based on current rents for comparable unassisted units. The HA's system

must take into consideration the location, size, type, quality, age and

amenities of the unit to be leased in determining comparability and the

reasonable rent.

(2) HUD verification method: The latest IA annual audit report.

(3) Rating: (i) The latest IA audit report states that:

(A) The HA has a written methodology it follows to determine rent

reasonableness; and

(B) Based on a random sample of tenant files, the HA documents rent

reasonableness for each unit leased at initial leasing and annually

thereafter. 20 points.

(ii) The latest IA audit report includes the statement in paragraph

(b)(3)(i) of this section, except that the HA documents rent

reasonableness for only 80 to 99 percent of units at initial leasing

and annually thereafter. 10 points.

(iii) The latest IA audit report does not support either statement

in paragraphs (b)(3)(i) and (b)(3)(ii) of this section. 0 points.

(c) Fair market rent (FMR) limit and payment standard (PS). (1)

This indicator shows whether at least 90 percent of the units newly

leased under the rental certificate program have initial gross rents at

or below the applicable FMR/exception rent limits, and whether the HA

has adopted payment standards for the rental voucher program, for each

FMR area in the HA jurisdiction, which do not exceed the applicable

FMR/exception rent limits.

(2) HUD verification method: MTCSupport--Rents and Rent Burdens

Report--Shows newly leased certificate units' gross rents as percent of

FMR and shows voucher payment standards as percent of FMR.

n rent limits, and whether the HA

has adopted payment standards for the rental voucher program, for each

FMR area in the HA jurisdiction, which do not exceed the applicable

FMR/exception rent limits.

(2) HUD verification method: MTCSupport--Rents and Rent Burdens

Report--Shows newly leased certificate units' gross rents as percent of

FMR and shows voucher payment standards as percent of FMR.

(3) Rating: (i) At least 90 percent of the units newly leased under

the rental certificate program have initial gross rents at or below the

applicable FMR/exception rent limits and the HA's rental voucher

program payment standards do not exceed the applicable FMR/exception

rent limits. 5 points.

(ii) More than 10 percent of rental certificate program units have

been newly leased at initial gross rents that exceed the applicable

FMR/exception rent limits or the HA's rental voucher program payment

standards exceed the FMR/exception rent limits. 0 points.

(d) Annual reexaminations. (1) This indicator shows whether the HA

conducts a reexamination for each participating family at least every

12 months.

(2) HUD verification method: MTCSupport--Key Management Indicators

Report--Shows percent of reexaminations that are more than 2 months

overdue. The 2-month allowance is provided only to accommodate a

possible lag in the HA's electronic reporting of the annual

reexamination on Form HUD-50058, and to allow the processing of the

data into MTCS. The 2-month allowance provided here for rating purposes

does not mean that any delay in completing annual reexaminations is

permitted.

(3) Rating: (i) Fewer than 2 percent of all HA reexaminations are

more than 2 months overdue. 10 points.

(ii) 2 to 10 percent of all HA reexaminations are more than 2

months overdue. 5 points.

(iii) More than 10 percent of all HA reexaminations are more than 2

months overdue. 0 points.

d here for rating purposes

does not mean that any delay in completing annual reexaminations is

permitted.

(3) Rating: (i) Fewer than 2 percent of all HA reexaminations are

more than 2 months overdue. 10 points.

(ii) 2 to 10 percent of all HA reexaminations are more than 2

months overdue. 5 points.

(iii) More than 10 percent of all HA reexaminations are more than 2

months overdue. 0 points.

(e) Correct tenant rent calculations. (1) This indicator shows

whether the HA correctly calculates tenant rent in the rental

certificate program and the family's share of the rent to owner in the

rental voucher program.

(2) HUD verification method: MTCSupport--Key Management Indicators

Report--Shows percent of all tenant rent and family's share of the rent

to owner calculations that are incorrect based on data sent to HUD by

the HA on Forms HUD-50058.

(3) Ratings: (i) 2 percent or fewer of all HA tenant rent and

family's share of the rent to owner calculations are incorrect. 5

points.

(ii) More than 2 percent of all HA tenant rent and family's share

of the rent to owner calculations are incorrect. 0 points.

(f) Income determination and utility allowances. (1) This indicator

shows whether, at the time of admission and reexamination, the HA

verifies and correctly determines adjusted annual income for each

assisted family, and whether the HA maintains and properly applies an

up-to-date utility allowance schedule. (24 CFR 813.109).

(2) HUD verification method: The latest IA annual audit report.

(3) Rating: (i) (A) The latest IA audit report states that, based

on the audit and a random sample of tenant files, for at least 90

percent of families:

(1) The HA obtains third party verification of reported family

income, assets, and composition, and/or documents tenant files to show

why independent verification is not possible;

(2) The HA properly attributes and calculates allowances for any

medical, child care, and/or handicapped assistance costs; and

on the audit and a random sample of tenant files, for at least 90

percent of families:

(1) The HA obtains third party verification of reported family

income, assets, and composition, and/or documents tenant files to show

why independent verification is not possible;

(2) The HA properly attributes and calculates allowances for any

medical, child care, and/or handicapped assistance costs; and

(3) The HA uses the appropriate utility allowances for the unit

leased.

(B) The audit report also states that the HA has analyzed utility

rate data within the last year, and adjusted its utility allowance

schedule if there has been a change of 10 percent or more in a utility

rate since the last time the utility allowance schedule was revised. 20

points.

(ii) The latest IA audit report includes the statements in

paragraph (f)(3)(i) of this section, except that the HA obtains third

party verifications, properly attributes allowances, and uses the

appropriate utility allowances for only 80 to 89 percent of families.

10 points.

(iii) The latest IA audit report does not support the statements in

either paragraph (f)(3)(i) or (f)(3)(ii) of this section. 0 points.

(g) Time from request for lease approval (RFLA) to HQS inspection.

(1) This indicator shows whether the HA promptly inspects a unit when a

rental voucher or certificate holder submits a RFLA.

(2) HUD verification method: On-site confirmatory review.

points.

(iii) The latest IA audit report does not support the statements in

either paragraph (f)(3)(i) or (f)(3)(ii) of this section. 0 points.

(g) Time from request for lease approval (RFLA) to HQS inspection.

(1) This indicator shows whether the HA promptly inspects a unit when a

rental voucher or certificate holder submits a RFLA.

(2) HUD verification method: On-site confirmatory review.

(3) Rating: (i) 90 percent or more units are inspected within 7

calendar days of HA receipt of RFLA. 10 points.

(ii) 90 percent or more units are inspected within 14 calendar days

of HA receipt of RFLA. 5 points.

(iii) Less than 90 percent of units are inspected within 14

calendar days of RFLA. 0 points.

(iv) If a unit for which an HA receives a RFLA is occupied, and

therefore not available for inspection at the time the HA receives the

RFLA, the HA may document this fact and the date that the HA is later

notified that the unit is vacant and available for inspection. The

later date may be used as the date of the HA's receipt of the RFLA for

rating under this indicator.

(h) Pre-contract housing quality standards (HQS) inspections. (1)

This indicator shows whether each unit leased passed HQS inspection

before the beginning date of the assisted lease term. (24 CFR 982.305).

(2) HUD verification method: MTCSupport--Key Management Indicators

Report--Shows percent of newly leased units where the effective date of

the assistance contract is before the date the unit passed HQS

inspection.

(3) Rating: (i) Each unit under HAP contract passed HQS inspection

before the beginning date of the assisted lease term. 5 points.

(ii) Any unit has been leased that did not pass HQS inspection

before the beginning date of the assisted lease term. 0 points.

ows percent of newly leased units where the effective date of

the assistance contract is before the date the unit passed HQS

inspection.

(3) Rating: (i) Each unit under HAP contract passed HQS inspection

before the beginning date of the assisted lease term. 5 points.

(ii) Any unit has been leased that did not pass HQS inspection

before the beginning date of the assisted lease term. 0 points.

(i) Annual HQS inspections. (1) This indicator shows whether the HA

inspects each unit under contract at least annually. (24 CFR

982.405(a)).

(2) HUD verification method: MTCSupport--Key Management Indicators

Report--Shows percent of HQS inspections that are more than 2 months

overdue. The 2-month allowance is provided only to accommodate a

possible lag in the HA's electronic reporting of the annual HQS

inspection on Form HUD-50058, and to allow the processing of the data

into MTCS. The 2-month allowance provided here for rating purposes does

not mean that any delay in completing annual HQS inspections is

permitted.

(3) Rating: (i) No annual HQS inspections of units under contract

are more than 2 months overdue. 10 points.

(ii) Some but less than 10 percent of all annual HQS inspections of

units under contract are more than 2 months overdue. 5 points.

(iii) 10 percent or more of all annual HQS inspections of units

under contract are more than 2 months overdue. 0 points.

(j) HQS quality control inspections. (1) This indicator shows

whether an HA supervisor or other qualified person reinspects a random

sample of at least 5 percent of completed HQS inspections. (24 CFR

982.405(b)).

(2) HUD verification method: The latest IA annual audit report.

(3) Rating: (i) The latest IA audit report states that the auditor

has determined that an HA supervisor or other qualified person performs

reinspections of a sample of 5 percent of inspections for quality

control purposes. 5 points.

(ii) The latest IA audit report does not support the statement in

paragraph (j)(3)(i) of this section. 0 points.

ation method: The latest IA annual audit report.

(3) Rating: (i) The latest IA audit report states that the auditor

has determined that an HA supervisor or other qualified person performs

reinspections of a sample of 5 percent of inspections for quality

control purposes. 5 points.

(ii) The latest IA audit report does not support the statement in

paragraph (j)(3)(i) of this section. 0 points.

(k) HQS enforcement. (1) This indicator shows whether, following

each HQS inspection, the unit passes HQS or cited deficiencies are

corrected within 30 days or any HA-approved extension. In addition, if

deficiencies are not corrected timely, the indicator shows whether the

HA stops (abates) HAPs or terminates the HAP contract or, for family-

caused defects, takes prompt and vigorous action to enforce the family

obligations. (24 CFR 982.404).

(2) HUD verification method: The latest IA annual audit report.

(3) Rating: (i) The latest IA audit report states that the review

of a random sample of tenant files shows that, if HQS deficiencies are

not corrected within 30 days or any HA-approved extension, the HA stops

(abates) HAPs or takes prompt and vigorous action to enforce family

obligations. 10 points.

(ii) The latest IA audit report does not support the statement in

paragraph (k)(3)(i) of this section. 0 points.

(l) Lease-up. (1) This indicator shows whether the HA successfully

contracts for the units that have been under budget for at least one

year.

(2) HUD verification method: Latest Report on Program Utilization

(HUD-52683).

vigorous action to enforce family

obligations. 10 points.

(ii) The latest IA audit report does not support the statement in

paragraph (k)(3)(i) of this section. 0 points.

(l) Lease-up. (1) This indicator shows whether the HA successfully

contracts for the units that have been under budget for at least one

year.

(2) HUD verification method: Latest Report on Program Utilization

(HUD-52683).

(3) Rating: (i) 98 percent or more of the units budgeted for the

last completed HA fiscal year are under contract. 20 points.

(ii) 95 percent or more but less than 98 percent of the units

budgeted for the last completed HA fiscal year are under contract. 10

points.

(iii) Less than 95 percent of the units budgeted for the last

completed HA fiscal year are under contract. 0 points.

(iv) If the HA failed to submit the required Report on Program

Utilization, 0 points shall be assigned for this indicator.

(m) Family self-sufficiency (FSS) enrollment. (1) This indicator

shows whether the HA has enrolled families in the FSS program as

required. This indicator applies only to HAs with mandatory FSS

programs (i.e., HAs that received FY 1992 FSS incentive award Section 8

funding or that received FY 1993 or later year Section 8 funding

(excluding renewal funding)). (24 CFR 984.105).

(2) HUD verification method: MTCSupport--Resident Characteristics

Report--Shows number of families enrolled in FSS. This number is

divided by the number of mandatory FSS slots based on funding reserved

for the HA through the second to last completed Federal fiscal year.

(3) Rating: (i) The HA has filled 80 percent or more of its

mandatory FSS slots. 10 points.

(ii) The HA has filled 60 to 79 percent of its mandatory FSS slots.

5 points.

(iii) The HA has filled fewer than 60 percent of its mandatory FSS

slots. 0 points.

divided by the number of mandatory FSS slots based on funding reserved

for the HA through the second to last completed Federal fiscal year.

(3) Rating: (i) The HA has filled 80 percent or more of its

mandatory FSS slots. 10 points.

(ii) The HA has filled 60 to 79 percent of its mandatory FSS slots.

5 points.

(iii) The HA has filled fewer than 60 percent of its mandatory FSS

slots. 0 points.

(n) Deconcentration. (1) This indicator applies only to HAs with

jurisdiction in metropolitan areas. The indicator shows whether the HA

effectively solicits participation of owners of affordable units in all

areas of its jurisdiction, provides assistance to Section 8 families

with children to motivate and increase housing choice, and takes action

to broaden metropolitan area-wide housing choice.

(2) HUD verification method: MTCS data and HA narrative describing

actions to broaden metropolitan area-wide housing choice. HUD assesses

the HA's effectiveness in encouraging deconcentration by determining

whether Section 8 families with children are at least as dispersed

throughout the metropolitan area as FMR-priced units. FMR-priced units

are standard quality rental units, excluding zero- and one-bedroom

units, that rent at or below the FMR. To compare the dispersal of

Section 8 families with children to the dispersal of FMR-priced units,

HUD first determines the dispersal of FMR-priced units among all census

tracts in an HA jurisdiction and in the metropolitan area based on 1990

census data and FMRs. HUD then considers the poverty rates of the

census tracts and determines what poverty rate divides the FMR-priced

units in half (the ``dividing poverty rate''). That is, at what poverty

rate are half of the FMR-priced units dispersed in census tracts with

poverty rates above that level, and half dispersed in census tracts

with poverty rates below that level

ased on 1990

census data and FMRs. HUD then considers the poverty rates of the

census tracts and determines what poverty rate divides the FMR-priced

units in half (the ``dividing poverty rate''). That is, at what poverty

rate are half of the FMR-priced units dispersed in census tracts with

poverty rates above that level, and half dispersed in census tracts

with poverty rates below that level. Then HUD determines the percent of

Section 8 families with children that reside in census tracts with

poverty rates below the dividing poverty rate. The goal is to have at

least 60 percent of Section 8 families with children living in census

tracts with poverty rates below the dividing poverty rate. HUD makes

the determination twice: First, for only the

HA's area of jurisdiction, and then for the entire metropolitan area.

HUD also assesses the HA's actions to broaden metropolitan area-wide

housing choice such as counseling, transportation assistance, and

cooperation with other metropolitan area HAs or nonprofit organizations

which promote housing choice.

(3) Rating: (i) At least 50 percent of Section 8 families with

children reside in the HA jurisdiction census tracts with poverty rates

below the dividing poverty rate; and at least 50 percent of Section 8

families with children reside in the metropolitan area census tracts

with poverty rates below the dividing poverty rate, or the HA is taking

action to broaden metropolitan area-wide housing choice. 10 points.

(ii) 40 to 49 percent of Section 8 families with children reside in

the HA jurisdiction census tracts with poverty rates below the dividing

poverty rate; and 40 to 49 percent of Section 8 families with children

reside in the metropolitan area census tracts with poverty rates below

the dividing poverty rate, or the HA is taking action to broaden

metropolitan area-wide housing choice. 5 points.

(iii) Neither statement in paragraph (n)(3)(i) or (n)(3)(ii)

applies. 0 points.

iction census tracts with poverty rates below the dividing

poverty rate; and 40 to 49 percent of Section 8 families with children

reside in the metropolitan area census tracts with poverty rates below

the dividing poverty rate, or the HA is taking action to broaden

metropolitan area-wide housing choice. 5 points.

(iii) Neither statement in paragraph (n)(3)(i) or (n)(3)(ii)

applies. 0 points.

(o) Welfare to work. (1) This indicator shows whether the HA helps

assisted families move from welfare to work. HUD will determine the

percentage of the HA's rental voucher and certificate program families

whose primary source of income at the start of the previous federal

fiscal year was AFDC and/or general assistance (``welfare families'')

(excluding families whose head of household is elderly or disabled)

which had earnings as the primary source of income (``working

families'') at the end of the previous federal fiscal year. This

indicator will be implemented in SEMAP beginning in federal fiscal year

1999.

(2) HUD verification method: MTCSupport--Key Management

Indicators--Shows percent of welfare families who became working

families during the previous federal fiscal year.

(3) Rating: (i) More than 15 percent of welfare families became

working families during the previous federal fiscal year. 10 points.

(ii) Between 5 and 15 percent of welfare families became working

families during the previous federal fiscal year. 5 points.

(iii) Fewer than 5 percent of welfare families became working

families during the previous federal fiscal year. 0 points.

Subpart B--Program Operation

Sec. 985.101 SEMAP certification.

amilies became

working families during the previous federal fiscal year. 10 points.

(ii) Between 5 and 15 percent of welfare families became working

families during the previous federal fiscal year. 5 points.

(iii) Fewer than 5 percent of welfare families became working

families during the previous federal fiscal year. 0 points.

Subpart B--Program Operation

Sec. 985.101 SEMAP certification.

(a) An HA must submit the HUD-required SEMAP certification form

within 45 calendar days after the start of its fiscal year.

(1) The certification must be approved by HA board resolution and

be signed by the board of commissioners chairperson and by the HA

executive director. Where a unit of local government or a state

administers the Section 8 program, a resolution approving the

certification is not required, and the certification must be executed

by the Section 8 program director and the chief executive officer of

the unit of government.

(2) An HA that subcontracts administration of its program to one or

more subcontractors shall require each subcontractor to submit the

subcontractor's own SEMAP certification on the HUD-prescribed form to

the HA in support of the HA's SEMAP certification to HUD. The HA shall

retain subcontractor certifications for three years.

(3) An HA may include with its SEMAP certification any information

bearing on the accuracy or completeness of the information used by the

HA in providing its certification.

(b) Failure of an HA to submit its SEMAP certification within 45

calendar days after the start of its fiscal year will result in an

overall performance rating of troubled and the HA will be subject to

the requirements at Sec. 985.107.

include with its SEMAP certification any information

bearing on the accuracy or completeness of the information used by the

HA in providing its certification.

(b) Failure of an HA to submit its SEMAP certification within 45

calendar days after the start of its fiscal year will result in an

overall performance rating of troubled and the HA will be subject to

the requirements at Sec. 985.107.

(c) An HA's SEMAP certification is subject to HUD verification by

an on-site confirmatory review at any time.

Sec. 985.102 SEMAP profile.

Upon receipt of the HA's SEMAP certification, the HUD Office will

rate the HA's performance under each SEMAP indicator in accordance with

Sec. 985.3. If an HA administers both the rental certificate program

and the rental voucher program, performance under each indicator is

initially assessed separately for each program. If the indicator

ratings differ by program, the HUD Office shall assign the HA the lower

rating for the indicator. The HUD Office will then prepare a SEMAP

profile for each HA which shows the rating for each indicator, sums the

indicator ratings, and divides by the total possible points to arrive

at an HA's overall SEMAP score.

Sec. 985.103 SEMAP score and overall performance rating.

(a) High performer rating. HAs with SEMAP scores of at least 90

percent shall be rated high performers under SEMAP. An HA that achieves

an overall performance rating of high performer may receive national

recognition by the Department.

(b) Standard rating. HAs with SEMAP scores of 60 to 89 percent

shall be rated standard.

(c) Troubled rating. HAs with SEMAP scores of less than 60 percent

shall be rated troubled.

ing. HAs with SEMAP scores of at least 90

percent shall be rated high performers under SEMAP. An HA that achieves

an overall performance rating of high performer may receive national

recognition by the Department.

(b) Standard rating. HAs with SEMAP scores of 60 to 89 percent

shall be rated standard.

(c) Troubled rating. HAs with SEMAP scores of less than 60 percent

shall be rated troubled.

(d) Modified rating. (1) Notwithstanding an HA's SEMAP score, the

HUD Office may modify an HA's overall performance rating when warranted

by circumstances which have bearing on the SEMAP indicators such as

adverse litigation, a conciliation agreement under Title VI of the

Civil Rights Act of 1964 (42 U.S.C. 3600-3620), fair housing and equal

opportunity monitoring and compliance review findings, fraud or

misconduct, audit findings or substantial noncompliance with program

requirements.

(2) When the HUD Office modifies an overall performance rating for

any reason it shall explain in writing to the HA the reasons for the

modification.

Sec. 985.104 HA right of appeal of overall rating.

An HA may appeal its overall performance rating to the HUD Office

by providing justification of the reasons for its appeal.

Sec. 985.105 HUD Office SEMAP responsibilities.

(a) Annual review. The HUD Office shall assess each HA's

performance under SEMAP annually and shall assign each HA a SEMAP score

and overall performance rating.

(b) Notification to HA. No later than 45 calendar days after

receipt of the HA's SEMAP certification, the HUD Office shall notify

each HA in writing of its rating on each SEMAP indicator, of its

overall SEMAP score and of its overall performance rating (high

performer, standard, troubled). The HUD notification letter shall

identify and require correction of any SEMAP deficiencies (indicator

rating of zero) within 45 calendar days.

calendar days after

receipt of the HA's SEMAP certification, the HUD Office shall notify

each HA in writing of its rating on each SEMAP indicator, of its

overall SEMAP score and of its overall performance rating (high

performer, standard, troubled). The HUD notification letter shall

identify and require correction of any SEMAP deficiencies (indicator

rating of zero) within 45 calendar days.

(c) On-site confirmatory review. The HUD Office may conduct an on-

site confirmatory review to verify the HA certification and the HUD

rating under any indicator.

(d) Changing rating from troubled. The HUD Office must conduct an

on-site confirmatory review of an HA's performance before changing any

annual overall performance rating from troubled to standard or high

performer.

(e) Appeals. The HUD Office must review, consider and provide a

final

written determination to an HA on its appeal of its overall performance

rating.

(f) Corrective action plans. The HUD Office must review the

adequacy and monitor implementation of HA corrective action plans

submitted under Sec. 985.106(c) or Sec. 985.107(c), and provide

technical assistance to help the HA improve program management. If an

HA is assigned an overall performance rating of troubled, the HA's

corrective action plan must be approved by the HUD Office.

Sec. 985.106 Required actions for SEMAP deficiencies.

(a) When the HA receives the HUD Office notification of its SEMAP

rating, an HA must correct any SEMAP deficiency (indicator rating of

zero) within 45 calendar days.

(b) The HA must send a written report to the HUD Office on its

correction of any identified SEMAP deficiency.

(c) If an HA fails to correct a SEMAP deficiency within 45 calendar

days as required, the HUD Office may then require the HA to prepare and

submit a corrective action plan for the deficiency within 30 calendar

days.

Sec. 985.107 Required actions for HA with troubled performance rating.

) The HA must send a written report to the HUD Office on its

correction of any identified SEMAP deficiency.

(c) If an HA fails to correct a SEMAP deficiency within 45 calendar

days as required, the HUD Office may then require the HA to prepare and

submit a corrective action plan for the deficiency within 30 calendar

days.

Sec. 985.107 Required actions for HA with troubled performance rating.

(a) Required on-site review. Upon assigning an overall performance

rating of troubled, the HUD Office must conduct an on-site review of HA

program management.

(b) HUD written report. The HUD Office must provide the HA a

written report of its on-site review containing HUD findings of program

management deficiencies and recommendations for improvement.

(c) HA corrective action plan. Upon receipt of the HUD Office

written report on its on-site review, the HA must write a corrective

action plan and submit it to HUD for approval. The corrective action

plan must:

(1) Specify goals to be achieved;

(2) Identify obstacles to goal achievement and ways to eliminate or

avoid them;

(3) Identify resources that will be used or sought to achieve

goals;

(4) Identify an HA staff person with lead responsibility for

completing each goal;

(5) Identify key tasks to reach each goal;

(6) Specify time frames for achievement of each goal, including

intermediate time frames to complete each key task; and

(7) Provide for regular evaluation of progress toward improvement.

(d) Monitoring. The HA and the HUD Office must monitor the HA's

implementation of its corrective action plan to ensure performance

targets are met.

(e) Use of administrative fee reserve prohibited. Any HA assigned

an overall performance rating of troubled may not use any part of the

administrative fee reserve for other housing purposes (see 24 CFR

982.155(b)).

f progress toward improvement.

(d) Monitoring. The HA and the HUD Office must monitor the HA's

implementation of its corrective action plan to ensure performance

targets are met.

(e) Use of administrative fee reserve prohibited. Any HA assigned

an overall performance rating of troubled may not use any part of the

administrative fee reserve for other housing purposes (see 24 CFR

982.155(b)).

(f) Upgrading poor performance rating. The HUD Office shall change

an HA's overall performance rating from troubled to standard or high

performer if HUD determines that a change in the rating is warranted

because of improved HA performance and an improved SEMAP score.

Sec. 985.108 SEMAP records.

The HUD Office shall maintain SEMAP files, including

certifications, notifications, appeals, corrective action plans, and

related correspondence for at least three years.

Sec. 985.109 Default under the Annual Contributions Contract (ACC).

HUD may determine that an HA's failure to correct identified SEMAP

deficiencies or to prepare and implement a corrective action plan

required by HUD constitutes a default under the ACC.

Dated: October 21, 1996.

Kevin Emanuel Marchman,

Acting Assistant Secretary for Public and Indian Housing.

Note: Appendix 1 will not be codified in the Code of Federal

Regulations.

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