[Federal Register Volume 61, Number 232 (Monday, December 2, 1996)]
[Proposed Rules]
[Pages 63930-63941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30297]



[[Page 63929]]

_______________________________________________________________________

 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

  Federal Register / Vol. 61, No. 232 / Monday, December 2, 1996 / 
Proposed Rules  

[[Page 63930]]



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.

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

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.

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.
    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

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.
    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

[[Page 63931]]

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. 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. 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. 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. 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.
    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

[[Page 63932]]

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. 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. 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. 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.
    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,

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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. 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.                                                                                                    
----------------------------------------------------------------------------------------------------------------
      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
    (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.

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.

    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

[[Page 63934]]

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. 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

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.
    (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.
    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

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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.
    (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.
    (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.
    (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
    (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.
    (3) Rating: (i) 90 percent or more units are inspected within 7 
calendar days of HA receipt of RFLA. 10 points.

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    (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.
    (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.
    (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).
    (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.
    (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. 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

[[Page 63937]]

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.
    (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.

    (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.
    (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.
    (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.
    (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

[[Page 63938]]

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.

    (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) 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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