[Federal Register Volume 61, Number 251 (Monday, December 30, 1996)]
[Rules and Regulations]
[Pages 68894-68950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32469]
[[Page 68893]]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 901
Public Housing Management Assessment Program; Interim Rule
Federal Register / Vol. 61, No. 251 / Monday, December 30, 1996 /
Rules and Regulations
[[Page 68894]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 901
[Docket No. FR-3447-I-03]
RIN 2577-AA89
Public Housing Management Assessment Program
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Interim rule.
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SUMMARY: This interim rule implements the proposed revision, published
on May 6, 1996, of the Public Housing Management Assessment Program
(PHMAP) at 24 CFR part 901. PHMAP applies to public housing agencies
(PHAs) and resident management corporations (RMCs), and any other
entities under contract to manage public housing, but does not apply to
Indian housing authorities, nor to the Family Self-Sufficiency Program
authorized under section 23. PHMAP provides policies and procedures to
identify PHA management capabilities and deficiencies, and assists HUD
State/Area Offices in accountability monitoring and risk management.
DATES: Effective Date: January 29, 1997. Assessments using the
requirements of this rule will begin with PHAs whose fiscal years end
on March 31, 1997, the final date of the quarter after this rule is
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Deputy Assistant
Secretary for Public and Assisted Housing Operations, Office of Public
and Indian Housing, Department of Housing and Urban Development, 451
Seventh Street, S.W., Washington, D.C. 20410, telephone (202) 708-1380.
A telecommunications device for hearing or speech impaired persons
(TTY) is available at (202) 708-0850. (These are not toll-free
telephone numbers.)
SUPPLEMENTARY INFORMATION: On May 6, 1996, HUD published a proposed
rule (61 FR 20358) to revise the entire PHMAP at 24 CFR part 901.
Eighty-seven comments were received on the proposed rule. The public
comments on the proposed rule and the resulting changes in this rule
are discussed below in section II of this preamble.
I. Highlights of Changes From the Proposed Rule
A number of changes, more fully discussed in section II of this
preamble, below, have been made to the proposed rule by this interim
rule, including the following:
The definition for ``vacancy days: is modified to specify
that it pertains to ``dwelling'' units.
The definitions and methodologies for both the Performance
Funding System (PFS) and PHMAP should be the same as long as feasible,
and the language of the new rule reflects that.
Definitions of the terms ``effective lease date,''
``maintenance plan,'' and ``move-out date'' are added.
The definition of ``average turnaround time'' is changed
to read, ``. . . the annual average of the total number of turnaround
days between the latter of the legal expiration date of the immediate
past lease or the actual move-out date of the former tenant (whenever
that occurred, including in some previous fiscal year) and the date a
new lease takes effect.''
The threshold for progress in reducing the vacancy rate
that applies to a C grade has been changed from 30% to 15 percentage
points.
The term ``Reduced Actual Vacancy Rate in Previous 3
Years'' is clarified to include the fiscal year being assessed under
PHMAP in the 3-year period.
Dwelling units used for non-dwelling purposes with HUD
approval, employee occupied units, and vacant units approved for
demolition or disposition are not included as available units in the
determination of occupancy/vacancy rates
For purposes of indicator #2, Modernization, a minimum
time is specified between the date HUD's monitoring report or audit is
provided to the PHA and the end of the PHA's fiscal year in order to
give the PHA sufficient time to correct all findings. The Department
has revised components #3 and #4 to reflect a minimum time of 75
calendar days.
The Department agrees that emergency CGP work does not
require prior HUD approval and has revised component #5 of indicator
#2, Modernization, to specifically exclude emergency work.
The Department has added specific language to indicator
#4, Work Orders, stating that all preventive maintenance work orders
are to be tracked, as well as which type of work orders are exempted
from the calculation of this indicator.
The new resident services and community building indicator
is now subdivided into four equally weighted components, and the
indicator or the individual components are subject to exclusion based
on the particular circumstances of each PHA. The name of this indicator
has been renamed ``Resident Services and Community Building'' to place
a more accurate emphasis upon the specific role of PHAs for these
functions. PHA's with 100% elderly developments will not be assessed
under this indicator. To avoid penalizing small PHAs with active
programs, PHAs with fewer than 250 units or with 100% elderly
developments may request to be assessed under the indicator at the time
of PHMAP certification submission.
The Resident Services and Community Building indicator has
been revised in order to assess PHAs for the functions they perform in
operating resident services programs and for resident management or TOP
performance only when the PHA is the contract administrator for the
program.
The rule has been changed to state that indicator #8,
Security, does not apply to PHAs with fewer than 250 units under
management unless the PHA requests to be assessed under the indicator
at the time of the PHMAP certification submission.
Section 901.105(d)(3)(iv) has been clarified in the new
rule to state that a PHA's score for indicators #1, #4 and/or #5, after
any adjustment(s) for physical condition and/or neighborhood
environment, may not exceed the maximum potential weighted points
assigned to the respective indicator(s).
Section 901.115(e) of the proposed rule read, ``PHAs with
more than 100 units that achieve a total weighted score of less than
60% on indicator (2), modernization, shall be designated as mod-
troubled.'' The Department agrees that these ``small'' PHAs should also
be assessed on their modernization program, and has amended this
section accordingly.
The posting of PHA PHMAP scores is now required at all
offices, rather than in all developments.
The rule makes clear that PHAs are only required to post
and report out final PHMAP scores and do not have to post and report
any score that is appealed in a timely basis and is under consideration
by HUD.
The rule now specifically permits an appeal from a State/
Area Office rejection of a claim for additional scoring adjustment that
is based on the physical condition or neighborhood environment of
housing developments.
In sections 901.220(b) and 901.225, the Department has
changed the percentage in the new rule to require that 20% of the
residents at a PHA in substantial default indicate to HUD their
interest in participating in the competitive proposal process.
The period has been extended to a 60, rather than 45, day
submission period for certifications to be submitted following the end
of a PHA's fiscal year.
[[Page 68895]]
II. Discussion of Public Comments
General Comments
Comment: One comment stated that PHAs should be monitored, but the
PHMAP grading system is not the answer.
Response: Congress passed the amendments to the 1937 Act that
authorize PHMAP, and it is the clear intent and purpose of Congress to
require HUD to assess PHA management performance. The authorizing
statute provides specific statutory indicators, and permits, as HUD
deems appropriate, up to five additional ones to be used for this
purpose.
Comment: Twenty-four comments stated that a truer assessment can be
accomplished now than before; overall, the proposed rule is positive;
generally pleased with the proposed revisions that eliminate the
snapshot indicators; and the proposed rule is a vast improvement over
the current PHMAP certification. Many of the commenters commended HUD's
effort to streamline the certification process by reducing the number
of indicators from 12 to eight and by providing standard definitions
for critical terms. The first six indicators are measures of essential
property management and a marked improvement over the current system.
Response: The comments are noted by the Department.
Comment: Five comments felt that there should be a transition
period to allow adequate time to change computer programs. There should
be at least one year to sample the new indicators to see how changes
are going to affect individual PHAs. Any revision of the PHMAP should
be made effective beginning with the next fiscal year after the new
rule has been published. Two comments felt that if Congress has moved
the authorization process forward, PHA's should have an ``option year''
implementation where a PHA has a choice to use either the current PHMAP
or the new PHMAP. If the authorization process is stalled, the
Department should not implement the new rule.
Response: Most of the data elements required to determine the grade
or score for the new indicators are already being maintained by PHAs
for reporting requirements for the current PHMAP rule or for other
programs. Because of that, a long transition period is not needed.
Therefore, assessment under this rule will begin with PHAs whose fiscal
year ends the quarter after the publication of this rule (PHAs whose
fiscal year ends in the quarter immediately following publication of
this revised rule will be assessed under the ``old'' PHMAP rule). This
transition period will permit PHAs to organize their data in order to
respond to the new requirements. During the first year of
implementation of the new rule, the Department will consider
modification and exclusion requests based on special circumstances
arising from the initial implementation process. A choice of which set
of criteria to use (have PHAs choose under which PHMAP rule, old or
new, to be assessed) is not feasible because all PHA's must be assessed
using the same indicators for the same period of time (i.e., the same
calendar year) in order for the scoring to be comparable and fair. HUD
is moving forward with this rule because the implementation of the new
PHMAP is not dependant upon Congressional authorization. The new rule
is published as an interim rule to indicate HUD's intention to continue
to refine and improve PHMAP.
Comment: Three Comments requested the Department not to establish a
system which requires PHAs to retroactively retrieve information. The
Commenters stated that in areas where ``improvement over the last three
years'' is considered to calculate the grade, the information needed is
not readily available to the PHAs in the new format required by the
proposed rule. A transition process should be addressed in the new rule
to deal with this.
Response: The PHMAP new rule does not require a PHA to
retroactively retrieve information unless the PHA chooses to certify to
the percentage of improvement within the prior three year period as
permitted by some of the indicators. Since whether to make such a
certification is the decision of each PHA, a PHA should factor in the
additional time to retrieve the necessary information. A transitional
period for this reason is deemed to be unnecessary.
Comment: Three Comments felt that with fewer indicators, it will be
more difficult for small PHAs to achieve high performer status; a low
score on one indicator will have a much greater impact on the total
score.
Response: The reinvention and streamlining of the PHMAP process
seeks to focus on the most significant management aspects of PHA
management and reduce the burden of the PHMAP process while still
producing a valid and reliable assessment. However, the use of fewer
indicators does not result in a disproportionate impact from any one
indicator. The use of modification and exclusion requests allows PHAs
the opportunity to justify why they should not be penalized by a
performance that does not exactly meet the requirements of an
indicator. Even if additional, though less significant, indicators were
used in PHMAP, the weighting of indicators according to their
significance would reduce their individual impact on the score despite
the additional assessment burden that would result.
Comment: One Comment stated that HUD has attempted to add
compliance with specific directives to a program that is supposed to
rate performance, and that including them in PHMAP waters down the
focus and the results of the program. HUD should remove all non-
essential components (Section 3 program at 24 CFR part 135, energy/
utility management, etc.).
Response: HUD has attempted to limit PHMAP to examining essential
aspects of PHA management. Of these, some that deal with compliance
issues, such as the energy indicator, are essential because they are
statutory. In other indicators, such as Resident Initiatives, which
examines, among other subjects, implementation of Section 3 programs,
the degree of successful implementation is regarded as a valid measure
of a PHA's efforts to encourage partnerships with residents and the
local community that help improve management operations at the PHA.
However, compliance-related measures have been kept at a minimum in
this rule.
Comment: One Comment felt that the State/Area Offices should be
given the flexibility to correct shortcomings in the system which could
not have been foreseen in advance.
Response: This rule does provide a high degree of the requested
flexibility to State/Area Offices. The State/Area Offices assess each
PHA within their jurisdiction on an annual basis, and make
determinations for high-performing, standard, and troubled PHAs, and
troubled PHAs with respect to the program under section 14 (mod-
troubled) in accordance with a PHA's PHMAP weighted score. On-site
confirmatory reviews may be conducted by the State/Area Offices, which
may result in corrections to a PHAs total weighted score, if
appropriate. In addition, State/Area Offices make determinations for
exclusion and modification requests, perhaps the greatest area of
flexibility in the PHMAP rule. At the same time, HUD must ensure that
PHMAP is a truly nationwide assessment methodology and that comparable
performance by PHAs in different State/Area Offices is rated without
regard to the location.
Comment: One Comment stated that the Commenter has worked very hard
to achieve high performer status, but cannot achieve it, under the
proposed
[[Page 68896]]
PHMAP ratings. Surely, a rating scheme can be formulated that would be
equally fair to all PHAs, taking into consideration the huge
differences between small and large PHAs, big city and rural PHAs, and
the necessity for each to be operated differently.
Response: As indicated in the preamble of the proposed rule, the
Departments of Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act, 1992 (92 App. Act) (approved
October 28, 1991, Pub. L. 102-139) provided that the evaluation of PHAs
must be administered flexibly to ensure that they are not penalized for
circumstances beyond their control; and that the weights assigned to
indicators must reflect the differences in management difficulty that
result from physical condition and neighborhood environment. HUD
implements this mandate, which also reflects the concerns expressed in
the comment, by permitting PHAs to submit modification and exclusion
requests, by limiting the applicability of certain indicators by PHA
size, and by assigning additional adjustments to a PHA's PHMAP score
based upon physical condition and neighborhood environment.
Comment: Two comments stated that PHMAP scores for PHAs and RMCs
should be assessed and scored separately. The purpose of the RMC is to
manage and maintain public housing units independent of the PHA. The
RMC is an independent body that neither answers to, nor is required to
follow the advice of the PHA. Resident groups are being given an
enormous amount of responsibility, without the corresponding
accountability which puts the PHA in an unfair and untenable position.
To relieve the RMC of the necessity of being accountable creates a
situation of ``smoke and mirrors.'' Don't let resident management be an
illusion; make it real. If the RMC has been deemed eligible and able to
manage, it should also be deemed eligible to handle the corresponding
success or failure. Do not combine RMC and PHA PHMAP scores.
Response: As discussed in the preamble to the proposed rule,
because an RMC enters into a contract with a PHA to perform specific
management functions on a development-by-development basis, and because
the scope of the management that is undertaken varies, not every
indicator that applies to a PHA would be applicable to each RMC. Even
if an RMC were to assume all of the management functions for a
particular development, 24 CFR 964.225(d), entitled, Management
contract, and 24 CFR 964.225(h), entitled, Prohibited activities,
provide that a PHA may enter into a management contract with a resident
management corporation, but a PHA may not contract for assumption by
the resident management corporation of the PHA's underlying
responsibilities to the Department under the ACC. In addition, 24 CFR
964.225(k) requires a PHA to review, not less than annually, an RMC's
performance to ensure that it complies with all applicable requirements
and meets agreed-upon standards of performance. The ultimate
responsibility for the management of all of its developments resides
with the PHA, whether it contracts out management or other services to
an RMC or any other contractor.
Comment: Two comments stated that the sample worksheet for
indicator #6 and the PHMAP certification form are not exactly user
friendly. One commenter suggested that HUD redesign these two forms so
that they can be readily understood and computer formatted for those
PHAs that have such capability. The other commenter stated that the new
rule should include a standard questionnaire form for PHA use.
Response: The worksheet and certification form have been
redesigned, as applicable, to make them more user friendly. HUD
welcomes additional, specific recommendations to improve these
documents further.
Comment: One comment felt that PHMAP should be aimed toward
identifying a quality and reliable service delivery. Progress of
development conditions, resident involvement in the solution of
community affairs, as well as independent achievements by the residents
should be evidence of growth and should be rewarded with high scores
and additional benefits.
Response: Even with the reduction and streamlining of PHMAP to
measure only the essential aspects of PHA management, as discussed in
previous responses, the significance of resident involvement and
achievement are recognized in this rule by maintaining resident
involvement as a separate indicator. However, this is only one factor
in a program that attempts to assess all of the significant areas of
PHA management and a PHA must perform well in each area to receive a
high score and additional benefits.
Comment: One comment maintained that the results in the quality of
work and development conditions should be evaluated in connection with
available resources versus market cost in the jurisdictions.
Response: The current PHMAP regulation contains substantial
provisions to ensure that PHAs are not penalized for conditions beyond
their control: (1) a PHA may request a modification of any indicator
and/or component to compensate for conditions beyond its control; (2) a
PHA may request the exclusion of an indicator and/or component for the
same reason; (3) without requesting a modification, the current and new
PHMAP regulations both allow PHAs to modify the scoring calculations
for certain indicators by exempting certain units; and (4) there is a
two-stage appeal process available if the PHA fails to find relief
under items one, two and three, above. As discussed previously,
exclusion and modification requests are processed by the local State/
Area Office, which would have the greatest awareness of the resources
and market conditions affecting a PHA. These procedures provide the
appropriate mechanism to address special circumstances, such as area
market costs, affecting a PHA's performance.
Comment: Two comments were concerned with revisions that would
require the collection and management of new data when that data is
needed solely for PHMAP and is not normally utilized in the management
of housing. Such changes to the data collection and processing system
are not easily accomplished.
Response: The Department's experience in implementing PHMAP so far
has resulted in some refinement in the data necessary to assess
management performance. The goal of this rule is to provide a more
valid assessment process and HUD believes the data requested will
produce this result. HUD will continue to evaluate the appropriateness
and usefulness of the information it gathers in its implementation of
this rule, and will make adjustments as warranted.
Comment: Three comments stated that the proposed rule should be
delayed until Congress has completed action concerning the management
assessment criteria of PHAs. Bills in the Senate and the House have
provisions that would affect PHMAP. The Senate bill would add two
indicators and the House bill would create an accreditation process for
PHAs. It is not clear how these provisions may be reconciled. If the
final bill contains significant changes, HUD should incorporate them
into a new proposed rule re-issued for comment.
Response: HUD believes that this rule, incorporating nearly five
years of experience and feedback on the rule first implemented in
January 1992, represents an improvement over the existing process. The
Department will
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fully implement any statutory amendments to PHMAP when they are made,
but is also continuing to go forward with this rule to avoid delay in
implementing an improved process.
Comment: One comment stated that a PHA's ability to maintain its
units will decline due to the budget cuts to all PHAs, thus affecting
the PHMAP scores. With no funds for repairs, more units will fail HQS.
How are PHAs suppose to improve and maintain housing units when funds
are reduced, and PHAs are denied modernization funds?
Response: HUD recognizes that PHAs have not been fully funded. In
FY 1996, for example, PHAs received only 89% of their funding
eligibility under the Performance Funding System (PFS). To the extent
that a PHA can demonstrate its management performance has been
adversely affected by funding shortfalls, it should do so in an
exclusion/modification request. PHAs are expected and encouraged to do
their best, but they cannot be expected to do the impossible. In
addition, alternative measures have been implemented such as minimum
rents and the new focus on mixed-income housing, which provide PHAs
with possible alternative income sources.
Comment: One comment stated that a system designed to measure
performance of PHAs nationally must be flexible and accommodate local
differences. PHMAP should give consideration to the conditions and
level of difficulty involved in owning and operating public housing in
poverty impacted and distressed urban areas.
Response: PHMAP is required by statute to take into account the
physical condition of a PHA's developments and their neighborhood
environment in assessing management. In the previous rule, PHMAP scores
could be adjusted, based upon physical condition and neighborhood, by
up to 10 points to raise a designation to the next status level. In
this rule, the overall PHMAP score of a PHA will be adjusted by adding
weighted points that reflect the differences in the difficulty of
managing developments that result from the physical condition and/or
the neighborhood environment of a PHA's developments.
Comment: Two comments felt that two indicators, Resident Services
and Security, are troubling and display a tendency toward meddling and
micromanagement. HUD has been trying to retreat from that tendency.
Plus, Congress has been cutting funding for PHAs. The commenters felt
that these indicators are non-management in nature and are not within
the control of the PHA. PHMAP should grade only those indicators which
are within the control of the management.
Response: A PHA's management efforts are directed toward
developments, which are not just properties or structures, but which
are housing: buildings that are people's homes. Because of this, there
is a strong relationship between a PHA's management efforts and quality
of life for a development's residents. While the PHA cannot mandate or
control the positive interaction or advancement of its tenants, it can
foster the environment and opportunity for such interaction and
advancement. The resident involvement indicator attempts to measure a
PHA's success in accomplishing this. On the other hand, a PHA is
obligated to manage and respond to the unlawful behavior of tenants
whose actions impede the peaceful enjoyment of other tenants. The
security indicator addresses the PHA's success in managing this
significant housing issue.
Comment: One comment supports extending coverage to alternative
management entities.
Response: The Department appreciates this concurrence in its effort
to assess and improve the management performance of every PHA.
Comment: One comment urges HUD to adopt those changes that help
streamline the process of assessment and to use the simplest methods
necessary to achieve a particular goal or outcome.
Response: As discussed above, it is HUD's intention to streamline
and improve the PHMAP process with this new rule. Further, HUD is by no
means closing the door on additional refinement, but will continue to
consider and examine additional ways of improving PHMAP. To this end,
this rule is being published as an interim rule.
Comment: One comment felt that it is equally important for PHAs to
develop strong relationships with their surroundings and their
neighbors. There should be points added or deducted to a PHA's final
score based on the role a PHA assumes and its relationship with its
surroundings.
Response: The resident involvement indicator in this rule, as did
the previous resident initiatives indicator that is being replaced,
assesses, in part, a PHA's efforts to involve residents to improve the
community in which they live. Beyond this specific aspect of community
involvement, it is likely that a well managed PHA, the general goal of
PHMAP, is a positive community asset and a good neighbor. The
recognition of outstanding individual community contributions and
achievements by PHAs is important and receives attention from HUD in
special ceremonies rather than in PHMAP, which focuses on the overall,
day-to-day management aspects of PHAs.
Comment: One comment felt that there should be a simplified list of
indicators to be used for smaller PHAs: vacancy rate; rents
uncollected; inspections; and financial management.
Response: The authorizing statute for PHMAP lists seven indicators
that must be used in assessing PHAs. This limits HUD's ability to
differentiate between large and small PHAs in the indicators used for
assessment. However, for indicators #7 and #8, PHAs with fewer than 250
units will not be assessed under these indicators unless they request
to be assessed at the time of submission of the PHMAP certification.
Comment: Three comments stated that the proposed rule is more
process-oriented and requires the tracking and/or collection of much
more data. This is more burdensome and requires additional
administrative responsibilities at a time when the level of public
housing operating subsidy is being reduced.
Response: Although the Paperwork burden estimate for this rule
exceeds the Paperwork burden estimate for the previous rule published
on January 17, 1992, a substantial part of that increase results from
HUD's recognition that a change in necessary data for assessment
purposes will initially require more effort to compile. As was the case
for the previous rule, it is expected that as the collection and
organization of the data becomes more routine following the first
submission, the associated burden will also decrease.
Comment: One comment felt that HUD should look for ways to
eliminate regulations, not just change regulations.
Response: In the past year, HUD has undertaken an extensive effort
to reinvent and streamline all of its rules, and hundreds of pages of
regulations have been eliminated. The statute authorizing PHMAP
requires its implementation by regulations, and HUD must follow this
Congressional mandate.
Comment: Two comments stated that a continuing concern is that
making the annual grade in PHMAP may become the true mission of many
PHAs.
Response: HUD does not consider the prospect of PHA's refining
their management practices to become high performers under PHMAP year
after year to be distressing. The purpose of PHMAP is to assess the
quality of PHA management, and in implementing this program, HUD
intends for the score
[[Page 68898]]
achieved to be a valid measure of performance. To address situations in
which the PHMAP score poorly corresponds to the actual conditions at a
PHA, the rule permits the State/Area Office, in exceptional
circumstances listed in the rule, to reinstate any review to address
particular deficiencies, and to deny or rescind incentives or high
performer status, even though a PHA has satisfied all of the indicators
for high or standard performer designation. The purpose of this
provision is to prevent PHMAP from being an empty, pro forma exercise.
Comment: One comment believes that PHMAP is but one way to evaluate
a PHA's management and ultimately, the quality of its stock. PHMAP is
not a comprehensive measure of PHA quality and it is too process
oriented. Greater emphasis should be placed on key results which more
accurately equate with the quality of the housing stock.
Response: The observation in this comment does not quite correspond
to the parameters and purpose of PHMAP as established under the
authorizing statute. PHMAP evaluates PHA management performance using
seven indicators that are made mandatory under the statute, which
permits the Department to use up to five additional indicators. These
requirements establish limits on what must and what may be used to
assess the quality of a PHA's management, and not the quality of its
housing stock. The statute explicitly requires HUD to take into account
the difficulty of managing developments that result from their physical
condition, indicating the Congressional determination that, to some
degree, the quality of the housing stock is independent of the PHA's
management capability. HUD is obliged to implement PHMAP in a manner
consistent with the statute, and attempts to do so in a manner that
will produce a valid and reliable result. As the Department hopes this
rule demonstrates, HUD is, and will continue to be, receptive to the
refinement of PHMAP based upon its administrative experience and the
input it receives from PHAs.
Comment: One comment encourages HUD to publish handbook guidance
well in advance of the effective date of the new rule so that PHAs may
make any planning, record keeping or operational changes required to
ensure compliance and performance.
Response: The Department anticipates the issuance of a revised
PHMAP Handbook 7460.5 and a new confirmatory review guidebook prior to
the applicability date of the new rule.
Comment: One comment stated that the term ``approved, funded, on-
schedule annual modernization program'' is defined in the rule and in
the preamble under the discussion of indicator #1. But the term is not
used in indicator #1. Is it intended that the term be applied to the
exemption for ``vacant units undergoing modernization?'' If so, it
should be made explicit. Is it intended that the term be used in
connection with indicator #2? If so, then this term is contrary to the
rule's discussion of indicator #2, which includes only CIAP and CGP.
Response: The comment is noted, and the definition for ``approved,
funded, on-schedule annual modernization program'' is superseded by the
definition for ``vacant units undergoing modernization.'' The
definition in this rule, which includes the Hope VI Program, the
Vacancy Reduction Program (VRP), lead based paint risk assessment
funding (1992-1995) and any successor program to the CGP or the CIAP,
applies to indicators #1, #4 and #5, as appropriate. In addition, the
Department intended for all modernization programs to be assessed under
indicator #2. For this reason, lead based paint risk assessment funding
will be assessed under all five components of indicator #2. However,
due to the design of the Hope VI and the VRP, these program areas
cannot be assessed under components #1 and #2 under the modernization
indicator. Therefore, in completing a PHA's assessment for indicator
#2, the State/Area Office will only examine components #3, #4 and #5
for the Hope VI and the VRP. Appropriate language has been added to
indicator #2 in the new rule. A similar comment was made with respect
to indicators #4 and #5, and this response is also applicable to those
two indicators.
Section 901.10 Indicator #1, Vacancy Rate and Unit Turnaround
Component #1, Vacancy Rate
Comment: Many comments agreed with the changes proposed for the
indicator and commended the Department for making the indicator a more
representative measure of vacancies. Six comments commended the
Department for allowing an adjusted vacancy rate to be used for grades
above a C. Seven comments stated that this is a much better way to
compare vacancy indicator grades and scores since all PHAs will be
compared on the same basis. Several comments indicated that this is a
more accurate measure of good management and concurred with the
proposed rule combining these two indicators whereas currently they are
separate. One comment stated that the changes made to indicator #1 are
much more equitable than the current indicator requirements and two
other comments indicated agreement with adjusting the vacancies by the
conditions listed in the rule and with the grading scale for the
vacancy rates. Three comments expressed strong support for the change
indicating that it will allow HUD to more accurately judge a PHA's
vacancy rate.
Response: The Department agrees that, since the adjusted vacancy
rate is derived from valid exemptions, PHAs should be able to achieve
grades above a C level based on an adjusted vacancy rate. The
Department feels that the new component #1 will provide a more
representative picture of PHA vacancies than the current indicator. The
Department also agrees with the assumption that if a PHA scores C or
above in the vacancy component it should not have a problem with
turning around vacant units, and that combining current indicators #1
and #5 into the new indicator #1 is a correct decision.
Comment: Four comments stated that the new vacancy indicator is
really a measure of the number of vacancies weighted equally to the
turnover rate. The comments indicated that the new weighting of
turnover will penalize PHAs that have successful programs for families
that move out of public housing. Two comments stated that the proposed
rule rewards process over product and activity over results, and that
the proposal is far more process-oriented and less results-oriented
than the present system for counting vacancies. The proposed rule
states that vacancy rates should have greater significance than unit
turnaround but proposes a scoring system that requires greater reliance
on unit turnaround and unit turnover than on the number of units vacant
at the end of each month. Eight comments indicated that a 12 month
average of the number of units that are vacant at the end of each month
should be used. This is normally what is expected in any rental market
and the proposed method is too complicated and requires too much staff
time to calculate. Another comment stated that the proposed method
places as much emphasis on turnaround time as on actual vacancies and
suggested using a twelve month average of the number of vacant units on
the 10th day of each month to avoid the problem.
Three comments indicated that the new vacancy indicator would not
reward actual occupancy. Instead of measuring the number of units
vacant at the end of each month, it measures the number of units leased
each month and the amount of time required to lease the
[[Page 68899]]
units to arrive at a vacancy rate which converts to an occupancy rate.
The current method is an honest way to define occupancy levels.
Computing the vacancy rate by calculating the ratio of unit vacancy
days to unit days available places greater reliance on unit turnaround.
It requires PHAs to calculate the vacancy days for all units leased in
a given month plus the vacancy days for all units remaining vacant at
the end of the month, divided by the total unit days available for
occupancy that month.
Six comments stated that this method calculates vacancy days, which
is a function of turnover, rather than the actual number of vacant
units. For example, if two PHAs have the same number of units and
turnaround time, but one has higher turnover, the latter will
automatically have more vacant days than the former. The vacancy rate
should be the average vacancy rate over the past twelve months. Three
comments indicated that the current indicator allows PHAs to answer the
question, ``What is your vacancy rate?'' The answer is, ``Our vacancy
rate is the number of units vacant at the end of the month compared
with the number of units available for occupancy.'' Two comments stated
that if a PHA has a high turnover rate because it is moving residents
out for private lease-up or home ownership, this too, should be an
allowable adjustment to the vacancy rate because PHAs with high move-
out rates are adversely affected even though they may have no control
over the reasons for the high move-out. Two comments suggested that the
snapshot picture be retained.
Three comments indicated that the proposed rule penalizes high
turnover rates and provided the following examples: PHA with a high
turnover rate but the same unit turnaround time would get a higher
vacancy rate than a PHA with lower turnover rate (same unit turnaround
time): PHA ``Y'' with 100 units, and 20 units vacated and filled during
the year (10 days average turnaround) would have a .55% vacancy rate;
and PHA ``Z'' with 100 units, and 40 units vacated and filled during
the year (10 days average turnaround) would have a 1.10% vacancy rate.
A PHA with a high turnover rate and a lower unit turnaround time could
get a higher vacancy rate than a PHA with lower turnover rate and a
higher unit turnaround time: PHA ``A'' with 100 units, and 60 units
vacated and filled during the year (20 days average turnaround) would
have a 3.2% vacancy rate and a B grade. PHA ``B'' with 100 units, and
only 30 units vacated and filled during the year (35 days average
turnaround) would have a 2.8% vacancy rate and an A grade, even though
it averaged a higher (35 vs. 20) vacancy turnaround rate. There is no
basis for rewarding or penalizing a housing authority based on a higher
or lower percentage of residents moving out during a year. Turnover
rates depend on a variety of factors, many beyond the PHA's control.
Some factors are: availability of alternative affordable housing; self-
sufficiency programs; resident demographics; eligibility screening and
lease enforcement; and HUD required transfers.
Response: The Department agrees that by using a methodology that
takes into account circumstances and actions that impact on the
occupancy/vacancy status of a unit over the entire course of the PHA's
fiscal year, PHAs with high turnover rates will have more vacancy days
than comparable PHAs with low turnover rates, assuming that the
turnaround time is the same. The Department disagrees, however, with
the conclusion that this makes the proposed methodology less useful
than one based on taking a snapshot, either on a one-time basis, as is
currently the case, or on a monthly basis over a year's time as
suggested in some comments. The ``snapshot'' approach may be easier to
implement but it grades the PHA performance based on a single-day
measurement that may or may not be representative of the PHA
performance in this area over the entire period of time being assessed.
If an average based on 12 snapshots is better than one snapshot, then
an average based on 365 snapshots will present the most accurate
picture.
It is incorrect to state that the measure of vacancies and the
measure of turnaround time have been given equal weight in the
development of this indicator. The new rule combines the vacancy
indicator and the turnaround indicator of the current Sec. 901 into one
single indicator that has two components. The first component (with a
weight of x2) measures the vacancy rate and, if applicable, the
progress a PHA has made in reducing the vacancy rate. The second
component (with a weight of x1) measures turnaround time. Because the
vacancy rate is a clear manifestation of management effort and reflects
the essence of a PHA's mission, it has been weighted more heavily than
the unit turnaround component. In addition, the proposed rule would use
the second component only when a PHA scores below a C on the first
component.
The proposed methodology provides ample opportunities for a PHA to
adjust its vacancy days for turnover of units due to reasons such as
modernization or that are due to circumstances and actions beyond the
control of the PHA, such as court-ordered or HUD-approved desegregation
efforts. A PHA also has the option of requesting a modification to the
calculation of this component that would take into account any other
special factor, such as self-sufficiency activities or security
measures implemented by the PHA, that may contribute to a higher than
normal turnover of units. The indicator should not be a deterrent or
penalty to PHAs that have successful programs that encourage residents
to move out of public housing to private market housing opportunities.
Success builds upon success and a PHA that is able to work with
residents and prepare them for home ownership or private market rental
units should not have difficulties in attracting applicants for units
that have been vacated.
The Department believes the proposed method of calculating this
component to be the most accurate measure of a PHA's performance in
this area. Also, contrary to some comments, the proposed method of
calculation is the method commonly in use in the real estate industry.
Comment: One comment stated that the proposed rule requires more
calculations than the current method and also requires tracking each
unit for potential adjustments. This will be difficult for many PHAs
and for HUD field staff to verify. The current occupancy rate
calculation method is preferred. Three comments indicated that the
indicator will take hours more in record keeping. HUD reduces PFS and
modernization monies, but expects more and more in reports and record
keeping. The proposed method is cumbersome, inconsistent with other HUD
definitions for determining vacancy, and increases the difficulty level
for calculating vacancy rates.
Two comments stated that the new method of calculating the vacancy
rate is far more process-intensive than the previous methods. PHAs
should be given the opportunity to take a simple average based upon
end-of-month vacancies rather than using the far more complex
calculation offered in the proposed rule. Two comments stated that it
is poor management practice to calculate vacancy/occupancy percentages
one way for the PFS and another way for a management assessment system.
Two comments agreed with the expansion and clarification of the units
that can be exempted from the adjusted vacancy rate and indicated that
the nine
[[Page 68900]]
exemptions should remain consistent with reporting under the PFS.
One comment indicated concern with the need to maintain data on the
cause of each vacancy, as in the examples presented in the preamble.
For large PHAs the data collection and maintenance becomes very
difficult. Maintenance of this data is doable, but HUD needs to
recognize the impact on PHA data systems if the various categories for
adjustment are revised from time to time.
Three other comments stated that this level of evaluating vacancies
would be burdensome for large PHAs. To track the actual vacancy rate
and have the ability to also accurately calculate an adjusted vacancy
rate would require significant alterations to the mainframe computer
system programs as well as to standard operating procedures, and large
PHAs need ample time to implement these changes. One comment stated
that the new component requires that PHAs analyze each vacant unit and
in the absence of readily available industry software, this process
could prove burdensome for large PHAs. Another comment stated that if
HUD retains the methodology of the proposed rule it should provide PHAs
with software that do the bulk of the calculation for them.
Response: The Department does not believe that the information
collection requirements for this indicator represent an undue burden on
PHAs. Most of the data elements required to determine the grade or
score for the two components that comprise this indicator are already
being maintained by PHAs and used in calculating operating subsidy
eligibility under the PFS or used for reporting requirements of other
programs. In fact, if PHAs have been maintaining turnaround time data
accurately under the previous interim rule, no new data collection will
be required, just a change in computation.
The Department understands that a well-run PHA should have a system
in place for monitoring occupied units and vacant units and the
duration of vacancies. Beyond simply being good business practice, PHAs
must monitor turnaround time, both to evaluate the effectiveness of
their maintenance and marketing and leasing efforts, and to develop
information for the current PHMAP indicator on vacant unit turnaround
time. This should pose no more onerous burden on large PHAs than on
smaller institutions, and in fact, would probably be even more
important to a large PHA, where remote monitoring of large-scale
activities is the norm.
In response to the suggestion that HUD should provide software for
this purpose, HUD has no plans to develop additional software at this
time. In addition, as a matter of policy, HUD cannot be in a position
of competing with private-sector software developers.
To a significant extent, the Department has also used definitions
and methodologies in this section that are the same as those used in
other programs. An example of this consistency is that the adjustment
for units vacant for circumstances and actions beyond the PHA's control
as defined in Sec. 901.1(a)(9) is the same for both PHMAP and PFS. The
Department will issue guidance to PHAs on how to use existing sources
of data to calculate each component of this indicator.
Comment: Three comments stated that if HUD wants PHAs to calculate
vacancy loss, then HUD should adjust the turnaround indicator to
reflect that goal, rather than throwing out the existing common sense
method of calculating vacancies. Three other comments indicated that
HUD's justification for the new vacancy indicator is the need to
calculate vacancy loss like the private sector does. The private sector
can estimate dollar value of vacancy loss, but PHAs cannot because PHAs
do not realize rental income until the unit is rented. The private
sector can ``go down their waiting list'' or advertise in the paper to
pick the tenant who can move in the day the unit is ready and PHAs
can't do that. The information can be useful, but the private sector
uses it to determine budgets, not to determine vacancy rate.
Response: The Department disagrees with these comments. Neither the
current vacancy indicator nor the new vacancy indicator were developed
to be a measure of rental revenue lost because of units becoming
vacant. The vacancy indicator is not a measure of financial
performance, but a measure of the ability of the PHA to maximize
occupancy and minimize turnaround time within certain constraints
recognized by the Department.
Comment: Several comments addressed the changes in the grading
scale. One comment indicated that a vacancy rate of 3% for a grade C is
too stringent. Another expressed support for the change from 1% to 3%
vacancy rate in order to achieve an A grade, indicating that it makes
sense with the national average vacancy rate of 7%. Two comments stated
that the current 99% vacancy rate for an A is valid. Another comment
expressed concern with the change indicating that a vacancy rate of 7%
would yield a C grade and still exclude the unit turnaround component
from consideration. One comment stated that it is not clear if the 3%
vacancy threshold for not having to report unit turnaround was retained
or not. Another comment stated its support for the provision that
permits PHAs to choose between adjusted and actual vacancy rate
calculation, but suggested that HUD retain the previous interim rule's
alternative grade C for a reduction in vacancies of at least 30%.
One comment expressed support for the option that allows a PHA to
achieve a C grade if it reduced its actual vacancy rate by at least 15
percentage points within the past three years and has an adjusted
vacancy rate of between four and five percent. It also indicated
support for somewhat lower grades for PHAs making slower progress.
Another comment stated that a PHA can improve by at least 15% and still
receive a lower grade by not matching the adjusted vacancy rate
requirement.
Response: The Department agrees that a vacancy rate of 3% for a
grade C is too stringent and changed that in the proposed rule. The
Department believes that the new grading scale is reasonable and takes
into account the national average vacancy rate and also takes into
account the new method of calculating the vacancy rate, which is more
representative of the true performance of PHAs in this area over the
period of time being assessed.
The Department is also proposing a different threshold for not
having to report unit turnaround. The second component, vacant unit
turnaround time, will only apply to PHAs that score below a C grade on
the first component. PHAs can achieve a C grade by meeting one of the
following conditions: the PHA has an actual vacancy rate of greater
than 5% and less than or equal to 7%; or an adjusted vacancy rate of
greater than 3% and less than or equal to 4%; or the PHA reduced its
actual vacancy rate by at least 15 percentage points within the past
three years and has an adjusted vacancy rate of greater than 4% and
less than or equal to 5%.
Regarding the threshold for progress in reducing the vacancy rate
that applies to a C grade, the Department changed it from 30% to 15
percentage points. The Department agrees that it is important to
recognize and reward significant progress. It also understands that the
grade relief should not defeat the balance of the grading scale. The
grading scale already provides for a somewhat lower grade (a D) for
PHAs with adjusted vacancy rates between four and five percent that do
not achieve the 15 percentage points decrease in the actual vacancy
rate.
Comment: One comment requested that the term ``Reduced Actual
Vacancy
[[Page 68901]]
Rate in Previous 3 Years'' be clarified in order to indicate if the
fiscal year being assessed under PHMAP is the third year of that 3-year
period or if the 3-year period is prior to the PHMAP year being
assessed.
Response: The Department agrees with the comment and the new rule
has been changed to state that the fiscal year being assessed is the
third year of that three year period. An example will be provided in
the revision to the PHMAP Handbook 7460.5.
Comment: One comment stated that the idea of measuring a PHA's
performance over the previous three years seems to be unfair and
generate inaccurate statistics because of diverse variables that would
not remain constant over the years and suggested that each year be
measured against its previous year. Another comment indicated that the
PHA does not currently have a three-year history of the daily vacancy
rate so it must have time to collect this data. It proposed to use the
average rate on the last day of each month until it can get the actual
daily and adjusted rates. One other comment indicated that it would be
extremely difficult to track vacancy days and unit days available for
the previous three years and requested that a more accurate and
equitable method of calculation be sought so that comparison statistics
can remain accurate and consistent.
Response: The Department agrees that due to the change in the
method of computation, vacancy rates generated under the two systems
cannot be compared unless an adjustment is made to the statistics for
the previous two years. Only those PHAs interested in using this
grading option (progress in reducing the vacancy rate during the
previous three-year period) will have to recompute the vacancy rate for
the two years prior to the year being assessed, using the new
methodology. Most of the data needed for this will come from the
records developed by the PHA to comply with the PHMAP reporting
requirements for the current unit turnaround indicator.
Comment: One comment suggested that the five grades be condensed
into a ``satisfactory'' rating (2% adjusted vacancy rate or below);
``adequate'' rating (2-4%); and ``unsatisfactory'' rating (over 4%);
the five grades could be used as a mechanism for setting goals for
troubled PHAs but need not be required for all PHAs.
Response: The Department has some sympathy for the suggestion that
the number of evaluation levels be reduced and simplified, but we do
not believe it appropriate to address that simplification issue at this
time. The biggest reason for maintaining the larger number of
evaluation categories is that beyond the pass/fail differentiation, the
Department expects to be able to use PHMAP scores, and to some extent,
individual indicators, to identify PHAs where performance is clearly
superior and worthy of emulation, and at the other extreme, cases where
performance indicates a need for the Department's intervention in PHA
operations. Five or six ``grades'' may or may not be the perfect model
for this kind of evaluation, but the existing structure appears to be
working to date, and in the absence of demonstrable benefits of
alternate approaches, HUD does not see a need to revisit this issue at
this time.
Comment: One comment stated that it appears to be impossible for
PHAs to obtain a grade of D or F if the adjusted vacancy rate is
greater than 6%. This is not a true grading system and makes it
impossible for PHAs with a high vacancy rate to realize any points for
improvement. It would be unfair to compare a PHA with an older housing
stock to a PHA which may have newer stock or modernized units.
Response: The comment is partially correct that under the proposed
rule an adjusted vacancy rate greater than 6% will result in a PHA
receiving a grade of F. If a PHA has an adjusted vacancy rate greater
than 6% and less than or equal to 7%, and has reduced its actual
vacancy rate by at least 5 percentage points during the past three
years, then the PHA would get an E instead of an F. The grading system
is not unfair to high vacancy PHAs because it does allow for
adjustments in recognition that some types of vacancies are beyond the
control of the PHA.
Comment: One comment stated that the actual vacancy rate does not
exempt units occupied by employees, units used for resident services
and units undergoing modernization. PHAs are penalized by an increase
in the actual vacancy rate when these units are not exempted from the
actual vacancy rate. This creates the potential for PHAs to eliminate
needed resident services by eliminating space for these services in an
effort to decrease the vacancy rate. Most PHAs will be prevented from
ever using the actual vacancy rate if these units are not exempted.
Response: The Department disagrees with the comment. The rule has
been clarified to indicate that units approved for non-dwelling use,
employee occupied units and vacant units approved for deprogramming
will be completely excluded from the computation of this indicator.
Regarding the units undergoing modernization, PHAs are not penalized
because these units can also be excluded under the adjusted vacancy
rate computation. The grading scale for the vacancy indicator allows
PHAs to get all possible grades, including an A, under the adjusted
vacancy rate option. There is no real incentive for PHAs to cut back on
resident services by eliminating space for these services in an effort
to decrease the vacancy rate.
Comment: One comment stated that the increase in difficulty for
calculating the vacancy rate will increase the cost of a PHA's annual
audit.
Response: The Department believes that the increase in scope of
work would not represent a substantial increase in the cost of the
audit and that the additional expense, if any, will represent a good
investment for the PHA. Since the Department reimburses a PHA for its
audit costs, it will reimburse a PHA for any additional audit costs
resulting from changes to any of the indicators.
Comment: One comment stated that the proposed calculation counts
vacant units both during the month and at the end of the month,
regardless of reoccupancy during the 30 days.
Response: The Department disagrees. The proposed calculation adds
the number of vacant units each day of the year (adjusting for valid
exemptions) and divides by the number of unit/days available.
Comment: Three comments proposed that PHAs should be able to choose
either the current method or the new method for computing vacancy
rates. One of the comments stated that there are currently two methods
for calculating the vacancy rate and it seems a bit arbitrary to
abolish this flexibility that PHAs utilize to reduce their paperwork
requirements. Form HUD-51234 already is a requirement that must be
submitted by PHAs and to require a duplication of effort for PHMAP
purposes is contrary to good management practices. The comments
recommend the use of form HUD-51234 or the new calculation methodology
at the discretion of the PHA. This would enable PHAs to retain
flexibility in the manner in which they choose to determine the vacancy
rate without imposing any additional paperwork burden unless the PHAs
elect to do so.
Response: While the Department favors maximum local flexibility, it
is impractical to allow PHAs to be able to pick and choose among
different methodologies for developing the data for this most important
indicator. Allowing that would make it impossible to compare the
vacancy rates for different PHAs (and even for the same
[[Page 68902]]
PHA over a period of time). The Department believes very strongly that
all program participants need to be evaluated under the same basic
procedures, especially the same definitions. To do otherwise is to
invite complaints that the process compares apples with oranges; the
process can't afford to permit the PHAs to elect whether to present
``apples or oranges'' for evaluation.
Comment: One comment stated that the Department should give
consideration to reducing the vacancy standards for a period of time
due to the One Strike policy. Improved screening standards will
increase the amount of time to process an application. If the
Department is seriously concerned about quality of life in PHAs, give
the occupancy people time to do their jobs efficiently.
Response: The Department agrees that the implementation of the
``One Strike and You're Out'' policy and stricter security measures may
temporarily increase vacancy and turnover rates at some PHAs. Adequate
planning in the implementation of the security measures should help
PHAs reduce these temporary problems. After the initial stages, these
programs will have a positive impact on the vacancy and turnover rates
of PHAs due to the increased security and stability of their public
housing communities. Because these situations will greatly vary from
PHA to PHA, it would not be proper to make any changes, even temporary
ones, to the grading standards of the vacancy indicator. Instead, PHAs
that believe that the implementation of stricter security measures
related to the ``One Strike and You're Out'' policy negatively impacted
their vacancy rate may submit a modification request along with their
PHMAP certification.
Comment: One comment stated that because of the low weight (x1) of
the turnaround component relative to the vacancy rate component, the
turnaround component is almost unnecessary since it can't change the
grade of the indicator in a significant way.
Response: The Department disagrees with the comment. Although the
component would not have a big impact in determining the final grade of
the indicator, this is in accordance with the position of the
Department regarding the interrelation and relative weight of the two
components. Because the vacancy rate is a clear manifestation of
management effort and reflects the essence of a PHA's mission, it has
been weighted more heavily than the vacant unit turnaround component.
In addition, the new rule uses the second component only when a PHA
scores below a C on the first component. The Department believes that
if vacancies are at a C level or above, the PHA does not have a problem
with turning around vacant units. It should be noted that the component
would have at least a minor impact in the final grade of the indicator
(may increase or decrease one grade level) and may add up to 6.66
points to the total PHMAP score.
Comment: One comment stated that the proposed rule requirement for
vacant units undergoing modernization is inconsistent with scheduling
adjustments that HUD permitted in the past in recognition of the
realities that some PHAs face in soliciting bids from contractors for
modernization funded work. The proposed time requirement would punish a
PHA with few vacancies that may need to ``stockpile'' vacancies to
accumulate sufficient volume of work to obtain competitive bids from
contractors. It is recommended that all vacancies covered by a funded,
on-schedule modernization program be excluded from the vacancy rate
calculation.
Response: The Department disagrees because the small purchase
procedure is a viable option for PHAs with few vacancies to accomplish
modernization costing less than $100,000 (or a lesser amount as
specified by State law). Under this method, PHAs solicit quotes from an
adequate number (normally, no less than three) of sources and can award
the contract to the offeror with the lowest quote. This method is
significantly less time consuming than the normal sealed bid procedure
where formal advertising is involved. It is also noted that contractors
can be procured for utilization on an as-needed basis, allowing them to
begin work immediately.
Comment: One comment stated that the proposed definition of and
calculations concerning a vacant unit undergoing modernization seems to
be counterproductive; a more equitable way of calculating vacant days
would be to count only those vacant days between the completion of the
modernization work and the day of tenant move-in or reoccupancy.
Response: The Department disagrees with the comment regarding the
adjustment for vacant units undergoing modernization. The adjustments
provided in the proposed rule are either activities that the Department
wishes to support, such as modernization, or represent circumstances or
actions that the Department considers to be beyond the PHA's control.
In such cases where these definitions apply to vacant units before the
units are included in a HUD-approved modernization budget, the units
may be exempted for those other reasons. If the units were vacant prior
to being included in the HUD-approved modernization budget for other
than the exempted reasons in the rule, the vacancy days accumulated
prior to the unit being included in the HUD-approved modernization
budget must be included in the vacancy rate calculation as non-exempted
vacancy days.
Comment: One comment stated that not excluding the vacancy days
that accumulated prior to a unit being included in the HUD-approved
modernization budget from the calculation of this indicator could
result in substantial dollars wasted to make vacant units temporarily
habitable until such time that a modernization plan has been approved
by HUD. Dollars invested in temporary major rehabilitation of units
located in buildings subsequently placed under modernization are lost
because major replacements cannot be salvaged during/after
modernization. In order to not provide PHAs with an unintentional PHMAP
performance measure incentive to waste limited HUD dollars, vacancy
days for units in a building included in a modernization budget which
was approved by HUD during the PHMAP assessment year should be exempt
regardless of whether or not some units in the building were vacant
prior to HUD's approval of the plan.
Another comment recommended excluding from the vacancy calculation
units that a PHA has scheduled to modernize but not yet included in the
modernization budget, as well as vacant units that have been modernized
and are scheduled to be reoccupied. These vacant units should be
excluded because the vacancies are part of the normal modernization
process and are not the result of poor performance. For example, this
PHA has completed modernization of hundreds of apartments for people
with mobility impairments, but HUD has not permitted us to rent
accessible apartments to non-disabled families. These vacancy days
should not be included in the vacancy rate calculation.
Response: The Department disagrees with the comments. The issue of
whether to expand the preferential treatment for units undergoing
modernization to include units scheduled for modernization but not yet
under a modernization budget (for example, units scheduled for
modernization in the second year of the CGP Five Year Plan) was
discussed as part of the Vacancy Rule negotiated rulemaking proceedings
but not adopted. The Department was part of
[[Page 68903]]
the consensus that developed the definition of vacant unit undergoing
modernization and believes it to be appropriate. For the same reason,
the Department does not believe that an adjustment should be given for
the time between completion of modernization work and reoccupancy. Once
a unit has been modernized, there is no reason to allow an adjustment
for the time needed to lease the unit. Marketing and leasing of units
is a normal function of a PHA.
The Department also disagrees with the second part of the comment.
HUD does not control whether or not a PHA can admit non-disabled
applicants to a unit designed for the disabled. If a PHA cannot lease
units with accessible facilities to the persons with disabilities, they
are free to lease those units to non-disabled applicants (see Handbook
7465.1 REV-2, paragraph 5-2c). The cited handbook urges that a PHA
facing such a circumstance `` * * * include a provision in the lease
requiring the family to move if someone needing that size specially
designed unit applies and there is an appropriate unit available for
the family originally admitted.''
Comment: One comment indicated that the PHA has a large number of
competing subsidized units, and certain bedroom sizes and certain
handicapped units are very difficult to rent to residents that are
actually eligible for them. Another comment stated that the indicator
does not accurately reflect the capabilities of a PHA to manage its
units; such factors as market conditions greatly impact a PHA's score
in this area. One other comment indicated that the rule does not
provide enough information on what may be acceptable under changing
market conditions and it does not define what constitutes ``aggressive
marketing and outreach measures'' or provide standards by which such
goals should be reached or judged.
Response: The Department feels that the new rule adequately
addresses the issue of marketing difficulties at Sec. 901.5 and
Sec. 901.10(b)(2)(iii). An adjustment may be made to a PHA's vacancy
days because of market conditions. In order to justify the adjustment,
the PHA will need to document the specific market conditions that exist
and document marketing and outreach efforts. The PHA will need to
describe when the downturn in market conditions occurred, the
location(s) of the unit(s) effected, the likelihood that these
circumstances will be mitigated or eliminated in the near term and why
the market conditions are such that they are preventing the PHA from
occupying, selling, demolishing, rehabilitating, reconstructing,
consolidating, or modernizing the vacant units. The Department has
provided examples of what constitutes changing market conditions in 24
CFR Sec. 990.102 and will issue further guidance to PHAs on this
circumstance in the revision of the PHMAP Handbook 7460.5.
Comment: One comment stated that the grading system for this
indicator penalizes PHAs that are actively modernizing their housing
stock. To require lower vacancy rates for PHAs actively improving their
housing stock through modernization than for PHAs not undertaking the
improvements is egregious at best. The scoring of actual and adjusted
vacancies appears to be unnecessary since the adjusted vacancy rate
only occurs for authorized reasons as defined by HUD. To allow for
adjustments to be made and then apply a different scoring criteria is
illogical and inconsistent.
Response: The Department disagrees with the comment. The proposed
methodology provides ample opportunities for a PHA to adjust its
vacancy days for turnover of units due to reasons that are accepted and
supported by the Department such as modernization or are due to
circumstances and actions beyond the control of the PHA, such as court-
ordered or HUD-approved desegregation efforts. A PHA also has the
option of requesting a modification to the calculation of this
component that would take into account some other factor that is
causing frequent turnover of units at the PHA. The Department believes
the proposed method of calculating this component to be the most
accurate measure of a PHA's performance in this area.
Exemptions
Comment: One comment stated that adjusted vacancies help a poorly
performing PHA score better under the proposed rule, but generally will
do nothing to assist high-performing PHAs because it is doing the
things necessary to prevent these types of vacancies. A high-performing
PHA with just normal vacancies is hurt by the proposed rule. Another
comment stated that the proposed scoring range is looser and,
therefore, objectionable and there are more exemptions. Vacancies have
decreased since the advent of PHMAP, just because HUD is grading PHAs
and they are concentrating on keeping vacancies low. HUD should not
reduce its standards simply to satisfy PHAs who aren't getting the job
done. There should be no changes to the current grading standards. HUD
is going in the wrong direction by making PHMAP high-performance status
so easy to attain as it compromises the credibility of the evaluation
process.
Another comment stated that if a PHA chooses an adjusted vacancy
rate, it has the potential to exempt vacancy days in nine different
categories, some of which are very broad. Under this scenario, it is
conceivable that some PHAs will assume responsibility for few vacancy
days. One other comment stated that most exemptions are easy to
determine or validate except for units uninhabitable ``for reasons
beyond the PHA's control.'' Two other comments indicated that ``reasons
beyond the PHA's control'' is vague and may indirectly be within the
control of the PHA. Because such an adjustment should be the exception
rather than the rule, it should be eliminated. Such units fall into a
murky area that some poorly run agencies may be tempted to exploit. It
may be difficult to demonstrate that the conditions leading to
condemnation by the health department were either within or outside of
a PHA's control.
Response: The Department believes that the adjustments are not a
function of whether a PHA is a high or poor performer, but a
recognition that there are some circumstances and actions that impact
on vacancies that are beyond the control of the PHA, such as a natural
disaster, or that should be supported, such as modernization. The
Department understands that there are often good reasons for unit
vacancies, and that a blanket appraisal of unit vacancies as a bad
condition glosses over some very real and explicable conditions that
affect management of low-income properties in the real world.
The Department believes that it has defined the categories of
vacancies completely enough that most of a PHA's vacancies can be
clearly identified, and that a PHA has a fair opportunity to explain
its situation. Where some number of unit vacancies cannot be adequately
explained in terms of the acceptable or allowable categories, the PHA
will be held strictly accountable, but where the unit vacancies are
within the parameters established by HUD, under the negotiated
rulemaking for the PFS vacancy rule, for example, the Department does
not believe it fair or reasonable that the PHA should be penalized. The
Department agrees that the exemption categories, as presented in the
proposed rule, need some clarification and the new rule reflects that.
The category mentioned by some of the comments is duplicated in the
proposed rule and that duplication will be eliminated in the new rule.
The exemptions will remain consistent with the nine exemption
categories used under PFS.
[[Page 68904]]
Comment: Two comments stated that the language for exemption of
units vacant for circumstances and actions beyond the PHA's control
(Sec. 901.10(9)(v)) provides that insufficient funding for otherwise
approvable applications made for CIAP funds (only PHAs with less than
250 units are eligible to apply and compete for CIAP funds) are
exempted from the calculation of this component. It further provides
that this definition will cease to be used if CIAP is replaced by a
formula grant. The comments stated that this subsection should apply to
CGP, particularly now with the budget reductions. Also, one of the
comments stated that vacant units covered in proposed unit demolition
and disposition applications should be excluded, even if the
applications have yet to be acted upon by HUD.
Response: The Department disagrees and has retained this language
in the new rule. The provisions referred to in the comments were taken
directly from the new Vacancy Rule published in the Federal Register on
February 28, 1996 (61 FR 7586). The rule incorporated recommendations
of a regulatory negotiation advisory committee. The committee did
discuss the issue of providing relief to PHAs (and RMCs) because of
insufficient funding for the CIAP and CGP programs. The relief was
limited, however, to insufficient funding for an otherwise approvable
CIAP application (or failure of a PHA to fund an otherwise approvable
RMC request for CGP funds from its PHA). The CIAP is a competitive
program with insufficient funding to cover the needs of all approvable
funding applications. When the funding program is competitive, a PHA
either gets the funding applied for, or it doesn't. However, since the
CGP is a formula grant program, with guaranteed yearly funding, a CGP
PHA is better able to plan modernization activities in advance and make
crucial repairs as necessary.
The Department does not agree with the suggestion that a PHA be
able to assume HUD approval of a pending application for demolition or
disposition, if the application has not been acted upon at the end of
the fiscal year being assessed. There are significant differences
between initiating the application process and receiving approval to
dispose or demolish.
Comment: Six comments indicated that vacancy days for units that
suffer casualty damage, especially by fire, should not be counted until
the unit is turned back over to the PHA after the contractor completes
the repairs, if applicable, instead of at the time of insurance claim
settlement. It is more logical to include casualty-damaged units in the
same exemption status as units undergoing modernization or units
documented to be uninhabitable for reasons beyond the PHA's control.
The exempted vacancy days for units that suffer casualty damage should
change to read, ``vacant units that have sustained casualty damage
until the unit is ready to be leased or 90 days, whichever is
earlier.''
Response: The Department disagrees with the comment. The indicator
retained the current provision that already allows a PHA to make an
adjustment for the period of time during which the claim is being
adjusted. Since the fire damage to the unit may be minimal or severe,
it would not be appropriate for the Department to allow an automatic
additional period of time of up to 90 days to repair the unit. PHAs may
request a modification to the calculation if they believe they have a
situation (severe damage) that warrants a special adjustment.
Comment: One comment recommended substituting the word ``permits''
for ``requires'' in Sec. 901.10(a)(4) which exempts vacant units in
which resident property has been abandoned, but only if State law
requires the property to be left in the unit. The comment added that
when a resident abandons a unit, leaving their personal property
therein, many small PHAs have no other appropriate space to store such
property during the period of time specified by State law before they
can legally dispose of the abandoned property.
Response: The Department does not concur in the recommendation. The
point of this provision is to limit the period of time when a vacant
unit would be exempted from the vacancy count to the period of time
that is beyond the PHA's control. The proposed change would expand the
provision to cases in which State law ``permits'' a unit to remain
encumbered by abandoned possessions. HUD believes that the existing
language--``requires''--is more specific and more limiting, and is more
consistent with the intent of this regulation and similar recent
regulatory efforts to reduce unit vacancies.
The Department recognizes that some small PHAs might be
inconvenienced by having to store abandoned effects for some period of
time before disposition, but we are not convinced that such
inconvenience is sufficient to justify holding a residential unit off-
line. In most cases, laws on abandonment require that the landlord
secure abandoned property, not necessarily that they leave such
property in place in anticipation of the abandoning family's possible
return. If storage space is at a premium, PHAs have the option of
renting a storage locker and either deducting the cost of the rental
from the proceeds of the sale of the goods, if any, or collecting that
cost from the resident, should he/she re-appear.
Comment: One comment stated that the total available units should
not include units that are being modernized as a result of Federally
mandated work projects (such as a lead-based paint abatement project)
that require that the residents be relocated while the work is being
performed. All vacant units as a result of Federally mandated work that
requires resident relocation should be considered not available for the
period of time that the unit is vacant as a result of the required
work, including the use of the unit to relocate residents during the
course of the work. Another comment stated that the exemptions should
include a category for units held to house residents relocated due to
comprehensive modernization. When a large development undergoes
comprehensive modernization, it is difficult to quickly find units to
transfer all residents; a reasonable time limit should be included in
the exemption.
Response: The Department partially agrees with the comment. The
proposed methodology for calculating the vacancy rate component already
permits a PHA to make an adjustment to its vacancy days for units
undergoing modernization. A PHA also has the option of requesting a
modification to the calculation of this component that would take into
account any other special factors or special circumstances that are out
of the control of the PHA. The Department does not agree with the
suggestion that PHAs be allowed to adjust their vacancy days for units
that are not undergoing modernization but are being held vacant for
relocation purposes.
Comment: One comment stated that the exemption of units that are
uninhabitable is valuable because it allows troubled PHAs to work on
renovating units and getting them back into the occupied inventory
without being penalized in the vacancy rate calculations.
Response: The Department agrees that this exemption category is
valuable, but it should be noted that the category restricts the
exempted units to those uninhabitable for reasons beyond the PHA's
control. The rule further defines these reasons.
Comment: One comment suggested that the rule should be expanded to
[[Page 68905]]
specifically exempt vacant days due to transfer of residents resulting
from overhoused/underhoused conditions and when for security reasons, a
resident must be relocated under a witness protection program.
Response: The Department does not agree with the comment that the
new rule include adjustments for vacancy days associated with
relocation of residents because of over/underhoused circumstances. This
is a situation that should be dealt with by the PHA as part of its
normal operations. Adequate planning on the part of the PHA can greatly
reduce the amount of time that the units involved in the transfer
remain vacant. Vacancies arising as a result of relocation of residents
for security reasons may be dealt with under the modification
procedures.
Comment: One comment indicated that the rule should clarify whether
the PHA can exclude units used for non-dwelling purposes, for resident
services, or that are occupied by PHA employees even if HUD has not
specifically approved their conversion for non-dwelling purposes.
Response: The Department believes that the relevant rules are
sufficiently clear. PHAs may not use dwelling units for non-dwelling
purposes without explicit authorization for the conversion, and there
should be no expectation that HUD would permit exemption of vacant
units used for unauthorized purposes.
Comment: One comment indicated that it appears that
Sec. 901.10(a)(3) requires that to be exempted under this item, units
have to comply with the two conditions at the same time. The comment
added that the exemption should apply if either one of the conditions:
high/unsafe levels of toxic materials or structurally unsound, is
present.
Response: The Department agrees with the comment that the exemption
should apply when either one of the conditions is satisfied. The new
rule has been modified to conform with the Vacancy Rule and the subject
items are now covered under Secs. 901.10(b)(2)(ii) and (b)(2)(iv).
Comment: Two comments observed that there are several categories of
units exempted ``off-the-top'' when calculating adjusted vacancy rate
and turnaround time. The comments indicated that HUD should clarify if
the exemption of units vacant for circumstances beyond the PHA's
control due to changing market conditions is determined by the PHA
(self-certified) or reviewed and decided by HUD as a modification. The
comments also requested HUD to clarify the exemption of units vacant
for circumstances beyond the PHA control due to natural disasters as to
who determines or declares the natural disaster condition.
The comments suggested that, because these are excluded ``off-the-
top'' and using a PHA-certified figure, it is left entirely to the PHA
to decide if these circumstances apply, when they apply, and then to
subtract them out of the calculation. As currently structured, a PHA
could unilaterally adjust the figures they report under ``adjusted
vacancy rate'' and ``turnaround time'' because they believe that
``changing market conditions'' have caused their units to remain
vacant, or because ``insufficient CIAP funding'' prevented the PHA from
occupying the units. All market conditions are ``changing'' to some
extent, and no CIAP-funded PHA ever receives ``sufficient funding for
otherwise approvable applications'' to meet all of their needs. The
real question is, when are these circumstances sufficiently unique and
extensive to impact a PHA's ability to occupy its units?
The comments indicated that these two conditions are so subjective
and judgmental that they should be addressed through the regular PHMAP
modification process. The comments added that it is inappropriate for
an allegedly objective assessment process such as PHMAP to allow the
entity being assessed (i.e., the PHA) to exercise this degree of
unilateral control over their own assessment. This may help to improve
PHA grades, but it does nothing for the integrity of the PHMAP
assessment process. One comment requested that exemptions be clearly
defined, leaving as little subjective determination as possible to HUD
field staff. Another comment requested HUD to clarify if the PHA may
exempt the units listed when preparing the PHMAP certification or if it
should request a modification.
Response: The Department disagrees with the proposition that the
PHAs have free rein to define away unit vacancies as a function of
natural calamities and/or market circumstances beyond control. These
issues were a major source of discussion during the negotiation of the
PFS Vacancy Rule, and the language upon which the negotiated rulemaking
committee reached agreement is faithfully reproduced in this
regulation. For example, the committee deemed the term ``natural
disaster'' sufficiently precise for purposes of establishing a formula
for determining PFS eligibility.
In the case of a claim for exemption under any of these ``beyond-
the-control'' criteria, the PHAs can exclude the units when preparing
the PHMAP certification, but HUD intends that the burden of proof
should fall on the PHA to demonstrate that it has done what it can to
remedy the reason(s) for the vacancy. In the case of a ``natural
disaster'' claim, the PHA would be expected to point to a proclamation
by the President or the Governor that the county or other local area in
question has, in fact, been declared a disaster area. Where a PHA
claims extraordinary market conditions, the PHA will be expected to
document the market conditions to which it refers (the examples of
changing population base and competing projects are the simplest) and
the explicit efforts that the PHA has made to address those conditions.
The Department does not believe that it can draft a regulation that
concretely defines and delimits all the circumstances that could affect
a PHA's capacity to maintain high occupancy levels, nor does HUD deem
it advisable to attempt to do so. The PHAs and their parent State and
local governments are in the best position to recognize and appreciate
specific local circumstances. In this regulation, and in the supporting
handbook guidance, we will expect that PHAs will be able to provide
data with which to support their self-certifications, and upon which
HUD reviewers can verify such self-certifications, but HUD believes
that it would be counter-productive to attempt to define further or to
limit the scope of PHAs' capacity to describe their real-world
situations.
Comment: One comment proposes that an adjustment factor be added
for turnovers delayed because the applicant must give 30 to 60 days
notice (by lease) to their current landlord before moving.
Response: The Department does not agree with the proposed addition.
PHAs should know local conventions on requirements for notice, and plan
their own management activities accordingly, projecting expected
turnovers and providing notice to applicants that a unit is expected to
become available, for example, far enough in advance to avoid delays in
leasing. In those cases where special local circumstances make this
unfeasible, the PHA may submit a modification request to the indicator.
Comment: One comment requested guidance on HUD's interpretation of
units that are vacant ``for reasons beyond the PHA's control'' asking
whether this category includes items such as termite damage, vandalism,
or casualty loss that may not be covered by insurance if there is a
high deductible. Two other comments asked if the exemption would
include units delayed for reoccupancy as a result of heavy
[[Page 68906]]
vandalism since such vandalism is often beyond the PHA's control.
Response: The Department does not consider that the examples cited
in the comment fall under the definition of units vacant for reasons
beyond the PHA's control. Termite control is similar to other examples
of pest control and is considered part of the normal maintenance
operations of any standard performance PHA. A well managed PHA should
also have insurance coverage for casualty loss (including vandalism)
providing enough coverage to enable the PHA to repair the units in case
of casualty damage. In cases where special local circumstances may make
this unfeasible, the PHA should submit a modification request to the
indicator.
Definitions
Comment: One comment stated that the definition of ``under
construction'' as related to force account work should be changed to
indicate that force account work has started in the block (as opposed
to the specific unit).
Response: The new rule has been changed to indicate that force
account work has started either in the unit(s) or in the building(s).
Comment: One comment stated that the term ``units available for
occupancy'' needs to be clearly defined. Some troubled PHAs could argue
that a certain number of their units are not available for occupancy
because of the extremely poor condition of the units.
Another comment indicated that the term ``dwelling unit'' is not
defined in the proposed rule. It should be defined as a unit that is
either leased or available for lease to eligible low-income residents.
Another comment stated that the term ``available unit'' is defined in
the preamble and the rule but never used again. Instead, the term
``unit'' is used in connection to the terms ``vacant unit'' and
``vacancy day''. The term ``unit days available'' is used but no clear
connection is ever drawn between it and ``available units''. HUD should
clarify and substitute where necessary.
One comment stated that the term ``vacant unit'' in the rule is
different from the term as used in the preamble. The preamble indicates
that ``units under lease for non-dwelling uses should not be
included...'' In other words, these units should be excluded. The rule
definition states that units under lease for police substations, social
service providers, etc., are treated the same as units under lease to
eligible families. If an occupant vacates the unit, it is made
available to another social service provider. These units are not
available for lease to eligible low-income residents, and as such,
should not be treated the same as units which are available in this
definition. It should be clarified whether these units will be excluded
from the computation of vacant units or if they will be counted as
occupied units. Another comment stated that units used for non-dwelling
purposes and dwelling units occupied by PHA employees and units used
for resident services need to have additional parameters defined. This
adjustment may encourage some poorly run PHAs to use these loopholes to
get a better adjusted vacancy rate.
Response: The Department agrees that dwelling units used for non-
dwelling purposes with HUD approval, employee occupied units, and
vacant units approved for demolition or disposition should not be
included as available units in the determination of occupancy/vacancy
rates and the new rule reflects that change. We also agree with the
definition of a ``dwelling unit'' as a unit that is either leased or
available for lease to eligible low-income residents.
Comment: Two comments indicated that while the use of the total
unit days available as the denominator in both the actual and adjusted
vacancy rates provides a simple procedure, it tends to understate the
adjusted vacancy rate. A more accurate calculation would exclude the
adjusted vacant units from both the numerator and denominator.
Response: The calculation of the vacancy rate and the use of that
rate to determine a given grade for PHMAP purposes has been and
continues to be closely linked to the methodology and definitions used
in the PFS. Under the PFS, a PHA, when calculating occupancy or vacancy
rates, first determines the total number of dwelling units in its
inventory (the denominator portion of the rate being calculated).
Regulations then permit the PHA to exclude units that have been
approved for deprogramming (e.g., demolition or disposition) as they
become vacant and units approved for non-dwelling use. These exclusions
reflect the permanent nature of the action. Units that are undergoing
modernization or are vacant because of circumstances beyond the PHA's
control are not excluded from the denominator because these actions are
not permanent. By remaining in the denominator, they will continue to
be eligible for operating subsidy.
The inclusion of units undergoing modernization or units vacant
because of circumstances beyond the PHA's control in the denominator
does not make the calculation of the PHMAP adjusted vacancy rate either
``more'' accurate or ``less'' accurate. What is necessary is that the
two quantities that comprise the rate have a logical relationship to
each other. In this case, the relationship is between a PHA's dwelling
unit inventory and that portion of the inventory that is vacant during
the PHA's fiscal year. Under both PHMAP and PFS, there are incentives
to minimize the portion of the inventory that is vacant and both
approaches start by looking at the proportion of total vacancies to the
dwelling unit inventory. If that rate is low enough, the PHA will
maximize its PHMAP grade and its operating subsidy eligibility.
Both PHMAP and PFS also recognize that not all vacancies are
``equal.'' A PHA with a high number of vacant units may still maximize
its PHMAP grade and PFS eligibility if it can show that most of the
vacant units are undergoing modernization. When one makes an adjustment
to the total number of vacancies to exclude those that are undergoing
modernization, the PHA is not changing the fact that the unit is still
part of the PHA's dwelling unit inventory. This is why the adjustment
is only to the numerator portion of the rate and not to the
denominator.
Comment: One comment indicated that the term ``vacancy day''
definition uses the qualifying statement ``...unless the vacancy day is
exempted for an eligible reason.'' A ``vacancy day'' does not lose its
status as a ``vacancy day'' because it is exempted. It simply becomes a
``vacancy day that is exempted''. This should be clarified because
other terms (like ``actual vacancy rate'' and ``adjusted vacancy
rate'') make reference to it in their definitions. Another comment
proposed that the definition for vacancy day should be modified to
specify that it pertains to ``dwelling'' units.
Response: The Department agrees with the comments and the new rule
reflects the changes.
Comment: One comment indicated that the term ``units available for
occupancy'' is defined as the number of units identified on a PHA's ACC
times the number of days available and asked then what number should be
used for units acquired or built during the assessment year? Two
comments asked whether occupied units that have not reached Date of
Full Availability (DOFA) are counted or excluded until they reach DOFA
date.
Response: The definition of number of ``units available for
occupancy'' has been clarified to exclude three categories of units
from the number of units identified in the PHA's ACC. The units
acquired or built during an assessment year will be added on a prorated
basis based on the sum of the
[[Page 68907]]
number of days available of each individual unit added to the ACC. The
date to be used for determining days available is the date of ``End of
Initial Operating Period'' (EIOP) for the corresponding project.
COMMENT: One comment stated that the formula used for the calculation
of the actual vacancy rate is inconsistent with that used for the
completion of PHA financial information and creates the potential for
errors when preparing both the PHMAP certification and the annual
budget documents. The actual vacancy rate should be consistent
throughout all HUD requirements (i.e., form HUD-51234 and budget
forms).
Response: The Department agrees that the definitions and
methodologies for both PFS and PHMAP should be the same as long as
feasible, and the language of the new rule reflects that.
Comment: One comment recommended adding to the list of definitions
the terms ``move-out date,'' which is when the PHA regains possession
of the unit by the legal expiration of the lease; and ``effective lease
date,'' which is the date from which rent is due and payable and all
other provisions of the lease are enforceable.
Response: The Department partially agrees with the comment and the
new rule includes the definitions. The ``effective lease date'' is the
date when the executed lease contract becomes effective and rent is due
and payable and all other provisions of the lease are enforceable. On
the other hand, the ``move-out date'' is the actual date when the
resident vacates the unit, which may or may not coincide with the legal
expiration of the lease agreement.
Component #2, Unit Turnaround
Comment: Two comments stated that if the turnaround calculation is
retained, it should be kept as a separate indicator. Two comments
suggested the elimination of this component, because unit turnaround
measures efficiency of scheduling maintenance activities, which should
be covered by indicators #4 and #5.
Response: The Department disagrees with both of these suggestions.
The requirement to measure a PHA's ability to turn around its vacant
units is statutory, whether the statutory requirement is carried out by
establishing a separate indicator for unit turnaround or by including
unit turnaround as a component of a different indicator. The Department
agrees with the assumption that if vacancies are at a grade C or above,
a PHA does not have a problem with turning around vacant units. The
Department also disagrees that unit turnaround solely measures a PHA's
efficiency of scheduling maintenance activities. The calculation of
unit turnaround also includes down time, which is the time between when
the unit is vacated and a work order is issued for the repair of the
unit; and lease-up time, which is the time from when maintenance
completes the repair of the unit and a new lease takes effect.
Comment: Three comments stated that this component does not
accurately measure a PHA's performance in maintaining and leasing their
units because nothing in the component shows how many units the PHA had
to turn around during the year. These commenters believed the
percentage of units that are turned around during the year should be
included in the formula. For example, if a PHA has a turnaround time of
20 days, and turned over 45% of their units, and you multiply the
turnaround time (20 days) times the percentage of turnover (45%), it
equals 20 times 45%, or nine days. You then subtract nine days from the
20 days to equal a turnaround of 11 days. The commenters felt that this
is a more accurate measure of a PHA's ability to manage and turnaround
per unit. A PHA with a high yearly turnaround is unduly taxed under the
current formula.
Response: The Department disagrees with this suggestion because
this component is measuring the annual average of time it takes a PHA
to turn around its vacant units, rather than measuring the turnover
rate, which takes into account how many units the PHA had to turn
around during the year.
Comment: Three comments stated that the calculation of unit
turnaround includes vacancy days from prior fiscal years, offering
little incentive (scoring) under the proposed rule for re-occupying
older units. It is recommended that unit turnaround time be capped at
one year or 360 days.
Response: The Department disagrees because to do so would result in
an inaccurate assessment of a PHA's ability to turnaround all vacant
units and would provide no incentive for PHAs to ensure that long-tern
vacant units are turned around and reoccupied. In addition, if these
units are not included in the calculation of this component, it would
result in a skewed perception of a PHA's ability to manage its total
maintenance/re-leasing activities. Furthermore, ``turnaround time'' is
a term of art and means all the days that elapse between one tenancy
and the next. In the event that unusual or special circumstances
exists, a PHA may request a modification to the calculation of this
component.
Comment: Two comments feel that this component should be given the
same exemptions as in component #1.
Response: The Department agrees and stated so in both the preamble
and the regulation of the proposed rule, as well as in the new rule.
Comment: Two comments stated that unit turnaround time should
exempt seven days for each PHA-required transfer because one resident
has two units tied-up for a week and sometimes longer.
Response: The Department disagrees with this suggestion. Although
the total time it took the two units mentioned in the comment to be
turned around may have been a week or longer, each unit was turned
around on different days, with different individual total turnaround
time. The intent of this component is to measure the annual average
number of days it takes a PHA to turn around its vacant units, which
includes for each vacant unit a total of down time, make ready time,
and lease up time.
Comment: Two Comments questioned the definition which states that
units are exempted from the vacancy calculation if special conditions
exist that are beyond control of the PHA. They inquired whether this
definition includes units delayed for reoccupancy as a result of heavy
vandalism. They contend that it should because such vandalism is often
beyond the PHA's control.
Response: The Department has determined not to specifically include
heavy vandalism as part of conditions beyond a PHA's control in this
definition since circumstances for individual PHAs will differ. In such
a case, a PHA may submit a modification request to exclude such units
in the calculation of this component, accompanied by justifying
documentation.
Comment: One Comment stated that unit turnaround is assessed based
on calendar days rather than working days (25% of the time in 20
calendar days is non-working time). The Commenter contended that it
should be based on regular working days since most PHAs cannot afford
to pay overtime salary rates.
Response: The Department disagrees and will continue to use
calendar days as the standard for all of the PHMAP indicators.
Vacancies, rent collection, etc., are not based on working days, and it
would be unrealistic to do so. In addition, it is easier to calculate
calendar days, especially when using an automated system, due to the
necessity of factoring in holidays and weekends when using working
days.
[[Page 68908]]
Comment: One Comment stated that unit turnaround operates against
thorough tenant screening and compliance with city code requirements
and, therefore, against the reputation of public housing. These other
factors that affect unit turnaround should be considered, including
strict lease compliance, terminating residencies or relocating over or
underhoused families. The Commenter said that conscientious
implementation of HUD policy can create large turnovers, stress
maintenance resources and result in poor ratings, while a PHA with no
turnovers or even lack of attention to over and under-housing can
maintain an excellent rating.
Response: The Department disagrees with this statement because the
enforcement of and/or compliance with these factors is part of the
ongoing management responsibility of all PHAs. Using good management
practices, a PHA should not have a higher turnaround time due to
enforcement and/or compliance with the other factors mentioned in the
Comment. For example, a PHA that strictly enforces rent collection
procedures will typically have fewer evictions since more residents
will pay rent in a timely manner. This normally will eliminate the need
for evictions or situations where huge balances are built up and the
resident vacates as a result of not being able to pay off the
indebtedness once court action is taken. If a PHA enforces the lease
clauses regarding the upkeep of the unit by occupants through informing
the resident of the family's responsibility, providing instruction as
necessary, and through inspections, repair, and properly instituted
resident charges, units will tend to be in better condition when
vacated, thereby reducing needed repairs and subsequently reducing
vacant unit turnaround time. Additionally, a lack of attention to over
and underhoused residents will affect a PHA's turnover rate, rather
than its turnaround time.
Comment: One Comment requested that the Department consider the
implementation of an exception to the component whereby, if all but one
unit turns over in a timely manner, a PHA can request an exception for
a circumstance that was beyond its control. Even one exception can have
a big impact in a small PHA.
Response: The Department agrees, and in the event a truly unusual
or special circumstance exists, a PHA may submit a modification request
that addresses the circumstance(s) beyond its control.
Comment: One Comment stated that assessing this component based on
how the PHA fared in the first component is appropriate and the grading
is equitable.
Response: The Department agrees, and will continue to examine unit
turnaround as the second component under this indicator.
Comment: One Comment stated that if the current turnaround method
stays, it should be a measure of when the unit is ready physically for
rental and the new tenant has committed to the unit, not necessarily
when physical occupancy occurs.
Response: The Department disagrees with the Comment for several
reasons. First, there is no guarantee that maintenance staff will start
renovations as soon as possible after the unit is vacated. Secondly,
there is no guarantee that the first applicant that is offered the unit
will accept, thereby leaving the unit vacant for a longer period of
time. Thirdly, the Department believes that the definition of
turnaround time takes into account the concerns expressed in the
Department's first two reasons for disagreeing. A well managed PHA
coordinates maintenance and resident selection activities to ensure
that as many units as possible are available for occupancy as soon as
possible by planning move-ins in advance and notifying applicants as
soon as possible. Since the PHMAP assesses management performance, it
is appropriate to include the management of the total maintenance/re-
leasing activities in this component.
Comment: One Comment (1) disagrees that unit turnaround is an
unnecessary component for high performers; (2) feels that this
component should be weighted as proposed; (3) believes that an adjusted
turnaround time exceeding 30 days is unacceptable performance for any
management agency regardless of the vacancy rate; and (4) believes that
the need for a turnaround time of 50 days or less to score on this
component is a poor standard and would not show the results of what may
be clear and significant performance improvements.
Response: The Department disagrees with the first statement because
normally, a PHA (whether a standard or high performer) that achieves at
least a grade of C for component #1 does not have a problem with
turning around vacant units, i.e., unit turnaround is not a factor in a
high vacancy rate. The Department agrees with the second statement
because the vacancy rate is a clear manifestation of management effort
and embodies the essence of a PHA's mission; therefore, it is weighted
more heavily than the process-oriented unit turnaround component. It is
not clear what the Comment meant in the third statement by ``adjusted
turnaround time.'' This term was not referred to in the proposed rule,
was not included as a definition, nor was it used in the text of the
component. The Department also disagrees with the fourth statement and
believes that the range between the grades in this component is
equitable for the new rule.
Comment: One Comment stated that the proposed rule provides that
the calculation of turnaround time for newly modernized units starts
when the unit is turned over to the PHA from the contractor and ends
when the lease is effective for the new or returning resident. This
provision eliminates a level playing field for measuring the normal
turnaround time required by a PHA to restore vacant units to occupancy.
The Commenter alleges that this gives unfair advantage to PHAs that did
not need to vacate units for modernization and it doubly penalizes PHAs
that modernize units for completing modernization on large numbers of
units concurrently. The Commenter felt that this component should
measure the time it takes PHAs to restore units to occupancy when they
vacate for normal move-out reasons.
Response: The Department disagrees with this Comment and believes
that this method of calculating unit turnaround does provides a level
playing field for PHAs because it provides a standard method that will
be used by all PHAs. The Department does not believe that this method
of calculating unit turnaround gives an unfair advantage to any PHA,
regardless of the scope or type of modernization. A unit that is
modernized with the resident in place is not included in the
calculation of this indicator because it has not been vacated and
subsequently turned around; therefore, there is no advantage to be
considered. If a PHA vacates a unit to modernize, the time it took to
modernize the unit is not included in unit turnaround time regardless
of the number of units completing modernization concurrently. A PHA
should be able to plan for move-ins in advance and notify applicants in
sufficient time to coincide with the availability of units. This
component will continue to measure unit turnaround for whatever reason
the unit is vacated and turned around.
Comment: One Comment recommended that average turnaround time be
defined as, ``the annual average of the total number of turnaround days
between the legal expiration date of the immediate past lease (whenever
that occurred, including in some previous fiscal year) and the date a
new lease takes effect, that being the date from which rent is due and
payable and all
[[Page 68909]]
other provisions of the lease are enforceable.'' This allows PHAs to
take into consideration the wide variety of local ordinances and State
statues that effect the termination of a lease and date the PHA thereby
regains possession of the unit.
Response: The Department agrees, in part, with this recommendation,
and will change the definition of average turnaround time to read,
``...the annual average of the total number of turnaround days between
the latter of the legal expiration date of the immediate past lease or
the actual move-out date of the former tenant (whenever that occurred,
including in some previous fiscal year) and the date a new lease takes
effect.'' This change will take into consideration the wide variety of
State and local laws that effect the termination of a lease. By
retaining the actual move-out date of the former tenant in the
definition, a PHA is not penalized for doing evictions, since in such
cases, the resident usually vacates after the legal expiration date of
the lease. It should be noted that in the rare case where an applicant
executes a lease and moves into the unit prior to the completion of
minor repairs, the calculation of turnaround time continues until the
repairs to the unit have been completed by the PHA.
Indicator #2, Modernization--Sec. 901.15
The weight for this indicator has been increased to x1.5 in the new
rule to reflect the importance of planning for and allocating scarce
modernization funding.
Comment: Ten Comments supported the greater emphasis being given to
obligation of funds in relation to expenditure of funds for components
#1 and #2.
Response: The Department concurs that by assigning more weight to
fund obligation, and less to fund expenditure, the rule largely removes
the disincentive for PHAs to accept inferior work products from
contractors.
Comment: Two comments recommended that there should be intermediate
grades for components #1 and #2 that allow for varying times beyond the
required deadlines (e.g., within one year after deadline = C, two years
= D, etc.). Interim grades should be adopted to recognize that
capacities vary between PHAs and the size of their modernization
programs. One method would be: A for 100%, B for 90-99.9%, C for 80-
89.9%, D for 70-79.9%, and F for below 70%. If the Department remains
adamant that these are too many grades, then at least a grade of C
should be available for > 80% but < 100%. Another comment suggested
that components #1 and #2 should have more grades (A-F) to allow small
amounts of funds to be expended/obligated without scoring an F. For
example, 99% of funds obligated/expended would receive a score of B,
and 95% of funds obligated/expended would receive a score of C. Another
comment recommended that all components should have grades A-F; larger
PHAs may have multiple modernization projects being run simultaneously.
A problem with just one such project should not be the cause of a
failing grade. In addition, another comment recommended that an
intermediate grade of C should be created for components #1 and #2 for
PHAs that, for example, are one year behind the expenditure or
obligation time. Some PHAs may need to accumulate funds over several
years in order to fully carry out their strategic plans. Another
comment recommended that large PHAs that administer complex, multi-year
programs that exceed $100 million in a single year, be given more
flexible standards than are proposed for components #1 and #2. The
proposed rule refers to the HUD-approved original implementation
schedule, and the previous interim rule refers to the HUD-approved
revised schedule. HUD should allow a grade of A for these two
components where the HUD-approved original or revised implementation
schedule allows longer than three years to expend all funds, and the
PHA is either in compliance with that schedule or has timely self-
executed an extension of the HUD-approved deadline for valid reasons
beyond its control.
Response: The Department does not agree with these comments since
components #1 and #2 adequately take into account situations where
longer times are appropriate in the original implementation schedule or
are necessary in the revised implementation schedule due to reasons
outside of the PHA's control. The Department believes that it is
appropriate to distinguish between time extensions due to reasons
outside of the PHA's control (which have no adverse impact on the PHA's
score on components #1 and #2) and time extensions due to reasons
within the PHA's control (which avoid fund recapture, but have an
adverse impact on the PHA's score on components #1 and #2). The
Department notes that the need to use leftover funds is a reason for a
time extension outside of the PHA's control. In addition, the
Department notes that while larger PHAs have more funds to obligate and
expend, such PHAs also have greater resources and capacity to implement
their programs; therefore, size of program is not appropriate in
measuring fund obligation and expenditure performance.
Comment: Six comments expressed concern about how HUD will define
``significant findings'' for components #3 and #4 in the new rule. This
is a very critical issue since HUD staff judgments vary widely from
city to city. Significant findings should be really significant. PHAs
should have the opportunity to see and comment on the definition.
Response: The Department has revised components #3 and #4 to
include a definition of ``findings.'' The Department has eliminated the
term ``significant'' since, by definition, all findings made in
connection with HUD monitoring or an audit are significant. Items that
are not significant are considered to be observations and are not
designated as findings.
Comment: Two comments disagreed that obligation of funds should be
weighted higher than expenditure of funds. Often it is easier to enter
into a contract than it is to complete one. Emphasis should be on a
PHA's planning efforts and its record of delivering promised work.
Response: The Department does not agree with this comment. The
Department believes that the more time-consuming part of implementation
involves the design work, the bid process, and the award of contract.
In the overwhelming majority of cases, fund expenditure occurs
routinely after fund obligation, in accordance with the schedule for
periodic payments.
Comment: Two comments were unclear about the reporting requirements
for a self-executed time extension for obligation of funds and
suggested that the Department provide a short list of examples of the
types of circumstances ``out of the control of the PHA'' which would
warrant a self-executing extension.
Response: The Department has revised components #1 and #2 to
provide additional examples which are: unforeseen delays in contracting
or contract administration; and need to use left-over funds from a
completed modernization program for additional work. Additional
examples will be provided in the revised PHMAP Handbook 7460.5.
Comment: One comment stated that it was not clear what data were
being used to score components #1, #2 and #5, and suggested that HUD
needs to develop a procedure reflecting PHA performance in the same
fiscal year as other PHMAP grades.
[[Page 68910]]
Response: The Department scores components #1 and #2 on the basis
of Federal Fiscal Year (FFY), not PHA fiscal year, in order to provide
a uniform measurement for all PHAs, without regard to the relationship
between the construction season and PHA fiscal year. The Department
scores components #3, #4, and #5 based on the status of the PHA's
modernization program(s) as of the PHA's fiscal year end. The
Department intends to continue these bases for scoring.
Comment: One comment noted that the components are well described
and the grading is equitable.
Response: The comment is noted by the Department.
Comment: One comment recommended that only fund obligation should
be measured since in fact this is the only activity really under a
PHA's control, with expenditures affected by contractor progress,
litigation, and other outside factors.
Response: Fund expenditure is a performance measure mandated by the
1992 Appropriations Act and, therefore, must be included.
Comment: One comment recommended that the modernization indicator
be changed for the assessment of the CGP. Requirements for measurements
should be in large percentages rather than items of work (i.e., 33% of
all funds three years old or less should be obligated). Further detail
should not be required. HUD should model these reporting requirements
on those of the CDBG program. There should be flexibility for
expenditure rate requirements based on circumstances beyond PHA
control, such as contractor default, the discovery of hidden
conditions, etc.
Response: The Department believes that the component on fund
obligation appropriately assesses performance under the CGP. The CGP
provides annual formula funding for modernization. Accordingly, such
stable and predictable funding should enable CGP PHAs to plan and
implement their modernization programs in an expeditious manner. The
Department strongly believes that two years is adequate time for most
PHAs to obligate all funds, but provides for a longer time period where
appropriate.
Comment: One comment recommended that fund obligation be extended
to three years rather than the two proposed.
Response: The Department believes that two years is a more
appropriate measure of performance. However, the Department notes that
the PHA may propose, and HUD may approve, implementation schedules with
fund obligation deadlines of longer than two years due to local
differences in work scope and complexity, construction seasons,
material or equipment supply, or State/local contracting requirements.
Comment: One comment questioned how HUD will know whether the PHA
extended the target date within 30 calendar days after the deadline and
whether such extensions were for reasons outside of the PHA's control.
These components are not certified by the PHA, but are graded by HUD
based on HUD in-house information. HUD will only know what it can
gather from LOCCS and from on-site reviews. Assessments will be very
inconsistent and of questionable accuracy.
Response: A PHA is currently required to inform HUD if it has
extended the target date for fund obligation so that HUD may enter the
revised date into the Line of Credit Control System (LOCCS). A PHA also
is currently required to report on all time extensions that it issued
and the reasons for those extensions in its annual CGP performance and
evaluation report for the program year ending June 30. If a PHA issues
a time extension between June 30 and September 30, it will be required
to inform HUD so that components #1 and #2 may be scored correctly. If
the State/Area Office fails to take into account a time extension made
by the PHA, the PHA may appeal its score to the State/Area Office so
that the corrected information may be used in rescoring.
Comment: One comment stated that component #1 is an example of
excessive flexibility, in that a PHA can miss the performance target
but still receive a grade A by executing a self-imposed time extension
within 30 calendar days after the expenditure deadline so long as the
extension is for conditions which the PHA determines is beyond its
control. A PHA also can manage this requirement by simply including in
its original implementation schedule, a time period longer than three
years to expend its modernization funds. The same options are available
in connection with component #2.
Response: The Department believes that PHA flexibility to issue
time extensions for reasons outside of the PHA's control is critical to
streamlining program requirements and is an important tool in
expediting program implementation. HUD still approves the original
implementation schedule and may require a shorter time period if a PHA
proposes a time period that is too long. Also, HUD reviews the basis on
which the PHA issues a time extension and, if inappropriate, may
withdraw the PHA's authority to do so, thereby requiring that all
future time extensions be submitted for prior HUD approval.
Comment: One comment questioned the term ``modernization'' as used
in components #1 and #2. Does it mean CIAP/CGP only, or the larger
definition of ``modernization'' found in the term ``approved funded,
on-schedule annual modernization program?'' The comment contended that
the rule uses two different definitions of the term ``modernization'':
one that is CIAP/CGP only; and one that includes more than just CIAP/
CGP.
Response: All components apply to both the CGP, the CIAP and lead
based paint risk assessment (1992-1995). Only components #3, #4 and #5
apply to funding under the HOPE VI Program and the Vacancy Reduction
Program for the assessment of this indicator. The new rule has been
revised to include this language.
Comment: One comment recommended that HUD decouple the fund
obligation deadline from specific modernization projects. This is in
keeping with HUD's approach in the community development program arena
where HUD tracks a specified amount of funds obligated each year
regardless of the year in which HUD allocated the funds to a locality.
Response: The Department does not agree with this comment since
each annual grant must be individually tracked and closed out.
Comment: One comment stated that components #1 and #2 do not
measure the adequacy of modernization efforts or address the adequacy
of the overall maintenance program of the PHA.
Response: The Department points out that both components are
mandated by statute. The Department believes that component #2, fund
obligation, is a critical indicator of modernization performance.
Neither component is intended to address the adequacy of the PHA's
overall maintenance program.
Comment: One comment stated that a PHA's potential score for
components #3 and #4 seems to be subject to the timing of a HUD
monitoring visit. A PHA should not be graded on these components unless
at least three months have elapsed between the date of HUD's monitoring
report to the PHA and the end of the PHA's fiscal year; also, the time
frame for HUD reviews should be clarified.
Response: The Department agrees that a minimum time should be
specified between the date of HUD's monitoring report or audit is
provided to the PHA and the end of the PHA's fiscal year in order to
give the PHA sufficient time to correct all findings. Accordingly, the
Department has revised components #3
[[Page 68911]]
and #4 to reflect a minimum time of 75 calendar days.
Comment: One comment stated that a clearer distinction should be
established between an ``A'' and a ``C'' grade for components #3 and
#4; i.e., that a PHA must ``have corrected'' all findings versus ``be
in the process of correcting'' all findings.
Response: The phrase the ``PHA has corrected'' all findings means
that HUD concurs in the PHA's determination that the violation no
longer exists and that HUD is ready to close the finding or has already
closed it. The phrase the ``PHA is in the process of correcting'' all
findings means that the violation still exists and the finding is not
yet ready to be closed.
Comment: One comment supports an appeal process in the event a PHA
and HUD differ on what constitutes ``significant findings.''
Response: As stated, above, this language has been changed and the
term ``significant'' has been eliminated. In addition, the PHMAP rule
at Sec. 901.125 sets forth the PHA's right of appeal.
Comment: One comment recommended that HUD use qualified building
inspection firms or inspectors, in combination with qualified HUD
engineers as they are available to inspect the physical work that is
completed rather than the Corps of Engineers.
Response: The Department intends to use all resources available to
it, including the U.S. Army Corps of Engineers, for inspection of
approved modernization programs.
Comment: One comment recommended that component #5 be covered under
indicator #6, financial management, since financial management of the
modernization program is part of the overall financial management of
the PHA's programs.
Response: The Department rejects this comment since the
modernization budget controls are so integral to implementation
performance by a PHA.
Comment: One comment supported the change to component #5 that
reflects the flexibility recently provided to CGP PHAs to move work
items between approved annual statements and the five-year action plan
and to address emergency items not reflected in either document.
Another comment noted that emergency CGP work does not require prior
HUD approval.
Response: The Department agrees that emergency CGP work does not
require prior HUD approval and has revised component #5 to specifically
exclude emergency work.
Comment: One comment proposed a new component related to the
incorporation of work orders, which are identified by yearly
inspections of systems and units and deferred for modernization, in the
modernization plan.
Response: The Department does not agree with this comment because
all work orders are tracked under indicator #4 in the new rule. A work
order deferred for modernization is any work order that is combined
with similar work items as defined in Sec. 901.5.
Indicator #3 Rents Uncollected--Sec. 901.20
Comment: Ten comments supported the simplification of the indicator
and the grading method, without further comment.
Response: The comments are noted by the Department.
Comment: Ten comments sought a variety of additional exclusions
from ``dwelling rent'' such as charges for amounts that cannot be
collected by the PHA without stopping the eviction process, amounts
owed by tenants no longer in possession, disputed amounts, amounts
written off, or amounts abated. One PHA thought that the indicator was
inconsistent with the one strike policy in indicator #8 because a
resident evicted for selling drugs would be charged dwelling rent that
could not be collected during the eviction process.
Response: The Department does not agree. The reasons for nonpayment
of rent are varied and the specific conditions mentioned are not
unique. The purpose of the indicator is to assess a PHA's ability to
deal with conditions for nonpayment effectively to collect the rent
due; excluding the charges related to all possible reasons for
noncollection would defeat the purpose of the indicator. A PHA may
request a modification or exclusion to this indicator due to highly
unusual or unique circumstances.
Comment: Five comments pointed out inconsistencies in terminology
in the indicator that they believed made the indicator unclear. One
comment stated that the terminology in Sec. 901.20 doesn't have the
same specificity as the summary. The language in Sec. 901.20 needs to
be revised to conform with the summary and the definitions. There were
four comments regarding the definition of the terms ``current dwelling
rent billed,'' ``current dwelling rent uncollected,'' ``percent of
current dwelling rent,'' and ``rents uncollected.''
Response: The terminology referred to in the comments has been
changed in the new rule to be consistent.
Comment: Four comments stated that uncollected rent of 2% or less
for a grade of A was unduly restrictive and not in line with the
private market standard. The comments requested that the 2% be changed
to 5% to conform to industry standards.
Response: The Department believes that the percentage for grade A
is fair since this grade represents the truly outstanding PHA, rather
than the industry standard. The industry standard of 5% is reflected in
grade C of this indicator, and denotes standard performance.
Comment: Two comments noted that the indicator is not as simple as
it seems since data required by the indicator is not readily available
in the accounting system. One comment stated that the method should not
be changed from the interim method.
Response: The Department recognizes that accounting systems do not
usually collect or compile the specific tenant accounts receivable
information required for indicator #3 as proposed; therefore, the
proposed indicator has been changed to incorporate information that is
collected by PHAs to compile other tenant accounts receivable and
financial reports. The major change between the new indicator and the
current method is that the new indicator includes only information for
tenants in residence during the assessed fiscal year.
Comment: One PHA commented that rent collections are so important
that the indicator should have a weight of x3.
Response: The Department agrees that rent collections are important
to the financial health of the PHA, and it has the second highest
weight of all the indicators. The weighting has been simplified to a
ten point scale, with only indicator #1, vacancy rate and unit
turnaround, having a weight of x2.
Indicator #4, Work Orders Sec. 901.25
General Comments
Comment: Many comments received were generally supportive of the
revised requirements of this indicator. Most indicated that the changes
made to this indicator will create a management tool that is more
equitable and provide a more accurate measurement of work order
completion.
Response: The comments are noted by the Department.
Comment: Four comments stated that recording the time for
completing emergency and non-emergency work orders is unnecessary and
unproductive. The extra administrative expense to record the time of
processing work orders is not justified. One comment stated that this
change will put an excessive burden on small PHAs in tracking the time
involved on routine
[[Page 68912]]
(non-emergency) work orders due to the many factors which can effect
how long it takes to do a work order.
Response: The Department does not agree with this statement. This
indicator is a statutory requirement under the PHMAP. The preamble to
the PHMAP rule and the new rule state that ``implicit in this indicator
is the adequacy of the PHA's work order system in terms of how a PHA
accounts for and controls its work orders, and its timeliness in
preparing/issuing work orders.'' Therefore, there should not be
substantial additional administrative expense since an adequate work
order system must be able to track and control work orders from the
dates/times of when the work orders were initiated to the dates/times
when they were completed.
Comment: Two comments stated that emergency work orders should be
at least equal in weight to non-emergency work orders.
Response: The Department believes that since emergency conditions
must be abated immediately or no longer than 24 hours from when first
reported, the tracking and controlling of non-emergency work orders
would provide more accurate information of PHA work order performance.
Hence, more weight is given to the PHAs' non-emergency work order
activities. However, the weight of the total indicator in the new rule
is x1.
Comment: Two comments stated that the definitions for cyclical work
orders and preventive maintenance are very similar, which is especially
distressing because the proposed rule is very clear in its requirement
that the two not be confused.
Response: The Department agrees that there are many instances in
which PHAs might not use the work order process to do general cleaning
activities, pick up trash or change light bulbs. When they do, these
work orders are classified as cyclical work orders and are excluded
from component #2, non-emergency work order, calculation. Other
examples of cyclical work orders might be work orders that are
routinely written each year to replace furnace filters, clean out site
and roof storm drains or raking leaves in the fall. Preventive
maintenance work orders are usually generated from preventive
maintenance inspections. They are primarily related to the modification
or repair of physical systems of units, buildings and grounds. The
Department will include examples of cyclical and preventive work orders
in the revision of the PHMAP Handbook 7460.5.
Comment: Two comments stated that for work orders done by outside
contractors, which may take longer to complete or that require special
parts, if a vendor has difficulty in securing a part, the PHA would be
penalized even though the living conditions in the unit aren't
compromised.
Response: The Department does not agree with this comment. The
Department has provided up to 25 days for the average time to complete
non-emergency work orders in order for a PHA to achieve a grade A for
this component. This is quite liberal as compared to the private
sector. The few cases that might exceed the 25 day period, due to a
wait on a special part, should not significantly impact a final PHMAP
score. In regards to emergency work orders, if the emergency condition
in a particular unit cannot be corrected or abated within the 24 hour
time frame, the resident(s) could be moved out of the unit, which would
abate the emergency situation.
Comment: Two comments wants to know if the reduction of days needed
to complete work orders affect grades A and B, or is it only taken into
consideration when the grade is C or less. Under what conditions may a
PHA make such an election? To this, the rule appears to be silent.
Response: The reduction of days needed to complete non-emergency
work orders is only taken into consideration when the grade is C or
less. The Department has revised the reduction of days needed to
complete non-emergency work orders during the preceding three years to
conform with other changes in the new rule.
Comment: One comment stated that this indicator is poorly written
and needs additional clarification.
Response: The comment is not specific as to where the
clarifications are needed. The Department wants a new PHMAP rule that
is clear, concise and easy to understand, and welcomes any and all
suggestions on how it can achieve that goal. If some areas of the rule
are unclear to a reader, or needs further interpretation, he/she can
contact the local State/Area Office for assistance.
Comment: One comment stated that PHAs may need technical assistance
to construct an effective tracking system without spending scarce funds
on additional software or special tracking systems.
Response: The Department agrees with this comment and maintains
that PHAs must have in place an adequate work order system that tracks
and controls work orders from the dates that they were initially
entered into the system to the dates when they were completed. The
necessary information to grade emergency and non-emergency work orders
should be readily accessible from the data in the PHA's work order
system. However, if the PHA's existing system cannot perform the
necessary tracking function, it should be a priority of the PHA to up-
date the existing system or replace it with one that can. To that end,
HUD is always available to provide appropriate technical assistance.
Comment: One comment stated that there should be a one year delay
in implementation.
Response: The Department has determined that the revisions in the
new PHMAP rule will apply to PHAs with fiscal years ending the quarter
after the new PHMAP rule is published in the Federal Register.
Comment: One comment stated that this indicator does not provide
any means for measuring the effectiveness of a PHA's response to
deficiencies identified in inspections.
Response: The Department agrees. Measuring the effectiveness of PHA
response to deficiencies is too subjective and would not necessarily be
the same from PHA to PHA; PHMAP measures performance.
Comment: One comment stated that a confirmatory review should be
required each year by qualified HUD staff or building inspection firms.
Response: The Department disagrees due to the lack of resources.
Risk management is used to determine where confirmatory reviews are
most needed.
Component #1, Emergency Work Orders
Comment: One comment stated that the evaluation for grading
emergency work orders under component #1, is too tight, i.e., 99% of
the emergency work orders completed or abated within 24 hours for a
grade A and down to 95% completed or abated for a grade F.
Response: The Department does not agree. The Department defines
emergency as physical work items that pose an immediate threat to the
life, health and safety of residents or that are related to fire
safety. If emergency work items cannot be completed or abated within 24
hours, the PHA could move the resident out of the unit until the
emergency work is completed or abated. The removal of the resident(s)
from the emergency condition is considered abatement. Therefore,
correcting or abating an emergency situation should never exceed 24
hours.
Comment: One comment stated that a more specific definition of
emergency work orders should be given, possibly including examples.
Response: Emergency means physical work items that pose an
IMMEDIATE
[[Page 68913]]
threat to life, health, safety, or property, or that are related to
fire safety. Some of the more easily definable emergency situations
would be: (1) an unhealthy or undrinkable water supply; (2) a gas leak;
(3) a broken sanitary sewer line where sewage is ponding on the surface
of the ground; (4) failed heating systems in colder winter climates;
(5) hazardous electrical systems; non-working smoke detector or fire
alarm system; and (7) toxic material situations such as exposure to
asbestos or defective lead-based paint. Situations such as leaky roofs,
broken windows or stairways might be classified as an emergency
depending on specific circumstances and the degree to which the
situation is an immediate threat to tenant health, safety or to
property. Temporarily covering a hole in the roof or broken window, or
closing off a stairwell until the condition can be corrected would be
considered emergency abatement and would change these types of work
orders from emergency to regular (non-emergency) work orders. The
Department will include examples of emergency and non-emergency work
orders in the revision of the PHMAP Handbook 7460.5.
Component #2, Non-Emergency Work Orders
Comment: Two comments stated that excluding cyclical work orders
from the calculation of this indicator serves to create what must be an
unintentional disincentive to devote staff resource time to routine
daily maintenance work. The PHA that devotes all of its maintenance
resources to competing PHMAP measured work orders while ignoring trash
on the grounds and in the hallways will score higher than a PHA that
devotes its resources to daily maintenance as well as inspection and
resident initiated work orders. Unless the PHMAP rule intends to cause
PHAs to place a very low priority on the completion of daily
maintenance work orders, work orders generated to accomplish this work
should not be excluded from the calculation of this indicator.
Response: The Department disagrees with this suggestion since this
component was designed to only measure PHA performance in completing
work orders and was never intended to place daily maintenance work at a
low priority or ignore trash on the grounds and in the hallways.
Normally, tasks such as picking up trash, etc., are performed by
laborers and would not be covered by a work order. Work orders exempted
for modernization, issued to prepare a vacant unit for re-rental, or
issued for the performance of cyclical maintenance are not necessarily
the same from PHA to PHA and consequently, would tend to skew the
performance grade results from PHA to PHA if they were not exempted.
Comment: One comment stated that preventive maintenance work orders
are not exempted from the calculation of this component and should be.
This PHA issues over 3,000 work orders for preventive maintenance to be
performed on the heating systems over the period of the three to four
month non-heating season. If these are included in the count, there is
no possible way for this PHA to obtain a high score for this component
since the work could never be completed in 25 days or less.
Response: It appears that the work orders described above should be
classified as cyclical work orders, which are excluded from the non-
emergency calculation. If this is not the case, the PHA does have the
option to request HUD's approval of either a modification or exclusion
of this indicator.
Comment: One comment stated that to divide work orders among
routine and emergency, then determine average number of days it took to
complete them assumes that only closed work orders will be counted
under this indicator, and any work order that is not closed will be
counted against the following fiscal year as we currently do with
vacant units. Please clarify.
Response: The calculation of this indicator includes: the number of
days in the assessed fiscal year it takes to close active non-emergency
work orders carried over from the previous fiscal year; the number of
days it takes to complete non-emergency work orders issued and closed
during the assessed fiscal year; and the number of days all active non-
emergency work orders are open in the assessed fiscal year, but not
completed. The new rule includes a definition of the average number of
days for non-emergency work orders to be completed.
Comment: One comment stated that this indicator should specifically
state that HUD wants all preventive maintenance work orders tracked
rather than focusing on exclusions and thus, place proper emphasis on
preventive maintenance.
Response: The Department agrees and has added specific language to
the new rule stating that all preventive maintenance work orders are to
be tracked, as well as which type of work orders are exempted from the
calculation of this indicator.
Section 901.30 Indicator #5, Annual Inspection of Units and Systems
General Comments
Comment: Three comments support the improvements in this indicator,
particularly reducing the components from four to two and eliminating
redundancies.
Response: HUD agrees that it is more appropriate to track all work
orders, including inspection generated work orders, under indicator #4.
Indicator #5 now focuses more on a PHA's ability to determine short-
term maintenance needs and long-term modernization needs.
Comment: Three comments expressed concern about the possible
subjective interpretation of the adequacy of a PHA's inspection system
by HUD field staff. A clear and reasonable description of an adequate
inspection system should be included in the rule.
Response: The preamble to the proposed rule stated that the
adequacy of a PHA's inspection program will be part of the confirmatory
review in terms of the quality of a PHA's inspections, and how a PHA
tracks both inspections and needed repair, and the adequacy of a PHA's
inspection system is also included in the new rule. The Department
recognizes that what is adequate for one PHA may not be adequate for
another PHA, thereby making this term general in concept. Examples of
inspection systems will be included in a guidebook on the conduct of
confirmatory reviews and in the revised PHMAP Handbook 7560.5.
Comment: Two comments stated that the two components are well
described and are graded equitably. However, it should be clarified if
damages caused by residents that are not reported to maintenance for
prompt repair could be exempted and considered as repairs for code
compliance.
Response: If a unique or unusual circumstance were to occur, a PHA
could request a modification to this indicator to avoid being penalized
for circumstances beyond its control. However, one of the purposes of
an annual unit inspection is for a PHA to be able to identify, at least
annually, the condition of its housing stock. Since this indicator no
longer measures the amount of time it takes to correct unit/system
deficiencies, the annual inspection would simply initiate corrective
action.
Comment: One comment stated that this indicator is poorly written
and needs additional clarification.
Response: The comment is not specific as to where the
clarifications are needed. The Department wants a
[[Page 68914]]
new PHMAP rule that is clear, concise and easy to understand, and
welcomes any and all suggestions on how it can achieve that goal. If
some areas of the rule are unclear to a reader, or needs further
interpretation, he/she may contact the local State/Area Office for
assistance.
Comment: One comment stated that PHAs must have adequate time to
change the manner in which they track annual inspections and needed
repairs.
Response: The Department agrees, and the new rule will apply to
PHAs whose fiscal year ends the quarter after the publication of this
rule in the Federal Register.
Comment: One comment recommended that a confirmatory review of this
indicator be required each year by HUD or qualified building inspection
firms that would track whether each item was completed or whether it
was referred to a work order and when the work order was completed.
Response: The Department disagrees because these issues are more
properly examined under indicator #4, work orders. Also, due to the
lack of resources, risk management is used to determine where
confirmatory reviews are most needed. However, when HUD conducts a
confirmatory review of indicator #4, the items mentioned in the comment
are verified and confirmed.
Comment: One comment stated that component #2 should have a higher
weight. The commenter suggested that there should be a new component
that requires a monthly walk through of the common areas, with the
results of these inspection being available for HUD monitoring.
Response: The Department disagrees with both parts of the comment.
HUD believes that the inspection of units and the inspection of systems
are equally important to the quality of a PHA's housing stock and,
therefore, each component is weighted equally. The Department believes
that adding a new component that requires a monthly walk through of the
common areas would result in the micromanagement of PHAs.
Comment: One comment asked why the proposed certification form asks
the question, ``Percent of units meeting HQS.''
Response: This question has always been on the certification form.
The Department requests this information for trending and statistical
purposes.
Comment: One comment felt that this indicator has been severely
weakened. Poor property management may be rewarded simply because
inspections have been conducted. The necessary follow-up to correct
identified deficiencies is not addressed in the proposed rule.
Response: The Department disagrees with this comment because
inspection generated repair items are tracked under indicator #4, work
orders.
Comment: One comment suggested that units under proposed demolition
and disposition applications that are vacant should be excluded from
this indicator.
Response: The Department does not agree with this comment. There
have been and will continue to be significant differences between
initiating the application process and receiving approval to dispose or
demolish.
Comment: One comment does not agree with the exemption of occupied
units that the PHA has made two documented attempts to inspect because
this could become an excuse for PHAs with poor inspection programs.
Response: The Department disagrees that such a situation is likely
to happen because the language of the exemption goes on to state that
PHAs may claim this exemption only if it can document that appropriate
legal action (up to and including eviction of the legal or illegal
occupant(s)), has been taken under the provisions of the lease to
ensure that the unit can be subsequently inspected.
Comment: One comment observed that the expanded definition of what
units are excluded from the calculations are an improvement. It seems
logical to exclude units in the same category as in the vacancy
indicator. However, there is concern about the exclusion of ``units
vacant for circumstances and actions beyond the PHA's control.'' The
concept is too vague. There will be situations cited that may arguably
be within an agency's control. HUD should, minimally, identify a short
list of examples as a guide to PHAs and HUD State/Area Offices.
Response: The Department agrees and this rule has been revised to
specifically state the allowable exemptions for indicator #5.
Comment: One comment agrees with excluding units documented as
uninhabitable, but feels the term should be defined (e.g., condemned by
local health department). In addition, PHAs with uninhabitable units
should indicate what plans they have to demolish and dispose of such
units.
Response: The language for this indicator already states that units
that are documented to be uninhabitable by order of the local health
department may be exempted. To further enumerate all of the possible
Federal, State or local agencies that could be involved in such a
process is unnecessary since situations differ from PHA to PHA.
However, if units have been determined to be in such a state as to be
designated uninhabitable, HUD strongly recommends that PHAs at least
inspect these units annually to verify the structural integrity of the
building. This is particularly important for scattered site units and
long-term vacant buildings. In addition, a CGP PHA has to address the
physical needs of all of its developments in its Comprehensive Plan.
Component #1, Annual Inspection of Units
Comment: Three comments stated that HQS should remain as the
standard, with the PHA expanding on the HQS requirements to include
local code items. Otherwise, HUD would need knowledge of many different
local codes to properly assess PHA actions. The commenters added that
it would be necessary to adapt HQS at the highest local standard or a
PHA would have to modify inspection standards based on where the unit
was located.
Response: The Department requires that HQS be used as the
inspection criteria for PHAs only if there are no local occupancy and/
or housing codes that cover a PHA's jurisdiction. The PHMAP Handbook
7460.5 requires that a PHA comply with local occupancy and/or housing
codes. Rather than expand on the HQS requirements to include local code
items, a PHA should expand upon local code requirements to include
omitted HQS items. If a PHA is dealing with more than one local
occupancy/housing code within its jurisdiction, the PHA should
incorporate HQS items into the local occupancy/housing inspection forms
for each locality.
Comment: Two comments stated that incorporating maintenance long-
term planning into annual inspections would greatly compromise the
ability of a PHA to abate common problems. In addition, it is difficult
to determine if completion of long-term preventive maintenance
functions (exterior painting, etc.) would be included.
Response: The Department disagrees with this comment and believes
that just the opposite is likely to occur. A PHA's ability to abate
common problems should be greater when a PHA is able to plan for short-
term maintenance needs and long-term modernization needs. Such planning
will allow a PHA to budget appropriate expenditures from its operating
budget and modernization program, thereby avoiding possible budget
short falls. With such planning done on an on-going basis, a PHA can
focus more resources on day-to-day operations and the abatement of
[[Page 68915]]
common problems. In addition, the completion of long-term preventive
maintenance items are included at the discretion of each PHA. A PHA may
decide to fund all exterior painting out of its operating budget,
painting ``X'' amount of units/buildings each year on a rotating basis.
Or, a PHA may decide to include 50% of its exterior painting under its
modernization program, and fund the exterior painting of the remaining
units out of its operating budget.
Comment: One comment felt that the proposed indicator does not
exempt occupied units scheduled for modernization this year or the
next. Inspection of occupied units scheduled for imminent modernization
should be limited to an inspection of emergency conditions only. It
seems wasteful to take the time to write up deficiencies on a unit when
specifications have been developed and possibly even bid for the
modernization of the unit. One comment stated that the term ``referred
the deficiency to the current year's or next year's modernization
program'' is an incredible loophole simply permitting the existence of
non-compliant conditions.
Response: This indicator does exempt a vacant unit undergoing
modernization as stated in the preamble language and the proposed rule.
The Department has added new language to the new rule in order to
clarify the circumstances under which work orders can be deferred to
modernization. As stated in the definition for this term, only similar
items can be deferred by a PHA to be completed in the current year's
modernization program, or to be completed in next year's modernization
program if there are less than three months remaining before the end of
the PHA fiscal year when the work order was generated.
However, before an item is deferred to modernization, it should be
(1) similar to a work item that is in the current year's modernization
program, (2) similar to a work item that is in next year's
modernization program, or (3) similar to deficiencies noted in other
units/buildings and the correction of such deficiencies has not been
included in the current or next year's modernization program, but the
current or next year's Annual Statement is revised to include the new
work item. If the similar deficiency that was deferred for
modernization is not corrected in the current or next year's
modernization program, the work item may no longer be exempted from the
calculation of this indicator and the deficiency reverts back to being
tracked through the work order system.
Occupied units shall be inspected, particularly for detection and
repair of emergency conditions, as long as they remain occupied. Non-
emergency work orders generated during inspection of occupied units
scheduled for imminent modernization (this year or the next) should be
classified as deferred for modernization and not included in the
computation of this indicator as long as the identified deficiencies
are part of the work items included in the modernization project.
Comment: One comment stated that it is not clear whether preventive
maintenance items, such as repairs to stoves and plumbing, etc., would
be recorded or tracked. How are they recorded if completed during the
inspection?
Response: All preventive maintenance items should be recorded and
tracked through the work order tracking system. This information will
enable a PHA to plan for short- and long-term maintenance needs. If a
minor deficiency is corrected during an inspection, the PHA should not
retroactively issue a work order for that work item. A minor deficiency
that is corrected during the inspection is no longer a deficiency, and
there is no need to issue a work order. However, any parts used to
complete minor repairs made during the course of an annual inspection
should be tracked through inventory control.
Comment: One comment was concerned that many PHAs may misinterpret
the indicator as suggesting that a PHA must use only local housing/
occupancy code or HQS, and nothing else.
Response: A PHA should use local housing and/or occupancy codes,
and should expand upon local code requirements to include omitted HQS
items, when applicable. In cases where there is no local occupancy and/
or housing code or the local code is less stringent than HQS, the PHA
should use HQS.
Component #2, Annual Inspection of Systems
Comment: One comment stated that there is no definition provided
for the term ``maintenance plan'' and yet it is used as a factor of
measure for indicator #5, component #2. The use of this term appears to
be with an appropriate intent to allow for the fact that a major system
that has been inspected and documented to be in good repair does not
require another inspection in the following year. An effective PHA
systems maintenance plan could appropriately reschedule the system for
inspection three years later. If the system is new, after the first
year of operation, testing it might not need to be rescheduled until
five years later. A maintenance plan would document the performance of
appropriately scheduled preventive maintenance on systems. Only safety
systems and those required to be inspected and certified annually by
State law for safety reasons should require annual inspection. If the
intent of this provision is the use of the term ``maintenance plan'' is
to allow for this fact, it should be clearly stated as such. Otherwise,
different Field Offices will be left to subjectively interpret the
meaning of this term and its applicability in the determination of PHA
performance under indicator #5.
Response: The Department agrees that the term ``maintenance plan''
should be defined. It is defined in the rule as a comprehensive annual
plan of a PHA's maintenance operation by providing the total year's
estimated work schedule supported by a staffing plan, contract
schedule, materials and procurement plan, training, and approved
budget. The plan should establish a strategy for meeting the goals and
time frames of the facilities management planning and execution,
capital improvements, utilities, and energy conservation activities.
The Department disagrees with the rest of the comment because this
component examines whether a PHA inspects all of its systems at least
annually to ensure the viability of the units/buildings and the
provision of safe, sanitary and decent housing.
Section 901.35 Indicator #6, Financial Management
Component #1, Cash Available
Comment: Eight comments specifically approved of combining the cash
and energy/utility consumption components; three more comments
specifically approved of the cash available component.
Response: The comments are noted by the Department.
Comment: Three comments objected to the combination of cash
available with energy/utility consumption and/or to the use of one or
the other as a measure of financial management. Commenters stated that
energy is not a measure of financial management and that available cash
is not a measure of energy management.
Response: The Department disagrees. Although the amount of cash on
hand is not by itself a measure of energy management, efficiencies in
operation and in energy/utility consumption will reduce expenditures
and thereby affect cash available.
[[Page 68916]]
Comment: Nine comments stated that the indicator should include
other factors such as ratio of reserves to expenses over a period of
time, an assessment of audit findings, average monthly cash reserves
instead of a ``snapshot'' of cash available at fiscal year end, ability
to maintain expenses within budget, ability to maintain an adequate
reserve level for contingencies, or that the existing interim
indicators should be retained.
Response: The Department does not disagree that there are a number
of additional factors that could be measured as an indication of good
financial management. However, the review of existing PHMAP procedures
was done with the intent of streamlining and of limiting the number and
content of the indicators to the basic information that could be used
for performance measurement. This review process intentionally resulted
in fewer, not more, indicator measurements. Maintaining a minimum level
of liquidity was determined to be a basic requirement for financial
management that should be an essential part of performance measurement.
Comment: Nine comments expressed concern that the terms ``cash
available,'' ``cash reserves,'' and ``routine operating expenses'' were
not adequately defined and would lead to inconsistent reporting on the
part of PHAs. One comment stated that the sample worksheet should be
revised to be computer friendly. One comment stated that the ``Analysis
of General Fund Cash Balance'' should be used in lieu of the sample
worksheet. One comment stated that the sample worksheet should match
the information on form HUD-52595, Balance Sheet, because it would be
difficult for small PHAs to identify accounts receivable/payable that
would be active within 30 days.
Response: The Department notes that the sample worksheet is
intended as guidance to the PHA in determining the cash available to
meet routine operating expenditures, but its use is optional. ``Routine
operating expenses'' are identified on the worksheet as being those
reported on form HUD-52599, Statement of Operating Receipts and
Expenditures, Line 520, Total Routine Expense. If a PHA experiences
one-time expenditures in a given year that would distort the use of
Line 520 information for the indicator, the PHA may request a
modification. If PHAs follow the practice of aging their accounts
receivable/payable, determining those that would be active within 30
days should not be a problem, and if the accrual information is
immaterial to the computation, it need not be included. The use of
information directly from form HUD-52595, Balance Sheet, would be
possible only in the case of a PHA with no programs other than the
management of PHA-owned rental. For the same reason, the Department
does not think that the ``Analysis of General Fund Cash Balance,''
which is based on form HUD-52595, is a substitution for the sample
worksheet since the Analysis does not, without further calculation,
provide the user with the amount of cash specifically available for
PHA-owned rental operations. In any case, the sample worksheet is
optional and a PHA may choose to develop its own format and procedures,
as long as its results are the same as would be derived by utilizing
the optional worksheet.
Comment: Five comments stated that the indicator penalizes PHAs for
using reserve dollars to operate, and two comments expressed concern
that small PHAs will never be able to accumulate sufficient cash to
score well on the indicator.
Response: The Department recognizes that PHAs must make choices in
the use of funds and that there are circumstances that may make it
difficult to achieve or to sustain a given level of cash, or that may
reduce available cash on a short term basis. However, HUD also
recognizes that in order to function in a financially responsible
manner a PHA must have a minimum amount of cash on hand to cover day-
to-day routine expenditures. Available cash to cover one month's
routine expenditures would be 8.33% of total routine expenditures; a
PHA does not fail this indicator unless the percentage is less than 5%.
In order to meet its monitoring responsibilities, it is important that
the Department take note of such PHAs and of the circumstances that are
affecting their cash flow situation.
Comment: Three comments asked if the cash available calculation was
to be adjusted for subsidy proration or year end adjustments for
subsidy.
Response: The sample worksheet for indicator #6 has provision for
including year end adjustments for subsidy in determining cash
availability. The difference between subsidy eligibility and the
prorated subsidy amount is not included because the amount of the
difference will not be realized in cash payments.
Comment: One comment stated that percentages should be applied to
PHAs of all sizes since $3 million in cash for a large PHA might not be
enough to cover unexpected financial difficulties. One comment stated
that dollars, not percentages, should be applied to all PHAs.
Response: The indicator measures cash available to cover routine
expenditures, not unexpected cash needs for emergencies. The new
indicator is measured in percentages because a percent gives a more
flexible basis for evaluation than a flat dollar amount.
Comment: One comment expressed concern that the indicator would
encourage PHAs to exercise poor financial judgment by deferring needed
maintenance expenditures in order to maintain a large cash balance and
score well on indicator #6.
Response: The Department disagrees. Indicator #6 is but one
indicator in a group of indicators intended to measure PHA performance;
two other indicators (#4 and #5) measure the PHA's performance in the
area of maintenance.
Comment: One comment stated that the available cash should take
into consideration funds that might be available from local government
to help the PHA.
Response: The Department disagrees that the PHA potential to tap
the local government for funds should be automatically included in
determining the amount of cash available. Unless the local government
is legally required to subsidize the operation of the PHA, there is no
assurance that the local government's willingness or ability to provide
funds to the PHA will continue in the future.
Component #2, Energy Consumption
In the proposed rule, the Department indicated particular interest
in receiving comments from PHAs as to whether they preferred Option A,
Option B or the choice of being able to use either option for their
PHMAP certification and assessment. Option A compares energy/utility
consumption expenses to the average of those computed on a three year
rolling base and Option B measures whether or not a PHA has conducted
an energy audit and implemented the improvements recommended as a
result of the energy audit.
Comment: Nine comments preferred a choice of either Option A or
Option B. Four comments stated a preference for Option B.
Response: The Department adopts the preferred approach of the
majority of comments, which offers PHAs required to be assessed on this
component a choice of either Option A or Option B.
Comment: Five comments stated that the energy/utilities component,
Option A, should be based on consumption instead of dollars expended
since PHAs don't have any control over the utility rate charged by
local utility companies.
[[Page 68917]]
Response: The Department agrees and the proposed PHMAP energy/
utilities component, Option A, does measure energy/utilities
consumption rather than dollars. The sample worksheet for computing
Option A compares a PHA's current consumption to its rolling base
period consumption. In comparing Line 17 to Line 13 of form HUD-52722B,
Adjustment for Utilities Consumption and Rates, the rolling base period
consumption is adjusted prior to the comparison with the current year
to reflect the current year's rates. Since the same rates are used, the
only difference in the amounts compared is due to consumption. The
wording of the proposed rule regarding Option A in the preamble may
have been confusing in this regard and this option has been revised to
refer to energy/utility consumption expenses.
Comment: Three comments stated that the upgrading of equipment,
e.g., the addition of security lighting, affects consumption and that
PHAs should not be penalized. One comment stated that PHAs should not
be penalized for positive initiatives, such as increased utilization by
resident initiatives and family self-sufficiency participants, that
result in increased consumption for office buildings.
Response: The Department agrees that a PHA should not be penalized
for increased energy/utility consumption due to upgrades of equipment
such as adding security lighting for safety, etc., and resident
initiatives programs. Therefore, with sufficient supporting
documentation, a PHA may request a modification to exempt the excess
energy/utility consumption from the calculation of the energy/utility
component, Option A. The Department anticipates the issuance of a
revised PHMAP Handbook 7460.5 subsequent to the effective date of the
new rule. Examples of eligible modification requests and required
supporting documentation will be included in the Handbook.
Comment: One comment stated that the component should be named
``utility consumption'' rather than ``energy consumption'' since water
and sewer charges are a utility expense for PHAs, not an energy source.
Response: The name of the component was, in fact, changed from
``energy'' to ``energy/utility'' in the proposed rule to reflect the
fact that water and sewer charges, which are now included in the
consumption measurement, are, as the comment states, a utility expense
for PHAs, not an energy source. This component is referred to as
``energy consumption'' in the new rule, with Option A referred to as
``energy/utility consumption expenses.''
Comment: One comment stated that the cost of utilities, in
comparison with other operating expenses, is not sufficient to justify
a PHMAP indicator when other expenses are not measured at all under the
PHMAP.
Response: The Department disagrees. Currently, PHA utility expenses
exceed $1 billion annually and represent over one-quarter of PHA
operating expenses. It is clear that the cost of utilities is a major
operating expense that must be addressed on an on-going basis by
management. Congress recognized the importance of this issue by
including it in the statute as one of the mandatory indicators.
Therefore, the cost of utilities must be included in the PHMAP
assessment.
Comment: One Comment supported the elimination of measuring energy/
utility consumption for those PHAs scoring C or higher for component
#1, but stated that the energy audit rule at Sec. 905.302 should be
revised to require an audit every five years only for PHAs that score
lower than C. Otherwise, the Comment states, comparing energy and
utility cost to the average of a three year rolling base should be
eliminated as unnecessary.
Response: The Department disagrees. The Department addressed this
concern regarding audits for standard and high performers at the time
it issued the final rule at 24 CFR part 965 earlier this year. At that
time, it was noted that PHA utility expenses exceed $1 billion
annually, and the appropriation for operating subsidy for fiscal years
1994 and 1995 was sufficient to fund PHAs at 95% and 96%, respectively.
In fiscal year 1996, the appropriation for operating subsidy was only
sufficient to fund PHAs at 89%. It is not guaranteed that future
appropriations will result in a higher percentage of funding. Hence,
the Department must ensure that PHAs conduct audits as one means of
holding down operating costs, including the cost of utilities, and
ensuring that the limited funds available for operations are used as
efficiently as possible.
HUD's Office of Inspector General (OIG) recently completed an Audit
Report entitled ``Review of Opportunities to Reduce Utility Costs At
Public Housing Authorities.'' The OIG report was based on visits to
approximately 63 PHAs that manage 41% of the 1.3 million public housing
units nationally. The OIG indicated that, despite past efforts,
opportunities for reducing utility costs continue to exist and are cost
effective in many instances due to ongoing improvements in technology.
PHA managers need to be aware of, evaluate, and give maximum
consideration to these ongoing and new opportunities when managing
their utility costs. The OIG further states, that, because of
improvements in technology, managing utilities is a continuous process
that requires an ongoing energy management program.
Comment: One Comment stated that the rule needs a definition of
``energy audit'' and ``cost effective'' so that PHAs know how to
determine what is ``cost effective'' and what is not. In addition, the
Comment stated that the rule should also cross-reference the location
of any applicable HUD guidance on the matter.
Response: The terms referenced by the Commenter have previously
been defined at 24 CFR 965.303, PHA-Owned or Leased Projects-
Maintenance and Operation. However, as a result of President Clinton's
regulatory reinvention efforts and Executive Order 12866, Regulatory
Planning and Review, issued by President Clinton on September 30, 1993,
HUD commenced a comprehensive review of all of its regulations to
determine which regulations could be eliminated and streamlined. One
such review was with respect to 24 CFR part 965. The Department favored
providing PHAs with more flexibility to meet local custom and
eliminated those definitions. The Department still believes that those
definitions still represent a reasonable description for those terms
and may be used by PHAs. The revised PHMAP Handbook 7460.5 will include
cross-references to applicable HUD issuances as appropriate.
Comment: One Comment stated that the energy/utility component could
be greatly improved by lowering the standards and recommended adopting
a standard of a 10% increase for a grade C level performance and a 4%-
5% increase for a grade A.
Response: The Department believes that the current percentage
ranges are equitable and that a choice of using Option A or Option B,
which the Department has decided to adopt, offers PHAs much greater
latitude with regard to the energy/utilities component.
Comment: One Comment stated a preference to let Option A stand as a
separate indicator as it does now since Option B (energy audits) is not
funded by the Department.
Response: The Department disagrees with this rationale on the basis
of its belief that a sound energy management program is fundamental to
good property management and that energy audits are a cost of doing
business that should be included as a part of an agency's budget.
[[Page 68918]]
Comment: One Comment stated that, for purposes of PHMAP, Option A
should be modified to reinstate the HDD factor. One Comment stated that
if HDDs are not considered for PHMAP, the rolling base period should be
extended so as not to distort energy expenditure trend data due to
abnormal weather. One Comment stated that the elimination of the HDD
factor no longer offers adjustments for unusually harsh winters.
Response: The Department agrees that HDDs should be considered for
purposes of PHMAP if an HDD adjustment would significantly affect a
PHA's assessment. For purposes of PHMAP, therefore, a PHA may request a
modification to adjust consumption using an HDD adjustment for space
heating utilities provided that the same data source is used for the
current year as well as the three year rolling base period. The HDD
factors used by a PHA are subject to HUD State/Area Office approval.
Comment: One Comment recommended the elimination of Option A due to
conditions beyond the control of the PHA (e.g., rate increases) or
positive initiatives (e.g., increased resident programs that have
resulted in increased consumption to provide facilities for these
activities).
Response: As previously discussed, Option A measures only
consumption, not rate, increases and increased consumption due to
special circumstances, e.g., resident initiatives programs, will be
addressed in a revised PHMAP Handbook 7460.5.
Comment: One Comment proposed that Option B be modified to permit a
passing grade for PHAs that have conducted an energy audit and have an
implementation plan for all items in the audit in that it may not be
feasible to implement all recommendations given insufficient funding
and other priorities relating to health and safety.
Response: The Department agrees. A PHA may achieve a grade C under
Option B if it has completed the energy audit, developed an
implementation plan and is on schedule with its implementation
schedule, based on available funds. The implementation plan should
identify at least the items from the audit, the estimated cost, the
planned funding source (e.g., funds from 1998 operating budget, 1998
CGP, etc.) and the anticipated date of completion for each item. The
Department has changed the language in the new rule to reflect this
comment.
Comment: One Comment expresses concern that at the time of a PHMAP
self-certification, an audit report may have just been issued or may be
five years old. The Comment states that this would give some PHAs an
advantage and force others into an F grade. The Comment also questions
whether a PHA should implement all cost effective recommendations,
e.g., it may be cost-effective to use gas appliances rather than
electric, but could create a carbon monoxide danger in units of a
certain design. Other recommendations may be cost-effective over a very
long payback period but there may be higher priority needs. The Comment
recommends that Option B refer to an energy audit completed at least
two years earlier and implementation of all recommendations with a
payback period of five years or less unless the PHA has established
good cause for not implementing them.
Response: The Comment lacks specificity as to exactly how the
Commenter believes that the existence of an audit just issued or which
may be five years old will give any PHA an advantage. Not all PHAs are
going to do audits at the same time, nor would the Department expect
them to. As such, some PHAs will be completing work from a previous
audit while other PHAs are planning new work from a recently completed
audit. The Department does not have a problem with this sequence as it
expects energy management to be a constant, ongoing and evolutionary
process. Therefore, HUD has determined not to revise Option B to refer
to an energy audit completed at least two years earlier, and not to
adopt the suggestion that PHAs implement all recommendations with a
payback period of five years or less unless the PHA has established
good cause for not implementing them.
The Department has no problem with eliminating an otherwise cost
effective energy conservation measure (ECM) if the existing design
would render the measure hazardous. Issues such as this should be a
consideration during the development of the audit itself. At that
point, consideration would have to be given to the cost of work
necessary to make the ECM safe. If all costs are considered, including
the additional hazard, the ECM would likely not be cost effective.
The Department believes that a two year audit period is excessively
short and unnecessarily burdensome on PHAs, and has included in this
component the existing five year frequency contained in 24 CFR part
965. As noted above, during HUD's streamlining process of 24 CFR part
965, the definition of cost effective (a pay back period of 15 years or
less) was eliminated. HUD favors giving PHAs the flexibility to
determine what is cost effective. Therefore, HUD will not adopt the
recommendation of requiring incorporation of EMCs with a five year
payback. The revised PHMAP Handbook 7460.5 will include cross-
references to applicable HUD issuances, as appropriate.
Indicator #7, Resident Services and Community Building--Section 901.40
General Comments
Comment: One comment stated that this indicator combines several
distinct elements with the grading system, requiring a PHA to score an
A on each element in order to score an A on the indicator. The comment
added that these elements should be reorganized as separate components
within the indicator and the indicator grade should be a composite of
the component scores, as is the pattern in the other PHMAP indicators.
Response: The Department agrees with the comment and the new rule
reflects the changes. The new resident services and community building
indicator is now subdivided into four equally weighted components, and
the indicator or the individual components are subject to exclusion
based on the particular circumstances of each PHA. The name of this
indicator has been renamed ``Resident Services and Community Building''
to place a more accurate emphasis upon the specific role of PHAs for
these functions.
Comment: One comment suggested that the criteria for this indicator
should recognize innovations in program design or implementation beyond
the traditional grant programs that often require considerable effort
and resourcefulness.
Response: The Department agrees that PHAs should promote innovation
in the implementation of resident programs, especially if this results
in linkages to additional resources and measurable results. The
subdivision of the indicator into four components will provide more
flexibility to recognize this type of innovation when assessing the
indicator. The Department will provide further guidance, in the form of
examples of activities that PHAs could get credit under each one of the
components, in the revision of the PHMAP Handbook 7460.5.
Comment: One comment indicated agreement with the reduction of
weight factor from triple weight but suggested that a reduction to a
weight of x1.5 would be more appropriate.
Response: The Department disagrees with the comment. A weight of x1
in the new 100 point system represents 10% of the score. A weight of x3
in the current 220 point system represents 13.6% of
[[Page 68919]]
the score. It should also be considered that some elements of the
current resident initiatives indicator are now covered in the new
security indicator. The Department feels that the weight assigned to
the new resident services and community building indicator is adequate.
Comment: One comment stated support for a PHMAP indicator measuring
resident involvement, but expressed disappointment with the language of
the proposed rule and indicated that the current rule gives more
flexibility and offers a broader base for resident participation.
Another comment stated that the proposed scoring aspects of the
indicator appear unrealistic. Both comments suggested HUD retain the
current indicator.
Response: The Department disagrees that the current resident
initiatives indicator should be retained, without changes, in the new
rule. The Department agrees that the indicator required some
clarification in order to make it easier to assess and score and the
new rule reflects those changes.
Comment: Two comments requested that the term ``on-going management
issues'' be defined. The comments argued that this is a very broad term
and could create problems if PHAs are required to pass all on-going
management issues by the residents because business delays would be
very costly. The comments stated that this is not a practical
requirement and that the term ``ample opportunity'' is too vague.
Another comment requested that the terms: ``Section 3 program,''
``monitors progress,'' ``issues reports,'' ``encouraged the formation
of a resident council,'' ``mechanisms to ensure residents have ample
opportunity for input,'' and ``percent of goals met under
implementation plan'' be defined in the rule.
Response: Many of these terms have either been revised, or the term
is defined elsewhere in the Code of Federal Regulations. The Department
will add any applicable guidance regarding such terms in the revised
PHMAP Handbook 7460.5.
Comment: The Department received several comments regarding
applicability of this indicator to small PHAs. One comment stated that
it is impossible for small PHAs to organize a workable resident
initiatives program with part-time staff and that the indicator imposes
too much extra work and is an administrative burden for small PHAs.
Another comment indicated that small PHAs don't have the resources to
handle this workload and residents don't have the interest. Five
comments proposed that PHAs with 100 units or less be exempted from
this indicator and that only large PHAs be assessed under it.
Three comments suggested that the indicator be removed for all
housing authorities, or revised to consider only PHAs of 250 or more
units. The comments proposed that as a minimum, PHAs with 249 or less
units should be exempted. The comments argued that HUD has used 249 or
less units as criterion for ``small housing authorities'' for nearly
all aspects of funding such as CIAP vs. CGP, Youth Build Grants,
Vacancy Reduction Grants, or Tenant Opportunity Program grants. Another
comment indicated that maybe this indicator exclusion should be for all
PHAs with less than 500 units.
One comment stated that small PHAs should be assessed under the
indicator because residents of these PHAs also have a right to
involvement in PHA management. One comment indicated that under the
proposed changes, HUD has the appearance that it no longer cares what
these smaller PHAs are doing. Another comment added that all PHAs
should be assessed under the indicator in order to ensure that they are
informed of the programs available and are conforming, to the best of
their ability, to the Section 3 program. One other comment stated that
since many PHAs over the past three years have gotten extensively
involved in aspects of resident initiatives, it seems unfair to
automatically exclude the efforts of those who have performed and
earned merit. Another comment suggested that PHAs with 100% elderly
units be excluded from this indicator.
Response: The Department agrees that since it has used fewer than
250 units as a threshold for ``small housing authorities'' for nearly
all aspects of funding, the same criterion should and is being used for
applicability of this indicator. This policy is consistent with the
Tenant Participation and Tenant Opportunities regulation (24 CFR part
964) which has a participating threshold of 250 units, and it is also
utilized in the CGP. In addition, PHA's with 100% elderly developments
will not be assessed under this indicator. To avoid penalizing small
PHAs with active programs, PHAs with fewer than 250 units or with 100%
elderly developments may request to be assessed under the indicator at
the time of PHMAP certification submission.
Comment: Two comments indicated that what this indicator measures
is not a property management issue, but a social issue related to PHAs.
The provision of social service support is not a function of PHA
management any more than it is a function of privately owned or Section
8 residential property management.
Response: The Department understands that active resident
participation and involvement have a direct affect on property
management and are a key element to a successful, well managed public
housing community. The Department provided a separate resident
initiatives indicator and component on resident involvement in PHMAP
because there is considerable evidence that resident services programs
can help to promote and sustain housing authority management successes.
Various tenant participation initiatives (patrols, neighborhood clean-
ups, etc.) can reduce vandalism and project maintenance. Resident
employment initiatives get residents involved in positive pursuits and
employed residents can act as role models for others. Overall,
involving residents in the various facets of property management--as
trainees in a landscaping project or as participants in screening
prospective residents--can showcase self-improvement and individual
responsibility and contribute substantially to building positive and
strong public housing communities.
Comment: Two comments requested HUD to clarify if the indicator
intends to ``examine efforts'' or to ``require efforts'' and argued
that it seems that it has been prescribed to require PHAs to develop
and administer programs that at times are not funded by HUD, are not
long-term commitments by HUD, and in most cases, the results of
performance are predicated on the residents' willingness to
participate. It is not equitable to score a PHA on items that are
beyond the PHA's control. It is equitable to request PHAs to adopt
resolutions encouraging participation. Another comment indicated that
this is an unfunded mandate.
One comment stated that the performance message has now been
confused with compliance items. Another comment indicated that PHMAP is
intended to be a performance-based assessment system in which
indicators must be written so that standards and criteria are clear,
measurable, and capable of being duplicated from one PHA to another.
The comment added that too much of this indicator is process-oriented,
not performance-based and that adopting programs and ``mechanisms'' is
administrative process and offers no guarantee or measure of results.
One other comment stated that the indicator, as currently structured,
will be very difficult to grade and will produce very inconsistent
results. Three comments recommended that this indicator be
[[Page 68920]]
deleted entirely because it measures process and not outcomes.
Response: This indicator has been revised to hold PHAs accountable
only for the functions they perform in operating resident services
programs. The indicator has been subdivided into four separate
components to make it easier to assess and grade: economic uplift and
self-improvement; resident organization, resident involvement; and
resident programs management. Each has been reshaped to address the
public comments, especially to focus solely on the PHA's
responsibilities for resident services. The indicator has been renamed
``Resident Services and Community Building'' to place a more accurate
emphasis upon the specific roles of PHAs for these functions.
In response to concerns about short-term resident initiatives
funding, it should be emphasized that PHAs would only be assessed for
programs for which it has been funded. PHAs could also get credit for
programs implemented through a partnership, for which the funding was
made available through another of the partners.
Component #1, Economic Uplift and Self-Improvement
Comment: One comment stated that under the proposed changes, HUD
adds a Section 3 requirement that has mixed adherence throughout the
country. Another comment indicated that in small communities there are
very few Section 3 programs and if there is one and the contractor's
contract calls for them to hire Section 3 people, all a PHA can do is
inform the residents that they may apply. One other comment argued that
the implementation of Section 3 programs and the number of residents
hired by the PHA is not a measure of its management. The comment
concluded that resident self-sufficiency and related programs don't
have any place in a management assessment program.
One comment indicated that to implement Section 3 training, you
must have residents willing to participate. It stated that most of
their residents are elderly, handicapped or have very small children
and many are not able to work. Another comment stated that the Section
3 program may be disadvantageous to large municipalities facing a
hiring freeze. Another comment stated that Section 3 is a mandate for
any department using federal funds, and should not be a centralized
program, as indicator #7 seems to require. It added that there seems to
be no final rule for Section 3 in Public Housing (24 CFR part 135) and
its status seems in doubt.
One comment mentioned that it does not have a concern with the
Section 3 program emphasis because it has a great program now, but it
is concerned with future funding and the impact if no new funding is
available to continue the program. One comment agreed with the
Department's efforts to emphasize the Section 3 program and another
comment recommended that PHAs be required to show results in employment
efforts in subsequent years to add to the results oriented focus. One
other comment stated that it is difficult to be consistently abreast of
a PHA performance under Section 3 and resident employment and suggested
that it must be a PHA requirement to report resident employment to the
HUD office in order to assess this criteria. Another comment stated
that Section 3 is already a requirement and argued that PHAs should not
get credit for something they are already required to implement. It
further suggested that credit be given only for those things that PHAs
do that are over and above HUD requirements such as internship programs
or on the job training plans and also for using CGP funds to assist
resident groups and develop security measures.
Response: The inclusion of an employment-related subcomponent in
the resident initiatives indicator reflects the Department's emphasis
on economic uplift as a proactive means to reducing dependency, and as
mandated by the recent welfare reform legislation. The Department
understands that there is considerable evidence that the increase in
working families is very beneficial to property management. Because of
the importance of this area, the Department wishes to give PHAs credit
for the leadership role they can perform in employment-related
initiatives. The Department has expanded the definition to include all
employment-related initiatives, not just Section 3 or those in the
public sector. Section 3 is effective as an interim rule and should be
viewed as one tool in employment related initiatives.
In response to comments that the indicator be strengthened,
language has been added to the indicator to require the PHA to provide
evidence that they have one or more economic uplift and self-
improvement programs and partnerships for economic uplift, including
but not limited to, Section 3 initiatives. Such opportunities can be
provided either directly or through non-PHA partners. The Department
believes it is important for PHAs to get credit for their initiatives
in promoting employment opportunities for residents. It is expected
that PHAs will provide data on the number of residents by development
in employment-related programs as well as evidence of the number of
residents obtaining employment. PHAs can use Multifamily Tenant
Characteristics System information to measure employment.
While the Department is supportive of PHAs efforts to measure
employment, the indicator only requires that PHAs implement programs
(HUD funded or non-HUD funded through partnerships) in its family
occupied developments and set up and implement a system for measuring
progress. The Department is not trying to dictate specific numeric
employment goals but rather emphasizing activities that help measure
PHA effort in implementing these programs.
Component #2, Resident Organization
Comment: One comment stated that HUD's encouragement of a resident
council at each family development site assumes that resident councils
are an absolute for every family development, regardless of the size of
the development. Resident councils for some small developments are not
only not necessary, but impractical. Another comment indicated that
family developments are often built on scattered sites throughout a
wide geographical area. The comment added that it is next to impossible
to establish a resident council under these conditions and that this
goal should be voluntary in these situations.
Response: Current HUD requirements give PHAs and resident
communities the flexibility to determine how resident councils are
organized. There is no specific requirement for a resident council at
each development. The local public housing community should determine
what kind of representation system suits its needs and makes the most
sense. In larger developments, a separate resident council is merited.
In smaller PHAs, a city-wide council may be more appropriate.
Comment: One comment stated that the current rule is supportive of
resident councils and other resident groups while the proposed rule is
too restrictive because it only makes reference to resident councils.
The comment added that, while highly desirable, it is not always
possible to organize and conduct development-wide elections and it
urged the Department to reinstate the ``or other resident groups''
language of the current rule. Three comments suggested that the
indicator reference to resident councils at each PHA family development
should be changed to specify ``HUD recognized resident councils.''
Response: HUD is supportive of all resident organizations that work
to benefit the residents, but the indicator
[[Page 68921]]
does not pretend to cover all possible forms of resident organization.
The Department considers that resident councils, as official vehicles
of resident representation, should be encouraged and the indicator
measures PHA efforts to promote this goal. In regards to the issue of
``HUD-recognized resident councils,'' the Department understand that it
is not HUD's role to certify resident councils and that it is the PHA's
responsibility to certify if such organizations have been formed in
compliance with approved regulations, policies and procedures.
Component #3, Resident Involvement
Comment: Four comments stated that PHAs should not be penalized for
lack of participation by the residents provided the PHA promotes self-
sufficiency programs and community involvement. The comments indicated
that PHAs may offer a variety of programs and training for residents,
but they cannot make residents attend and participate. Another two
comments recommended that an exclusion of the indicator be permitted in
such cases where a PHA can show that the residents are not interested
in forming a resident council and do not want to be involved in any of
the programs covered by this indicator. One other comment also
recommended to make each component potentially able to be excluded,
based upon PHA's situation. Two comments stated that this indicator
cannot accurately establish levels of participation, interest, etc., of
the residents, it only measures the level of opportunities the PHA
makes available to its residents. Therefore, it cannot measure
performance.
Response: The Department agrees that PHAs cannot be made
responsible for lack of interest by residents in organizing resident
councils, but PHAs can be assessed on their efforts to promote and
facilitate the organization of resident councils by activities such as:
facilitating space for meetings, providing training, access to bulletin
boards, helping to schedule and promote meetings, approving Board
policies and developing PHA procedures for certifying resident
councils.
In response to some of the concerns expressed in the comments, the
Department changed the indicator to subdivide it into four components.
This component measures PHA efforts regarding resident councils, and
PHA collaboration and support to existing resident councils or to those
that are in the process of being organized. A PHA is not responsible
for the formation or continuation of resident councils as these
functions are the responsibility of the resident councils. The
Department is making the indicator and each of its components subject
to exclusion. This would certainly apply to cases where the PHA can
show evidence that it has predominately scattered site units and that
residents are not interested in these programs. The Department will
provide additional guidance to PHAs on this issue in the revision of
the PHMAP Handbook 7460.5.
Comment: Three comments indicated that resident involvement is
simply not an appropriate measure of a PHA's management capability.
Response: The Department disagrees and as mentioned earlier,
believes that active resident participation and involvement have a
direct affect on property management and are key elements to a
successful, well managed PHA. In addition, there is considerable
evidence that resident involvement and resident services programs can
help to promote and sustain housing authority management successes.
Resident Surveys
Comment: One comment stated that resident surveys would be time
consuming, but may be helpful. Another comment suggested that PHAs
should be required to complete a resident survey on the fear of crime
and the measure of disorder in each community once a year.
Two comments stated that resident surveys are most important in
order to establish programs in which the residents are interested and
suggested that PHAs be required to report on whether they conduct
resident surveys for modernization or whether the PHA attempts to
conduct resident surveys or communicates with newsletters. Five other
comments expressed support for resident surveys, with one proposing an
annual standardized survey used as a learning tool by PHAs and another
three arguing that standardized surveys should only be used as models
for PHAs to develop locally oriented surveys.
One comment suggested that resident surveys be optional for well
managed PHAs and required under the MOA for troubled PHAs. Another
comment stated that conducting resident surveys is a good idea, but HUD
should allow PHAs to complete regular surveys in lieu of HUD's mandated
ideas of what resident involvement means.
Two comments indicated that PHAs should be encouraged, but not
required, to conduct such surveys, with HUD assisting in the
development of survey formats and data analysis models that PHAs may
use for this purpose. The comments argued that if HUD wishes to use
customer satisfaction as the basis for the PHMAP score, then HUD should
conduct the survey itself using some type of sampling technique that
employs consistent and statistically reliable methods. Another comment
expressed concern with the feasibility of implementing this measure in
small PHAs with a majority of elderly and residents with disabilities.
Another comment stated that consumer satisfaction is critical in
public housing and a survey of residents may be a way to gauge
satisfaction. Surveys should not be conducted by PHAs; that would add
too much paperwork and residents would feel inhibited to express their
true feelings. Surveys should be conducted by private contractors,
using a standardized form on a statistically significant sample of
residents (using MTCS data to assure a diverse and representative
group) from each PHA. The results would be shared with HUD and the PHA.
Ten comments stated that resident surveys as suggested would only
amount to more paperwork with few, if any, tangible results. A survey
completed by the resident council or advisory board would be more
accurate and more useful. Another three comments stated that the
present contact with residents is sufficient to adequately assess their
level of satisfaction. One comment indicated that no new unfunded tasks
should be imposed on PHAs through PHMAP.
Four comments indicated that surveys, by their nature, are
subjective in orientation and often reflect the goals of the entity
doing the survey. There are too many variables which would affect the
responses. To direct PHAs to design and implement their own surveys
would be a self-serving exercise of little real value. For HUD to
develop a standard survey to be used by every PHA, each with its own
set of problems and capabilities, would result in a document devoid of
any real meaning. Another two comments stated that surveys are complex
to develop and can be resented or distrusted by residents. Four
comments expressed concern with the cost to PHAs of implementing
resident surveys and indicated that a national format is not a good
idea because of the special local conditions. Another comment stated
that PHAs shouldn't be penalized for lack of resident response to these
surveys.
Two other comments argued that total consumer satisfaction is
impossible to achieve and even more difficult to measure. Requiring
PHAs to conduct periodic surveys for this purpose is an undue burden,
especially on large PHAs
[[Page 68922]]
where housing projects are distant from one another and from the PHA.
One comment recommended that this be a voluntary activity and that
it not be included in performance measurements. Another comment
requested HUD to provide technical assistance in the area of assessing
consumer satisfaction, but discouraged the creation of a new reporting
requirement. HUD could distribute information to PHAs on how to design,
develop and implement resident satisfaction surveys. It is unrealistic
to expect that a single resident survey instrument will necessarily be
meaningful to every PHA and every resident population. In times of
diminishing operating subsidies, HUD should not force PHAs to conduct
such surveys only for the sake of PHMAP.
Response: In response to the comments, the Department decided not
to require the implementation of resident surveys as part of the PHMAP
process. Although it is not required, PHAs may consider the voluntary
use of this optional tool to obtain resident input and to measure
resident involvement and satisfaction.
The Tenant Participation and Tenant Opportunities regulation (24
CFR Sec. 964) stipulates that PHAs shall encourage full resident
participation and partnership with the PHA. The Department does not
want to provide overly specific instructions to PHAs, but instead wants
to offer options for alternative approaches for promoting constructive
resident participation and customer satisfaction. Therefore, the
component on resident participation has been changed to require a PHA
to provide evidence that the PHA is providing meaningful ways to
communicate and partner with residents concerning the quality of life
and housing management services (such as screening, relocation, capital
improvements), but is not prescribing the specific method(s).
Possible methods used by PHAs would include, but not be limited to:
resident membership on the PHA Board of Commissioners or on specific
policy committees that contribute substantially in planning and
implementing PHA programs; regular resident consultation through
ongoing, scheduled meetings with the PHA-certified duly-elected
resident councils; regular communication mechanisms with residents,
such as a newsletter, as well as other means such as customer surveys
and focus groups.
Component #4, Resident Programs Management
Comment: Several comments stated that PHA performance should not be
assessed based on grants and activities that are not under the control
of the PHA. Sixteen comments indicated that TOP and TAG are controlled
by the resident organization and not by the PHAs and that it would be
unfair of HUD to hold PHAs accountable for tenant organization grants
that are not under the PHA's control. One of the comments suggested
that HUD eliminate this component. Another comment asked if a PHA would
get credit if its resident organization implements a TOP grant
training.
Response: The Department agrees that PHAs should not be held
responsible for resident activities or grants that are not under their
control and the new rule reflects these changes. The indicator has been
revised in order to assess PHAs for the functions they perform in
operating resident services programs and for resident management or TOP
performance only when the PHA is the contract administrator for the
program.
Comment: One comment stated that in order to meet 90% of the goals
as defined in the grants, a PHA would need to adjust those goals under
various circumstances, i.e., numbers versus percentages; either the
grant plan should allow for a percentage versus an exact number to be
included, or the goal must be flexible enough to change when
circumstances dictate.
Another two comments indicated that this indicator requires the
documentation of achievement of a certain percentage of goals under
resident initiative programs, but goals tend to be few and somewhat
unquantifiable; such program goals should not be measured by PHMAP
unless the goals had been articulated with the understanding that they
were to be quantifiable and achievable within the grant term; progress
is often in the hands of the tenants and tenant leaders.
Two comments stated that there is general concern that measuring
performance in meeting grant goals may be difficult to evaluate and may
not be representative of performance. There is a clear incentive for
PHAs to establish easily attainable goals to protect a good PHMAP
score. We believe the goals for such programs should be set as high as
possible and used as targets for achievement. Some other system of
measurement should be found. This should be measured in the criteria
used to determine management capability in the competition to receive
grants.
One comment argued that HUD shouldn't ask PHAs to document goals
met under resident initiatives programs. Those programs already have
exhaustive reporting requirements.
One comment stated that the standard defined as 90% and 60% of goal
attainment under the implementation plan for any and all of the grant
programs are too stringent and perhaps inappropriate to the goals being
measured. The measure of goal attainment based on implementation
strategies is at best subjective and at times affected by conditions
beyond the control of the PHA.
One comment indicated concern with the indicator measuring resident
involvement via any resident related grants received by the agency. The
comment argued that HUD would do better to leave grant measurements
with the specific grant processes and perhaps rate PHAs on whether they
have a system to become informed about resident related grant
opportunities or if they have applied, assuming they have resources to
do so.
Another comment indicated that Sec. 901.40(a)(4) attempts to
measure compliance in many categorical funding programs in which PHAs
are voluntary participants and that have their own contractual
requirements and enforcement mechanisms. If HUD were to grade
compliance with these contracts under PHMAP, HUD would be unilaterally
imposing new contractual provisions that substantially alter the
consequences of performance or non-performance. Provisions of this
nature should not take effect unless and until they are subject to
negotiation between the contracting parties.
One comment stated that applying for social service grants is a PHA
option, not a requirement. PHAs that do not elect to apply are
appropriately not penalized. How can evaluation of a PHA's performance
of optional activities be used as a basis to rate the PHA's management
performance?
Response: The Department included resident grant progress as a
component of the resident initiatives indicator because it is critical
that any available categorical grant funding be utilized effectively to
meet the defined work plan objectives of the specific programs. This
component would only apply if the PHA has responsibility for
administering one or more grant programs.
By applying to these programs, a participating PHA accepts
implementation requirements attached to them. Goals for these programs
are developed by the PHA and should reflect realistic expectations of
what the
[[Page 68923]]
PHA proposes to accomplish. The rule reflects some margin of
flexibility in grading the percentage of goals achieved. Assessing PHAs
on performance in managing grant programs is not new to PHMAP. PHAs are
assessed under other areas of their management, including performance
in managing grant programs (competitive or formula) such as
modernization. In addition, the Department has revised the regulation
to eliminate assessment of the resident management or TOP unless the
PHA acts as the contract administrator for the resident grantee.
Section 901.45 Indicator #8, Security
General Comments
Comment: There were fifteen comments recommending that indicator #8
not apply to smaller PHAs, described variously as those PHAs with fewer
than 500 units, fewer than 250 units, and fewer than 100 units. One
comment felt that all PHAs, regardless of size, should be assessed
under this indicator because crime and drugs exists everywhere.
Response: In response to the comments received, the Department has
determined that indicator #8 will apply to PHAs with 250 or more units
under management. To avoid penalizing small PHAs with active programs,
PHAs with fewer than 250 units can request to be assessed under the
indicator at the time of the PHMAP certification submission. However,
PHAs with fewer than 250 units should be keeping records of crime,
reporting it to local law enforcement, administering rigorous screening
criteria, evicting residents who engage in criminal activity, and
meeting the goals specified by categorical grants as good management
practices, even though they are not required to be measured on this
activity.
Comment: There were two comments specifically supporting ``One
Strike and You're Out'' and screening and eviction policies through
indicator #8. Two commenters mentioned that constraints in existing
State law or the local court system have made it difficult to comply
with the intent of the one strike policy. Two other commenters
indicated that PHAs should be required to submit evidence that they
have implemented eviction policies that could be monitored through
tracking systems.
Response: The Department is pleased that there is a positive
response to its one strike policies which are established pursuant to
the ``Housing Opportunity Program Extension Act of 1996'' and PIH
implementing guidance (Notice PIH 96-27), which provided additional
guidance to PHAs in the areas of screening, lease enforcement and
eviction in order to help PHAs fight crime. The one strike policy must
be implemented within the context of the applicable State laws and
court systems. PHAs will not be required to submit documentation at the
time of certification; rather, PHAs are required to maintain supporting
documentation for all of the indicators it certifies to for HUD post
review. To assist PHAs in setting up and operating successful programs,
the Department will provide examples of best practices in the
forthcoming revised PHMAP Handbook 7460.5.
Comment: There were four comments that felt that this indicator
would place unnecessary administrative burdens on a small PHA that does
not have a crime problem and is already cooperating with the local
police department. In addition, small PHAs do not have the resources
(funds and personnel) to perform the security measures required by this
indicator.
Response: Current practices by PHAs show that the cooperation of
PHAs and local law enforcement for the collection and reporting of PHA
crime information is not always a cost issue. Please note that the
Extension Act permits PHAs to request criminal conviction records of
adult applicants from the National Crime Information Center (NCIC),
police departments and other law enforcement agencies. The Public
Housing Drug Elimination Technical Assistance Program can be used to
assist PHAs in developing appropriate collection systems and data
bases. The Department anticipates that the use of NCIC and other data
sources in addition to the technical assistance from HUD will enable
PHAs to obtain necessary information in a timely manner.
Comment: Three comments felt that there should be a policy designed
for small PHAs and one for large PHAs. It will be very difficult for a
small PHA with no security problem and no resident involvement to make
a passing grade in this indicator.
Response: Rather than have a separate security indicator for small
and large PHAs, the Department has determined that PHAs with fewer than
250 units shall be exempted from this indicator unless the PHA requests
to be assessed under the indicator at the time of the PHMAP
certification submission.
Comment: Three comments stated that the criteria listed for this
indicator are measures of process and not necessarily results. A more
appropriate measure would include actual crime data. Also, indicators
of vacancy percentage and financial management are directly related to
the degree of security in the developments.
Response: This indicator has been revised to reflect the comments
received and its components now more accurately measure results. The
Department agrees that vacancies and financial management are directly
related to security in the developments, but performance in these areas
are measured under indicators #1 and #6.
Comment: One comment suggested that this indicator shouldn't apply
until adequate time is provided for PHAs to establish the proper
documentation, reporting, and tracking criteria to successfully score
in this indicator. Another comment strongly requested that HUD require
data be provided beginning with the next fiscal year after the
effective date of the provisions of this indicator because it would be
very difficult to secure data from January 1, 1996, to the present.
Response: The Department has determined that the new rule will
apply to PHAs with fiscal years ending the quarter after the new rule
is published in the Federal Register.
Comment: One comment stated that this indicator combines several
distinct elements with the grading system, requiring a PHA to score an
A on each element to score an A on the indicator. These elements should
be reorganized as separate components within the indicator and the
indicator grade should be a composite of the component scores, as is
the pattern in the other PHMAP indicators.
Response: The Department will grade this indicator as a composite
of the sub-component scores, as is the pattern in other PHMAP
indicators.
Comment: One comment felt that security is not a property
management issue, but a social issue related to PHAs, and was outside
of the PHA's control. Another comment stated that reducing crime and
drugs was an appropriate property management issue.
Response: In both public and private property management, crime and
drug problems have a direct affect on property management. Because of
this, the Department has determined it is critical that this indicator
apply to all PHAs with 250 units or more under management.
Comment: One comment stated that this indicator will be very
difficult to grade objectively and consistently. The terms ``mechanism
to track crime-related problems'' and ``system for taking action'' are
vague and undefined and need clarification. Two comments questioned the
meaning of ``document results in screening out'' various applicants.
One comment felt the proposed measure of PHA actions to appropriately
screen out applicants and
[[Page 68924]]
evict residents who engage in criminal activity is the only appropriate
measure of PHA management performance under this indicator.
Response: The Department has rephrased this component and the first
two phrases mentioned are no longer included in the new rule. The third
phrase commented on has been revised to say, ``can document that it
successfully screens out and denies admission to a public housing
applicant who * * *'' and ``can document that it successfully evicts a
public housing resident who * * *'' This new language more clearly
embodies the intent of the one strike policy. The Department agrees
with the last comment.
Comment: One comment felt that the term ``crime'' should be defined
to avoid wasting time on crimes that do not affect the safety/security
of residents.
Response: The Department has not established one uniform national
definition of crime, since different types of crime represent different
threats, and vary among communities. HUD believes each PHA should
decide what constitutes criminal violations that are unacceptable to
the local community. In general, the crimes against which PHAs should
screen applicants are those that would pose a threat to the health or
safety of other residents or PHA staff, or a financial risk to the PHA.
These crimes would be lease violations. These are the crimes against
which applicants should be screened and for which violators be evicted.
Comment: One comment stated that Sec. 901.110(e) should state that
indicator #8 should be excluded automatically for PHAs with 100 or
fewer units.
Response: The Department agrees with this comment and the rule has
been changed to state that this indicator does not apply to PHAs with
fewer than 250 units under management unless the PHA requests to be
assessed under the indicator at the time of the PHMAP certification
submission.
Comment: One comment reflected that criteria #2 and #3 deal with
screening and evictions. If HUD is to allow a PHA to self-certify on
this indicator, the PHA should be required to submit evidence of
policies and leases to support the certification.
Response: The Department disagrees and is requiring that a PHA
maintain supporting documentation for all of the indicators it
certifies to for post review by HUD or the independent auditor rather
than submit additional documentation at the time of certification.
Comment: One comment felt that too many communities already have
police departments that avoid their responsibilities in public housing
``projects'' for reasons that include the perception that public
housing is a Federal rather than local responsibility. This indicator
plays into that mind set, and therefore, hurts the crime fighting goals
PHAs and HUD share.
Response: The Department believes that the establishment of one
strike leasing, eviction and related processes have already proven to
be effective in crime/drug reduction. This indicator has been designed
to measure the implementation of mechanisms that many PHAs have already
used successfully in developing safe and secure environments for public
housing residents.
Comment: One comment believes that this is the most important
indicator for large PHAs where crime is a critical problem, and should
have a greater weight than x1.
Response: The Department agrees that this is a very important
indictor. This indicator and indicator #7, resident involvement, have a
combined total of 20 points in a 100 point scale. The Department feels
that this is an equitable distribution when the importance of all of
the indicators are considered as a whole.
Comment: One comment thought that PHAs should request help from the
HUD State Coordinator in getting assistance from law enforcement
agencies.
Response: The Department recommends that a PHA first contact its
State/Area Office for technical assistance in obtaining assistance from
law enforcement agencies, and to explore alternative solutions. HUD
agrees that the State Coordinator and the Area Representative should be
advised of unresolved difficulties in implementing the one strike
policy. The Department will provide assistance, as appropriate, to
further the implementation of the one strike policy.
Comment: One comment suggested that additional criteria should be
considered that would give recognition to PHAs that have made
tremendous progress in arresting crime and/or have established resident
patrols to assist in crime reduction.
Response: The Department appreciates the suggestion, but feels that
the appropriate vehicle for such recognition is its Performance Awards
Ceremony.
Comment: One comment suggested there be a criterion that measures a
PHA's efforts to get resident involvement in citizen patrols.
Response: The Department agrees that citizen patrols are very
effective in helping to reduce incidence of crime in a community, and
this criterion is indirectly measured under components #1 and/or #4 of
this indicator.
Component #1, Tracking and Reporting Crime Related Problems
Comment: Thirty comments felt that PHAs should not be held
accountable under indicator #8 for cooperation with local police
departments and other community agencies, as this partnership was
beyond their control. At least one commenter expressed concern about
being able to access criminal data. Another commenter indicated that
PHAs do not have the authority to address crime problems.
Response: As a result of these concerns, the Department has
determined that PHAs will not be assessed for partnerships with the
local police departments and other local agencies, with the exception
of grade A. Grade A of this component has been revised to assess a
PHA's cooperative system for tracking and reporting incidents of crime
to local police authorities. Grades below an A assess only the
reporting of incidents of crime to local police authorities. Although
PHAs will not be measured under this criterion for grades below an A,
it is essential for PHAs to work closely with local and State agencies
in order to operate effective crime and drug prevention programs. Also,
while PHAs do not specifically have the authority for arrests, they can
utilize one strike to deny admission or evict known criminal violators.
Comment: Five comments thought that documentation from local law
enforcement agencies might be a method of reporting crime in small
housing authorities.
Response: The Department couldn't agree more. All PHAs are
encouraged to develop partnership relationships with local law
enforcement entities, and all PHAs should be keeping records of crime,
reporting it to local law enforcement, administering rigorous screening
criteria, and evicting residents who engage in criminal activity.
Comment: One comment stated that HUD shouldn't ask PHAs to try to
require their municipal police departments to act beyond the scope of
the Cooperation Agreement.
Response: It is not intended that tracking and reporting crime-
related problems would in any way mandate PHAs to require their
municipal police departments to act beyond the scope of the Cooperation
Agreement. A PHA should always act within the scope of the Cooperation
Agreement and should never require another agency to act beyond the
scope of the Agreement.
[[Page 68925]]
Comment: One comment stated that PHAs that complain that they
cannot negotiate obtaining monthly calls for service confirm that they
have poor relations with their local police departments.
Response: Although this may be true, it is not necessarily through
lack of trying. A PHA should continue to negotiate working
relationships with local law enforcement entities.
Component #4, Grant Program Goals
Comment: Five comments reflected that this indicator requires the
documentation of achievement of a certain percentage of goals under
resident initiative programs, but goals tend to be few and somewhat
unquantifiable. Such program goals should not be measured by PHMAP
unless the goals had been articulated with the understanding that they
were to be quantifiable and achievable within the grant term. There is
general concern that measuring performance in meeting grant goals may
be difficult to evaluate and may not be representative of performance.
There is a clear incentive for PHAs to establish easily attainable
goals to protect a good PHMAP score. Four of these commenters felt that
some other system of measurement should be found, or the indicator
eliminated. One commenter proposed that the goals be set as high as
possible and used as a target for achievement. Seven commenters
indicated that PHAs should not be rated on this indicator unless there
was specific funding for all PHAs, and therefore, this program area was
an unfunded mandate. One commenter stated that PHAs should only be
rated on resident initiatives, not security. One commenter questioned
why the goal did not track progress in goal achievement under the Drug
Elimination program.
Response: The Department believes that the establishment of one
strike leasing, eviction and related processes have already proven to
be effective in crime/drug reduction. This indicator has been designed
to measure the implementation of mechanisms that many PHAs have already
used successfully in developing safe and secure environments for public
housing residents. Grant goals are part of the overall evaluation of an
application for funding. If a PHA has unrealistic goals, they are
either renegotiated, or the PHA does not receive funding.
The Department has determined that security will continue to be a
separate indicator because it is integral to good management and can be
accomplished without additional funding, or with operating subsidy and
comprehensive grant funds. PHAs should make use of these or other
allowable funding sources to address crime and security problems. The
Department cannot restrict factors to those in the Drug Elimination
Program since crime problems affect all PHAs, not only those that have
successfully competed for drug elimination grants.
Comment: One comment stated that goal achievement should be
measured in terms of program implementation (which it is within the
power of the PHA), not impact on crime (which is beyond the control of
the PHA). A range from 85% to 100% should be establish for achieving an
A grade.
Response: The Department has determined that a PHA will achieve a
grade A for this indicator if it is meeting at least 90% of its goals
under the implementation plan for any and all of these programs.
Data Collection--Sec. 901.100
Comment: Thirty comments stated that 45 days to submit the
certification is a concern because PHAs are busy completing their year
end work. It would cause a problem for small PHAs that have limited
human resources to complete all other fiscal year end reports required.
The time to submit should remain 90 days. Two comments stated that 45
days to submit its certification would be sufficient time as long as
there was a quorum for the Board meeting, and as long as the process
works smoothly. Seven comments recommended that certifications should
be submitted 60 days following the end of a PHA's fiscal year.
Response: HUD is attempting to balance the need to make the PHMAP
scoring as quick and timely as possible, so that it more accurately
reflects a PHA's current status, with the additional year end burden it
represents to both PHAs and HUD itself. In light of the above comments,
the Department has determined that a better balance is achieved with a
60, rather than 45, day submission period, and the rule is amended
accordingly.
Comment: Two comments pointed out that PHAs that request and
receive an extension to submit their fiscal year end financial reports
should also be granted an extension to file their PHMAP certification.
Large PHA's must routinely ask for extensions to submit their year end
financial statements.
Response: The Department agrees with the comment. To satisfy
administrative requirements, PHAs must submit extension requests or
waiver requests for both their fiscal year end financial reports and
their PHMAP certification. However, a State/Area Office may grant an
extension for the submission of year end financial statements for a
period of no more than 90 calendar days. Requests for extensions for
more than 90 calendar days, or requests for extensions in addition to
the initial 90 calendar days, shall be approved by the Assistant
Secretary, as well as waivers for the submission of a PHA's PHMAP
certification.
Comment: Two comments felt that PHMAP should be more flexible so as
not to discourage otherwise outstanding performance due to late
submission of required reports or a PHA's inability to review and
approve submissions more quickly. Lateness should not have the effect
of decimating the performance ratings in all areas rated by PHMAP.
Response: The Department disagrees with this comment, and will
retain the option which permits State/Area Offices to award a
presumptive rating of failure in all of the PHMAP indicators if
required reports have not been submitted to HUD in a timely manner. HUD
believes that outstanding performance includes a PHA's ability to
submit in a timely manner required reports that are used to calculate
the PHA's PHMAP score.
Comment: Two comments felt that the revisions to the rule may
require major changes in the systems used to maintain records related
to PHMAP. Changes in a PHA's information systems will be both costly
and burdensome. It will require PHAs to focus important resources on
administrative areas that will not improve the manner in which quality
housing is provided to low-income families.
Response: HUD recognizes that, at least initially, the changes made
by this rule to improve PHMAP will impose a burden on PHAs who will
have to make necessary adjustments in their information systems. As was
the case for the previous rule, it is expected that as the collection
and organization of the data will become more routine following the
first submission, the associated burden will also decrease.
Comment: One comment felt that the time frame for submission should
relate to the size of the PHA.
Response: HUD disagrees with this comment. The Department has
received comments from small PHAs citing small staffs and from large
PHAs citing large administrative burdens to justify changes in the time
frame for submission. The Department has concluded that, until
experience demonstrates otherwise, the same time frame for submissions
should apply to all PHAs.
[[Page 68926]]
Comment: One comment felt that the certification form is cumbersome
and includes requests for information currently available to HUD,
specifically financial data required to be provided to HUD by all PHAs,
or more information than currently required. It appears to require
inclusion of data necessary for HUD to perform or confirm the
calculations made by the PHA, and this is repetitive since PHA audits
ensure accuracy in reporting. This is contrary to HUD's intent to
require PHAs to certify to information otherwise not available.
Response: The worksheet and certification form have been redesigned
to make them more user friendly, as applicable. HUD welcomes
additional, specific recommendations to improve these documents
further. The Department disagrees that the certification form requests
information currently available to HUD. For example, the new
certification form financial management question for indicator #6
requests the dollar amount of a PHA's cash reserve available for
operations. The requested financial information is not reported on any
other required reporting submission. The Department cannot rely totally
on audit report confirmation because audit reports are not normally
available until after the PHMAP process has been completed for the
assessed fiscal year. The certification form requires a PHA to state
the raw data that are used to calculate the score of specific
indicators to ensure accurate calculation.
Comment: One comment stated that if the purpose is to shorten the
time it takes for a PHA to learn its status/score, it may be more
appropriate to reduce the amount of time that HUD has to respond. It
should not take any more than two weeks to review the PHA submission
(one page) and to perform any analysis or calculations for indicators
that HUD scores.
Response: HUD is attempting to balance the need to make the PHMAP
scoring as quick and timely as possible, so that it more accurately
reflects a PHA's current status, with the additional year end burden it
represents to both PHAs and HUD itself. In light of the above comments,
the Department has determined that a better balance is achieved with a
60, rather than 45, day submission period. State/Area Offices monitor
other program areas in addition to the PHMAP, which is just one facet
of the Department's overall affordable rental housing efforts. In
addition to the section 8 program, State/Area Offices must administer
such efforts as modernization programs, resident initiative programs,
and drug elimination programs. The Department feels that 60 days for
State/Area Offices to complete a PHMAP assessment is equitable in view
of other workload requirements.
Comment: One comment reflected that in the preamble to the proposed
rule, HUD states that it will require State/Area Offices to give PHAs
their PHMAP scores within 45 days from certification, but the proposed
rule's text does not contain that requirement. The commenter suggests
that HUD include that requirement in the text.
Response: State/Area Offices will be required to meet the 60 day
notification period by an internal directive that will be as binding
upon them as a regulatory requirement.
Comment: One comment observed that Sec. 901.100(b)(5) stipulates
that a PHA's certification will be post-reviewed by HUD during the next
on-site review, but is subject to verification at any time. What does
this mean? It suggests that verification could be accomplished by some
means other than on-site review. It is critical to clearly stipulate in
the rule a standard and consistent approach that must be followed by
all HUD State/Area Offices in order to validate, document and justify a
conclusion that a PHMAP score certified by a PHA should be changed.
Response: On-site reviews are usually conducted pursuant to risk
management, and Sec. 901.100(b)(9) simply provides that certification
verification can take place at any time notwithstanding the regularly
scheduled on-site reviews. In addition, the rule does clearly stipulate
a standard and consistent approach to validate, document and justify a
conclusion that a PHMAP score certified by a PHA should be changed. The
verification language in Sec. 901.100(b)(9) is related to the provision
at Sec. 901.115(k), that permits, in exceptional circumstances that
constitute a standard and consistent approach, a State/Area Office to
reinstate any review as necessary to address particular deficiencies,
or deny or rescind incentives or high performer status, even though a
PHA has satisfied all of the indicators for high or standard performer
designation.
Comment: One comment asked exactly what information does HUD expect
to derive from ``existing reporting and data forms?'' As written, only
indicator #2 can be scored by HUD without complete and total reliance
on PHA self-certified data. This is an enormous flaw in any allegedly
objective assessment process, including PHMAP.
Response: The assessment process is the result of balancing the two
objectives of maximizing reliability and minimizing the administrative
burden. The Department realizes that the extensive demands upon both
its own and PHAs' resources limit what may be appropriately imposed
upon PHAs and adequately monitored by the Department. HUD's reliance
upon PHA-certified data is backed up by the admittedly small number of
on-site reviews HUD is able to conduct, but these reviews do indicate
substantial, good faith compliance. HUD attempts to target its
monitoring resources as efficiently as possible by focusing on troubled
or near troubled PHAs or PHAs in which the factors identified in
Sec. 901.115(k) of the rule are present. The required supplement to the
independent audit requires a PHA's independent audit to ascertain
whether the PHA maintains the data necessary to support its PHMAP
certification and whether the PHMAP data are consistent with the PHA's
other records. HUD will continue to consider ways in which the
reliability of PHMAP may be improved. In addition, the new rule has
been revised to state that a PHA may not appeal its PHMAP score to the
State/Area Office if the reason the PHA received a failing in any
indicator or component was due to the fact that the PHA did not provide
justifying documentation to the independent auditor for the
indicator(s) the PHA certified to.
Comment: One comment stated that the clause that allows PHAs to
include in their PHMAP certifications ``any information bearing on the
accuracy or completeness of the data being used by HUD in grading an
indicator'' is confusing. A PHA should certify to the correct data in
exactly the manner prescribed by the PHMAP process. If a PHA believes
that the data does not fairly represent its performance, it should
submit a ``modification'' request, but the data in the certification
shouldn't be changed.
Response: The rule, at Sec. 901.100(b)(3), provides that a PHA may
include such information in its certification, rather than through an
exclusion or modification request, and that HUD will consider the
information in grading the affected indicator. The intent is not to
encourage a result that the certified information would be changed, but
to encourage a PHA to submit corrected data, late reports, or
previously omitted required data at the time it submits its PHMAP
certification. This provision allows more flexibility in the PHMAP
process, and helps ensure that the most recent data is available to use
in completing the PHMAP assessment.
Comment: One comment felt that the provision that suggests a PHA
could get
[[Page 68927]]
a presumptive F in all PHMAP indicators if the certification is not
submitted on time should be clarified. Does this mean all indicators or
only those which rely on the certification?
Response: The language states all indicators. This provision at
Sec. 901.100 (b)(4) gives HUD a direct and timely way of enforcing the
certification requirement. Although compliance with PHMAP is the norm
among PHAs, if failure to provide the certification would only result
in failing grades for the indicators subject to certification, a PHA
may decide to forgo submitting the certification when a passing grade
could be achieved without it. This would defeat the purpose of PHMAP to
assess the performance of a PHA on all of the indicators.
Computing Assessment Score--Sec. 901.105
Comment: Two comments agree that the establishment of clear-cut
adjustment guidelines is a good addition to PHMAP.
Response: The comment is noted by the Department.
Comment: One comment stated that the physical condition of a
project reflects not only the care and maintenance provided by the PHA,
it also reflects the attitudes and behavior of residents in some
communities. Those cases where the physical condition of the project
does not improve regardless of a PHA's efforts to improve and maintain
the project in safe and sanitary condition should be considered as a
condition beyond the PHA's control, and a modification or exclusion
should be allowed for this reason.
Response: The Department disagrees with this comment. If a
resident's attitudes and behavior cause maintenance or other physical
problems, it then becomes a lease enforcement issue rather than
automatic grounds for a modification or exclusion request due to
conditions beyond a PHA's control. However, HUD considers modification
and exclusion requests individually, and on a case by case basis, and
grants or denies them as appropriate.
Comment: One comment stated that the definition of neighborhood is
based on census tract and proposed that HUD permits also the option of
census block groups. Census blocks allows for more specific definition
of demographic characteristics.
Response: The Department agrees that PHAs may use census blocks as
well as census track data, as appropriate.
Comment: One comment stated that the proposed rule excludes
developments that received comprehensive modernization within the past
ten years from receiving additional weight for the physical condition
factor. Some PHAs receive comprehensive modernization for a portion of
a larger community. When that happens, some proportional additional
weight should be allowed for the physical condition factor.
Response: The Department has determined that if only certain units
or developments received substantial rehabilitation, the additional
weight would be prorated to exclude the units or developments with
substantial rehabilitation. The revision to the PHMAP Handbook 7460.5
will include examples of proration.
Comment: One comment suggested that an alternative for weighting
could be to provide extra credit for PHAs that, because of aggressive
efforts to develop joint programs, are able to mitigate the adverse
conditions in the general vicinity of the developments as well as
within them.
Response: The Department may not provide an alternative to the
physical condition and neighborhood environment factors because they
are statutory. A PHA's efforts to mitigate the adverse conditions in
the general vicinity of the developments will be recognized by the
resident involvement indicator to the extent the PHA involves residents
in such efforts. In general, it is expected that a well-managed PHA
would have a positive influence on the adverse conditions in its
general vicinity, but the PHA's primary responsibility is to conditions
within its developments, and this remains the focus of PHMAP.
Comment: One comment felt that adjustments for physical condition
and neighborhood environment are too liberal and can result in
artificially inflated scores.
Response: The Department disagrees with this comment, since the
adjustments for physical condition and/or their neighborhood
environment apply to the following three indicators only: indicator #1,
vacancy percentage and unit turnaround; indicator #4, work orders; and
indicator #5, annual inspection and condition of units and systems.
Comment: One comment reflected that Sec. 901.105(d)(3)(ii) states
that developments that have received comprehensive modernization within
the past ten years are not eligible for a weighted score for the
physical condition factor. Are these developments eligible for the
neighborhood factor?
Response: Yes, these developments are eligible for the neighborhood
environment factor.
Comment: One comment reflected that Sec. 901.105(d)(3)(iii) states
that a PHA that receives a grade of A under indicators #4 and #5 may
not claim the additional weight for indicator #1 since the physical
condition of its developments is not applicable. Is a PHA eligible for
the additional weight for indicator #1 using the neighborhood
environment factor?
Response: Yes, such a PHA is eligible for the neighborhood
environment factor.
Comment: One comment disagreed that a PHA that receives a grade of
A under indicators #4 and #5 may not claim the additional weight for
indicator #1 since the physical condition of its developments is not
applicable. The ability of management to lease a vacant unit bears a
direct relationship to its age and neighborhood environment. A PHA's
ability to market a unit and a housing applicant's decision to rent a
unit is influenced by the neighborhood conditions and environment in
which the development is located. Accordingly, the additional weight
for indicator #1 should be permitted. Another comment stated that a PHA
could be doing a good job of inspecting units and responding to work
orders and still have a high vacancy rate at one or more of its
developments due to neighborhood environment (if not also physical
condition). A PHA has the right to qualify under either one or both.
Response: The Department disagrees with this comment, and maintains
that if a unit is in good physical condition, the age of the unit has
little bearing on the ability to rent the unit. HUD believes that well
maintained units, as evidenced by an outstanding rating in the areas of
work orders and the condition of units and systems, are not eligible
for the additional weight for physical condition, since indicators #4
and #5 account for the physical condition of a PHA's units. The
additional weight based upon neighborhood environment for indicator #1
is permitted in such a case.
Comment: One comment stated that since PHAs already have the right
to seek modifications or exclusions, rewarding PHAs with bonus points
seems ludicrous.
Response: The additional weight given the factors of physical
condition and neighborhood environment represents the Department's
implementation of the statutory mandate to have the weights assigned to
various indicators reflect these factors. The use of exclusion and
modification
[[Page 68928]]
requests implements the statutory mandate that PHAs not be penalized as
a result of circumstances beyond their control.
Comment: One comment stated that the additional points made
available to PHAs that demonstrate a significant number of units
subject to adverse physical conditions or neighborhood environment,
seem significant. If over 50% of a PHA's units are subject to such
conditions, a PHA may get no more than one additional point for each of
the three indicators that can be adjusted under the rule.
Response: This comment is correct, and the Department believes that
this represents a fair and equitable adjustment for the physical
condition and neighborhood environment of a PHA's developments.
Comment: One comment stated that the proposed rule also excludes
``developments that have received comprehensive modernization funds
within the past ten year'' from eligibility for the adjustment based on
physical condition. This should be revised to make it clear that
``comprehensive modernization'' does not simply mean the use of any CGP
money, but contemplates, for example, ``significant capital investments
that addresses more than 80% of a development's assessed capital
need.''
Response: The Department has defined modernization to include not
only the CIAP and CGP, but also the Vacancy Reduction Program, Hope VI
Program, and any successor program(s) to the CGP or the CIAP. For
indicator #2, modernization, all components apply to both the CGP and
the CIAP. Only components #3, #4 and #5 apply to funding under the Hope
VI Program and the Vacancy Reduction Program for the assessment of
indicator #2.
Comment: One comment thought this section should be more explicit
in order to allow anyone to actually compute a PHA's score following
the instructions, and examples should be provided.
Response: The Department agrees, and examples of how to compute a
PHA's score will be included in the revision to the PHMAP Handbook
7460.5.
Comment: One comment stated that the provision for ``adjustment for
physical condition and neighborhood environment'' makes reference to
units located in developments over 10 years old that require major
capital investment. HUD needs to clarify how that applies to scattered-
site projects where the age of the units and buildings will vary
greatly.
Response: For scattered site projects, where the age of the units
and buildings vary, the Date of Full Availability (DOFA) should be
applied. Normally, when a PHA purchases scattered site units, they are
rehabilitated prior to occupancy. DOFA also applies in cases where
scattered site units are built under new construction.
Comment: One comment pointed out that HUD needs to define how to
compute the 5% (of the units) to which the limiting conditions apply
for the ``adjustment for physical condition and neighborhood
environment.'' Is it individually computed or cumulative (i.e., 5% of
physical condition vs. 3% of physical condition plus 2% of neighborhood
environment condition).
Response: The percent of units to which the limiting conditions
apply is computed as the total number for physical condition (PC) and
neighborhood environment (NE) with each unit counted only once if both
apply to it (so that a PHA with 10 units both PC and NE + 5 units PC
only + 5 units NE only would have 20 eligible units that would be used
for purposes of computing the percent applicable to indicators #1, #4
and #5; unless the PHA received a grade of A in indicators #4 and #5,
then indicators #4 and #5 would have zero eligible units, and indicator
# 1 would have 15 eligible units for purposes of computing the
percent). This procedure of adding the number of units to which both
conditions apply to the number of units to which only one condition
applies is followed because the rule reads, ``Any PHA with 5% or more
of its units subject to either or both of the above conditions shall,
if they so choose, be issued a weighted PHMAP score in addition to the
regular score based solely upon the certification of the PHA.''
Comment: One comment stated that the provision for ``adjustment for
physical condition and neighborhood environment'' states that PHAs will
certify to ``which of the indicators the extra scoring will be added.''
How is the PHA to make this determination? What would preclude the PHA
to add the points to all three indicators? The sample certification
form offers no clarification of this issue, nor does the rule. The PHA
should be required to certify the data used to claim the
``adjustment.''
Response: A PHA does certify to the adjustment for physical
condition (PC) and neighborhood environment (NE). It could and should
add the points to each of the three indicators to which the weights
apply. Example: a 100 unit (scattered site) PHA has 10 units both PC
and NE + 10 units PC only + 10 units NE only. In this case .8 is added
to indicators #1, #4 and #5 (because both or either conditions apply to
at least 30% but less than 40% of the units, and .8 is the weight added
for this percentage range), except if indicators #4 and #5 get grades
of A, zero is added to indicators #4 and #5, and .7 is added to
indicator #1 (because PC does not apply for purposes of indicator #1
when indicators #4 and #5 get grades of A, and so the 10 units would
not be counted for indicator #1, leaving 20 eligible units, 20% of the
total, for which .7 is the added weight).
Comment: One comment suggested that Sec. 901.105(d)(3)(ii) should
read: Units in developments that have received comprehensive
modernization within the past ten years are not eligible to be included
in the calculation of total PHA units subject to ``management
difficulties'' due to physical condition only.
Response: The Department agrees and has rephrased that section to
read: Units in developments that have received substantial
rehabilitation within the past ten years are not eligible to be
included in the calculation of total PHA units due to physical
condition only.
Comment: One comment felt that Sec. 901.105(d)(3)(iv) should be
clarified since it is confusing.
Response: The Department agrees, and this has been clarified in the
new rule to state that a PHA's score for indicators #1, #4 and/or #5,
after any adjustment(s) for physical condition and/or neighborhood
environment, may not exceed the maximum potential weighted points
assigned to the respective indicator(s).
PHA Request for Exclusion or Modification--Sec. 901.110
Comment: Two comments stated that the previous interim rule permits
a PHA to submit a request if the PHA were to discover and demonstrate
``highly unusual circumstances.'' The commenters urge HUD to retain
this mechanism to permit consideration of first-time exclusion/
modification requests at the appellate level. It is recognized and
expected that HUD would subject such requests to strict scrutiny, but
there is no reason why such matters cannot be solved by State/Area
Office Directors of Public Housing as part of the appellate process
rather than at the Assistant Secretary level.
Response: This stipulation was eliminated because it restricted the
grounds for appeal.
Comment: One comment reflected that this section requires that a
request for an exclusion or modification be submitted at the time of
certification. There has been no understanding from HUD on how it
grades certain items or
[[Page 68929]]
what time periods are considered for the indicators that HUD grades.
PHAs should have the right to request an exclusion or modification on
the HUD-graded indicators after HUD has announced the preliminary
grades on them.
Response: The indicators scored by HUD are based on information
that a PHA submits to HUD on other reports. Therefore, a PHA should
know what its HUD graded scores are based on. The interim and proposed
rules clearly state ``annual'' and ``immediate past fiscal year,''
except for components #2-1 and #2-2, where they clearly state Federal
fiscal year.
PHA Score and Status--Sec. 901.115
Comment: Seventeen comments felt that denying high performer status
to a PHA if it scores below a C on any indicator is not a good change.
It does not make sense to punish a PHA for only one low score; the
total numerical rating should be the only determination in high/
standard/troubled performer. The commenters noted that under the
proposed rule, PHAs with the same overall score could receive different
ratings; this does not seem equitable. The overall performance of the
PHA operation is being graded, not an indicator. Denying high performer
status to a PHA that gets less than a C in any indicator should be
dropped from the rule. Two other comments felt that a system that
really identifies and rewards outstanding performance is much more
desirable.
Response: The Department believes that high performer designation
should identify outstanding management performance, and thus stipulates
that a PHA shall not be designated as a high performer if it receives
less than a C for any indicator. The intent in not to punish a PHA, but
rather to recognize PHAs for outstanding management performance. It has
always been possible for PHAs to have the same score, but a different
designation, when high performer designation was awarded or when
troubled designation was withheld.
Comment: One comment notes that Sec. 901.115(g)(1) stipulates that
PHMAP incentives or high performer status could be rescinded in the
case of a PHA that is operating under a special agreement with HUD. The
commenter asks what a special agreement is and how does it bear on a
PHA's actual performance rating under PHMAP? Three additional comments
strongly opposes sections 901.115(g)(2) and (3), which would allow the
State/Area HUD Office to deny or rescind incentives or high performer
status for PHAs either involved in litigation that bears directly upon
the management of PHAs or are operating under a court order. HUD should
require that the ``specific explanation'' referred to in
Sec. 901.115(g) include, at least, a summary of proven fraud,
misconduct, or substantial noncompliance. PHAs that can achieve high
performer status while operating under these conditions should not be
penalized by HUD for continuing to manage operations efficiently and
demonstrate positive effort to eliminate obstacles while improving
housing conditions for families.
Response: Section 901.115(k) only delineates the exceptional
circumstances under which State/Area Offices may deny or rescind
initiatives or high performer status. Such actions are not automatic
when these exceptional circumstances are present, but are determined on
a case by case basis with consideration of the specific circumstances
involved. In addition, these determinations may be appealed to the
Assistant Secretary, providing an additional safeguard that they will
not be made without due deliberation.
Comment: One comment suggested that HUD should submit a written
explanation of any PHMAP score of C or below on any indicator not
directly certified by the PHA because PHAs are required to submit an
Improvement Plan for indicators with grades under C.
Response: The indicators scored by HUD are based on information
that a PHA submits to HUD on other reports. Therefore, a PHA should
know on what its HUD graded scores are based. Improvement plans are
only required for a grade of F and a State/Area Office may require it
for every indicator with a grade of D or E.
Comment: One comment observed that in the preamble to the previous
interim rule, HUD stated that it would address how the State/Area
Offices will determine at which PHAs it would conduct confirmatory
reviews in handbook guidance. HUD should at least provide handbook
guidance on the factors that the State/Area Office will consider to
select a PHA for a confirmatory review.
Response: The Department has provided such guidance in the Field
Office Monitoring of Public Housing Agencies (PHAs) Handbook 7460.7
REV-2.
Comment: One comment stated that Sec. 901.115(e) suggests that a
``small'' PHA (100 units or less) will not be designated as mod-
troubled, no matter how bad their program is. This is not reasonable.
Response: Section 901.115(e) of the proposed rule reads, ``PHAs
with more than 100 units that achieve a total weighted score of less
than 60% on indicator (2), modernization, shall be designated as mod-
troubled.'' The Department agrees that these ``small'' PHAs should also
be assessed on their modernization program, and will amend this section
accordingly.
Comment: One comment stated that in Sec. 901.115(h), the reference
to ``paragraph (e)'' should be a reference to ``paragraph (g).''
Response: HUD agrees and has amended Sec. 901.115(l) to reference
Sec. 901.115(k).
Posting of PHA PHMAP Scores
Comment: Four comments felt that the posting of PHA PHMAP scores
should be required at all offices, rather than in all developments,
since many developments are too small to have an office or any other
building where such notice could be posted, and it is virtually
impossible to do with scattered site projects. Notice can be mailed to
residents where it is impractical or inappropriate to post the notice.
Response: The Department agrees and has amended this section
accordingly.
Comment: Three comments felt that it was not clear why the posting
of PHMAP scores is necessary, or why are PHAs being singled out when
reviews of other public entities are not held up for public scrutiny.
To post a score with no explanation is silly and there would be no way
to post an explanation. By the same token, to publish in the Federal
Register is not really fair without offering a PHA an opportunity to
explain why they may have scored poorly in a particular area.
Response: This provision was recommended by the Office of
Management and Budget in the course of its review of the proposed rule
in accordance with Executive Order 12866. These requirements are
intended to make the community, and tenants in particular, aware of
their PHA's management score and to encourage dialogue among the PHA,
residents and the community.
Comment: One comment felt that the rule should make clear that PHAs
are only required to post and report out final PHMAP scores and do not
have to post and report any score that is appealed in a timely basis
and is under consideration by HUD.
Response: The Department agrees and has amended this section
accordingly.
Comment: One comment observed that Sec. 901.120(b) references a
``handicapped'' score. This term is not used elsewhere in the rule. It
should be changed to ``adjustment for physical
[[Page 68930]]
condition and neighborhood environment''.
Response: The Department agrees and will amend this section
accordingly.
Comment: One comment stated that Sec. 901.120(c) should explicitly
state that a normal ``confirmatory review'' is to be conducted prior to
the issuance of the initial notification letter. This way, the
statement in paragraph (c)(1) about ``exceptional circumstance'' will
make sense.
Response: The Department agrees and has added appropriate language
to the rule.
Comment: One comment reflects that Sec. 901.120(c)(1) states that
the results of a confirmatory review should be explained in writing if
the review is conducted after the issuance of the initial notification
letter. The results of confirmatory reviews should always be explained
in writing to the PHA, regardless of when conducted.
Response: The Department agrees and has added appropriate language
to the rule.
Making the Right Decision
The Department specifically expressed its interest in receiving
comments concerning ways in which PHAs can receive positive recognition
within the context of this regulation for making the right decision.
Comment: One comment stated that it is unreasonable to put forth an
assessment system which rewards highly graded performance and not
expect actions to be guided by that system.
Response: The Department recognizes that PHMAP scores should not be
interpreted as the sole determinant of a PHA's performance, nor should
actions be solely guided by the PHMAP. Good management recognizes and
balances all variables in the day-to-day operations of a PHA.
Comment: One comment agrees with a PHA doing the right thing. If
doing the right thing is important for the PHA, then HUD should also do
the right thing. HUD should ensure that PHMAP scores can be adjusted
appropriately for any situation that results in lower grading of any
indicator that occurs while doing the right thing. Recognition is nice,
but PHMAP should be designed in such a way as to actually reward PHAs
for right decisions, not simply recognize them outside the program
structure.
Response: The Department believes that the ability to request a
modification or exclusion of any indicator will usually result in the
appropriate adjustments for making the right decision. The Department
will continue to explore ways to provide incentives to PHAs for making
the right decisions that result in the long-term improvement of overall
PHA operations and of a PHA's housing stock. In addition, the
Department will recognize such PHAs at the Performance Awards Ceremony.
State/Area Office Functions--Sec. 901.120
Comment: One comment reflected that Sec. 901.120(2)(c) states the
purpose of on-site confirmatory reviews but does not provide a standard
applied circumstance under which or manner in which they will be
carried out. The new rule should stipulate that an on-site confirmatory
review is required before a State/Area Office can decide to change the
PHMAP score certified by a PHA, and should include specifically what
documentation State/Area Offices must review as a basis for determining
the validity of PHA performance certifications. The confirmatory review
documentation requirements should be adequate to meet HUD's
verification needs while at the same time comply with the Paperwork
Reduction Act.
Response: State/Area Offices conduct confirmatory reviews on a risk
management basis, as discussed in the Field Office Monitoring of Public
Housing Agencies (PHAs) Handbook 7460.7 REV-2. The confirmatory review
guidebook and the revised PHMAP Handbook, which will be issued
subsequent to the publication of the new rule, will include appropriate
guidance regarding the conduct of confirmatory reviews. The rule
requires confirmatory reviews of PHAs with 100 or more units before
removing a designation of troubled or mod-troubled. In addition, the
rule requires a confirmatory review of any PHA that scores less than
60% for its total weighted score, or less than 60% on indicator #2,
modernization, before the designation of a PHA as troubled or mod-
troubled. Although troubled or mod-troubled pre-designation
confirmatory reviews were not previously mandatory, the Department has
determined that such reviews can be significant elements of its risk
management approach to PHMAP and can maximize the efficient use of its
limited resources.
Appeals--Sec. 901.125
Comment: One comment urged HUD to extend the deadline for appeals
to the State/Area to the 30th calendar day after the PHMAP initial
notification letter is received. The deadline in the proposed rule of
15 days after mailing is not sufficient time to file a carefully
crafted appeal, nor should the time to appeal be measured from the date
of mailing. The losing party in a Federal lawsuit has 30 days to
appeal. HUD should provide no less time to a PHA that contends it has
not been fairly or accurately assessed.
Response: The Department has determined not to change the time
frame for a PHA to submit an appeal. The experience of HUD has been
that appeals received in Headquarters are well thought out and
presented. A PHA that submits an appeal should not have to go through a
lengthy process in order to appeal; the documentation and information
should be readily available since the PHA would have researched the
information in order to submit its certification.
Comment: One comment stated that the proposed rule does not
specifically permit an appeal from a State/Area Office rejection of a
claim for additional scoring adjustment that is based on the physical
condition or neighborhood environment of housing developments. Although
the proposed rule appears to cover disputes over the analysis or
accuracy of data submitted in support of the claim, it would not cover
disputes over whether a PHA maintained adequate documentation to
support its claim. The proposed rule covers this type of dispute as it
relates to denials of exclusion or modification requests but does not
extend to a dispute over weighted scoring. This appears to be an
unintended oversight and should be corrected.
Response: HUD agrees and has amended this section accordingly.
Comment: One comment urges HUD to reconsider the amorphous term
``data errors'' that the proposed rule would carry over from the
previous interim rule or in the PHMAP Handbook 7460.5. HUD's failure to
explain the meaning of this term could result in ad hoc, overly narrow
interpretations by State/Area Offices in individual ratings. HUD should
revise this ground for appeal to encompass any dispute over the
accuracy, calculation, or interpretation of data employed in the
grading process that, if resolved in the PHA's favor, would affect its
regular or weighted score.
Response: The Department has changed the language to read, ``any
dispute over the accuracy, calculation, or interpretation of data
employed in the grading process that would affect a PHA's PHMAP
score.''
Comment: One comment stated that according to Sec. 901.125(a), a
PHA could appeal the denial of an exclusion/modification request if
that denial has any effect on their total score. This is different from
the 5% threshold in the current rule. If this is the intent, it should
be explicitly stated.
[[Page 68931]]
Response: The Department believes that it is stated explicitly: ``A
PHA may appeal...the denial of exclusion or modification requests when
their denial affects a PHA's total weighted score, * * *'' As stated
previously, a PHA should have the right to appeal its PHMAP score with
as few restrictions as possible.
Comment: One comment thought Sec. 901.125(a)(3) should specify how
long the State/Field Offices have to rule on an appeal.
Response: State/Area Offices will be required to meet the 30 day
period for responding to appeals by an internal directive that will be
as binding upon them as a regulatory requirement.
Comment: One comment stated that Sec. 901.125(a)(5) is duplicative
of paragraph (a)(1)(ii).
Response: The Department agrees and has deleted Sec. 901.125(a)(5)
from the new rule.
Incentives--Sec. 901.130
Comment: Five comments stated that HUD should specify the actual
HUD requirements that it intends to waive for high and standard
performers and supports the extension of any such incentives to
standard performers, as the proposed rule accomplishes. The proposed
rule falls short of offering any true incentives that would encourage
more PHAs to improve their performance. Besides a certificate, the only
other incentives mentioned are being relieved from unspecified
procedural requirements. But the rule also states that the State/Area
Office has the discretion to continue to hold PHAs accountable for
those same requirements. HUD must grant additional flexibility, on the
record, to standard and high performing agencies. In the past, there
seems to have been recognition, but little or no actual relief from
administrative burdens.
Response: The Department will cite specific incentives for high and
standard performers in the revision of the PHMAP Handbook 7460.5.
Incentives are presented in the handbook rather than the regulation to
enable the Department to revise the incentives more quickly as
conditions and circumstances warrant.
Comment: One comment felt that the administrative burden on PHAs is
growing and requested HUD to consider measurable relief such as the
elimination of Davis-Bacon or project-based accounting for well-managed
PHAs.
Response: The Department cannot eliminate administrative burdens
that are separate statutory requirements, such as Davis-Bacon and
project-based accounting (applicable to PHAs with 500 or more units).
However, the Department's Labor Relations Office is intending to
implement a provision that will allow PHAs to obtain only one HUD-
determined wage rate determination for a PHA's entire fiscal year.
Comment: One comment suggested that HUD exempt PHAs with three
consecutive years of standard or high performing determinations from
having to calculate and certify their PHMAP indicators. Rather, the
indicators could be subject to the independent public audit (IPA). If,
and when, the IPA indicates that a PHA is experiencing significant
management problems, it could again be subject to yearly
certifications.
Response: The Department disagrees with this suggestion because the
independent audit only checks the existence and consistency of a PHA's
PHMAP documentation; it does not award a score. In addition, a well
managed PHA should have little or no troubled certifying on an annual
basis.
Comment: One comment proposes that PHAs designated as high
performers for a minimum of three consecutive years be required to
certify to PHMAP only every other year unless and until they are
designated as something less than high performers. In the event that
their PHMAP score slips to standard performer or below, PHAs would
revert to annual certifications until they, once again, have
established themselves as high performers for three consecutive years.
This would not only be a good incentive for PHAs, but also would reduce
workload of the HUD offices.
Response: As stated, above, a well managed PHA should have little
or no troubled certifying on an annual basis.
Comment: One comment feels that HUD's proposal that representatives
of high-performing PHAs may be requested to serve on a Departmental
group working with troubled PHAs is not of sufficient benefit to most
PHAs. HUD must be willing to provide real cash incentive to the PHAs
that perform well, not just pat them on the back. For instance, if
high-performing PHAs are able to enter into ventures that provide
monies in excess of 100% PFS subsidy, they should be able to keep most,
if not all, of it. The ability of high-performing PHAs to generate
revenue should not be used to reward low-performing PHAs.
Response: The Department already permits the retention of ``other
income,'' as stipulated in Notice PIH 96-24, Performance Funding System
Policy Revision to Encourage Public and Indian Housing Authorities to
Facilitate Resident Employment and Undertake Entrepreneurial
Initiatives, issued April 3, 1996.
Comment: One comment stated that the proposed rule limits
incentives to mod high performers that are also overall high
performers. This appears to be a change from the previous interim rule,
and is unfair. Mod high performers that are overall standard performers
should be able to benefit from mod incentives.
Response: The Department disagrees with this comment and believes
that only outstanding performance overall and in modernization warrants
the high performer designation.
Comment: One comment encourages HUD to permit the State/Area
Offices to add incentives to the extent practical and as deemed
appropriate.
Response: The Department agrees and has amended the new rule to
permit State/Area Offices to add incentives to the extent practical and
as deemed appropriate, with prior concurrence of such action by the
Assistant Secretary.
Comment: One comment stated that Sec. 901.130(g) of the proposed
rule states that the State/Area Office will have discretion to subject
a PHA to any requirement that would otherwise be omitted under the
specified relief in accordance with Sec. 901.115. What does this mean?
It reads like an attempt to catch anything that the rule makers forgot
without specifying what. Anything significant that might be recognized
at some later date as omitted should be addressed as an amendment to
the rule for consistent application nationwide.
Response: This section refers to cases where the specified unusual
circumstances listed in Sec. 901.115 exist at a PHA and the State/Area
Office determines the necessity of reinstating any review or
requirement.
Comment: One comment stated that according to Sec. 901.130(a), both
high performers and standard performers will receive incentives. If so,
will these incentives be different for each group? If not, what is the
advantage of achieving high performer status?
Response: The Department agrees, and will provide separate
incentives for both standard and high performers.
Memorandum of Agreement--Sec. 901.135
Comment: One comment stated that an independent assessment team is
not discussed or defined anywhere else in the rule. What is it? What
are its functions? How is it assembled? The requirement for an
``independent assessment'' prior to ``troubled'' designation should be
thoroughly discussed somewhere in the rule.
[[Page 68932]]
Response: The Department went through the procurement process to
contract with the two consultants that conduct the independent
assessments. The function of the two consultants is to conduct an
assessment of problem areas independent of HUD, issue a report of
findings, and perhaps participate in MOA negotiations. Since the
independent assessment is separate from the PHMAP scoring process, the
independent assessment is addressed only in Sec. 901.135, Memorandum of
Agreement, in the new rule.
Improvement Plan--Sec. 901.145
Comment: One comment stated that the phrase, `` * * * as well as
other performance and/or compliance deficiencies as may be identified
as a result of an on-site review of the PHA's operations * * *, is too
broad and loose. The Improvement Plan shouldn't try to cover
everything; this muddies the Improvement Plan and the PHMAP process.
This section should specify that additional issues may be added to the
Improvement Plan only if HUD and the PHA agree that they are directly
related to PHA non-performance in the PHMAP deficiencies.
Response: The Department disagrees with this suggestion and
believes that the rule should provide the flexibility to permit
identified deficiencies to be addressed as soon as possible, whether
they are related to PHMAP or not. This provision allows all identified
deficiencies to be addressed in one document.
PHMAP Public Record--Sec. 901.155
Comment: One comment raised several questions, such as: how do FOIA
requirements apply to PHMAP records, if at all; how do these
requirements complement each other; are all internal HUD records on the
PHMAP assessment included in the ``open public record,'' including
those that would be excluded from the normal FOIA request? This should
be clarified.
Response: The FOIA does apply to PHMAP. The items listed in
Sec. 901.155 (``certifications, the records of exclusion and
modification requests, appeals, and designations of status based on
physical condition and neighborhood environment'') are all public
records, and do not make an exclusive or exhaustive list. Also included
would be such items as the notification to the PHA, and the State/Area
Office scoring sheet. Exemptions authorized under FOIA by 5 U.S.C.
552(b) would still apply. This section is clarified to read, ``...as
open records, available for public inspection for three years
consistent with the Freedom of Information Act (5 U.S.C. 552) and in
accordance with any procedures established by the State/Area Office to
minimize disruption of normal office operations.''
Substantial Default--Sec. 901.200
Comment: One comment observed that Sec. 901.200 requires HUD to
determine a PHA in ``substantial default'' if that PHA has been
designated as troubled and does not show significant improvement (i.e.,
10 point increase) in its PHMAP score within one year. The preamble
notes that the rationale for this is that ``troubled PHAs have already
had more than adequate time to implement corrective action, or will
have at least one year from the time of its initial troubled
designation.'' This is not correct. Because of the PHMAP score
notification process, a PHA would have less than a year to correct
deficiencies once it is notified and before the next assessment. The
time frame established for improvement is arbitrary and too short for
real improvement to take place. It may be reasonable for some PHAs but
not for others. Improvement in performance is the function of many
factors. This time frame should be changed.
Response: The rule is modified to stipulate one year after final
notification.
Notice and Response--Sec. 901.205
Comment: One comment stated that section (a) stipulates that if
information from any other credible source indicates that there may
exist events or conditions constituting a substantial breach or
default, HUD shall advise a PHA of such information. Before taking
further action, except in cases of apparent fraud or criminality, and/
or if emergency conditions exist posing an imminent threat to the life,
health or safety of residents, HUD shall afford the PHA a timely
opportunity to initiate corrective action. This provision lends itself
to unintentional abuse. The use of unidentified credible sources as the
basis for action on unverified conditions could leave PHAs vulnerable
to becoming the victims of political witch hunts. Even emergency
conditions allow 24 hours for corrective action. At minimum, a PHA
should be afforded 24 hours for emergencies and longer as appropriate
for non-emergency conditions to respond with verification that the
condition does or does not exist. This provision should be modified
accordingly.
Response: ``Timely opportunity'' varies due to possible individual
situations and the Department will provide for a reasonable amount of
time for a PHA to initiate corrective action. The Department will
consider each situation individually, and on a case by case basis, as
appropriate.
Resident Participation in Competitive Proposals--Sec. 901.220 and
Resident Petitions for Remedial Action--Sec. 901.225
Comment: One comment stated that Sec. 901.220(b) and Sec. 901.225
require at least 5% of the residents at a PHA in substantial default to
indicate to HUD their interest in participating in the competitive
proposal process. This percentage is unreasonably low. There isn't a
PHA in the country that doesn't have at least five people out of 100
eager to get rid of the current PHA management. This doesn't
necessarily mean that they know what they are talking about or are
right. The Department needs to seriously consider a threshold of
interest that is high enough to ensure true interest by the resident
population, not just a handful of disgruntled residents.
Response: The Department agrees, and has changed the percentage in
the new rule to require that 20% of the residents at a PHA in
substantial default indicate to HUD their interest in participating in
the competitive proposal process.
Technical Assistance--Sec. 901.235
Comment: One comment felt that this section is confusing and gives
the impression that it is designed to limit HUD's ability to offer
technical assistance and should be clarified.
Response: The Department disagrees and thinks this section very
specifically states and authorizes under what circumstances HUD may
provide technical assistance to troubled or near troubled PHAs.
III. Findings and Certifications
Justification for Interim Rulemaking
Although this rule could have been published as a final rule
because it was first published as a proposed rule for prior notice and
comment on May 6, 1996 (61 FR 20358), it is being published as an
interim rule to communicate HUD's intention to continue to revise and
improve the rule. Following a period of implementation and experience
with this rule, HUD will again solicit public comment to further refine
the PHMAP process.
Paperwork Reduction Act
The information collection requirements for the Public Housing
Management Assessment Program have been approved by the Office of
Management and Budget in accordance
[[Page 68933]]
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), and
assigned OMB control number 2577-0156. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless the collection displays a valid control number.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 establishes
requirements for Federal agencies to assess the effects of their
regulatory actions on State, local, local and tribal governments and
the private sector. This rule does not impose any Federal mandates on
any State, local or tribal governments or the private sector within the
meaning of the Unfunded Mandates Reform Act of 1995.
Environmental Review
A Finding of No Significant Impact with respect to the environment,
in accordance with HUD regulations at 24 CFR part 50, which implements
Sec. 102(2)(C) of the National Environmental Policy Act of 1969, was
prepared for the proposed rule and remains applicable. 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.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities, since the rule only establishes
management assessment criteria which will be utilized by State/Area
Offices for monitoring purposes and the provision of technical
assistance to PHAs.
Federalism
The General Counsel, as the Designated Official under Executive
Order 12612, Federalism, has determined that the policies contained in
this 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 rule is
intended to promote good management practices by including, in HUD's
relationship with PHAs, continuing review of PHAs' compliance with
already existing requirements. In addition, the rule carries out, as
unobtrusively as possible, a Federal statutory mandate. The rule does
not create any new significant requirements of its own. As a result,
the 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 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 rule involves requirements for management
assessment of PHAs. Any effect on the family would be indirect. To the
extent families in public housing will be affected, the impact of the
rule's requirements is expected to be a positive one.
List of Subjects in 24 CFR Part 901
Public housing, reporting and recordkeeping requirements.
Accordingly, part 901 of title 24 of the Code of Federal
Regulations is revised to read as follows:
PART 901--PUBLIC HOUSING MANAGEMENT ASSESSMENT PROGRAM
Sec.
901.1 Purpose, program scope and applicability.
901.5 Definitions.
901.10 Indicator #1, vacancy rate and unit turnaround time.
901.15 Indicator #2, modernization.
901.20 Indicator #3, rents uncollected.
901.25 Indicator #4, work orders.
901.30 Indicator #5, annual inspection of units and systems.
901.35 Indicator #6, financial management.
901.40 Indicator #7, resident services and community building.
901.45 Indicator #8, security.
901.100 Data collection.
901.105 Computing assessment score.
901.110 PHA request for exclusion or modification of an indicator or
component.
901.115 PHA score and status.
901.120 State/Area Office functions.
901.125 PHA right of appeal.
901.130 Incentives.
901.135 Memorandum of Agreement.
901.140 Removal from troubled status and mod-troubled status.
901.145 Improvement Plan.
901.150 PHAs troubled with respect to the program under section 14
(mod-troubled PHAs).
901.155 PHMAP public record.
901.200 Events or conditions that constitute substantial default.
901.205 Notice and response.
901.210 Interventions.
901.215 Contracting and funding.
901.220 Resident participation in competitive proposals to manage
the housing of a PHA.
901.225 Resident petitions for remedial action.
901.230 Receivership.
901.235 Technical assistance.
Authority: 42 U.S.C. 1437d(j); 42 U.S.C. 3535(d).
Sec. 901.1 Purpose, program scope and applicability.
(a) Purpose. This part establishes the Public Housing Management
Assessment Program (PHMAP) to implement and augment section 6(j) of the
1937 Act. PHMAP provides policies and procedures to identify public
housing agency (PHA), resident management corporation (RMC), and
alternative management entity (AME) management capabilities and
deficiencies, recognize high-performing PHAs, designate criteria for
defining troubled PHAs and PHAs that are troubled with respect to the
program under section 14 (Public Housing Modernization Program), and
improve the management practices of troubled PHAs and mod-troubled
PHAs.
(b) Program scope. The PHMAP reflects only one aspect of PHA
operations, i.e., the results of its management performance in specific
program areas. The PHMAP should not be viewed by PHAs, the Department
or other interested parties as an all-inclusive and encompassing view
of overall PHA operations. When viewing overall PHA operations, other
criteria, including but not limited to, the quality of a PHA's housing
stock, compliance issues, Fair Housing and Equal Opportunity issues,
Board knowledge and oversight of PHA operation, etc., even though not
covered under the PHMAP, are necessary in order to determine the
adequacy of overall PHA operations. The PHMAP can never be designed to
be the sole method of viewing a PHA's overall operations. A PHA should
not manipulate the PHMAP system in the short-term in order to achieve a
higher PHMAP score, thereby delaying or negating long-term improvement.
Making a correct and viable long-term decision (doing the right thing)
may hurt a PHA in the short-term (i.e., lower PHMAP score), but will
result in improved housing stock and better overall management of a PHA
over the long-term and a higher sustainable PHMAP score.
(c) Applicability. (1) The provisions of this part apply to PHAs
and RMC/AMEs as noted in the sections of this part. The management
assessment of an RMC/AME differs from that of a PHA. Because an RMC/AME
enters into a contract with a PHA to perform specific management
functions on a development-by-development or program basis, and because
the scope of the management that is undertaken
[[Page 68934]]
varies, not every indicator that applies to a PHA would be applicable
to each RMC/AME.
(2) Due to the fact that the PHA and not the RMC/AME is ultimately
responsible to the Department under the ACC, a PHA's score will be
based on all of the developments covered by the ACC, including those
with management functions assumed by an RMC or AME (pursuant to a court
ordered receivership agreement, if applicable). This is necessary
because of the limited nature of an RMC/AME's management functions and
the regulatory and contractual relationships among the Department, PHAs
and RMC/AMEs.
(3) A significant feature of RMC management is that 24 CFR
Secs. 964.225 (d) and (h) provide that a PHA may enter into a
management contract with an RMC, but a PHA may not contract for
assumption by the RMC of the PHA's underlying responsibilities to the
Department under the Annual Contributions Contract (ACC).
(4) When a PHA's management functions have been assumed by an AME:
(i) If the AME assumes only a portion of the PHA's management
functions, the provisions of this part that apply to RMCs apply to the
AME (pursuant to a court ordered receivership agreement, if
applicable); or
(ii) If the AME assumes all, or substantially all, of the PHA's
management functions, the provisions of this part that apply to PHAs
apply to the AME (pursuant to a court ordered receivership agreement,
if applicable).
(5) To ensure quality management results from a contract between an
AME and a PHA, or between an AME and HUD, minimum performance criteria
that relate to the PHMAP indicators, as applicable, should be included
in such contract. Failure to meet the performance criteria would be a
basis for termination of the contract. However, even in the absence of
explicit contractual provisions, this part applies to AMEs in
accordance with paragraph (b)(4) of this section, above.
Sec. 901.5 Definitions.
Actual vacancy rate is the vacancy rate calculated by dividing the
total number of vacancy days in the fiscal year by the total number of
unit days available in the fiscal year.
Adjusted vacancy rate is the vacancy rate calculated after
excluding the vacancy days that are exempted for any of the eligible
reasons. It is calculated by dividing the total number of adjusted
vacancy days in the fiscal year by the total number of unit days
available in the fiscal year.
Alternative management entity (AME) is a receiver, private
contractor, private manager, or any other entity that is under contract
with a PHA, or that is otherwise duly appointed or contracted (for
example, by court order, pursuant to a court ordered receivership
agreement, if applicable, or agency action), to manage all or part of a
PHA's operations. Depending upon the scope of PHA management functions
assumed by the AME, in accordance with Sec. 901.1(b)(2), the AME is
treated as a PHA or an RMC for purposes of this part and, as
appropriate, the terms PHA and RMC include AME.
Assessed fiscal year is the PHA fiscal year that has been reviewed
for management performance using the PHMAP indicators. Unless otherwise
indicated, the assessed fiscal year is the immediate past fiscal year
of a PHA.
Assistant Secretary means the Assistant Secretary for Public and
Indian Housing of the Department.
Available units are dwelling units, (occupied or vacant) under a
PHA's Annual Contributions Contract, that are available for occupancy,
after excluding or adjusting for units approved for non-dwelling use,
employee-occupied units, and vacant units approved for deprogramming
(units approved for demolition, disposition or units that have been
combined).
Average number of days for non-emergency work orders to be
completed is calculated by dividing the total of the:
(1) Number of days in the assessed fiscal year it takes to close
active non-emergency work orders carried over from the previous fiscal
year;
(2) The number of days it takes to complete non-emergency work
orders issued and closed during the assessed fiscal year; and
(3) The number of days all active non-emergency work orders are
open in the assessed fiscal year, but not completed, by the total
number of non-emergency work orders used in the calculation of
paragraphs (1), (2) and (3), of this definition.
Average turnaround time is the annual average of the total number
of turnaround days between the latter of the legal expiration date of
the immediate past lease or the actual move-out date of the former
tenant (whenever that occurred, including in some previous fiscal year)
and the date a new lease takes effect. Each time an individual unit is
re-occupied (turned around) during the fiscal year, the turnaround days
for that unit shall be counted in the turnaround time. Average
turnaround time is calculated by dividing the total turnaround days for
all units re-occupied during the assessed fiscal year by the total
number of units re-occupied during the assessed fiscal year.
Cash reserve is the amount of cash available for operations at the
end of an annual reporting period after all necessary expenses of a PHA
or development have been paid or funds have been set-aside for such
payment. The cash reserve computation takes into consideration both
short-term accounts receivable and accounts payable.
Confirmatory review is an on-site review for the purposes of State/
Area Office verification of the performance level of a PHA, the
accuracy of the data certified to by a PHA, and the accuracy of the
data derived from State/Area Office files.
Correct means to improve performance in an indicator to a level of
grade C or better.
Cyclical work orders are work orders issued for the performance of
routine maintenance work that is done in the same way at regular
intervals. Examples of cyclical work include, but are not limited to,
mopping hallways; picking up litter; cleaning a trash compactor;
changing light bulbs in an entryway; etc. (Cyclical work orders should
not be confused with preventive maintenance work orders.)
Deficiency means any grade below C in an indicator or component.
Down time is the number of calendar days a unit is vacant between
the later of the legal expiration date of the immediate past lease or
the actual move-out date of the former resident, and the date the work
order is issued to maintenance.
Dwelling rent refers to the resident dwelling rent charges
reflected in the monthly rent roll(s) and excludes utility
reimbursements, retroactive rent charges, and any other charges not
specifically identified as dwelling rent, such as maintenance charges,
excess utility charges and late charges.
Dwelling rent to be collected means dwelling rent owed by residents
in possession at the beginning of the assessed fiscal year, plus
dwelling rent charged to residents during the assessed fiscal year.
Dwelling rent uncollected means unpaid resident dwelling rent owed
by any resident in possession during the assessed fiscal year, but not
collected by the last day of the assessed fiscal year.
Dwelling unit is a unit that is either leased or available for
lease to eligible low-income residents.
Effective lease date is the date when the executed lease contract
becomes effective and rent is due and payable and all other provisions
of the lease are enforceable.
[[Page 68935]]
Emergency means physical work items that pose an immediate threat
to life, health, safety, or property, or that are related to fire
safety.
Emergency status abated means that an emergency work order is
either fully completed, or the emergency condition is temporarily
eliminated and no longer poses an immediate threat. If the work cannot
be completed, emergency status can be abated by transferring the
resident away from the emergency situation.
Emergency work order is a work order, from any source, that
involves a circumstance that poses an immediate threat to life, health,
safety or property, or that is related to fire safety.
Employee occupied units refers to units that are occupied by
employees who are required to live in public housing as a condition of
their job, rather than the occupancy being subject to the normal
resident selection process.
HQS means Housing Quality Standards as set forth at 24 CFR
Sec. 882.109 and amended by the Lead-Based Paint regulation at 24 CFR
Sec. 35.
Improvement Plan is a document developed by a PHA, specifying the
actions to be taken, including timetables, that may be required to
correct deficiencies where the grade for an indicator is a grade D or
E, and shall be required to correct deficiencies of failed indicators,
identified as a result of the PHMAP assessment when an MOA is not
required.
Indicators means the major categories of PHA management functions
that are examined under this program for assessment purposes. The list
of individual indicators and the way they are graded is provided in
Sec. 901.10 through Sec. 901.45.
Lease up time is the number of calendar days between the time the
repair of a unit is completed and a new lease takes effect.
Local occupancy/housing codes are the minimum standards for human
occupancy, if any, as defined by the local ordinance(s) of the
jurisdiction in which the housing is located.
Maintenance plan is a comprehensive annual plan of a PHA's
maintenance operation that contains the fiscal year's estimated work
schedule and which is supported by a staffing plan, contract schedule,
materials and procurement plan, training, and approved budget. The plan
should establish a strategy for meeting the goals and time frames of
the facilities management planning and execution, capital improvements,
utilities, and energy conservation activities.
Major systems include, but are not limited to, structural/building
envelopes which include roofing, walls, windows, hardware, flashing and
caulking; mechanical systems which include heating, ventilation, air
conditioning, plumbing, drainage, underground utilities (gas,
electrical and water), and fuel storage tanks; electrical systems which
include underground systems, above ground systems, elevators, emergency
generators, door bells, electronic security devices, fire alarms, smoke
alarms, outdoor lighting, and indoor lighting (halls, stairwells,
public areas and exit signs); and transformers.
Make ready time is the number of calendar days between the date the
unit is referred to maintenance for repair by a work order and
occupancy is notified that the unit is ready for re-occupancy.
Memorandum of Agreement (MOA) is a binding contractual agreement
between a PHA and HUD that is required for each PHA designated as
troubled and/or mod-troubled. The MOA sets forth target dates,
strategies and incentives for improving management performance; and
provides sanctions if performance does not result.
Move-out date is the actual date when the resident vacates the
unit, which may or may not coincide with the legal expiration of the
lease agreement.
Non-emergency work order is any work order that covers a situation
that is not an immediate threat to life, health, safety, or property,
or that is unrelated to fire safety.
Percent of dwelling rent uncollected is calculated by dividing the
amount of dwelling rent uncollected by the total dwelling rent to be
collected.
PHA means a public housing agency. As appropriate in accordance
with Sec. 901.1(b)(2), PHA also includes AME.
Percentage of emergency work orders completed within 24 hours is
the ratio of emergency work orders completed in 24 hours to the total
number of emergency work orders. The formula for calculating this ratio
is: total emergency work orders completed (or emergency status abated)
in 24 hours or less, divided by the total number of emergency work
orders.
PHA-generated work order is any work order that is issued in
response to a request from within the PHA administration.
Preventive maintenance program is a program under which certain
maintenance procedures are systematically performed at regular
intervals to prevent premature deterioration of buildings and systems.
The program is developed and regularly updated by the PHA, and fully
documents what work is to be performed and at what intervals. The
program includes a system for tracking the performance of preventive
maintenance work.
Preventive maintenance work order is any work done on a regularly
scheduled basis in order to prevent deterioration or breakdowns in
individual units or major systems.
Reduced actual vacancy rate within the previous three years is a
comparison of the vacancy rate in the PHMAP assessment year (the
immediate past fiscal year) with the vacancy rate of that fiscal year
which is two years previous to the assessment year. It is calculated by
subtracting the vacancy rate in the assessment year from the vacancy
rate in the earlier year. If a PHA elects to certify to the reduction
of the vacancy rate within the previous three years, the PHA shall
retain justifying documentation to support its certification for HUD
post review.
Reduced the average time it took to complete non-emergency work
orders during the previous three years is a comparison of the average
time it took to complete non-emergency work orders in the PHMAP
assessment year (the immediate past fiscal year) with the average time
it took to complete non-emergency work orders of that fiscal year which
is two years previous to the assessment year. It is calculated by
subtracting the average time it took to complete non-emergency work
orders in the PHMAP assessment year from the average time it took to
complete non-emergency work orders in the earlier year. If a PHA elects
to certify to the reduction of the average time it took to complete
non-emergency work orders during the previous three years, the PHA
shall retain justifying documentation to support its certification for
HUD post review.
Resident-generated work order is a work order issued by a PHA in
response to a request from a lease holder or family member of a lease
holder.
Resident management corporation (RMC) means the entity that
proposes to enter into, or that enters into, a management contract with
a PHA in accordance with 24 CFR 964.120. As appropriate in accordance
with Sec. 901.1(b)(2), RMC also includes AME.
Routine operating expenses are all expenses which are normal,
recurring fiscal year expenditures. Routine expenses exclude those
expenditures that are not normal fiscal year expenditures and those
that clearly represent work of such a substantial nature that the
expense is clearly not a routine occurrence.
Standards equivalent to HQS are housing/occupancy inspection
standards that are equal to HUD's Section 8 HQS.
[[Page 68936]]
Substantial default means a PHA is determined by the Department to
be in violation of statutory, regulatory or contractual provisions or
requirements, whether or not these violations would constitute a
substantial default or a substantial breach under explicit provisions
of the relevant Annual Contributions Contract (ACC) or a Memorandum of
Agreement.
Unit days available are the number of days that the available units
were available for occupancy in a PHA fiscal year. Unit days available
are calculated by adding the number of days that each unit was
available for occupancy in the year.
Units approved for non-dwelling use refers to units approved for
non-dwelling status for use in the provision of social services,
charitable purposes, public safety activities and resident services, or
used in the support of economic self-sufficiency and anti-drug
activities.
Units vacant due to circumstances and actions beyond the PHA's
control are dwelling units that are vacant due to circumstances and
actions that prohibit the PHA from occupying, selling, demolishing,
rehabilitating, reconstructing, consolidating or modernizing the units.
For purposes of this definition, circumstances and actions beyond the
PHA's control are limited to:
(1) Litigation. The effect of court litigation such as a court
order or settlement agreement that is legally enforceable. An example
would be units that are required to remain vacant because of fire/
police investigations, coroner's seal, or as part of a court-ordered or
HUD-approved desegregation effort.
(2) Laws. Federal or State laws of general applicability, or their
implementing regulations. This category does not include units vacant
only because they do not meet minimum housing and building code
standards pertaining to construction or habitability under Federal,
State, or local laws or regulations, except when these code violations
are caused for reasons beyond the control of the PHA, rather than as a
result of management and/or maintenance failures by the PHA. Examples
of exempted units under this category are: vacant units that are
documented to be uninhabitable for reasons beyond the PHA's control due
to high/unsafe levels of hazardous/toxic materials (e.g., lead-based
paint or asbestos), by order of the local health department or
directive of the Environmental Protection Agency, where the conditions
causing the order are beyond the control of the PHA, and units kept
vacant because they became structurally unsound (e.g., buildings
damaged by shrinking/swelling subsoil or similar situations). Other
examples are vacant units in which resident property has been
abandoned, but only if State law requires the property to be left in
the unit for some period of time, and only for the period stated in the
law and vacant units required to remain vacant because of fire/police
investigations, coroner's seal, or court order.
(3) Changing market conditions. Example of units in this category
are small PHAs that are located in areas experiencing population loss
or economic dislocations that face a lack of demand in the foreseeable
future, even after the PHA has taken aggressive marketing and outreach
measures. Where a PHA claims extraordinary market conditions, the PHA
will be expected to document the market conditions to which it refers
(the examples of changing population base and competing projects are
the simplest), the explicit efforts that the PHA has made to address
those conditions, the likelihood that those conditions will be
mitigated or eliminated in the near term, and why the market conditions
are such that the PHA is prevented from occupying, selling,
demolishing, rehabilitating, reconstructing, consolidating or
modernizing the vacant units. In order to justify the adjustment, the
PHA will need to document the specific market conditions that exist and
document marketing and outreach efforts. The PHA will need to describe
when the downturn in market conditions occurred, the location(s) of the
unit(s) effected, the likelihood that these circumstances will be
mitigated or eliminated in the near term and why the market conditions
are such that they are preventing the PHA from occupying, selling,
demolishing, rehabilitating, reconstructing, consolidating, or
modernizing the vacant units.
(4) Natural disasters. These are vacant units that are documented
to be uninhabitable because of damaged suffered as a result of natural
disasters such as floods, earthquakes, hurricanes, tornadoes, etc. In
the case of a ``natural disaster'' claim, the PHA would be expected to
point to a proclamation by the President or the Governor that the
county or other local area in question has, in fact, been declared a
disaster area.
(5) Insufficient funding. Lack of funding for otherwise approvable
applications made for Comprehensive Improvement Assistance Program
(CIAP) funds (only PHAs with less than 250 units are eligible to apply
and compete for CIAP funds). This definition will cease to be used if
CIAP is replaced by a formula grant.
(6) Casualty Losses. Vacant units that have sustained casualty
damage and are pending resolution of insurance claims or settlements,
but only until the insurance claim is adjusted, i.e., funds to repair
the unit are received. The vacancy days exempted are those included in
the period of time between the casualty loss and the receipt of funds
from the insurer to cover the loss in whole or in part.
Vacancy day is a day when an available unit is not under lease by
an eligible low-income resident. The maximum number of vacancy days for
any unit is the number of days in the year, regardless of the total
amount of time the unit has been vacant. Vacancy days are calculated by
adding the total number of days vacant from all available units that
were vacant for any reason during the PHA's fiscal year.
Vacant unit is an available unit that is not under lease to an
eligible low-income family.
Vacant unit turnaround work order is a work order issued that
directs a vacant unit to be made ready to lease to a new resident and
reflects all work items to prepare the unit for occupancy.
Vacant unit undergoing modernization as defined in 24 CFR
Sec. 990.102. In addition, the following apply when computing time
periods for a vacant unit undergoing modernization:
(1) If a unit is vacant prior to being included in a HUD-approved
modernization budget, those vacancy days that had accumulated prior to
the unit being included in the modernization budget must be included as
non-exempted vacancy days in the calculation.
(2) The calculation of turnaround time for newly modernized units
starts when the unit in turned over to the PHA from the contractor and
ends when the lease is effective for the new or returning resident.
Thus, the total turnaround time would be the sum of the pre-
modernization vacancy time, and the post-modernization vacancy time.
(3) Unit-by-unit documentation, showing when a vacant unit was
included in a HUD-approved modernization budget, when it was released
to the PHA by the contractor, and when a new lease is effective for the
new or returning resident, must be maintained by the PHA.
(4) Units remaining vacant more than two FFYs after the FFY in
which the modernization funds are approved, may no longer be exempted
from the
[[Page 68937]]
calculation of the adjusted vacancy rate if the construction contract
has not been let. These units may be exempted again, but only after a
contract is let.
Vacant units approved for deprogramming exist when a PHA's
application for the demolition and/or disposition of public housing
units has received written approval from HUD; or when a PHA's
application to combine/convert has received written approval from HUD.
Work order is a directive, containing one or more tasks issued to a
PHA employee or contractor to perform one or more tasks on PHA
property. This directive describes the location and the type of work to
be performed; the date and time of receipt; date and time issued to the
person or entity performing the work; the date and time the work is
satisfactorily completed; the parts used to complete the repairs and
the cost of the parts; whether the damage was caused by the resident;
and the charges to the resident for resident-caused damage. The work
order is entered into a log which indicates at all times the status of
all work orders as to type (emergency, non-emergency), when issued, and
when completed.
Work order completed during the immediate past fiscal year is any
work order that is completed during the PHA's fiscal year regardless of
when it may have been received.
Work order deferred for modernization is any work order that is
combined with similar work items and completed within the current PHMAP
assessment year, or will be completed in the following year if there
are less than three months remaining before the end of the PHA fiscal
year when the work order was generated, under the PHA's modernization
program or other PHA capital improvements program.
Sec. 901.10 Indicator #1, vacancy rate and unit turnaround time.
This indicator examines the vacancy rate, a PHA's progress in
reducing vacancies, and unit turnaround time. Implicit in this
indicator is the adequacy of the PHA's system to track the duration of
vacancies and unit turnaround, including down time, make ready time,
and lease up time. This indicator has a weight of x2.
(a) For the calculation of the actual and adjusted vacancy rate
(and, if applicable, unit turnaround time), the following three
categories of units (as defined in the rule at Sec. 901.5), that are
not considered available for occupancy, will be completely excluded
from the computation:
(1) Units approved for non-dwelling use.
(2) Employee occupied units.
(3) Vacant units approved for deprogramming (i.e., demolition,
disposition or units that have been combined).
(b) For the calculation of the adjusted vacancy rate and turnaround
time, the vacancy days for units in the following categories (fully
defined in the rule at Sec. 901.5) shall be exempted:
(1) Vacant units undergoing modernization as defined in Sec. 901.5.
(i) Only vacancy days associated with a vacant unit that meets the
conditions of being a unit undergoing modernization will be exempted
when calculating the adjusted vacancy rate or, if necessary, the unit
turnaround time. Neither vacancy days associated with a vacant unit
prior to that unit meeting the conditions of being a unit undergoing
modernization nor vacancy days associated with a vacant unit after
construction work has been completed or after the time period for
placing the vacant unit under construction has expired shall be
exempted.
(ii) A PHA must maintain the following documentation to support its
determination of vacancy days associated with a vacant unit that meets
the conditions of being a unit undergoing modernization:
(A) The date on which the unit met the conditions of being a vacant
unit undergoing modernization: and
(B) The date on which construction work was completed or the time
period for placing the vacant unit under construction expired.
(2) Units vacant due to circumstances and actions beyond the PHA's
control as defined in Sec. 901.5. Such circumstances and actions may
include:
(i) Litigation, such as a court order or settlement agreement that
is legally enforceable.
(ii) Federal or, when not preempted by Federal requirements, State
law of general applicability or their implementing regulations.
(iii) Changing market conditions.
(iv) Natural disasters.
(v) Insufficient funding for otherwise approvable applications made
for CIAP funds. This definition will cease to be used if CIAP is
replaced by a formula grant.
(vi) Vacant units that have sustained casualty damage and are
pending resolution of insurance claims or settlements, but only until
the insurance claim is adjusted. A PHA must maintain at least the
following documentation to support its determination of vacancy days
associated with units vacant due to circumstances and actions beyond
the PHA's control:
(A) The date on which the unit met the conditions of being a unit
vacant due to circumstances and actions beyond the PHA's control;
(B) Documentation identifying the specific conditions that
distinguish the unit as a unit vacant due to circumstances and actions
beyond the PHA's control as defined in Sec. 901.5;
(C) The actions taken by the PHA to eliminate or mitigate these
conditions; and
(D) The date on which the unit ceased to meet such conditions and
became an available unit.
(E) This supporting documentation is subject to review and may be
requested for verification purposes at any time by HUD.
(c) Component #1, vacancy percentage and progress in reducing
vacancies. A PHA may choose whether to use the actual vacancy rate, the
adjusted vacancy rate or a reduction in the actual vacancy rate within
the past three years. This component has a weight of x2.
(1) Grade A: The PHA is in one of the following categories:
(i) An actual vacancy rate of 3% or less; or
(ii) An adjusted vacancy rate of 2% or less.
(2) Grade B: The PHA is in one of the following categories:
(i) An actual vacancy rate of greater than 3% and less than or
equal to 5%; or
(ii) An adjusted vacancy rate of greater than 2% and less than or
equal to 3%.
(3) Grade C: The PHA is in one of the following categories:
(i) An actual vacancy rate of greater than 5% and less than or
equal to 7%; or
(ii) An adjusted vacancy rate of greater than 3% and less than or
equal to 4%; or
(iii) The PHA has reduced its actual vacancy rate by at least 15
percentage points within the past three years and has an adjusted
vacancy rate of greater than 4% and less than or equal to 5%.
(4) Grade D: The PHA is in one of the following categories:
(i) An actual vacancy rate of greater than 7% and less than or
equal to 9%; or
(ii) An adjusted vacancy rate of greater than 4% and less than or
equal to 5%; or
(iii) The PHA has reduced its actual vacancy rate by at least 10
percentage points within the past three years and has an adjusted
vacancy rate of greater than 5% and less than or equal to 6%.
(5) Grade E: The PHA is in one of the following categories:
[[Page 68938]]
(i) An actual vacancy rate of greater than 9% and less than or
equal to 10%; or
(ii) An adjusted vacancy rate of greater than 5% and less than or
equal to 6%; or
(iii) The PHA has reduced its actual vacancy rate by at least five
percentage points within the past three years and has an adjusted
vacancy rate of greater than 6% and less than or equal to 7%.
(6) Grade F: The PHA is in one of the following categories:
(i) An actual vacancy rate greater than 10%; or
(ii) An adjusted vacancy rate greater than 7%; or
(iii) An adjusted vacancy rate of greater than 6% and less than or
equal to 7% and the PHA has not reduced its actual vacancy rate by at
least five percentage points within the past three years.
(d) Component #2, unit turnaround time. This component is to be
completed only by PHAs scoring below a grade C on component #1. This
component has a weight of x1.
(1) Grade A: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is less than or equal
to 20 calendar days.
(2) Grade B: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is greater than 20
calendar days and less than or equal to 25 calendar days.
(3) Grade C: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is greater than 25
calendar days and less than or equal to 30 calendar days.
(4) Grade D: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is greater than 30
calendar days and less than or equal to 40 calendar days.
(5) Grade E: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is greater than 40
calendar days and less than or equal to 50 calendar days.
(6) Grade F: The average number of calendar days between the time
when a unit is vacated and a new lease takes effect for units re-
occupied during the PHA's assessed fiscal year, is greater than 50
calendar days.
Sec. 901.15 Indicator #2, modernization.
This indicator is automatically excluded if a PHA does not have a
modernization program. This indicator examines the amount of unexpended
funds over three Federal fiscal years (FFY) old, the timeliness of fund
obligation, the adequacy of contract administration, the quality of the
physical work, and the adequacy of budget controls. All components
apply to both the Comprehensive Grant Program (CGP), the Comprehensive
Improvement Assistance Program (CIAP) and lead based paint risk
assessment funding (1992-1995), and any successor program(s) to the CGP
or the CIAP. Only components #3, #4 and #5 apply to funding under the
Hope VI Program and the Vacancy Reduction Program for the assessment of
this indicator. This indicator has a weight of x1.5.
(a) Component #1, unexpended funds over three Federal fiscal years
(FFYs) old. This component has a weight of x1.
(1) Grade A: The PHA has no unexpended funds over three FFYs old or
is able to demonstrate one of the following:
(i) The unexpended funds are leftover funds and will be recaptured
after audit;
(ii) There are no unexpended funds past the original HUD-approved
implementation schedule deadline that allowed longer than three FFYs;
or
(iii) The PHA has extended the time within 30 calendar days after
the expenditure deadline and the time extension is based on reasons
outside of the PHA's control, such as need to use leftover funds,
unforeseen delays in contracting or contract administration,
litigation, material shortages, or other non-PHA institutional delay.
(2) Grade F: The PHA has unexpended funds over three FFYs old and
is unable to demonstrate any of the above three conditions; or the PHA
requests HUD approval of a time extension based on reasons within the
PHA's control.
(b) Component #2, timeliness of fund obligation. This component has
a weight of x2.
(1) Grade A: The PHA has no unobligated funds over two FFYs old or
is able to demonstrate one of the following:
(i) There are no unobligated funds past the original HUD-approved
implementation schedule deadline that allowed longer than two FFYs; or
(ii) The PHA has extended the time within 30 calendar days after
the obligation deadline and the time extension is based on reasons
outside of the PHA's control, such as need to use leftover funds,
unforeseen delays in contracting or contract administration,
litigation, material shortages, or other non-PHA institutional delay.
(2) Grade F: The PHA has unobligated funds over two FFYs old and is
unable to demonstrate any of the above two conditions; or the PHA
requests HUD approval of a time extension based on reasons within the
PHA's control.
(c) Component #3, adequacy of contract administration. For the
purposes of this component, the term ``findings'' means a violation of
a statute, regulation, Annual Contributions Contract or other HUD
requirement in the area of contract administration. This component has
a weight of x1.5.
(1) Grade A: Based on HUD's latest on-site inspection and/or audit,
where a written report was provided to the PHA at least 75 calendar
days before the end of the PHA's fiscal year, there were no findings
related to contract administration or the PHA has corrected all such
findings.
(2) Grade C: Based on HUD's latest on-site inspection and/or audit,
where a written report was provided to the PHA at least 75 calendar
days before the end of the PHA's fiscal year, there were findings
related to contract administration and the PHA is in the process of
correcting all such findings.
(3) Grade F: Based on HUD's latest on-site inspection and/or audit,
where a written report was provided to the PHA at least 75 calendar
days before the end of the PHA's fiscal year, there were findings
related to contract administration and the PHA has failed to initiate
corrective actions for all such findings or those actions which have
been initiated have not resulted in progress toward remedying all of
the findings.
(d) Component #4, quality of the physical work. For the purposes of
this component, the term ``findings'' means a violation of a statute,
regulation, Annual Contributions Contract or other HUD requirement in
the area of physical work quality. This component has a weight of x3.
(1) Grade A: Based on HUD's latest on-site inspection, where a
written report was provided to the PHA at least 75 calendar days before
the end of the PHA's fiscal year, there were no findings related to the
quality of the physical work or the PHA has corrected all such
findings.
(2) Grade C: Based on HUD's latest on-site inspection, where a
written report was provided to the PHA at least 75 calendar days before
the end of the PHA's fiscal year, there were findings related to the
quality of the physical
[[Page 68939]]
work and the PHA is in the process of correcting all such findings.
(3) Grade F: Based on HUD's latest on-site inspection, where a
written report was provided to the PHA at least 75 calendar days before
the end of the PHA's fiscal year, there were findings related to the
quality of the physical work and the PHA has failed to initiate
corrective actions for all such findings or those actions which have
been initiated have not resulted in progress toward remedying all of
the findings.
(e) Component #5, adequacy of budget controls. This component has a
weight of x1.
(1) Grade A: The CGP PHA has expended modernization funds only on
work in HUD-approved CGP Annual Statements, CGP Five-Year Action Plan,
excluding emergencies, or CIAP Budgets, or has obtained prior HUD
approval for required budget revisions. The CIAP PHA has expended
modernization funds only on work in HUD-approved CIAP Budgets or
related to originally approved work or has obtained prior HUD approval
for required budget revisions.
(2) Grade F: The CGP PHA has expended modernization funds on work
that was not in HUD-approved CGP Annual Statements, CGP Five-Year
Action Plan, excluding emergencies, or CIAP Budgets, and did not obtain
prior HUD approval for required budget revisions. The CIAP PHA has
expended modernization funds on work that was not in HUD-approved CIAP
Budgets or was unrelated to originally approved work and did not obtain
prior HUD approval for required budget revisions.
Sec. 901.20 Indicator #3, rents uncollected.
This indicator examines the PHA's ability to collect dwelling rent
owed by residents in possession during the immediate past fiscal year
by measuring the balance of dwelling rents uncollected as a percentage
of total dwelling rents to be collected. This indicator has a weight of
x1.5.
(a) Grade A: The percent of dwelling rent uncollected in the
immediate past fiscal year is less than or equal to 2% of total
dwelling rent to be collected.
(b) Grade B: The percent of dwelling rent uncollected in the
immediate past fiscal year is greater than 2% and less than or equal to
4% of total dwelling rent to be collected.
(c) Grade C: The percent of dwelling rent uncollected in the
immediate past fiscal year is greater than 4% and less than or equal to
6% of total dwelling rent to be collected.
(d) Grade D: The percent of dwelling rent uncollected in the
immediate past fiscal year is greater than 6% and less than or equal to
8% of total dwelling rent to be collected.
(e) Grade E: The percent of dwelling rent uncollected in the
immediate past fiscal year is greater than 8% and less than or equal to
10% of total dwelling rent to be collected.
(f) Grade F: The percent of dwelling rent uncollected in the
immediate past fiscal year is greater than 10% of total dwelling rent
to be collected.
Sec. 901.25 Indicator #4, work orders.
This indicator examines the average number of days it takes for a
work order to be completed, and any progress a PHA has made during the
preceding three years to reduce the period of time required to complete
maintenance work orders. Implicit in this indicator is the adequacy of
the PHA's work order system in terms of how a PHA accounts for and
controls its work orders, and its timeliness in preparing/issuing work
orders. This indicator has a weight of x1.
(a) Component #1, emergency work orders completed within 24 hours
or less. All emergency work orders should be tracked. This component
has a weight of x1.
(1) Grade A: At least 99% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(2) Grade B: At least 98% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(3) Grade C: At least 97% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(4) Grade D: At least 96% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(5) Grade E: At least 95% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(6) Grade F: Less than 95% of emergency work orders were completed
or the emergency was abated within 24 hours or less during the PHA's
immediate past fiscal year.
(b) Component #2, average number of days for non-emergency work
orders to be completed. All non-emergency work orders that were active
during the assessed fiscal year should be tracked (including preventive
maintenance work orders), except non-emergency work orders from the
date they are deferred for modernization, issued to prepare a vacant
unit for re-rental, or issued for the performance of cyclical
maintenance. This component has a weight of x2.
(1) Grade A: All non-emergency work orders are completed within an
average of 25 calendar days.
(2) Grade B: All non-emergency work orders are completed within an
average of greater than 25 calendar days and less than or equal to 30
calendar days.
(3) Grade C: The PHA is in one of the following categories:
(i) All non-emergency work orders are completed within an average
of greater than 30 calendar days and less than or equal to 40 calendar
days; or
(ii) The PHA has reduced the average time it takes to complete non-
emergency work orders by at least 15 days during the past three years.
(4) Grade D: The PHA is in one of the following categories:
(i) All non-emergency work orders are completed within an average
of greater than 40 calendar days and less than or equal to 50 calendar
days; or
(ii) The PHA has reduced the average time it takes to complete non
emergency work orders by at least 10 days during the past three years.
(5) Grade E: The PHA is in one of the following categories:
(i) All non-emergency work orders are completed within an average
of greater than 50 calendar days and less than or equal to 60 calendar
days; or
(ii) The PHA has reduced the average time it takes to complete non-
emergency work orders by at least 5 days during the past three years.
(6) Grade F: The PHA is in one of the following categories:
(i) All non-emergency work orders are completed within an average
of greater than 60 calendar days; or
(ii) The PHA has not reduced the average time it takes to complete
non-emergency work orders by at least 5 days during the past three
years.
Sec. 901.30 Indicator #5, annual inspection of units and systems.
This indicator examines the percentage of units that a PHA inspects
on an annual basis in order to determine short-term maintenance needs
and long-term modernization needs. Implicit in this indicator is the
adequacy of the PHA's inspection program in terms of the quality of a
PHA's inspections, and how a PHA tracks both inspections and needed
repairs. All occupied units are required to be inspected. This
indicator has a weight of x1.
(a) Units in the following categories are exempted and not included
in the calculation of the total number of units,
[[Page 68940]]
and the number and percentage of units inspected. Systems that are a
part of individual dwelling units that are exempted, or a part of a
building where all of the dwelling units in the building are exempted,
are also exempted from the calculation of this indicator:
(1) Occupied units where the PHA has made two documented attempts
to inspect, but only if the PHA can document that appropriate legal
action (up to and including eviction of the legal or illegal
occupant(s)), has been taken under provisions of the lease to ensure
that the unit can be subsequently inspected.
(2) Units vacant for the full immediate past fiscal year for the
following reasons, as defined at Sec. 901.5:
(i) Vacant units undergoing modernization; and
(ii) Vacant units that are documented to be uninhabitable for
reasons beyond a PHA's control due to:
(A) High/unsafe levels of hazardous/toxic materials;
(B) By order of the local health department or a directive of the
Environmental Protection Agency;
(C) Natural disasters; and
(D) Units kept vacant because they became structurally unsound.
(b) Component #1, annual inspection of units. This component refers
to an inspection using either the local housing and/or occupancy code,
or HUD HQS if there is no local code or the local code is less
stringent that HQS. This component has a weight of x1.
(1) Grade A: The PHA inspected 100% of its units and, if repairs
were necessary for local code or HQS compliance, either completed the
repairs during the inspection; issued work orders for the repairs; or
referred similar work items to the current year's modernization
program, or to next year's modernization program if there are less than
three months remaining before the end of the PHA fiscal year when the
inspection was completed.
(2) Grade B: The PHA inspected less than 100% but at least 97% of
its units and, if repairs were necessary for local code or HQS
compliance, either completed the repairs during the inspection; issued
work orders for the repairs; or referred similar work items to the
current year's modernization program, or to next year's modernization
program if there are less than three months remaining before the end of
the PHA fiscal year when the inspection was completed.
(3) Grade C: The PHA inspected less than 97% but at least 95% of
its units and, if repairs were necessary for local code or HQS
compliance, either completed the repairs during the inspection; issued
work orders for the repairs; or referred similar work items to the
current year's modernization program, or to next year's modernization
program if there are less than three months remaining before the end of
the PHA fiscal year when the inspection was completed.
(4) Grade D: The PHA inspected less than 95% but at least 93% of
its units and, if repairs were necessary for local code or HQS
compliance, either completed the repairs during the inspection; issued
work orders for the repairs; or referred similar work items to the
current year's modernization program, or to next year's modernization
program if there are less than three months remaining before the end of
the PHA fiscal year when the inspection was completed.
(5) Grade E: The PHA inspected less than 93% but at least 90% of
its units and, if repairs were necessary for local code or HQS
compliance, either completed the repairs during the inspection; issued
work orders for the repairs; or referred similar work items to the
current year's modernization program, or to next year's modernization
program if there are less than three months remaining before the end of
the PHA fiscal year when the inspection was completed.
(6) Grade F: The PHA has failed to inspect at least 90% of its
units; or failed to correct deficiencies during the inspection or issue
work orders for the repairs; or failed to refer similar work items to
the current year's modernization program, or to next year's
modernization program if there are less than three months remaining
before the end of the PHA fiscal year when the inspection was
completed.
(c) Component #2, annual inspection of systems. This component
examines the inspection of buildings and sites according to the PHA's
maintenance plan, including performing the required maintenance on
structures and systems in accordance with manufacturer's specifications
and established local/PHA standards, or issuing work orders for
maintenance/repairs, or including identified deficiencies in this
year's modernization program, or in next year's modernization program
if there are less than three months remaining before the end of the PHA
fiscal year when the inspection was performed. This component has a
weight of x1.
(1) Grade A: The PHA inspected all major systems at 100% of its
buildings and sites, according to its maintenance plan. The inspection
included performing the required maintenance on structures and systems
in accordance with manufacturer's specifications and established local/
PHA standards, or issuing work orders for maintenance/repairs, or
including identified deficiencies in the current year's modernization
program, or in next year's modernization program if there are less than
three months remaining before the end of the PHA fiscal year when the
inspection was performed.
(2) Grade B: The PHA inspected all major systems of at least a
minimum of 90% but less than 100% of its buildings and sites, according
to its maintenance plan. The inspection included performing the
required maintenance on structures and systems in accordance with
manufacturer's specifications and established local/PHA standards, or
issuing work orders for maintenance/ repairs, or including identified
deficiencies in the current year's modernization program, or in next
year's modernization program if there are less than three months
remaining before the end of the PHA fiscal year when the inspection was
performed.
(3) Grade C: The PHA inspected all major systems of at least a
minimum of 80% but less than 90% of its buildings and sites, according
to its maintenance plan. The inspection included performing the
required maintenance on structures and systems in accordance with
manufacturer's specifications and established local/PHA standards, or
issuing work orders for maintenance/ repairs, or including identified
deficiencies in the current year's modernization program, or in next
year's modernization program if there are less than three months
remaining before the end of the PHA fiscal year when the inspection was
performed.
(4) Grade D: The PHA inspected all major systems of at least a
minimum of 70% but less than 80% of its buildings and sites, according
to its maintenance plan. The inspection included performing the
required maintenance on structures and systems in accordance with
manufacturer's specifications and established local/PHA standards, or
issuing work orders for maintenance/ repairs, or including identified
deficiencies in the current year's modernization program, or in next
year's modernization program if there are less than three months
remaining before the end of the PHA fiscal year when the inspection was
performed.
(5) Grade E: The PHA inspected all major systems of at least a
minimum of 60% but less than 70% of its buildings and sites, according
to its maintenance plan. The inspection included performing the
required maintenance on structures and systems in accordance with
manufacturer's specifications and established local/PHA standards, or
[[Page 68941]]
issuing work orders for maintenance/ repairs, or including identified
deficiencies in the current year's modernization program, or in next
year's modernization program if there are less than three months
remaining before the end of the PHA fiscal year when the inspection was
performed.
(6) Grade F: The PHA failed to inspect all major systems of at
least 60% of its buildings and sites and perform the required
maintenance on these systems in accordance with manufacturers
specifications and established local/PHA standards, or did not issue
work orders for maintenance/repairs, or did not include identified
deficiencies in the current year's modernization program, or in next
year's modernization program if there are less than three months
remaining before the end of the PHA fiscal year when the inspection was
performed.
Sec. 901.35 Indicator #6, financial management.
This indicator examines the amount of cash reserves available for
operations and, for PHAs scoring below a grade C on cash reserves,
energy/ utility consumption expenses. This indicator has a weight of
x1.
(a) Component #1, cash reserves. This component has a weight of x2.
(a) Grade A: Cash reserves available for operations are greater
than or equal to 15% of total actual routine expenditures, or the PHA
has cash reserves of $3 million or more.
(2) Grade B: Cash reserves available for operations are greater
than or equal to 12.5%, but less than 15% of total actual routine
expenditures.
(3) Grade C: Cash reserves available for operations are greater
than or equal to 10%, but less than 12.5% of total actual routine
expenditures.
(4) Grade D: Cash reserves available for operations are greater
than or equal to 7.5%, but less than 10% of total actual routine
expenditures.
(5) Grade E: Cash reserves are greater than or equal to 5%, but
less than 7.5% of total actual routine expenditures.
(6) Grade F: Cash reserves available for operations are less than
5% of total actual routine expenditures.
(b) Component #2, energy consumption. Either option A or option B
of this component is to be completed only by PHAs that score below a
grade C on component #1. Regardless of a PHA's score on component #1,
it will not be scored on component #2 if all its units have tenant paid
utilities. Annual energy/utility consumption expenses includes water
and sewage usage. This component has a weight of x1.
(1) Option A, annual energy/utility consumption expenses.
(i) Grade A: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have not increased.
(ii) Grade B: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have not increased by more than 3%.
(iii) Grade C: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have increased by more than 3% and less than or equal to 5%.
(iv) Grade D: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have increased by more than 5% and less than or equal to 7%.
(v) Grade E: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have increased by more than 7% and less than or equal to 9%.
(vi) Grade F: Annual energy/utility consumption expenses, as
compared to the average of the three years' rolling base consumption
expenses, have increased by more than 9%.
(2) Option B, energy audit.
(i) Grade A: The PHA has completed or updated its energy audit
within the past five years and has implemented all of the
recommendations that were cost effective.
(ii) Grade C: The PHA has completed or updated its energy audit
within the past five years, has developed an implementation plan and is
on schedule with the implementation plan, based on available funds. The
implementation plan identifies at a minimum, the items from the audit,
the estimated cost, the planned funding source, and the anticipated
date of completion for each item.
(iii) Grade F: The PHA has not completed or updated its energy
audit within the past five years, or has not developed an
implementation plan or is not on schedule with its implementation plan,
or has not implemented all of the recommendations that were cost
effective, based on available funds.
Sec. 901.40 Indicator #7, Resident Services and Community Building.
This indicator examines the PHA's efforts to deliver quality
customer services and to encourage partnerships with residents,
resident organizations, and the local community, including non-PHA
service providers, that help improve management operations at the PHA;
and to encourage programs that promote individual responsibility, self
improvement and community involvement among residents and assist them
to achieve economic uplift and develop self-sufficiency. Also, if
applicable, this indicator examines PHA performance under any special
HUD grant(s) administered by the PHA. PHAs can get credit for
performance under non-HUD funded programs if they choose to be assessed
for these programs. PHAs with fewer than 250 units or with 100% elderly
developments will not be assessed under this indicator unless they
request to be assessed at the time of PHMAP certification submission.
This indicator has a weight of x1.
(a) Component #1, economic uplift and self-improvement. PHAs will
be assessed for all the programs that the PHA has HUD funding to
implement. Also, PHAs can get credit for implementation of programs
through partnerships with non-PHA providers, even if the programs are
not funded by HUD or the PHA, if they choose to be assessed for them.
PHAs must select either to be assessed for all or none of the non-HUD
funded programs. This component has a weight of x1.
(1) Grade A: The PHA Board of Commissioners, by resolution, has
adopted one or more economic uplift and self-improvement programs,
examples include but are not limited to, the Section 3 program,
homeownership, PHA support for resident education, training, child-
care, job-placement programs, Head Start, etc., and the PHA can
document that it has implemented these programs in developments
covering at least 90% of its family occupied units, either directly or
through partnerships with non-PHA providers, and the PHA monitors
performance under the programs and issues reports concerning progress,
including residents receiving services and residents employed, under
these programs.
(2) Grade C: The PHA Board of Commissioners, by resolution, has
adopted one or more economic uplift and self-improvement programs,
including but not limited to, the programs described in grade A, above,
and the PHA can document that it has implemented these programs in
developments covering at least 60% of its family occupied units, either
directly or through partnerships with non-PHA providers, and the PHA
staff monitors performance under the programs and issues reports to the
Board concerning progress, including residents receiving
[[Page 68942]]
services and residents employed, under these programs.
(3) Grade F: The PHA Board of Commissioners, by resolution, has not
adopted one or more economic uplift and self-improvement programs,
including but not limited to, the programs described in grade A, above,
or the PHA has not implemented these programs in developments covering
at least 60% of its family occupied units, either directly or through
partnerships with non-PHA providers.
(b) Component #2, resident organization. This component has a
weight of x1.
(1) Grade A: The PHA can document formal recognition of, a system
of communication and collaboration with, and support for resident
councils where these exist, and where no resident council exists, the
PHA can document its encouragement for the formation of such councils.
(2) Grade F: The PHA cannot document formal recognition of, or a
system of communication and collaboration with, or document its support
for resident councils where these exist, or where no resident council
exists, the PHA cannot document its encouragement for the formation of
such councils.
(c) Component #3, resident involvement. Implicit in this component
is the need to ensure a PHA's delivery of quality customer services to
residents. This component has a weight of x1.
(1) Grade A: The PHA Board of Commissioners, by resolution,
provides for resident representation on the Board and committees, and
the PHA has implemented measures that ensure the opportunity for
regular resident input into plans and the evaluation for ongoing
quality of life and housing management conditions, including but not
limited to, modernization and development programs, screening and other
occupancy matters, relocation, the operating budget, resident programs,
security and maintenance programs.
(2) Grade C: The PHA Board of Commissioners, by resolution,
provides for resident representation on the Board and committees, and
the PHA has implemented measures that ensure the opportunity for
regular resident input into plans and the evaluation for ongoing
quality of life and housing management conditions in the modernization
and development programs and at least three of the remaining six areas
described in grade A, above.
(3) Grade F: The PHA Board of Commissioners, by resolution, did not
provide for resident representation on the Board and committees, or the
PHA has not implemented measures that ensure the opportunity for
regular resident input into plans and the evaluation for ongoing
quality of life and housing management conditions in the modernization
and development programs and at least three of the remaining six areas
described in grade A, above.
(d) Component #4, resident programs management. This component
examines a PHA's management of HUD funded resident programs. However,
PHAs can also get credit for performance under non-HUD funded programs
if they choose to be assessed for them. PHAs must select either to be
assessed for all or none of the non-HUD funded programs. This component
has a weight of x1.
(1) Grade A: If the PHA has any HUD funded special programs that
benefit the residents, including but not limited to, the Family
Investment Center (FIC), Youth Sports (YS), Food Banks, Health Clinics,
Youth Apprenticeship Program (YAP), Family Self-Sufficiency (FSS), or a
Resident Management (RM) or Tenant Opportunity Programs (TOP) where the
PHA is the contract administrator, the PHA can document that it is
meeting at least 90% of its goals under the implementation plan for any
and all of these programs.
(2) Grade C: If the PHA has any HUD-funded special programs that
benefit the residents, including but not limited to, the programs
described in grade A, above, the PHA can document that it is meeting at
least 60% of its goals under the implementation plan for any and all of
these programs.
(3) Grade F: If the PHA has any HUD-funded special programs that
benefit the residents, including but not limited to, the programs
described in grade A, above, the PHA cannot document that it is meeting
at least 60% of its goals under the implementation plan for all of
these programs.
Sec. 901.45 Indicator #8, security.
This indicator evaluates the PHAs performance in tracking crime
related problems in their developments, reporting incidence of crime to
local law enforcement agencies, the adoption and implementation of
tough applicant screening and resident eviction policies and
procedures, and, as applicable, PHA performance under any HUD drug
prevention or crime reduction grant(s). PHAs can get credit for
performance under non-HUD funded programs if they choose to be assessed
for these programs. PHAs with fewer than 250 units will not be assessed
under this indicator unless they request to be assessed at the time of
PHMAP certification submission. This indicator has a weight of x1.
(a) Component #1, Tracking and Reporting Crime Related Problems.
This component has a weight of x1.
(1) Grade A: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures and can document that it (1) tracks
crime and crime-related problems in at least 90% of its developments,
and (2) has a cooperative system for tracking and reporting incidents
of crime to local police authorities to improve law enforcement and
crime prevention.
(2) Grade C: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures and can document that it (1) tracks
crime and crime-related problems in at least 60% of its developments,
and (2) reports incidents of crime to local police authorities to
improve law enforcement and crime prevention.
(3) Grade F: The PHA Board, by resolution, has not adopted policies
and the PHA has not implemented procedures or cannot document that it
(1) tracks crime and crime-related problems in at least 60% of its
developments, or (2) reports incidents of crime to local police
authorities to improve law enforcement and crime prevention.
(b) Component #2, Screening of Applicants. This component has a
weight of x1.
(1) Grade A: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures and can document that it
successfully screens out and denies admission to a public housing
applicant who:
(i) Has a recent history of criminal activity involving crimes to
persons or property and/or other criminal acts that would adversely
affect the health, safety or welfare of other residents or PHA
personnel;
(ii) Was evicted, because of drug-related criminal activity, from
housing assisted under the U.S. Housing Act of 1937, for a minimum of a
three year period beginning on the date of such eviction, unless the
applicant has successfully completed, since the eviction, a
rehabilitation program approved by the public housing agency;
(iii) The PHA has reasonable cause to believe is illegally using a
controlled substance; or
(iv) The PHA has reasonable cause to believe abuses alcohol in a
way that causes behavior that may interfere with the health, safety, or
right to peaceful enjoyment of the premises by other residents or PHA
personnel.
[[Page 68943]]
(2) Grade C: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures, but cannot document results in
successfully screening out and denying admission to a public housing
applicant who meets the criteria as described in grade A, above.
(3) Grade F: The PHA has not adopted policies or has not
implemented procedures that result in screening out and denying
admission to a public housing applicant who meets the criteria as
described in grade A, above, or the screening procedures do not result
in the denial of admission to a public housing applicant who meets the
criteria as described in grade A, above.
(c) Component #3, Lease Enforcement. This component has a weight of
x1.
(1) Grade A: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures and can document that it
appropriately evicts any public housing resident who:
(i) The PHA has reasonable cause to believe engages in any criminal
activity that threatens the health, safety, or right to peaceful
enjoyment of the premises by other residents or PHA personnel;
(ii) The PHA has reasonable cause to believe engages in any drug-
related criminal activity (as defined at section 6(l) of the 1937 Act
(42 U.S.C. 1437d(l)) on or off the PHA's property; or
(iii) The PHA has reasonable cause to believe abuses alcohol in
such a way that causes behavior that may interfere with the health,
safety, or right to peaceful enjoyment of the premises by other
residents or PHA personnel.
(2) Grade C: The PHA Board, by resolution, has adopted policies and
the PHA has implemented procedures, but cannot document results in
appropriately evicting any public housing resident who meets the
criteria as described in grade A, above.
(3) Grade F: The PHA has not adopted policies or has not
implemented procedures that document results in the eviction of any
public housing resident who meets the criteria as described in grade A,
above, or the eviction procedures do not result in the eviction of
public housing residents who meet the criteria as described in grade A,
above.
(d) Component #4, Grant Program Goals. This component examines a
PHA's management of HUD-funded drug prevention or crime reduction
programs. However, PHAs can also get credit for performance under non-
HUD funded programs if they choose to be assessed for them. PHAs must
select either to be assessed for all or none of the non-HUD funded
programs. This component has a weight of x1.
(1) Grade A: If the PHA has any special drug prevention program or
crime reduction program funded by any HUD funds, the PHA can document
that the goals are related to drug and crime rates, and it is meeting
at least 90% of its goals under the implementation plan for any and all
of these programs.
(2) Grade C: If the PHA has any special drug prevention program or
crime reduction program funded by any HUD funds, the PHA can document
that the goals are related to drug and crime rates, and it is meeting
at least 60% of its goals under the implementation plan for any and all
of these programs.
(3) Grade F: If the PHA has any special drug prevention program or
crime reduction program funded by any HUD funds, the PHA does not have
a system for documenting or cannot document that the goals are related
to drug and crime rates, or cannot document that it is meeting 60% or
more of its goals under the implementation plan for any and all of
these programs.
Sec. 901.100 Data collection.
(a) Information on some of the indicators will be derived by the
State/Area Office from existing reporting and data forms.
(b) A PHA shall provide certification as to data on indicators not
collected according to paragraph (a) of this section, by submitting a
certified questionnaire within 60 calendar days after the end of the
fiscal year covered by the certification:
(1) The certification shall be approved by PHA Board resolution,
and signed and attested to by the Executive Director.
(2) PHAs shall maintain documentation for three years verifying all
certified indicators for HUD on-site review.
(3) A PHA may include along with its certification submission,
rather than through an exclusion or modification request, any
information bearing on the accuracy or completeness of the data used by
HUD (corrected data, late reports, previously omitted required reports,
etc.) in grading an indicator. HUD will consider this assertion in
grading the affected indicator.
(4) If a PHA does not submit its certification, or submits its
certification late, appropriate sanctions may be imposed, including a
presumptive rating of failure in all of the PHMAP indicators, which may
result in troubled and mod-troubled designations.
(5) A PHA that cannot provide justifying documentation to HUD
during the conduct of a confirmatory review, or other verification
review(s), for any indicator(s) or component(s) certified to, shall
receive a failing grade in that indicator(s) or component(s), and its
overall PHMAP score shall be lowered.
(6) If the data for any indicator(s) or component(s) that a PHA
certified to cannot be verified by HUD during the conduct of a
confirmatory review, or any other verification review(s), the State/
Area Office shall change a PHA's grade for any indicator(s) or
component(s), and its overall PHMAP score, as appropriate, to reflect
the verified data obtained during the conduct of such review.
(7) A PHA that cannot provide justifying documentation to the
independent auditor for the indicator(s) or component(s) that the PHA
certified to, as reflected in the audit report, shall receive a grade
of F for that indicator(s) or component(s), and its overall PHMAP score
shall be lowered.
(8) A PHA's PHMAP score for individual indicators or components, or
its overall PHMAP score, may be changed by the State/Area Office
pursuant to the data included in the independent audit report, as
applicable.
(9) A PHA's certification and supporting documentation will be
post-reviewed by HUD during the next on-site review as determined by
risk management, but is subject to verification at any time.
Appropriate sanctions for intentional false certification will be
imposed, including suspension or debarment of the signatories, the loss
of high performer designation, a lower grade for individual indicators
and a lower PHMAP total weighted score.
(c) For those developments of a PHA where management functions have
been assumed by an RMC, the PHA's certification shall identify the
development and the management functions assumed by the RMC. The PHA
shall obtain a certified questionnaire from the RMC as to the
management functions undertaken by the RMC. The PHA shall submit the
RMC's certified questionnaire along with its own. The RMC's
certification shall be approved by its Executive Director or Chief
Executive Officer of whatever title.
Sec. 901.105 Computing assessment score.
(a) Grades within indicators and components have the following
point values:
(1) Grade A = 10.0 points;
(2) Grade B = 8.5 points;
(3) Grade C = 7.0 points;
(4) Grade D = 5.0 points;
(5) Grade E = 3.0 point; and
(6) Grade F = 0.0 points.
(b) If indicators or components are designated as having additional
weight
[[Page 68944]]
(e.g., x1.5 or x2), the points in each grade will be multiplied times
the additional weight.
(c) Indicators will be graded individually. Components within an
indicator will be graded individually, and then will be used to
determine a single grade for the indicator, by dividing the total
number of component points by the total number of component weights and
rounding off to two decimal places. The total number of component
weights for this purpose includes a one for components that are
unweighted (i.e., they are weighted x1, rather than x1.5 or x2).
(d) Adjustment for physical condition and neighborhood environment.
The overall PHMAP score will be adjusted by adding additional points
that reflect the adjustment to be given to the differences in the
difficulty of managing developments that result from physical condition
and neighborhood environment:
(1) Adjustments shall apply to the following three indicators only:
(i) Indicator #1, vacancy rate and unit turnaround;
(ii) Indicator #4, work orders; and
(iii) Indicator #5, annual inspection and condition of units and
systems.
(2) Definitions of physical condition and neighborhood environment
are:
(i) Physical condition: refers to units located in developments
over ten years old that require major capital investment in order to
meet local codes or minimum HQS standards, whichever is applicable.
This excludes developments that have been comprehensively modernized.
(ii) Neighborhood environment: refers to units located within
developments where the immediate surrounding neighborhood (that is a
majority of the census tracts or census block groups on all sides of
the development) has at least 51% of families with incomes below the
poverty rate as documented by the latest census data.
(3) Any PHA with 5% or more of its units subject to either or both
of the above conditions shall, if they so choose, be issued an adjusted
PHMAP score in addition to the regular score based solely upon the
certification of the PHA. The adjusted score shall be calculated as
follows:
------------------------------------------------------------------------
Percent of units subject to physical condition and/or Extra
neighborhood environment points
------------------------------------------------------------------------
At least 5% but less than 10%.................................. .5
At least 10% but less than 20%................................. .6
At least 20% but less than 30%................................. .7
At least 30% but less than 40%................................. .8
At least 40% but less than 50%................................. .9
At least 50%................................................... 1.0
------------------------------------------------------------------------
(i) These extra points will be added to the score (grade) of the
indicator(s) to which these conditions may apply. A PHA is required to
certify on form HUD-50072, PHMAP Certification, the extent to which the
conditions apply, and to which of the indicators the extra scoring
points should be added.
(ii) Units in developments that have received substantial
rehabilitation within the past ten years are not eligible to be
included in the calculation of total PHA units due to physical
condition only.
(iii) A PHA that receives a grade of A under indicators #4 and/or
#5 may not claim the additional adjustment for indicator #1 based on
physical condition of its developments, but may claim additional
adjustment based on neighborhood environment.
(iv) A PHA that receives the maximum potential weighted points on
indicators #1, #4 and/or #5 may not claim any additional adjustment for
physical condition and/or neighborhood environment for the respective
indicator(s).
(v) A PHA's score for indicators #1, #4 and/or #5, after any
adjustment(s) for physical condition and/or neighborhood environment,
may not exceed the maximum potential weighted points assigned to the
respective indicator(s).
(4) If only certain units or developments received substantial
rehabilitation, the additional adjustment shall be prorated to exclude
the units or developments with substantial rehabilitation.
(5) The Date of Full Availability (DOFA) shall apply to scattered
site units, where the age of units and buildings vary, to determine
whether the units have received substantial rehabilitation within the
past ten years and are eligible for a adjusted score for the physical
condition factor.
(6) PHAs shall maintain supporting documentation to show how they
arrived at the number and percentage of units out of their total
inventory that are subject to adjustment.
(i) If the basis was neighborhood environment, the PHA shall have
on file the appropriate maps showing the census tracts or census block
groups surrounding the development(s) in question with supporting
census data showing the level of poverty. Units that fall into this
category but which have already been removed from consideration for
other reasons (permitted exemptions and modifications and/or
exclusions) shall not be counted in this calculation.
(ii) For the physical condition factor, a PHA would have to
maintain documentation showing the age and condition of the units and
the record of capital improvements, indicating that these particular
units have not received modernization funds.
(iii) PHAs shall also document that in all cases, units that were
exempted for other reasons were not included in the calculation.
Sec. 901.110 PHA request for exclusion or modification of an indicator
or component.
(a) A PHA shall have the right to request the exclusion or
modification of any indicator or component in its management
assessment, thereby excluding or modifying the impact of those
indicator's or component's grades in its PHMAP total weighted score.
(b) Exclusion and modification requests shall be submitted by a PHA
at the time of its PHMAP certification submission to the State/Area
Office along with supporting documentary justification, rather than
during the appeal process.
(c) Requests for exclusions and modifications that do not include
supporting documentary justification will not be considered.
(d) Indicator #2, modernization, shall be automatically excluded by
the State/Area Office if a PHA does not have an open modernization
program.
(e) Indicator #7, resident services and community building, shall
be automatically excluded by the State/Area Office for PHAs with fewer
than 250 units, or with 100% elderly developments, unless they request
to be assessed at the time of the PHMAP certification submission.
(f) Indicator #8, security, shall be automatically excluded by the
State/Area Office for PHAs with fewer than 250 units unless they
request to be assessed at the time of the PHMAP certification
submission.
Sec. 901.115 PHA score and status.
(a) PHAs that achieve a total weighted score of 90% or greater
shall be designated high performers. A PHA shall not be designated as a
high performer if it scores below a grade of C for any indicator. High
performers will be afforded incentives that include relief from
reporting and other requirements, as described in Sec. 901.130.
(b) PHAs that achieve a total weighted score of 90% or greater on
its overall PHMAP score and on indicator #2, modernization, shall be
designated mod-high performers.
[[Page 68945]]
(c) PHAs that achieve a total weighted score of less than 90% but
not less than 60% shall be designated standard. Standard performers
will be afforded incentives that include relief from reporting and
other requirements, as described in Sec. 901.130.
(d) PHAs that achieve a total weighted score of less than 60% shall
be designated as troubled.
(e) PHAs that achieve 60% of the maximum calculation for indicator
#2, modernization, shall be designated as mod-troubled.
(f) Each PHA shall post a notice of its final PHMAP score and
status in appropriate conspicuous and accessible locations in its
offices within two weeks of receipt of its final score and status. In
addition, HUD will publish every PHA's score and status in the Federal
Register.
(g) A PHA that cannot provide justifying documentation to HUD
during the conduct of a confirmatory review, or other verification
review(s), for any indicator(s) or component(s) certified to, shall
receive a failing grade in that indicator(s) or component(s), and its
overall PHMAP score shall be lowered.
(h) If the data for any indicator(s) or component(s) that a PHA
certified to cannot be verified by HUD during the conduct of a
confirmatory review, or any other verification review(s), the State/
Area Office shall change a PHA's grade for any indicator(s) or
component(s), and its overall PHMAP score, as appropriate, to reflect
the verified data obtained during the conduct of such review.
(i) A PHA that cannot provide justifying documentation to the
independent auditor for the indicator(s) or component(s) that the PHA
certified to, as reflected in the audit report, will receive a grade of
F for that indicator(s), and its overall PHMAP score will be lowered.
(j) A PHA's PHMAP score for individual an indicator(s),
component(s) or its overall PHMAP score may be changed by the State/
Area Office pursuant to the data included in the independent audit
report, as applicable.
(k) In exceptional circumstances, even though a PHA has satisfied
all of the indicators for high or standard performer designation, the
State/Area Office may conduct any review as necessary, including a
confirmatory review, and deny or rescind incentives or high performer
status, as described in paragraphs (a) and (b) of this section in the
case of a PHA that:
(1) Is operating under a special agreement with HUD;
(2) Is involved in litigation that bears directly upon the
management of a PHA;
(3) Is operating under a court order;
(4) Demonstrates substantial evidence of fraud or misconduct,
including evidence that the PHA's certification of indicators is not
supported by the facts, resulting from such sources as a confirmatory
review, routine reports and reviews, an Office of Inspector General
investigation/audit, an independent auditor's audit or an investigation
by any appropriate legal authority; or
(5) Demonstrates substantial noncompliance in one or more areas
(including areas not assessed by the PHMAP). Areas of substantial
noncompliance include, but are not limited to, noncompliance with
statutes (e.g., Fair Housing and Equal Opportunity statutes);
regulations (e.g., 24 CFR Sec. 85); or the Annual Contributions
Contract (ACC) (e.g., the ACC, form HUD-53012A, Section 4, Mission of
the PHA). Substantial noncompliance would cast doubt on the PHA's
capacity to preserve and protect its public housing developments and
operate them consistent with Federal law and regulations.
(l) When a State/Area Office Public Housing Director acts for any
of the reasons stated in paragraph (k) of this section, the State/Area
Office will send written notification to the PHA with a specific
explanation of the reasons. An information copy will be forwarded to
the Assistant Secretary for Public and Indian Housing.
(m) A PHA may appeal denial of high performer status in accordance
with Sec. 901.125.
Sec. 901.120 State/Area Office functions.
(a) The State/Area Office will assess each PHA within its
jurisdiction on an annual basis:
(1) The State/Area Office will make determinations for high-
performing, standard, troubled PHAs and mod-troubled PHAs in accordance
with a PHA's PHMAP weighted score.
(2) The State/Area Office will also make determinations for
exclusion and modification requests.
(b) Each State/Area Office will notify each PHA of the PHA's grade
and the grade of the RMC (if any) assuming management functions at any
of the PHA's developments, in each indicator; the PHA's management
assessment total weighted score and status, and if applicable; its
adjustment for physical condition and neighborhood environment; any
determinations concerning exclusion and modification requests; and any
deadline date by which appeals must be received. PHA notification
should include offers of pertinent technical assistance in problem
areas, suggestions for means of improving problem areas, and areas of
relief and incentives as a result of high performer status. The PHA
must notify the RMC (if any) in writing, immediately upon receipt of
the State/Area Office notification, of the RMC's grades.
(c) An on-site confirmatory review may be conducted of a PHA by
HUD. The purpose of the on-site confirmatory review is to verify those
indicators for which a PHA provides certification, as well as the
accuracy of the information received in the State/Area Office
pertaining to the remaining indicators.
(1) Whenever practicable, a confirmatory review should be conducted
by HUD prior to the issuance of a PHA's initial notification letter.
The results of the confirmatory review shall be included in the PHA's
initial notification letter.
(2) If, in an exceptional circumstance, a confirmatory review is
conducted after the State/Area Office issues the initial notification
letter, the State/Area Office shall explain the results of the
confirmatory review in writing, correct the PHA's total weighted score,
as appropriate, and reissue the initial notification letter to the PHA.
(3) The State/Area Office shall conduct a confirmatory review of a
PHA with 100 or more units under management that scores less than 60%
for its total weighted score, or less than 60% on indicator #2,
modernization, before initially designating the PHA as troubled or mod-
troubled. The results of the confirmatory review shall be included in
the PHA's initial notification letter.
(4) The State/Area Office shall conduct a confirmatory review on a
yearly basis of all troubled and mod-troubled PHAs.
(5) The State/Area Office shall conduct a confirmatory review of a
PHA with 100 or more units under management prior to the removal of
troubled or mod-troubled designation.
(6) Independent confirmatory reviews (team members from other
State/ Area Offices) shall be conducted of troubled PHAs with 1250 or
more units under management prior to the removal of troubled
designation.
(d) A PHA that cannot provide justifying documentation to HUD
during the conduct of a confirmatory review, or other verification
review(s), for any indicator(s) or component(s) certified to, shall
receive a failing grade in that indicator(s) or component(s), and its
overall PHMAP score shall be lowered by the State/Area Office. The
State/Area Office shall explain to the PHA the reason(s) for the
change(s) in writing,
[[Page 68946]]
correct the PHA's grade for an individual component(s) and/or
indicator(s) and total weighted score, as appropriate, and reissue the
initial notification letter to the PHA.
(e) If the data for any indicator(s) or component(s) that a PHA
certified to cannot be verified by HUD during the conduct of a
confirmatory review, or any other verification review(s), the State/
Area Office shall change a PHA's grade for any indicator(s) or
component(s), and its overall PHMAP score, as appropriate, to reflect
the verified data obtained during the conduct of such review. The
State/Area Office shall explain to the PHA the reason(s) for the
change(s) in writing, correct the PHA's grade for an individual
component(s) and/or indicator(s) and total weighted score, as
appropriate, and reissue the initial notification letter to the PHA.
(f) A PHA that cannot provide justifying documentation to the
independent auditor for the indicator(s) or component(s) that the PHA
certified to, as reflected in the audit report, will receive a grade of
F for that indicator(s), and its overall PHMAP score will be lowered by
the State/Area Office. The State/Area Office shall explain to the PHA
the reason(s) for the change(s) in writing, correct the PHA's grade for
an individual component(s) and/or indicator(s) and total weighted
score, as appropriate, and reissue the initial notification letter to
the PHA.
(g) A PHA's PHMAP score for an individual indicator(s),
component(s) or its overall PHMAP score may be changed by the Area/
State Office pursuant to the data included in the independent audit
report, as applicable. The State/Area Office shall explain to the PHA
the reason(s) for the change(s) in writing, correct the PHA's grade for
an individual component(s) and/or indicator(s) and total weighted
score, as appropriate, and reissue the initial notification letter to
the PHA.
(h) Determinations on appeals and on petitions to remove troubled
or mod-troubled status will be made by the State/Area Office.
(i) Determinations of intentional false certifications will be made
by the State/Area Office. State/Area Offices shall consult with the
local Office of Inspector General for guidance in cases of
determinations of intentional false certification.
(j) In exceptional circumstances, the State/Area Office may deny or
rescind a PHA's status as a standard or high performer, in accordance
with Sec. 901.115(i), so that it will not be entitled to any of the
areas of relief and incentives.
(k) The State/Area Office will maintain PHMAP files for public
inspection in accordance with Sec. 901.155.
Sec. 901.125 PHA right of appeal.
(a) A PHA has the right to appeal its PHMAP score to the State/Area
Office, including a troubled designation or a mod-troubled designation.
A PHA may appeal its management assessment rating on the basis of data
errors (any dispute over the accuracy, calculation, or interpretation
of data employed in the grading process that would affect a PHA's PHMAP
score), the denial of exclusion or modification requests when their
denial affects a PHA's total weighted score, the denial of an
adjustment based on the physical condition and neighborhood environment
of a PHA's developments, or a determination of intentional false
certification:
(1) A PHA may appeal its management assessment rating to the State/
Area Office only for the reasons stated in paragraph (a) of this
section:
(i) A PHA may not appeal its PHMAP score to the State/Area Office
unless it has submitted its certification to the State/Area Office.
(ii) A PHA may not appeal its PHMAP score to the State/Area Office
if the reason the PHA received a deficient grade in any indicator or
component was due to the fact the PHA did not submit a required report
in a timely manner or without an approved time extension.
(iii) A PHA may not appeal its PHMAP score to the State/Area Office
if the reason the PHA received a failing grade in any indicator or
component was due to the fact that the PHA did not provide justifying
documentation to the independent auditor for any indicator(s) or
component(s) the PHA certified to.
(2) The appeal shall be submitted to the State/Area Office and
shall include supporting documentary justification of the reasons for
the appeal.
(3) The State/Area Office will make determinations on initial
appeals and will transmit the determination of the appeal to the PHA in
a notification letter that will also include the date and place for
submitting any further appeal.
(4) Appeals submitted to the State/Area Office without appropriate
documentation will not be considered and will be returned to the PHA.
(b) Appeals of rescission of high performer designation shall be
made directly to the Assistant Secretary for Public and Indian Housing.
(c) A PHA may appeal the denial of an initial appeal by the State/
Area Office to the Assistant Secretary for Public and Indian Housing
for the following reasons:
(1) Initial appeals denying high performer designation;
(2) Initial appeals denying the removal of troubled designation;
(3) Initial appeals denying the removal of mod-troubled
designation;
(4) The denial of an appeal of a determination of intentional false
certification;
(5) Data errors;
(6) The denial of exclusion or modification requests when their
denial affects a PHA's total weighted score;
(7) The denial of an adjustment based on the physical condition and
neighborhood environment of a PHA's developments;
(8) The refusal of a petition in accordance with Sec. 901.140 to
remove troubled or mod-troubled designations.
(d) A PHA may appeal its management assessment rating to the
Assistant Secretary for Public and Indian Housing only for the reasons
stated in paragraph (c) of this section.
(e) A PHA may not appeal its PHMAP score to the Assistant Secretary
unless it has submitted its certification to the State/Area Office.
(f) Appeals submitted to the Assistant Secretary for Public and
Indian Housing without appropriate documentation will not be considered
and will be returned to the PHA.
(g) The date and place by which any appeal must be submitted will
be specified in the letter from the State/Area Office notifying the PHA
of any determination or action. For example, the State/Area Office
initial notification letter or denial of initial appeal letter will
specify the date and place by which appeals must be received. The date
specified will be the 15th calendar day after the letter is mailed, not
counting the day the letter is mailed. If the 15th day falls on a
weekend or holiday, the date specified will be the next day that is not
on a weekend or a holiday. Any appeal not received by the specified
time and place will not be considered.
Sec. 901.130 Incentives.
(a) A PHA that is designated high performer or standard performer
will be relieved of specific HUD requirements, effective upon
notification of high or standard performer designation.
(b) A PHA shall not be designated a mod-high performer and be
entitled to the applicable incentives unless it has been designated an
overall high performer.
(c) High-performing PHAs, and RMCs that receive a grade of A on
each of the indicators for which they are assessed, will receive a
Certificate of
[[Page 68947]]
Commendation from the Department as well as special public recognition.
(d) Representatives of high-performing PHAs may be requested to
serve on Departmental working groups that will advise the Department in
such areas as troubled PHAs and performance standards for all PHAs.
(e) State/Area Offices may award incentives to PHAs on an
individual basis for a specific reason(s), such as a PHA making the
right decision that impacts long-term overall management or the quality
of a PHA's housing stock, with prior concurrence from the Assistant
Secretary.
(f) Relief from any standard procedural requirements does not mean
that a PHA is relieved from compliance with the provisions of Federal
law and regulations or other handbook requirements. For example,
although a high or standard performer may be relieved of requirements
for prior HUD approval for certain types of contracts for services, it
must still comply with all other Federal and State requirements that
remain in effect, such as those for competitive bidding or competitive
negotiation (see 24 CFR 85.36):
(1) PHAs will still be subject to regular independent auditor (IA)
audits.
(2) Office of Inspector General (OIG) audits or investigations will
continue to be conducted as circumstances may warrant.
(g) In exceptional circumstances, the State/Area Office will have
discretion to subject a PHA to any requirement that would otherwise be
omitted under the specified relief, in accordance with Sec. 901.115(i).
Sec. 901.135 Memorandum of Agreement.
(a) After consulting the independent assessment team and reviewing
the report identified in section 6(j)(2)(b) of the 1937 Act, a
Memorandum of Agreement (MOA), a binding contractual agreement between
HUD and a PHA, shall be required for each PHA designated as troubled
and/or mod-troubled. The scope of the MOA may vary depending upon the
extent of the problems present in the PHA, but shall include:
(1) Baseline data, which should be raw data but may be the PHA's
score in each of the indicators identified as a problem, or other
relevant areas identified as problematic;
(2) Annual and quarterly performance targets, which may be the
attainment of a higher grade within an indicator that is a problem, or
the description of a goal to be achieved, for example, the reduction of
rents uncollected to 6% or less by the end of the MOA annual period;
(3) Strategies to be used by the PHA in achieving the performance
targets within the time period of the MOA;
(4) Technical assistance to the PHA provided or facilitated by the
Department, for example, the training of PHA employees in specific
management areas or assistance in the resolution of outstanding HUD
monitoring findings;
(5) The PHA's commitment to take all actions within its control to
achieve the targets;
(6) Incentives for meeting such targets, such as the removal of
troubled or mod-troubled designation and Departmental recognition for
the most improved PHAs;
(7) The consequences of failing to meet the targets, including such
sanctions as the imposition of budgetary limitations, declaration of
substantial default and subsequent actions, limited denial of
participation, suspension, debarment, or the imposition of operating
funding and modernization thresholds; and
(8) A description of the involvement of local public and private
entities, including PHA resident leaders, in carrying out the agreement
and rectifying the PHA's problems. A PHA shall have primary
responsibility for obtaining active local public and private entity
participation, including the involvement of public housing resident
leaders, in assisting PHA improvement efforts. Local public and private
entity participation should be premised upon the participant's
knowledge of the PHA, ability to contribute technical expertise with
regard to the PHA's specific problem areas and authority to make
preliminary/tentative commitments of support, financial or otherwise.
(b) A MOA shall be executed by:
(1) The PHA Board Chairperson and accompanied by a Board
resolution, or a receiver (pursuant to a court ordered receivership
agreement, if applicable) or other AME acting in lieu of the PHA Board;
(2) The PHA Executive Director, or a designated receiver (pursuant
to a court ordered receivership agreement, if applicable) or other AME-
designated Chief Executive Officer;
(3) The Director, State/Area Office of Public Housing, except as
stated in (d) of this section; and
(4) The appointing authorities of the Board of Commissioners,
unless exempted by the State/Area Office.
(c) The Department encourages the inclusion of the resident
leadership in MOA negotiations and the execution of the MOA.
(d) Upon designation of a large PHA (1250 or more units under
management) as troubled, the State/Area Office shall make a referral to
HUD Headquarters for appropriate recovery intervention and the
execution of an MOA by the Assistant Secretary for Public and Indian
Housing.
(e) A PHA will monitor MOA implementation to ensure that
performance targets are met in terms of quantity, timeliness and
quality.
Sec. 901.140 Removal from troubled status and mod-troubled status.
(a) A PHA has the right to petition the State/Area Office for the
removal of a designation as troubled or mod-troubled.
(b) A PHA may appeal any refusal to remove troubled and mod-
troubled designation to the Assistant Secretary for Public and Indian
Housing in accordance with Sec. 901.125.
(c) A PHA with fewer that 1250 units under management will be
removed from troubled status by the State/Area Office upon a
determination by the State/Area Office that the PHA's assessment
reflects an improvement to a level sufficient to remove the PHA from
troubled status, or mod-troubled, i.e., a total weighted management
assessment score of 60% or more, and upon the conduct of a confirmatory
review for PHAs with 100 or more units under management.
(d) A PHA with 1250 units or more under management will be removed
from troubled status by the Assistant Secretary for Public and Indian
Housing upon a recommendation by the State/Area Office when a PHA's
assessment reflects an improvement to a level sufficient to remove the
PHA from troubled or mod-troubled status, i.e., a total weighted
management assessment score of 60% or more, and upon the conduct of an
independent confirmatory review (team members from other State/Area
Offices).
Sec. 901.145 Improvement Plan.
(a) After receipt of the State/Area Office notification letter in
accordance with Sec. 901.120(b) or receipt of a final resolution of an
appeal in accordance with Sec. 901.125 or, in the case of an RMC,
notification of its indicator grades from a PHA, a PHA or RMC shall
correct any deficiency indicated in its management assessment within 90
calendar days.
(b) A PHA shall notify the State/Area Office of its action to
correct a deficiency. A PHA shall also forward to the State/Area Office
an RMC's report of its action to correct a deficiency.
(c) If the State/Area Office determines that a PHA or RMC has not
corrected a deficiency as required within 90 calendar days after
receipt of its final
[[Page 68948]]
notification letter, the State/Area Office may require a PHA, or a RMC
through the PHA, to prepare and submit to the State/Area Office an
Improvement Plan within an additional 30 calendar days:
(1) The State/Area Office shall require a PHA or RMC to submit an
Improvement Plan, which includes the information stated in (d) of this
section, for each indicator that a PHA or RMC scored a grade of F.
(2) The State/Area Office may require, on a risk management basis,
a PHA or RMC to submit an Improvement Plan, which includes the
information stated in paragraph (d) of this section, for each indicator
that a PHA scored a grade D or E, as well as other performance and/or
compliance deficiencies as may be identified as a result of an on-site
review of the PHA's operations.
(d) An Improvement Plan shall:
(1) Identify baseline data, which should be raw data but may be the
PHA's score in each of the indicators identified as a problem in a
PHA's or RMC's management assessment, or other relevant areas
identified as problematic;
(2) Describe the procedures that will be followed to correct each
deficiency; and
(3) Provide a timetable for the correction of each deficiency.
(e) The State/Area Office will approve or deny a PHA's or RMC's
Improvement Plan, and notify the PHA of its decision. A PHA must notify
the RMC in writing, immediately upon receipt of the State/Area Office
notification, of the State/Area Office approval or denial of the RMC's
Improvement Plan.
(f) An Improvement Plan that is not approved will be returned to
the PHA with recommendations from the State/Area Office for revising
the Improvement Plan to obtain approval. A revised Improvement Plan
shall be resubmitted by the PHA or RMC within 30 calendar days of its
receipt of the State/Area Office recommendations.
(g) If a PHA or RMC fails to submit an acceptable Improvement Plan,
or to correct deficiencies within the time specified in an Improvement
Plan or such extensions as may be granted by HUD, the State/Area Office
will notify the PHA of its or the RMC's noncompliance. The PHA, or the
RMC through the PHA, will provide HUD its reasons for lack of progress
in submitting or carrying out the Improvement Plan within 30 calendar
days of its receipt of the noncompliance notification. HUD will advise
the PHA as to the acceptability of its reasons for lack of progress
and, if unacceptable, will notify the PHA that it will be subject to
sanctions provided for in the ACC and HUD regulations.
Sec. 901.150 PHAs troubled with respect to the program under section
14 (mod-troubled PHAs).
(a) PHAs that achieve a total weighted score of less than 60% on
indicator #2, modernization, may be designated as mod-troubled.
(b) PHAs designated as mod-troubled may be subject, under the
Comprehensive Grant Program, to a reduction of formula allocation or
other sanctions (24 CFR Sec. 968, Subpart C) or under the Comprehensive
Improvement Assistance Program to disapproval of new funding or other
sanctions (24 CFR Sec. 968, Subpart B).
Sec. 901.155 PHMAP public record.
The State/Area Office will maintain PHMAP files, including
certifications, the records of exclusion and modification requests,
appeals, and designations of status based on physical condition and
neighborhood environment, as open records, available for public
inspection for three years consistent with the Freedom of Information
Act (5 U.S.C. 552) and in accordance with any procedures established by
the State/Area Office to minimize disruption of normal office
operations.
Sec. 901.200 Events or conditions that constitute substantial default.
(a) The Department may determine that events have occurred or that
conditions exist that constitute a substantial default if a PHA is
determined to be in violation of Federal statutes, including but not
limited to, the 1937 Act, or in violation of regulations implementing
such statutory requirements, whether or not such violations would
constitute a substantial breach or default under provisions of the
relevant ACC.
(b) The Department may determine that a PHA's failure to satisfy
the terms of a Memorandum of Agreement entered into in accordance with
Sec. 901.135 of this part, or to make reasonable progress to meet time
frames included in a Memorandum of Agreement, are events or conditions
that constitute a substantial default.
(c) The Department shall determine that a PHA that has been
designated as troubled and does not show significant improvement (10
percentage point increase) in its PHMAP score within one year after
final notification of its PHMAP score are events or conditions that
constitute a substantial default:
(1) A PHA shall be notified of such a determination in accordance
with Sec. 901.205(c).
(2) A PHA may waive, in writing, receipt of explicit notice from
the Department as to a finding of substantial default, and voluntarily
consent to a determination of substantial default. The PHA must concur
on the existence of substantial default conditions which can be
remedied by technical assistance, and the PHA shall provide the
Department with written assurances that all deficiencies will be
addressed by the PHA. The Department will then immediately proceed with
interventions as provided in Sec. 901.210.
(d) The Department may declare a substantial breach or default
under the ACC, in accordance with its terms and conditions.
(e) The Department may determine that the events or conditions
constituting a substantial default are limited to a portion of a PHA's
public housing operations, designated either by program, by operational
area, or by development(s).
Sec. 901.205 Notice and response.
(a) If information from an annual assessment, as described in
Sec. 901.100, a management review or audit, or any other credible
source indicates that there may exist events or conditions constituting
a substantial breach or default, the Department shall advise a PHA of
such information. The Department is authorized to protect the
confidentiality of the source(s) of such information in appropriate
cases. Before taking further action, except in cases of apparent fraud
or criminality, and/or in cases where emergency conditions exist posing
an imminent threat to the life, health, or safety of residents, the
Department shall afford the PHA a timely opportunity to initiate
corrective action, including the remedies and procedures available to
PHAs designated as ``troubled PHAs,'' or to demonstrate that the
information is incorrect.
(b) In any situation determined to be an emergency, or in any case
where the events or conditions precipitating the intervention are
determined to be the result of criminal or fraudulent activity, the
Assistant Secretary is authorized to intercede to protect the
residents' and the Department's interests by causing the proposed
interventions to be implemented without further appeals or delays.
(c) Upon a determination or finding that events have occurred or
that conditions exist that constitute a substantial default, the
Assistant Secretary shall provide written notification of such
determination or finding to the affected PHA. Written notification
shall be transmitted to the Executive Director, the Chairperson of the
Board, and the appointing
[[Page 68949]]
authority(s) of the Board, and shall include, but need not necessarily
be limited to:
(1) Identification of the specific covenants, conditions, and/or
agreements under which the PHA is determined to be in noncompliance;
(2) Identification of the specific events, occurrences, or
conditions that constitute the determined noncompliance;
(3) Citation of the communications and opportunities to effect
remedies afforded pursuant to paragraph (a) of this section;
(4) Notification to the PHA of a specific time period, to be not
less than 10 calendar days, except in cases of apparent fraud or other
criminal behavior, and/or under emergency conditions as described in
paragraph (a) of this section, nor more than 30 calendar days, during
which the PHA shall be required to demonstrate that the determination
or finding is not substantively accurate; and
(5) Notification to the PHA that, absent a satisfactory response in
accordance with paragraph (d) of this section, the Department will take
control of the PHA, using any or all of the interventions specified in
Sec. 901.210, and determined to be appropriate to remedy the
noncompliance, citing Sec. 901.210, and any additional authority for
such action.
(d) Upon receipt of the notification described in paragraph (c) of
this section, the PHA must demonstrate, within the time period
permitted in the notification, factual error in the Department's
description of events, occurrences, or conditions, or show that the
events, occurrences, or conditions do not constitute noncompliance with
the statute, regulation, or covenants or conditions to which the PHA is
cited in the notification.
Sec. 901.210 Interventions.
(a) Interventions under this part (including an assumption of
operating responsibilities) may be limited to one or more of a PHA's
specific operational areas (e.g., maintenance, modernization,
occupancy, or financial management) or to a single development or a
group of developments. Under this limited intervention procedure, the
Department could select, or participate in the selection of, an AME to
assume management responsibility for a specific development, a group of
developments in a geographical area, or a specific operational area,
while permitting the PHA to retain responsibility for all programs,
operational areas, and developments not so designated.
(b) Upon determining that a substantial default exists under this
part, the Department may initiate any interventions deemed necessary to
maintain decent, safe, and sanitary dwellings for residents. Such
intervention may include:
(1) Providing technical assistance for existing PHA management
staff;
(2) Selecting or participating in the selection of an AME to
provide technical assistance or other services up to and including
contract management of all or any part of the public housing
developments administered by a PHA;
(3) Assuming possession and operational responsibility for all or
any part of the public housing administered by a PHA; and
(4) The provision of intervention and assistance necessary to
remedy emergency conditions.
(c) HUD may take the actions described in this part sequentially or
simultaneously in any combination.
Sec. 901.215 Contracting and funding.
(a) Upon a declaration of substantial default or breach, and
subsequent assumption of possession and operational responsibility, the
Department may enter into agreements, arrangements, and/or contracts
for or on behalf of a PHA, or to act as the PHA, and to expend or
authorize expenditure of PHA funds, irrespective of the source of such
funds, to remedy the events or conditions constituting the substantial
default.
(b) In entering into contracts or other agreements for or on behalf
of a PHA, the Department shall comply with requirements for competitive
procurement consistent with 24 CFR 85.36, except that, upon
determination of public exigency or emergency that will not permit a
delay, the Department can enter into contracts or agreements on a
noncompetitive basis, consistent with the standards of 24 CFR
85.36(d)(4).
Sec. 901.220 Resident participation in competitive proposals to manage
the housing of a PHA.
(a) When a competitive proposal to manage the housing of a PHA in
substantial default is solicited in a Request for Proposals (RFP)
pursuant to section 6(j)(3)(A)(i) of the 37 Act, the RFP, in addition
to publishing the selection criteria, will:
(1) Include a requirement for residents to notify the Department if
they want to be involved in the selection process; and
(2) Include a requirement for the PHA that is the subject of the
RFP to post a notice and a copy of the RFP in a prominent location on
the premises of each housing development that would be subject to the
management chosen under the RFP, for the purposes of notifying affected
residents that:
(i) Invites residents to participate in the selection process; and
(ii) Provides information, to be specified in the RFP, on how to
notify the Department of their interest.
(b) Residents must notify the Department by the RFP's application
due date of their interest in participating in the selection process.
In order to participate, the total number of residents that notify the
Department must equal at least 20 percent of the residents, or the
notification of interest must be from an organization or organizations
of residents whose membership must equal at least 20 percent of the
PHA's residents.
(c) If the required percentage of residents notify the Department,
a minimum of one resident may be invited to serve as an advisory member
on the evaluation panel that will review the applications in accordance
with applicable procurement procedures. Resident advisory members are
subject to all applicable confidentiality and disclosure restrictions.
Sec. 901.225 Resident petitions for remedial action.
The total number of residents that petition the Department to take
remedial action pursuant to sections 6(j)(3)(A)(i) through (iv) of the
1937 Act must equal at least 20 percent of the residents, or the
petition must be from an organization or organizations of residents
whose membership must equal at least 20 percent of the PHA's residents.
Sec. 901.230 Receivership.
(a) Upon a determination that a substantial default has occurred
and without regard to the availability of alternate remedies, the
Department may petition the court for the appointment of a receiver to
conduct the affairs of the PHA in a manner consistent with statutory,
regulatory, and contractual obligations of the PHA and in accordance
with such additional terms and conditions that the court may provide.
The court shall have authority to grant appropriate temporary or
preliminary relief pending final disposition of any petition by HUD.
(b) The appointment of a receiver pursuant to this section may be
terminated upon the petition to the court by the PHA, the receiver, or
the Department, and upon a finding by the court that the circumstances
or conditions that constituted substantial
[[Page 68950]]
default by the PHA no longer exist and that the operations of the PHA
will be conducted in accordance with applicable statutes and
regulations, and contractual covenants and conditions to which the PHA
and its public housing programs are subject.
Sec. 901.235 Technical assistance.
(a) The Department may provide technical assistance to a PHA that
is in substantial default.
(b) The Department may provide technical assistance to a troubled
or non-troubled PHA if the assistance will enable the PHA to achieve
satisfactory performance on any PHMAP indicator. The Department may
provide such assistance if a PHA demonstrates a commitment to undertake
improvements appropriate with the given circumstances, and executes an
Improvement Plan in accordance with Sec. 901.145.
(c) The Department may provide technical assistance to a PHA if
without abatement of prevailing or chronic conditions, the PHA can be
projected to be designated as troubled by its next PHMAP assessment.
(d) The Department may provide technical assistance to a PHA that
is in substantial default of the ACC.
(e) The Department may provide technical assistance to a PHA whose
troubled designation has been removed and where such assistance is
necessary to prevent the PHA from being designated as troubled within
the next two years.
Dated: December 10, 1996.
Kevin Emanuel Marchman,
Acting Assistant Secretary for Public and Indian Housing.
[FR Doc. 96-32469 Filed 12-27-96; 8:45 am]
BILLING CODE 4210-33-P