[Federal Register Volume 63, Number 175 (Thursday, September 10, 1998)]
[Rules and Regulations]
[Pages 48548-48560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23820]


      

[[Page 48547]]

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Part II





Department of Housing and Urban Development





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Section 8 Rental Voucher and Certificate Programs and Section 8 
Management Assessment Program (SEMAP) Establishment; Final Rule

  Federal Register / Vol. 63, No. 175 / Thursday, September 10, 1998 / 
Rules and Regulations  

[[Page 48548]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 985

[Docket No. FR-3986-F-02]
RIN 2577-AB60


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

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Final rule.

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SUMMARY: This rule establishes the Section 8 Management Assessment 
Program (SEMAP) to objectively measure public housing agency (HA) 
performance in key Section 8 tenant-based assistance program areas. 
SEMAP enables HUD to ensure program integrity and accountability by 
identifying HA management capabilities and deficiencies and by 
improving risk assessment to effectively target monitoring and program 
assistance. HAs can use the SEMAP performance analysis to assess their 
own program operations.

DATES: This rule is effective October 13, 1998, Sections 985.102 (SEMAP 
profile), 985.103 (SEMAP score and overall performance rating), 
985.105(a), 985.105(b), 985.105(d) and 985.105(e) (HUD SEMAP 
responsibilities) and 985.107 (Required actions for HA with troubled 
performance rating) are stayed as of October 13, 1998, until further 
notice.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Acting Director, Real 
Estate and Housing Performance Division, Office of Public and Assisted 
Housing Delivery, Public and Indian Housing, Department of Housing and 
Urban Development, Room 4220, 451 Seventh Street, SW, Washington, DC 
20410, telephone (202) 708-0477. Hearing or speech impaired individuals 
may call HUD's TTY number (202) 708-4594 or 1-800-877-8399 (Federal 
Information Relay Service TTY). (Other than the ``800'' number, these 
are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. History and Scope of Rule

    On December 2, 1996, at 61 FR 63930, HUD published a proposed rule 
to establish SEMAP for the tenant-based Section 8 rental voucher and 
rental certificate programs (24 CFR part 982), and for certain aspects 
of the project-based component of the certificate program and the 
Section 8 family self-sufficiency (FSS) program. The proposed rule 
described 15 performance indicators that the Department planned to use 
to assess HA performance; the annual HA SEMAP certification and HUD 
review process; HUD scoring procedures and procedures for designating 
high, standard and troubled performers; and requirements for corrective 
action plans for improving performance.
    HUD received 160 comments on the proposed rule which generally 
approve the broad purpose of the rule. Comments object to particular 
aspects of the proposed rule, and especially to inclusion of the 
proposed indicators for welfare to work and deconcentration. As a 
result of comments, the Department has revised the deconcentration 
indicator to measure HA efforts to expand housing opportunities rather 
than actual dispersal of Section 8 families. A deconcentration bonus 
indicator has also been added which awards up to 5 bonus points based 
on measurement of actual outcomes of HA actions as they impact on 
families choosing housing in low poverty areas. The Department has 
eliminated two (2) of the proposed indicators (time from request for 
lease approval to housing quality standards (HQS) inspection and 
welfare to work), and has added one indicator (utility allowance 
schedule). A new component has also been added to the FSS enrollment 
indicator to measure the percent of FSS participants with escrow 
account balances).
    The SEMAP rule does not apply to Indian housing authority (IHA) 
administration of the tenant-based Section 8 programs. SEMAP does not 
cover the Section 8 moderate rehabilitation program (24 CFR 882, 
subparts D and E).

II. Program Operation

    The basic SEMAP procedures have been modeled on the performance 
indicators for the assessment of public housing management required by 
section 6(j) of the U.S. Housing Act of 1937 (42 U.S.C. 1437d(j)). 
These public housing management indicators constituted the core of the 
former Public Housing Management Assessment Program (PHMAP), which has 
been replaced by the new Public Housing Assessment System (PHAS) 
implemented by a final rule published September 1, 1998. The PHAS is a 
much broader assessment system which places substantial weight on the 
physical condition of Public Housing. Although this SEMAP final rule 
does not include a physical assessment component, it is HUD's intention 
to develop a physical inspection system for Section 8 tenant-based 
assistance once the Department and the industry have gained experience 
with the new PHAS system. Subpart C has been reserved in this rule for 
a future physical assessment component.

A. SEMAP Certification

    Section 985.101 requires an HA administering a Section 8 tenant-
based assistance program to submit annually a SEMAP certification form 
within 60 calendar days after the end of its fiscal year. The 
certification form requires short answers from HAs concerning HA 
performance under the 14 SEMAP indicators and assures HUD that HA 
responses are accurate and that there is no evidence of seriously 
deficient performance. The HA board of commissioners approves, and the 
board chairperson and HA executive director sign, the certification. An 
HA must submit its first annual SEMAP certification form within 60 days 
after its first fiscal year end that follows the effective date of this 
final rule.

B. SEMAP Score and Overall Performance Rating

1. HUD Assessment and Verification of SEMAP Certification
    Upon receipt of the annual HA SEMAP certification, HUD will 
independently assess each HA's performance under SEMAP using annual 
audit reports, family data reported by HAs on Forms HUD-50058 and HUD-
50058-FSS and maintained in the HUD Multifamily Tenant Characteristics 
System (MTCS), and other available information to verify the HA 
responses. HUD may also conduct an on-site confirmatory review to 
verify an HA certification under any indicator. Based upon this HUD 
review and verification, HUD will prepare a SEMAP profile for each HA, 
assigning a rating for each SEMAP indicator in accordance with the 
regulation.
    The final rule provides at Sec. 985.3, that if the HUD verification 
method for a SEMAP indicator relies on data in MTCS, and HUD determines 
those data are insufficient to verify the HA's certification on the 
indicator due to the HA's failure to adequately report family data, HUD 
will assign a zero rating for the indicator. The Department expects 
that no less than 75 percent of an HA's rental voucher and certificate 
program participants must be reported for the MTCS data to be 
sufficient for assigning ratings under SEMAP. HUD, in its discretion, 
may increase the required level of MTCS reporting for SEMAP rating 
purposes at any time to a standard higher than 75 percent. HAs are 
reminded that the regulations in

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force since 1995, at 24 CFR 982.158 and 908.104, require 100 percent 
reporting of participant data to MTCS in accordance with HUD 
instructions.
    Comments question whether MTCS data are reliable for rating HAs 
under the SEMAP indicators and whether independent auditors (IAs) have 
sufficient capability to understand program rules to provide accurate 
assessments of compliance. Comments also express concern that auditors 
will vary in their audit procedures and that the cost of the audit will 
increase as a result of the auditor's added responsibilities under this 
rule.
    The Department will not rate indicators under this rule until it is 
confident that MTCS data are reliable and auditor guidance has been 
issued to help auditors understand program requirements and 
consistently measure compliance. Therefore, until HUD determines that 
the independent verification methods for the SEMAP indicators stated in 
Sec. 985.3 are properly implemented, the Department will accept the HA 
certification and will continue to depend on confirmatory reviews to 
the extent they are performed to measure performance and compliance.
    Initially, the Department will not assign overall performance 
ratings. When independent verification methods for the indicators are 
properly implemented, the Department will publish a Federal Register 
notice of the effective date for the full implementation of SEMAP, 
including ratings under the indicators and issuance of overall 
performance ratings, which is expected early in calendar year 2000. 
Consequently, implementation of Secs. 985.102 (SEMAP profile), 985.103 
(SEMAP score and overall performance rating), 985.105(a), (b), (d) and 
(e) (HUD SEMAP responsibilities), and 985.107 (Required actions for HA 
with troubled performance rating) will be deferred until further 
notice.
    Several comments expressed concern that the audit report to be used 
for independent verification of performance will not be available to 
HUD until as much as 13 months after the HA fiscal year for which 
performance is assessed. The Single Audit Act amendments of 1996, 
shortened to 9 months the amount of time between the end of an audit 
period and the submission of the audit report. Nonetheless, the 
Department recognizes that there is still a lag between the end of the 
HA fiscal year and the Department's receipt of the audit report. The 
Department plans to use the latest available audit report to rate those 
indicators for which the audit is the method of verification. The 
performance indicators measured by the auditor are mostly fundamental 
program responsibilities which HAs have been performing for many years 
and for which there has been long-standing guidance. In general, there 
ought not be substantial variance in an HA's administration of these 
functions from year to year. However, to the extent that the HA has 
improved performance under an indicator after the audit, the HA may 
describe to HUD any corrective action taken since the audit (see 
Sec. 985.101(a)(3)) and, if HUD deems it appropriate, HUD may adjust 
the HA's overall performance rating accordingly.
    The Department recognizes that the cost of the audit may increase 
due to additional compliance testing which may be required as a result 
of this rule, and due to the requirement for explicit statements in the 
audit report concerning compliance related to the SEMAP indicators. The 
Department has determined to bear the added cost in return for the 
increased information about how well HAs administer the aspects of the 
program measured by the audit.
2. Small Housing Agencies
    Several HAs commented that SEMAP is an undue administrative burden 
and should not apply to HAs that administer fewer than 250 units. SEMAP 
was designed to minimize any new recordkeeping burden. Under the final 
rule, an HA that is not already doing so will need to begin maintaining 
documentation of its 5 percent HQS quality control inspections. HAs 
with FSS programs will need to track the number of FSS families with 
escrow accounts. Initial HAs that deal with FSS families who have moved 
under portability but continue in the FSS program of the initial HA 
will also have a minimal extra record-keeping burden. For all other 
SEMAP indicators, the Department expects that all HAs already keep 
records that will demonstrate performance in conformity with 
longstanding program requirements. Consequently, the Department does 
not agree that there is any significant administrative burden 
associated with SEMAP that should preclude its implementation for small 
HAs.
    The Single Audit Act requires non-Federal entities that expend 
$300,000 or more a year in Federal awards to have an audit made for 
that year. HAs that expend less than $300,000 a year in Federal awards 
are exempt from Federal audit requirements. Therefore, the final rule 
provides that HAs that expend less than $300,000 a year in Federal 
awards and whose Section 8 programs are not audited by an IA, will not 
be rated under the SEMAP indicators for which HUD uses the audit report 
as the method of verification of HA performance. For these small HAs, 
the SEMAP score and overall performance rating will be determined based 
only on the remaining 7 SEMAP indicators, including lease-up and those 
indicators for which HUD uses MTCS as the method of verification. 
Although the SEMAP performance rating will not be determined using the 
indicators for which the audit report is the verification method, HAs 
not subject to Federal audit requirements must still complete the SEMAP 
certification for these indicators and performance under the indicators 
is still subject to HUD confirmatory reviews to the extent they are 
performed.
3. Determination of SEMAP Score and Overall Performance Rating
    Comments objected to the proposed rating of several indicators for 
which 100 percent compliance was required in order to achieve highest 
points under the indicator. Comments said rating should be less 
stringent to allow for human error or circumstances beyond the HA's 
control. In the final rule, the rating on several indicators has been 
relaxed to not require 100 percent compliance to achieve highest 
points. Notwithstanding that some room for error is allowed in the 
SEMAP ratings, HAs are reminded that they are responsible for full 
compliance with program requirements.
    Several HA comments requested the opportunity to review a 
preliminary SEMAP score before HUD issues a final score. The Department 
does not find the extra administrative procedures involved in issuing 
preliminary SEMAP scores worthwhile, since assignment of scores under 
SEMAP will be highly systematized, and the scores will generally be 
easily determinable from the IA audit report and from MTCS reports 
which HAs may obtain from HUD.
    HUD will sum its ratings for the individual indicators and divide 
by the potential maximum number of points to arrive at an overall HA 
SEMAP score. Points awarded under the deconcentration bonus indicator 
will be added to the sum of the ratings for the individual indicators, 
but will not be included in the potential maximum number of points. HAs 
with SEMAP scores of at least 90 percent will receive an overall 
performance rating of high performer; HAs with SEMAP scores of 60 to 89 
percent will receive an overall performance rating of standard; and HAs 
with scores of less than 60 percent will receive an overall performance

[[Page 48550]]

rating of troubled. HUD may modify an HA's overall performance rating 
when warranted by circumstances that have bearing on the SEMAP 
indicators such as an HA's appeal of its overall rating, adverse 
litigation, fair housing and equal opportunity compliance concerns, 
fraud or misconduct, audit findings, or substantial noncompliance with 
program requirements. HUD will provide the HA a written explanation of 
any modified overall performance rating.
    As indicated above, the Department will not rate indicators under 
this rule until it is confident that MTCS data are reliable and audit 
guidance has been issued to help auditors understand program 
requirements and consistently measure compliance.
4. HUD Notification to HA of SEMAP Ratings
    SEMAP Profile. The final rule provides that within 120 days of the 
HA's fiscal year end, HUD will complete an HA SEMAP profile and will 
notify the HA in writing of its rating on each SEMAP indicator, the 
HA's overall SEMAP score and its overall performance rating (high 
performer, standard, or troubled). HUD will also provide an HA's SEMAP 
ratings to the chief executive officer of the unit of local government 
where the HA has jurisdiction, and SEMAP ratings will be made available 
as public information over the Internet. As noted above, however, HUD 
will not assign an overall performance rating until HUD publishes the 
effective date for full implementation of SEMAP. The HUD notification 
letter will identify and require correction of any program management 
deficiencies within 45 days.
    Modifications, Exclusions, Appeals. Several comments urged that 
there be provision for modifications or exclusions of certain 
indicators as in the Public Housing Management Assessment Program 
(PHMAP), and that there be detailed appeal procedures.
    HUD finds the performance indicators in SEMAP so essential to 
adequate performance for any Section 8 tenant-based program that 
provision for modification or exclusion of any indicator is not 
warranted. Since appeals of SEMAP scores and ratings may be made for a 
variety of reasons in a variety of circumstances, the Department finds 
little practicality for a prescribed appeal process. The rule provides 
that the HA may appeal its overall performance rating to HUD by 
providing justification of the reasons for its appeal and that HUD must 
provide a final written determination to an HA on its appeal. An appeal 
made to a HUD hub or program center or to the HUD Troubled Agency 
Recovery Center and denied, may be further appealed to the Assistant 
Secretary.

C. Required Actions for SEMAP Deficiencies

    Section 985.106 requires that the HA improve its Section 8 program 
management for any SEMAP indicator that is rated zero (a ``SEMAP 
deficiency''), and must send HUD a written report of the corrective 
action taken on the SEMAP deficiency within 45 days of receipt of its 
SEMAP ratings from HUD. If an HA fails to correct SEMAP deficiencies as 
required, HUD will require that the HA prepare and submit a written 
corrective action plan for the deficiency within 30 days.
    HUD must, under Sec. 985.107, review on-site any HA that is 
assigned an overall performance rating of troubled. HUD will issue a 
written report of its on-site review findings and recommendations. Upon 
receipt of the HUD report, the HA must write a corrective action plan 
and submit it to HUD for approval. Both the HA and HUD must monitor 
implementation of a corrective action plan to ensure targets for 
improved performance are met.
    Any HA assigned an overall performance rating of troubled may not 
use any part of the administrative fee reserve for other housing 
purposes (see 24 CFR 982.155(b)). In these cases, HUD may require use 
of the administrative fee reserve for specific administrative 
improvements in areas where administration is found deficient.

D. HAs Under the Jurisdiction of More Than One HUD Office

    For any HA with jurisdiction under the jurisdiction of more than 
one HUD office (e.g., a state agency), the HUD office with the greatest 
amount of funding obligated under ACCs will assume all responsibility 
for administration of SEMAP for the HA.

E. Default Under ACC

    An HA's failure to correct identified SEMAP deficiencies or to 
prepare and implement a corrective action plan required by HUD may 
constitute a default under the ACC as determined by HUD. The ACC 
provides for HUD notice of a determination of default to the HA and 
authorizes HUD to take possession of all or any HA property, rights, or 
interests in connection with a program if HUD determines that the HA 
has failed to comply with obligations under the ACC, including 
compliance with all HUD regulations and other requirements (including 
the final SEMAP regulation), or with obligations under a housing 
assistance payments (HAP) contract.

III. SEMAP Indicators

A. Proposed Indicators for Deconcentration and Welfare to Work

    Comments nearly unanimously objected to inclusion of the proposed 
SEMAP indicators for deconcentration and welfare to work. The 
deconcentration indicator would have measured the extent to which 
Section 8 families with children leased units in census tracts of 
relatively low poverty, among metropolitan census tracts containing 
housing priced at or below the fair market rent (FMR), both within the 
HA's jurisdiction and within the entire metropolitan area. Comments 
state that deconcentration of assisted families is largely outside HA 
control, since the tenant-based program design gives families the right 
to choose their own housing. Comments also indicate that a performance 
requirement and the added costs to administer a mobility program which 
would produce significant results constitute an unfunded mandate. Some 
comments stated that the indicator is too complicated and confusing, 
and that the 1990 data used to determine areas with FMR-priced housing 
and poverty rates may be out of date.
    In light of the comments, the Department has decided to revise the 
deconcentration indicator. The revised indicator has been renamed 
``expanding housing opportunities'' (Sec. 985.3(g)) and measures an 
HA's efforts to encourage participation by owners of units located 
outside areas of poverty or minority concentration and to inform rental 
voucher and certificate holders of the full range of areas where they 
may lease housing, both inside and outside the HA's jurisdiction. The 
revised indicator measures HA actions required by program regulations 
at 24 CFR 982.54(d)(5), 982.301(a) and 982.301(b)(5) and 
982.301(b)(13), and so does not require an HA to take action that is 
not funded by the administrative fee. The expanding housing 
opportunities indicator applies only to HAs with jurisdiction in 
metropolitan FMR areas.
    The revised ``expanding housing opportunities'' indicator does not 
measure where families ultimately choose to lease housing. However, the 
Department continues to believe that it is important to develop a 
reasonable measure of the extent to which the HA's actions to expand 
housing opportunities actually result in family choices to lease 
housing in low poverty areas. The Department plans to issue a new

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proposed rule which will present and seek comment on a potential new 
SEMAP deconcentration indicator to measure outcomes that is less 
complicated than the deconcentration indicator in the December 2, 1996 
proposed rule.
    To acknowledge the effectiveness of HA actions in achieving 
deconcentration until a new SEMAP deconcentration outcome measure is 
developed, the Department has added a 5-point deconcentration bonus 
indicator to this final rule (Sec. 985.3(h)). The deconcentration bonus 
indicator will give HAs with jurisdiction in metropolitan FMR areas the 
option of providing data on the percent of Section 8 families with 
children who choose housing in low poverty census tracts in the HA's 
principal operating area. Bonus points may be awarded if half or more 
of all Section 8 families with children live in low poverty areas in 
the HA's principal operating area, or if the percent of Section 8 mover 
families with children who choose housing in low poverty areas exceeds 
by at least 2 percentage points the percent of all the HA's Section 8 
families with children who live in low poverty areas. For example, if 
20 percent of all assisted families with children are in low poverty 
tracts, and 22 percent of mover families with children locate in low 
poverty tracts, the HA would be awarded 5 bonus points. Because an HA 
might make progress that varies year by year, bonus points may also be 
awarded if the percent of families moving to low poverty tracts over a 
2-year period is 2 percentage points greater than the percent of all 
assisted families with children.
    State and regional HAs that provide Section 8 rental assistance in 
more than one metropolitan area within a State or region make these 
determinations separately for each metropolitan area or portion of a 
metropolitan area where the HA assists at least 20 families with 
children during the HA fiscal year. The separate metropolitan area 
ratings will then be weighted by the number of assisted families with 
children in each area and averaged to determine bonus points to be 
awarded to the State or regional HA.
    Low poverty census tracts are defined as those where the poverty 
rate in the tract is at or below 10 percent, or at or below the overall 
poverty rate for the principal operating area of the HA, whichever is 
greater. This definition of low poverty census tract is intended to be 
a relative measure that may differ for the inner city and suburban 
portions of a metropolitan area, and that is consistent with variations 
in the availability of affordable housing offered at or below HUD FMRs.
    The Department does not intend that the bonus indicator for 
deconcentration should cause any HA with jurisdiction in a metropolitan 
FMR area to directly or indirectly reduce a family's opportunity to 
select among available units, including those in high-poverty areas. 
Rather, HUD intends, by including the extent to which Section 8 
families with children choose housing in low poverty areas as a measure 
of performance for bonus points, that HAs will be encouraged to provide 
more outreach to owners in all areas of their jurisdictions and more 
counseling and assistance to motivate and increase housing choice on 
the part of families.
    The proposed welfare to work indicator would have measured the 
percent of Section 8 families whose primary source of income was 
welfare, who moved from welfare to work over the course of a year. 
Comments state that movement of families from welfare to work is not 
under the HA's control, but rather depends on state work incentives, 
family skills, the local economy, and the quality of job training and 
placement programs. Comments state that moving families from welfare to 
work is not an HA responsibility at all and is unrelated to federal 
housing laws and regulations. Several comments state that HAs should 
not be expected to coordinate social services without funds to pay the 
costs. The final rule eliminates the proposed welfare to work 
indicator, but retains the FSS indicator which has basis in federal 
housing law.

B. Remarks on Particular Indicators

1. Selection From the Waiting List
    This indicator measures whether the HA has written policies in its 
administrative plan for selecting applicants from the waiting list and 
follows these policies when selecting applicants for admission. The 
final rule raises the maximum points for the waiting list indicator 
(Sec. 985.3(a)) to 15 points from 10 points as had been proposed, based 
on comments which stressed the importance of this indicator.
2. Reasonable Rent
    The final rule requires, for maximum points under the reasonable 
rent indicator (Sec. 985.3(b)), that the HA document for at least 98 
percent of units leased that the rent to owner is reasonable based on 
current rents for comparable unassisted units, at the time of initial 
leasing; if there is any increase in the rent to owner; and at the HAP 
contract anniversary if there is a 5 percent decrease in the published 
FMR in effect 60 days before the HAP contract anniversary. This is 
changed from the proposed indicator which required that reasonable rent 
be documented at the time of initial leasing and ``at least annually''. 
The change corresponds to the current requirement in the Section 8 
certificate and voucher programs conforming rule.
    Comments asked HUD to clarify what is required as a method for the 
HA to determine reasonable rent. The Section 8 certificate and voucher 
programs conforming rule at Sec. 982.503, requires that the HA 
determine whether the rent to owner is a reasonable rent in comparison 
to rent for other comparable unassisted units. To make this 
determination the HA must consider location, quality, size, type, and 
age of the contract unit, and any amenities, housing services, 
maintenance and utilities to be provided by the owner under the lease. 
The Department plans to issue guidance concerning the determination of 
reasonable rent that will be substantially similar to guidance 
previously issued in paragraph 6-5 of Handbook 7420.7, Public Housing 
Agency Administrative Practices Handbook for the Section 8 Existing 
Housing Program.
    Some comments questioned why reasonable rent is included as a SEMAP 
indicator since, with fair market rents (FMRs) set at the 40th 
percentile rents for the area, it is not worth an HA's effort to 
determine that rent is reasonable.
    FMRs are set for entire metropolitan areas and for entire 
nonmetropolitan counties. Within these broad FMR areas it is normal for 
rents to vary considerably within submarkets. Within any broad FMR 
area, there are likely to be neighborhoods where prevailing rents are 
significantly below the HUD-published FMRs as well as neighborhoods 
with prevailing rents significantly above the HUD-published FMRs. In 
addition, any particular unit may command a lesser rent than the FMR 
due to its location, quality, size, type, age and amenities. 
Consequently, to ensure that rents paid under the Section 8 programs 
are not excessive in the local submarket, it is of utmost importance 
for the HA to make a determination of reasonable rent based on 
comparable unassisted units in the submarket determined by unit 
location, age, quality, size, type and amenities.
3. Determination of Adjusted Income
    The proposed rule included an indicator for income determination 
and utility allowances. Comments urged HUD not to combine the standard 
for

[[Page 48552]]

the utility allowance schedule with the income determination indicator. 
Accordingly, the final rule includes a separate utility allowance 
schedule indicator.
    The proposed rule provided that, to score points on the income 
determination indicator, the HA must obtain third party verification of 
family income, assets, and composition or document why independent 
verification is not possible. Some comments pointed out that third 
party verification of family composition is not generally required.
    The final rule clarifies at Sec. 985.3(c)(3), that the HA must 
obtain third party verification of adjusted income. This includes 
verification of annual income, the value of assets totalling more than 
$5,000, expenses related to deductions from annual income, and other 
factors that affect the determination of adjusted income and 
consequently the amount of assistance (e.g., full-time student status, 
custody). In general, the family's self-declaration of the numbers of 
its members, their ages, and their relationship to the head does not 
require third party verification unless there is HA uncertainty 
concerning these factors. For further clarification of verification 
requirements, HAs may use the guidance in paragraph 4-5 of Handbook 
7420.7.
4. Utility Allowance Schedule
    The final rule establishes a separate utility allowance schedule 
indicator (Sec. 985.3(d)) worth 5 points. The indicator measures 
whether the HA maintains an up-to-date utility allowance schedule.
5. HQS Quality Control Inspections
    Comments asked for clarification of which inspections were subject 
to the 5 percent quality control reinspection and over what period of 
time the quality control reinspections must be performed. The final 
rule clarifies at Sec. 985.3(e) that to obtain the 5 points under this 
indicator, an HA supervisor or other qualified person must reinspect a 
sample of units during the HA fiscal year, numbering at least 5 percent 
of the number of units under contract during the last completed HA 
fiscal year. In addition, the indicator has been modified to also 
require the reinspected sample to be drawn from recently completed HQS 
inspections (i.e., performed during the 3 months preceding 
reinspection) and to be drawn to represent a cross section of 
neighborhoods and the work of a cross section of inspectors.
    A small HA with only 1 or 2 employees may arrange with a nearby HA 
to have a qualified HQS inspector perform the required quality control 
inspections.
6. FMR Limit and Payment Standards
    The Department had requested specific comment on whether the FMR 
limit and payment standards indicator (Sec. 985.3(i)) should be 
retained as a SEMAP indicator in the final rule. Comments approved of 
the inclusion of this indicator in the final rule.
    FMR Limit. Many comments expressed confusion over the FMR standard 
which allows only 10 percent of newly leased certificate units to 
exceed the FMR/exception rent limit. HAs did not understand how the 
indicator accommodated their authority to exceed the FMR by up to 10 
percent for 20 percent of certificate units, as well as HUD's authority 
to approve area exception rents and case-by-case exception rents up to 
120 percent of FMR.
    Under the conforming rule, the HA's broad authority to exceed the 
FMR by up to 10 percent for 20 percent of certificate units, as well as 
HUD's authority to approve case-by-case exception rents up to 120 
percent of FMR have been eliminated. However, the conforming rule 
retains provisions for HUD-approved area exception rents and provides 
for HA approval of exception rents if needed as reasonable 
accommodation for persons with disabilities.
    The FMR indicator in the proposed rule was written to accommodate 
the new over-FMR tenancy option in the rental certificate program. 
Under the conforming rule, an HA may approve an initial gross rent that 
exceeds the FMR or HUD-approved exception rent (an over-FMR tenancy) 
for up to 10 percent of its incremental certificates under budget. The 
SEMAP proposed rule standard to have at least 90 percent of newly 
leased certificate units with initial rents at or below the FMR was 
meant to allow for up to 10 percent of all units to be leased under 
over-FMR tenancies. In this final rule the indicator has been modified 
for accuracy. The final rule standard excepts over-FMR tenancies from 
the measure entirely, and requires that at least 98 percent of units 
newly leased under the certificate program, other than over-FMR 
tenancies, have initial gross rents at or below the applicable FMR or 
approved exception rent limit.
    Payment Standards. In addition to measuring whether the HA's 
voucher payment standards do not exceed the applicable FMR or HUD-
approved exception rent limits, the final rule modifies the payment 
standard aspect of the proposed indicator to also measure whether the 
HA's payment standards are not less than 80 percent of the applicable 
FMR or HUD-approved exception rent limits.
7. Annual Reexaminations
    The Department had requested specific comment on whether the annual 
reexaminations indicator should be retained as a SEMAP indicator in the 
final rule. Comments approved of the inclusion of this indicator.
    Many comments recommended that the SEMAP indictor require the 
annual reexamination to be completed ``annually before the HAP contract 
anniversary'' rather than ``at least every 12 months''. Comments 
indicated that many HAs view the annual reexamination as an annual 
process that involves not only reexamination of the family's adjusted 
income, but also the annual HQS inspection and the owner's annual rent 
adjustment in the certificate program. Many HAs expressed concern about 
delays in rent negotiations or in HQS inspections impacting the 
timeliness of the HA's annual reexamination.
    The program requirement is that the results of the annual 
reexamination of the family's adjusted income take effect at least 
every 12 months. The annual reexamination of adjusted income does not 
entail the annual HQS inspection or the owner's rent adjustment, 
although HAs may, nevertheless, find it convenient to coordinate these 
annual processes.
    Some comments indicated that, when an HA knows a family move is 
imminent, the HA will intentionally delay the annual reexamination so 
that its effective date will coincide with the HQS inspection and the 
HAP contract anniversary for the family's new unit. The law and 
regulations do not permit a delay in the annual reexamination for this 
reason. However, HUD recognizes that it is administratively convenient 
for HAs to coordinate the timing of the annual reexamination, HQS 
inspection and owner's rent adjustment processes. When a family moves 
to a new unit and thereby establishes a new HQS inspection date and HAP 
contract anniversary date, if the family's latest annual reexamination 
took effect within 4 months prior to the new HAP contract anniversary, 
the HA may simply ascertain whether there has been any change in the 
family's adjusted income since the last annual reexamination and, if 
so, obtain third party verification of only the change. The HA must 
then use any new verified information together with information from 
the last annual reexamination to redetermine the family

[[Page 48553]]

share of rent and the housing assistance payment. The HA may consider 
and report that income redetermination, upon a move within 4 months of 
the effective date of the last annual reexamination, as a new annual 
reexamination. This will establish a new annual reexamination date that 
coincides with the date of the HQS inspection and HAP contract 
anniversary at the new unit.
    The ratings for the annual reexaminations indicator at 
Sec. 985.3(j) indicate that annual reexaminations may not be more than 
2 months overdue. This 2-month allowance is provided only to 
accommodate a possible lag in the HA's electronic reporting of the 
annual reexamination on Form HUD-50058, and to allow the processing of 
the data into the MTCS. The Form HUD-50058 data are used to measure 
performance under this indicator. The 2-month allowance provided here 
for rating purposes does not mean that any delay in completing annual 
reexaminations is ever permitted.
8. Correct Tenant Rent Calculations
    This indicator shows whether the HA correctly calculates tenant 
rent in the rental certificate program and the family's share of the 
rent to owner in the rental voucher program. The final rule 
(Sec. 985.3(k)) clarifies that the MTCS report used to verify 
performance under this indicator will cover only rent calculation 
discrepancies for regular certificate and voucher program tenancies, 
and will not include rent calculation discrepancies for over-FMR 
tenancies in the rental certificate program, for manufactured home 
owner rentals of manufactured home spaces, or for proration of 
assistance under the noncitizen rule.
9. Annual HQS Inspections
    The ratings for the annual HQS inspections indicator 
(Sec. 985.3(m)) indicate that annual HQS inspections may not be more 
than 2 months overdue. This 2-month allowance is provided only to 
accommodate a possible lag in the HA's electronic reporting of the 
annual HQS inspections on Form HUD-50058, and to allow the processing 
of the data into the MTCS. The Form HUD-50058 data are used to measure 
performance under this indicator. The 2-month allowance provided here 
for rating purposes does not mean that any delay in completing annual 
HQS inspections is ever permitted.
10. Lease-up
    The proposed rule required that 98 percent or more of units 
budgeted for the last completed HA fiscal year be contracted to receive 
maximum points under the lease-up indicator. Comments state that it is 
unreasonable to expect 98 percent lease-up with the required 3-month 
delay in reissuance of turnover and that this indicator should be 
excluded from SEMAP until the 3-month delay on reissuance is revoked.
    The final rule at Sec. 985.3(n) does not address the 3-month delay 
on reissuance of turnover. However, in the event future legislation 
impacts the lease-up indicator, or any other SEMAP indicator, the 
Department will publish a Federal Register notice to temporarily modify 
SEMAP standards as may be required by future legislative provisions.
    Many comments recommended that the lease-up indicator account for 
circumstances which affect leasing such as rental market factors, 
economic conditions, and HA termination of assistance for violations of 
family obligations. Other comments recommended that allocations for 
special use, such as in connection with public housing demolition or 
for litigation, should be excluded from measurement of performance 
under this indicator.
    The lease-up indicator under the final rule measures units leased 
during the last HA fiscal year as a percent of units budgeted for the 
last HA fiscal year. The number of units budgeted on Form HUD-52672, 
Supporting Data for Annual Contributions Estimates, is the number of 
units estimated to be leased during the fiscal year and should account 
for local market conditions, the HA's experience concerning 
terminations for violation of family obligations, as well as for 
anticipated leasing of units under special allocations. Therefore, the 
indicator has not been modified to further consider these factors.
    The proposed HUD verification method for lease-up has been modified 
to measure the number of units leased during the last HA fiscal year by 
using the number of unit months under contract as reported on the HUD-
approved Form HUD-52681, Voucher for Payment of Annual Contributions 
and Operating Statement, divided by 12 months, and then dividing by the 
number of units budgeted for the last HA fiscal year as shown on the 
HUD-approved Form HUD-52672. Comments indicate this method which 
measures lease-up over the course of the fiscal year is preferred over 
use of the Program Utilization Report which measures lease-up at a 
point in time.
11. FSS Enrollment and Escrow Accounts
    The final rule lowers the maximum points for FSS enrollment 
(Sec. 985.3(o)) to 5 points from 10 points as had been proposed; 
however, another 5-point FSS component has been added to the FSS 
indicator. Comments indicate that the SEMAP indicator for FSS should be 
fashioned to measure FSS results, not just to count families enrolled 
in FSS. The final rule includes a new 5-point FSS component which 
measures the percent of current FSS participants with FSS progress 
reports entered in MTCS who have had increases in earned income since 
enrollment and consequently, have built escrow account balances.
    The HUD method of verification for the FSS indicator is an MTCS 
report which shows the number of the HA's Section 8 families that are 
currently enrolled in the HA's FSS program and the percent of the HA's 
current FSS participants that have established escrow account balances. 
Occasionally, an FSS participant may move under portability to another 
HA's jurisdiction, but remains in the FSS program of the initial HA. 
When the family's FSS participation is properly reported by the 
receiving HA, MTCS will incorrectly report this family as enrolled and 
with an escrow account in the receiving HA's FSS program rather than in 
the initial HA's FSS program. Therefore, until the Form HUD-50058-FSS 
and MTCS are modified to show the FSS enrollment and escrow account in 
the initial HA's program, if the initial HA wishes to be given credit 
for the family's FSS enrollment and escrow account, it will be 
necessary for the initial HA to manually report on its SEMAP 
certification the number of its current FSS families enrolled and the 
number of its current FSS families with escrow accounts who have 
exercised portability and whose Section 8 assistance is administered 
and reported by the receiving HA.
    The FSS indicator at Sec. 985.3(o) applies only to HAs with 
mandatory FSS programs (i.e., HAs that received FY 1992 FSS incentive 
award Section 8 funding or that received FY 1993 and later year Section 
8 funding, excluding Section 8 funding in conjunction with Section 8 
and Section 23 contract terminations; public housing demolition, 
disposition and replacement; HUD multifamily property sales; prepaid or 
terminated mortgages under section 236 or section 221(d)(3); and 
Section 8 renewal funding).

[[Page 48554]]

C. Comments on Possible Additional Indicators

    The Department specifically invited comment on whether SEMAP should 
include performance indicators on rent burden and portability. Comments 
do not support and the final rule does not include performance 
indicators for these areas. However, note that the new expanding 
housing opportunities indicator (Sec. 985.3(g)) covers certain aspects 
of portability.
    The Department also invited comment on whether SEMAP should include 
a performance indicator on timeliness of housing assistance payments to 
owners. There was relatively light commenting on this potential 
indicator in response to the proposed rule; approximately 20 of 160 
comments addressed whether to add an indicator for timeliness of 
housing assistance payments--4 comments were supportive and 10 were 
opposed. Given the light response, the Department plans to issue a new 
proposed rule which will provide further detail concerning a possible 
indicator for timeliness of housing assistance payments and will seek 
further comment on whether to add this as a SEMAP indicator. Timeliness 
of housing assistance payments is not included as a SEMAP indicator in 
this final rule.
    The Department also plans to include in the forthcoming proposed 
rule another SEMAP indicator for HA implementation of certain HA 
screening and termination policies. On March 31, 1997, the Department 
issued a proposed rule for implementation of provisions under the 
Housing Opportunity Program Extension Act of 1996. The March 31, 1997 
proposed rule would require that an HA deny eligibility for families 
who were evicted from housing assisted under the 1937 Act for drug-
related criminal activity or for serious violation of the lease; 
terminate assistance for a family that was evicted from housing 
assisted under the program for serious violation of the lease; and 
establish standards for denying and terminating assistance if a family 
member is illegally using a controlled substance or has a pattern of 
abuse of alcohol that interferes with peaceful enjoyment of the 
premises by other residents. The new proposed SEMAP indicator would 
measure HA performance in implementing the requirements of the 
forthcoming final rule concerning these admissions and occupancy 
policies. The new SEMAP proposed rule will also revise the HQS quality 
control inspection sample size to require statistically significant 
sample sizes based on the size of the HA's tenant-based program.
    The Department noted in the preamble to the proposed rule that it 
plans to add a SEMAP indicator in the next 2 years to measure an HA's 
performance in analyzing computer matching results under the Tenant 
Eligibility Verification System (TEVS) and in taking appropriate 
administrative actions (e.g., resolving reported income discrepancies 
and tracking amount of money recovered). Comments indicate it is 
premature to include an indicator on HA action in support of computer 
matching since TEVS needs further development to ensure accuracy and 
completeness. The Department acknowledges that it is too early to 
include a SEMAP indicator related to TEVS, but plans to add a TEVS 
indicator in the future when the system is fully functional.
    Finally, the Department is considering adding two additional SEMAP 
indicators in the future: one to measure HA performance in enforcing 
HQS based on results of inspections performed by an auditing entity for 
a sample of units, and the second to measure customer satisfaction. 
Both of these measures of HA performance will be used for Public 
Housing under a revised public housing assessment system administered 
by the Department's Real Estate Assessment Center. After a period of 
testing the new public housing assessment system measures in these 
areas, the Department anticipates publishing a proposed rule to seek 
comment on similar indicators for SEMAP.

IV. Findings and Certifications

Paperwork Reduction Act Statement

    The information collection requirements contained in Secs. 985.101, 
985.107(c), and 985.106 in this rule have been approved by the Office 
of Management and Budget (OMB) in accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520), and assigned OMB control 
number 2577-0215. 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.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk at the above address.

Regulatory Planning and Review

    This rule has been reviewed in accordance with Executive Order 
12866, issued by the President on September 30, 1993 (58 FR 51735, 
October 4, 1993). OMB determined that this rule is a ``significant 
regulatory action,'' as defined in section 3(f) of the Order (although 
not economically significant, as provided in section 3(f)(1) of the 
Order). Any changes to the rule resulting from this review are 
available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the Office of the Rules Docket Clerk.

Regulatory Flexibility Act

    In accordance with 5 U.S.C. 605(b) (the Regulatory Flexibility 
Act), the undersigned hereby certifies that this rule is not 
anticipated to have a significant economic impact on a substantial 
number of small entities. The rule establishes management assessment 
criteria for HAs. HUD does not anticipate a significant economic impact 
on a substantial number of small entities, since the rule establishes 
management assessment criteria which will be utilized by State/Area 
Offices for monitoring purposes and the provision of technical 
assistance to HAs.

Unfunded Mandates Reform Act

    The Secretary has reviewed this rule before publication and by 
approving it certifies, in accordance with the Unfunded Mandates Reform 
Act of 1995 (2 U.S.C. 1532), that this rule does not impose a Federal 
mandate that will result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year.

Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this 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 HAs, continuing review of HAs' compliance with 
already existing requirements. The rule does not create any new 
significant requirements of its own. As a result, the

[[Page 48555]]

rule is not subject to review under the Order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers are 14.855 and 
14.857.

List of Subjects in 24 CFR Part 985

    Grant programs--housing and community development, Housing, Rent 
subsidies, Reporting and recordkeeping requirements.

    Accordingly, 24 CFR, chapter IX is amended as follows:
    1. A new part 985 is added to read as follows:

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

Subpart A--General

Sec.
985.1  Purpose and applicability.
985.2  Definitions.
985.3  Indicators, HUD verification methods and ratings.

Subpart B--Program Operation

985.101 SEMAP certification.
985.102  SEMAP profile.
985.103  SEMAP score and overall performance rating.
985.104  HA right of appeal of overall rating.
985.105  HUD SEMAP responsibilities.
985.106  Required actions for SEMAP deficiencies.
985.107  Required actions for HA with troubled performance rating.
985.108  SEMAP records.
985.109  Default under the Annual Contributions Contract (ACC).

Subpart C--Physical Assessment Component [Reserved]

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

Subpart A--General


Sec. 985.1  Purpose and applicability.

    (a) Purpose. The Section 8 Management Assessment Program (SEMAP) is 
designed to assess whether the Section 8 tenant-based assistance 
programs operate to help eligible families afford decent rental units 
at the correct subsidy cost. SEMAP also establishes an objective system 
for HUD to measure HA performance in key Section 8 program areas to 
enable the Department to ensure program integrity and accountability. 
SEMAP provides procedures for HUD to identify HA management 
capabilities and deficiencies in order to target monitoring and program 
assistance more effectively. HAs can use the SEMAP performance analysis 
to assess and improve their own program operations.
    (b) Applicability. This rule applies to HA administration of the 
tenant-based Section 8 rental voucher and rental certificate programs 
(24 CFR part 982), the project-based component (PBC) of the certificate 
program (24 CFR part 983) to the extent that PBC family and unit data 
are reported and measured under the stated HUD verification method, and 
enrollment levels and contributions to escrow accounts for Section 8 
participants under the family self-sufficiency program (FSS) (24 CFR 
part 984).


Sec. 985.2  Definitions.

    (a) The terms Department, Fair Market Rent, HUD, Secretary, and 
Section 8, as used in this part, are defined in 24 CFR 5.100.
    (b) The definitions in 24 CFR 982.4 apply to this part. As used in 
this part:
    Corrective action plan means a HUD-required written plan that 
addresses HA program management deficiencies or findings identified by 
HUD through remote monitoring or on-site review, and that will bring 
the HA to an acceptable level of performance.
    HA means a Housing Agency.
    MTCS means Multifamily Tenant Characteristics System. MTCS is the 
Department's national database on participants and rental units in the 
Section 8 rental certificate, rental voucher, and moderate 
rehabilitation programs and in the Public and Indian Housing programs.
    Performance indicator means a standard set for a key area of 
Section 8 program management against which the HA's performance is 
measured to show whether the HA administers the program properly and 
effectively. (See Sec. 985.3.)
    SEMAP certification means the HA's annual certification to HUD, on 
the form prescribed by HUD, concerning its performance in key Section 8 
program areas.
    SEMAP deficiency means any rating of 0 points on a SEMAP 
performance indicator.
    SEMAP profile means a summary prepared by HUD of an HA's ratings on 
each SEMAP indicator, its overall SEMAP score, and its overall 
performance rating (high performer, standard, troubled).


Sec. 985.3  Indicators, HUD verification methods and ratings.

    This section states the performance indicators that are used to 
assess HA Section 8 management. HUD will use the verification method 
identified for each indicator in reviewing the accuracy of an HA's 
annual SEMAP certification. HUD will prepare a SEMAP profile for each 
HA and will assign a rating for each indicator as shown. If the HUD 
verification method for the indicator relies on data in MTCS and HUD 
determines those data are insufficient to verify the HA's certification 
on the indicator due to the HA's failure to adequately report family 
data, HUD will assign a zero rating for the indicator. Similarly, if 
the HUD verification method for the indicator relies on the HA's annual 
audit report and HUD does not receive the audit report within the nine 
month reporting period, HUD may assign a zero rating for the indicator.
    An HA that expends less than $300,000 in Federal awards and whose 
Section 8 programs are not audited by an independent auditor (IA), will 
not be rated under the SEMAP indicators in paragraphs (a) through (g) 
of this section for which the annual IA audit report is the HUD 
verification method. For those HAs, the SEMAP score and overall 
performance rating will be determined based only on the remaining 
indicators in paragraphs (i) through (o) of this section as applicable. 
Although the SEMAP performance rating will not be determined using the 
indicators in paragraphs (a) through (g) of this section, HAs not 
subject to Federal audit requirements must still complete the SEMAP 
certification for these indicators and performance under the indicators 
is subject to HUD confirmatory reviews.
    (a) Selection from the Waiting List. (1) This indicator shows 
whether the HA has written policies in its administrative plan for 
selecting applicants from the waiting list and whether the HA follows 
these policies when selecting applicants for admission from the waiting 
list. (24 CFR 982.54(d)(1) and 982.204(a))
    (2) HUD verification method: The latest independent auditor (IA) 
annual audit report.
    (3) Rating: (i) The latest IA audit report states that:
    (A) The HA has written waiting list selection policies in its 
administrative plan and,
    (B) Based on randomly selected samples of applicants and 
admissions, documentation shows that at least 98 percent of the 
families in the samples of applicants and admissions were selected from 
the waiting list for admission in accordance with these policies and 
met the selection criteria that determined their places on the waiting 
list and their order of selection. 15 points.
    (ii) The latest IA audit report does not support the statement in 
paragraph (a)(3)(i) of this section. 0 points.
    (b) Reasonable Rent. (1) This indicator shows whether the HA has 
and implements a reasonable written

[[Page 48556]]

method to determine and document for each unit leased that the rent to 
owner is reasonable based on current rents for comparable unassisted 
units: at the time of initial leasing; if there is any increase in the 
rent to owner; and at the HAP contract anniversary if there is a 5 
percent decrease in the published fair market rent (FMR) in effect 60 
days before the HAP contract anniversary. The HA's method must take 
into consideration the location, size, type, quality and age of the 
units, and the amenities, housing services, and maintenance and 
utilities provided by the owners in determining comparability and the 
reasonable rent. (24 CFR 982.4, 24 CFR 982.54(d)(15), 982.158(f)(7) and 
982.503)
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that:
    (A) The HA has a reasonable written method to determine reasonable 
rent which considers location, size, type, quality and age of the units 
and the amenities, housing services, and maintenance and utilities 
provided by the owners; and
    (B) Based on a randomly selected sample of tenant files, the HA 
follows its written method to determine reasonable rent and has 
documented its determination that the rent to owner is reasonable in 
accordance with Sec. 982.503 for at least 98 percent of units sampled 
at the time of initial leasing, if there is any increase in the rent to 
owner and, at the HAP contract anniversary if there is a 5 percent 
decrease in the published FMR in effect 60 days before the HAP contract 
anniversary. 20 points.
    (ii) The latest IA audit report includes the statements in 
paragraph (b)(3)(i) of this section, except that the HA documents its 
determination of reasonable rent for only 80 to 97 percent of units 
sampled at initial leasing, if there is any increase in the rent to 
owner, and at the HAP contract anniversary if there is a 5 percent 
decrease in the published FMR in effect 60 days before the HAP contract 
anniversary. 15 points.
    (iii) The latest IA audit report does not support the statements in 
either paragraph (b)(3)(i) or (b)(3)(ii) of this section. 0 points.
    (c) Determination of adjusted income. (1) This indicator shows 
whether, at the time of admission and annual reexamination, the HA 
verifies and correctly determines adjusted annual income for each 
assisted family and, where the family is responsible for utilities 
under the lease, the HA uses the appropriate utility allowances for the 
unit leased in determining the gross rent. (24 CFR part 5, subpart F 
and 24 CFR 982.516)
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that, based on a 
randomly selected sample of tenant files, for at least 90 percent of 
families:
    (A) The HA obtains third party verification of reported family 
annual income, the value of assets totalling more than $5,000, expenses 
related to deductions from annual income, and other factors that affect 
the determination of adjusted income, and uses the verified information 
in determining adjusted income, and/or documents tenant files to show 
why third party verification was not available;
    (B) The HA properly attributes and calculates allowances for any 
medical, child care, and/or disability assistance expenses; and
    (C) The HA uses the appropriate utility allowances to determine 
gross rent for the unit leased. 20 points.
    (ii) The latest IA audit report includes the statements in 
paragraph (c)(3)(i) of this section, except that the HA obtains and 
uses independent verification of income, properly attributes 
allowances, and uses the appropriate utility allowances for only 80 to 
89 percent of families. 15 points.
    (iii) The latest IA audit report does not support the statements in 
either paragraph (c)(3)(i) or (c)(3)(ii) of this section. 0 points.
    (d) Utility Allowance Schedule. (1) This indicator shows whether 
the HA maintains an up-to-date utility allowance schedule. (24 CFR 
982.517)
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that the auditor 
has determined that the HA reviewed utility rate data within the last 
12 months, and adjusted its utility allowance schedule if there has 
been a change of 10 percent or more in a utility rate since the last 
time the utility allowance schedule was revised. 5 points.
    (ii) The latest IA audit report does not support the statement in 
paragraph (d)(3)(i) of this section. 0 points.
    (e) HQS quality control inspections. (1) This indicator shows 
whether an HA supervisor or other qualified person reinspects a sample 
of units under contract during the HA fiscal year, numbering at least 5 
percent of the number of units under contract during the last completed 
HA fiscal year (as determined by taking unit months under HAP contract 
as shown on the HA's latest approved year end operating statement 
divided by 12), for quality control of HQS inspections. The HA 
supervisor's reinspected sample is to be drawn from recently completed 
HQS inspections (i.e., performed during the 3 months preceding 
reinspection) and is to be drawn to represent a cross section of 
neighborhoods and the work of a cross section of inspectors. (24 CFR 
982.405(b))
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that the auditor 
has determined that an HA supervisor or other qualified person 
performed quality control HQS reinspections during the HA fiscal year 
for a sample of units under contract numbering at least 5 percent of 
the number of units under contract during the last HA fiscal year. The 
audit report also states that the reinspected sample was drawn from 
recently completed HQS inspections (i.e., performed during the 3 months 
preceding the quality control reinspection) and was drawn to represent 
a cross section of neighborhoods and the work of a cross section of 
inspectors. 5 points.
    (ii) The latest IA audit report does not support the statements in 
paragraph (e)(3)(i) of this section. 0 points.
    (f) HQS enforcement. (1) This indicator shows whether, following 
each HQS inspection of a unit under contract where the unit fails to 
meet HQS, any cited life-threatening HQS deficiencies are corrected 
within 24 hours from the inspection and all other cited HQS 
deficiencies are corrected within no more than 30 calendar days from 
the inspection or any HA-approved extension. In addition, if HQS 
deficiencies are not corrected timely, the indicator shows whether the 
HA stops (abates) housing assistance payments beginning no later than 
the first of the month following the specified correction period or 
terminates the HAP contract or, for family-caused defects, takes prompt 
and vigorous action to enforce the family obligations. (24 CFR 982.404)
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that the review 
of a randomly selected sample of case files with failed HQS inspections 
shows that, for all cases sampled, any cited life-threatening HQS 
deficiencies were corrected within 24 hours from the inspection and, 
for at least 98 percent of cases sampled, all other cited HQS 
deficiencies were corrected within no more than 30 calendar days from 
the inspection or any HA-approved extension, or, if any life-
threatening HQS deficiencies were not corrected

[[Page 48557]]

within 24 hours and all other HQS deficiencies were not corrected 
within 30 calendar days or any HA-approved extension, the HA stopped 
(abated) housing assistance payments beginning no later than the first 
of the month following the correction period, or took prompt and 
vigorous action to enforce family obligations. 10 points.
    (ii) The latest IA audit report does not support the statement in 
paragraph (f)(3)(i) of this section. 0 points.
    (g) Expanding housing opportunities. (1) This indicator applies 
only to HAs with jurisdiction in metropolitan FMR areas. The indicator 
shows whether the HA has adopted and implemented a written policy to 
encourage participation by owners of units located outside areas of 
poverty or minority concentration; informs rental voucher and 
certificate holders of the full range of areas where they may lease 
units both inside and outside the HA's jurisdiction; and supplies a 
list of landlords or other parties who are willing to lease units or 
help families find units, including units outside areas of poverty or 
minority concentration. (24 CFR 982.54(d)(5), 982.301(a) and 
982.301(b)(5) and 982.301(b)(13))
    (2) HUD verification method: The latest IA annual audit report.
    (3) Rating: (i) The latest IA audit report states that:
    (A) The HA has a written policy in its administrative plan which 
includes actions the HA will take to encourage participation by owners 
of units located outside areas of poverty or minority concentration, 
and which clearly delineates areas in its jurisdiction that the HA 
considers areas of poverty or minority concentration;
    (B) HA documentation shows that the HA has taken actions indicated 
in its written policy to encourage participation by owners of units 
located outside areas of poverty or minority concentration;
    (C) The HA has prepared maps that show various areas with housing 
opportunities outside areas of poverty or minority concentration both 
within its jurisdiction and neighboring its jurisdiction; has assembled 
information about the characteristics of those areas which may include 
information about job opportunities, schools, transportation and other 
services in these areas; and can demonstrate that it uses the maps and 
area characteristics information when briefing rental voucher and 
certificate holders about the full range of areas where they may look 
for housing;
    (D) The HA's information packet for rental voucher and certificate 
holders contains either a list of owners who are willing to lease (or 
properties available for lease) under the rental voucher or certificate 
programs; or a current list of other organizations that will help 
families find units and the HA can demonstrate that the list(s) 
includes properties or organizations that operate outside areas of 
poverty or minority concentration;
    (E) The HA's information packet includes an explanation of how 
portability works and includes a list of portability contact persons 
for neighboring housing agencies, with the name, address and telephone 
number of each, for use by families who move under portability; and
    (F) HA documentation shows that the HA has analyzed whether rental 
voucher and certificate holders have experienced difficulties in 
finding housing outside areas of poverty or minority concentration and, 
if such difficulties have been found, HA documentation shows that the 
HA has analyzed whether it is appropriate to seek approval of area 
exception rents in any part of its jurisdiction and has sought HUD 
approval of exception rents when necessary. 5 points.
    (ii) The latest audit report does not support the statement in 
paragraph (g)(3)(i) of this section. 0 points.
    (h) Deconcentration bonus. (1) Additional SEMAP points are 
available to HAs that have jurisdiction in metropolitan FMR areas and 
that choose to submit with their SEMAP certifications certain data, in 
a HUD-prescribed format, on the percent of their tenant-based Section 8 
families with children who live in, and who have moved during the HA 
fiscal year to, low poverty census tracts in the HA's principal 
operating area. For purposes of this indicator, the HA's principal 
operating area is the geographic entity for which the Census tabulates 
data that most closely matches the HA's geographic jurisdiction under 
State or local law (e.g., city, county, metropolitan statistical area) 
as determined by the HA, subject to HUD review. A low poverty census 
tract is defined as a census tract where the poverty rate of the tract 
is at or below 10 percent, or at or below the overall poverty rate for 
the principal operating area of the HA, whichever is greater. The HA 
determines the overall poverty rate for its principal operating area 
using the most recent available decennial Census data. Family data used 
for the HA's analysis must be the same information as reported to MTCS 
for the HA's tenant-based Section 8 families with children. If HUD 
determines that the quantity of MTCS data is insufficient for adequate 
analysis, HUD will not award points under this bonus indicator. Bonus 
points will be awarded if:
    (i) Half or more of all Section 8 families with children assisted 
by the HA in its principal operating area at the end of the last 
completed HA fiscal year reside in low poverty census tracts;
    (ii) The percent of Section 8 mover families with children who 
moved to low poverty census tracts in the HA's principal operating area 
during the last completed HA fiscal year is at least 2 percentage 
points higher than the percent of all Section 8 families with children 
who reside in low poverty census tracts at the end of the last 
completed HA fiscal year; or
    (iii) The percent of Section 8 families with children who moved to 
low-poverty census tracts in the HA's principal operating area over the 
last two completed HA fiscal years is at least 2 percentage points 
higher than the percent of all Section 8 families with children who 
resided in low poverty census tracts at the end of the second to last 
completed HA fiscal year.
    (iv) State and regional HAs that provide Section 8 rental 
assistance in more than one metropolitan area within a State or region 
make these determinations separately for each metropolitan area or 
portion of a metropolitan area where the HA has assisted at least 20 
Section 8 families with children in the last completed HA fiscal year.
    (2) HUD verification method: HA data submitted for the 
deconcentration bonus and latest IA annual audit report.
    (3) Rating: (i) The data submitted by the HA for the 
deconcentration bonus shows that the HA met the requirements for bonus 
points in paragraph (h)(1)(i), (ii) or (iii) of this section, and the 
latest IA audit report states that the auditor has determined that the 
HA has on file documentation of its analysis of data which supports its 
submission to HUD for bonus points under this indicator. 5 points.
    (ii) The data submitted by the HA for the deconcentration bonus 
does not show that the HA met the requirements for bonus points in 
paragraph (h)(1)(i), (ii) or (iii) of this section, or the latest IA 
audit report does not state that the auditor has determined that the HA 
has on file documentation of its analysis of data which supports its 
submission to HUD for bonus points under this indicator. 0 points.
    (iii) HUD will rate metropolitan areas within State or regional HA 
jurisdictions separately and the separate metropolitan area ratings 
will then be weighted by the number of assisted families with children 
in each area and

[[Page 48558]]

averaged to determine bonus points to be awarded to the State or 
regional HA.
    (i) Fair market rent (FMR) limit and payment standards. (1) This 
indicator shows whether: at least 98 percent of the units newly leased 
under the rental certificate program, other than over-FMR tenancies, 
have initial gross rents at or below the applicable FMR or approved 
exception rent limit; and whether the HA has adopted current payment 
standards for the rental voucher program by unit size for each FMR area 
in the HA jurisdiction, and, if applicable, for each HUD-approved 
exception rent area within an FMR area, which payment standards do not 
exceed the current applicable FMR or HUD-approved exception rent limits 
and which are not less than 80 percent of the current FMR/exception 
rent limit (unless a lower percent is approved by HUD). If the HA 
administers either the rental certificate program or the rental voucher 
program but not both, only the standard for the program which the HA 
administers applies. (24 CFR 982.508(a) and 982.505(b)(3)).
    (2) HUD verification method: HA data submitted on the SEMAP 
certification form concerning payment standards and MTCS report--Shows 
newly leased certificate units' gross rents (excluding over-FMR 
tenancies) compared to the FMR or approved exception rent.
    (3) Rating: (i) Excluding over-FMR tenancies, at least 98 percent 
of the units newly leased under the rental certificate program have 
initial gross rents at or below the applicable FMR or approved 
exception rent limits, and the HA's current rental voucher program 
payment standards do not exceed the current applicable FMR or HUD-
approved exception rent limits and are not less than 80 percent of the 
current FMR/exception rent limit (unless a lower percent is approved by 
HUD). 5 points.
    (ii) Excluding over-FMR tenancies, more than 2 percent of rental 
certificate program units have been newly leased at initial gross rents 
that exceed the applicable FMR/exception rent limits, or the HA's 
rental voucher program payment standards exceed the FMR/exception rent 
limits or are less than 80 percent of the current FMR/exception rent 
limit (unless a lower percent is approved by HUD). 0 points.
    (j) Annual reexaminations. (1) This indicator shows whether the HA 
completes a reexamination for each participating family at least every 
12 months. (24 CFR 5.617).
    (2) HUD verification method: MTCS report--Shows percent of 
reexaminations that are more than 2 months overdue. The 2-month 
allowance is provided only to accommodate a possible lag in the HA's 
electronic reporting of the annual reexamination on Form HUD-50058 and 
to allow the processing of the data into MTCS. The 2-month allowance 
provided here for rating purposes does not mean that any delay in 
completing annual reexaminations is permitted.
    (3) Rating: (i) Fewer than 5 percent of all HA reexaminations are 
more than 2 months overdue. 10 points.
    (ii) 5 to 10 percent of all HA reexaminations are more than 2 
months overdue. 5 points.
    (iii) More than 10 percent of all HA reexaminations are more than 2 
months overdue. 0 points.
    (k) Correct tenant rent calculations. (1) This indicator shows 
whether the HA correctly calculates tenant rent in the rental 
certificate program and the family's share of the rent to owner in the 
rental voucher program. (24 CFR 982 subpart K).
    (2) HUD verification method: MTCS report--Shows percent of tenant 
rent and family's share of the rent to owner calculations that are 
incorrect based on data sent to HUD by the HA on Forms HUD-50058. The 
MTCS data used for verification cover only regular certificate and 
voucher program tenancies and do not include rent calculation 
discrepancies for over-FMR tenancies in the rental certificate program, 
for manufactured home owner rentals of manufactured home spaces, or for 
proration of assistance under the noncitizen rule.
    (3) Ratings: (i) 2 percent or fewer of HA tenant rent and family's 
share of the rent to owner calculations are incorrect. 5 points.
    (ii) More than 2 percent of HA tenant rent and family's share of 
the rent to owner calculations are incorrect. 0 points.
    (l) Pre-contract housing quality standards (HQS) inspections. (1) 
This indicator shows whether newly leased units pass HQS inspection on 
or before the beginning date of the assisted lease and HAP contract. 
(24 CFR 982.305).
    (2) HUD verification method: MTCS report--Shows percent of newly 
leased units where the beginning date of the assistance contract is 
before the date the unit passed HQS inspection.
    (3) Rating: (i) 98 to 99 percent of newly leased units passed HQS 
inspection before the beginning date of the assisted lease and HAP 
contract. 5 points.
    (ii) Fewer than 98 percent of newly leased units passed HQS 
inspection before the beginning date of the assisted lease and HAP 
contract. 0 points.
    (m) Annual HQS inspections. (1) This indicator shows whether the HA 
inspects each unit under contract at least annually. (24 CFR 
982.405(a))
    (2) HUD verification method: MTCS report--Shows percent of HQS 
inspections that are more than 2 months overdue. The 2-month allowance 
is provided only to accommodate a possible lag in the HA's electronic 
reporting of the annual HQS inspection on Form HUD-50058, and to allow 
the processing of the data into MTCS. The 2-month allowance provided 
here for rating purposes does not mean that any delay in completing 
annual HQS inspections is permitted.
    (3) Rating: (i) Fewer than 5 percent of annual HQS inspections of 
units under contract are more than 2 months overdue. 10 points.
    (ii) 5 to 10 percent of all annual HQS inspections of units under 
contract are more than 2 months overdue. 5 points.
    (iii) More than 10 percent of all annual HQS inspections of units 
under contract are more than 2 months overdue. 0 points.
    (n) Lease-up. (1) This indicator shows whether the HA enters HAP 
contracts for the number of units under budget for at least one year.
    (2) HUD verification method: Percent of units leased during the 
last completed HA fiscal year as determined by taking unit months under 
HAP contract as shown on HA's latest approved year-end operating 
statement divided by 12, and dividing by the number of units budgeted 
as shown on the HA's approved budget for the same HA fiscal year.
    (3) Rating: (i) The percent of units leased during the last HA 
fiscal year was 98 percent or more. 20 points.
    (ii) The percent of units leased during the last HA fiscal year was 
95 to 97 percent. 15 points.
    (iii) The percent of units leased during the last HA fiscal year 
was less than 95 percent. 0 points.
    (o) Family self-sufficiency (FSS) enrollment and escrow accounts. 
(1) This indicator applies only to HAs with mandatory FSS programs. The 
indicator consists of 2 components which show whether the HA has 
enrolled families in the FSS program as required, and the extent of the 
HA's progress in supporting FSS by measuring the percent of current FSS 
participants with FSS progress reports entered in MTCS that have had 
increases in earned income which resulted in escrow account balances. 
(24 CFR 984.105 and 984.305)
    (2) HUD verification method: MTCS report--Shows number of families 
currently enrolled in FSS. This number

[[Page 48559]]

is divided by the number of mandatory FSS slots based on funding 
reserved for the HA through the second to last completed Federal fiscal 
year or based on a reduced number of mandatory slots under a HUD-
approved exception. An MTCS report also shows the percent of FSS 
families with FSS progress reports who have escrow account balances. 
HUD also uses information reported on the SEMAP certification by 
initial HAs concerning FSS families enrolled in their FSS programs but 
who have moved under portability to the jurisdiction of another HA.
    (3) Rating: (i) The HA has filled 80 percent or more of its 
mandatory FSS slots and 30 percent or more of FSS families have escrow 
account balances. 10 points.
    (ii) The HA has filled 60 to 79 percent of its mandatory FSS slots 
and 30 percent or more of FSS families have escrow account balances. 8 
points.
    (iii) The HA has filled 80 percent or more of its mandatory FSS 
slots, but fewer than 30 percent of FSS families have escrow account 
balances. 5 points.
    (iv) 30 percent or more of FSS families have escrow account 
balances, but fewer than 60 percent of the HA's mandatory FSS slots are 
filled. 5 points.
    (v) The HA has filled 60 to 70 percent of its mandatory FSS slots, 
but fewer than 30 percent of FSS families have escrow account balances. 
3 points.
    (vi) The HA has filled fewer than 60 percent of its mandatory FSS 
slots and less than 30 percent of FSS families have escrow account 
balances. 0 points.

Subpart B--Program Operation


Sec. 985.101  SEMAP certification.

    (a) An HA must submit the HUD-required SEMAP certification form 
within 60 calendar days after the end of its fiscal year.
    (1) The certification must be approved by HA board resolution and 
be signed by the board of commissioners chairperson and by the HA 
executive director. If the HA is a unit of local government or a state, 
a resolution approving the certification is not required, and the 
certification must be executed by the Section 8 program director and by 
the chief executive officer of the unit of government or his or her 
designee.
    (2) An HA that subcontracts administration of its program to one or 
more subcontractors shall require each subcontractor to submit the 
subcontractor's own SEMAP certification on the HUD-prescribed form to 
the HA in support of the HA's SEMAP certification to HUD. The HA shall 
retain subcontractor certifications for 3 years.
    (3) An HA may include with its SEMAP certification any information 
bearing on the accuracy or completeness of the information used by the 
HA in providing its certification.
    (b) Failure of an HA to submit its SEMAP certification within 60 
calendar days after the end of its fiscal year will result in an 
overall performance rating of troubled and the HA will be subject to 
the requirements at Sec. 985.107.
    (c) An HA's SEMAP certification is subject to HUD verification by 
an on-site confirmatory review at any time. (Information collection 
requirements in this section have been approved by the Office of 
Management and Budget under control number 2577-0215)


Sec. 985.102  SEMAP profile.

    Upon receipt of the HA's SEMAP certification, HUD will rate the 
HA's performance under each SEMAP indicator in accordance with 
Sec. 985.3. HUD will then prepare a SEMAP profile for each HA which 
shows the rating for each indicator, sums the indicator ratings, and 
divides by the total possible points to arrive at an HA's overall SEMAP 
score. SEMAP scores shall be rounded off to the nearest whole percent.


Sec. 985.103  SEMAP score and overall performance rating.

    (a) High performer rating. HAs with SEMAP scores of at least 90 
percent shall be rated high performers under SEMAP. HAs that achieve an 
overall performance rating of high performer may receive national 
recognition by the Department and may be given competitive advantage 
under notices of fund availability.
    (b) Standard rating. HAs with SEMAP scores of 60 to 89 percent 
shall be rated standard.
    (c) Troubled rating. HAs with SEMAP scores of less than 60 percent 
shall be rated troubled.
    (d) Modified or withheld rating. (1) Notwithstanding an HA's SEMAP 
score, HUD may modify or withhold an HA's overall performance rating 
when warranted by circumstances which have bearing on the SEMAP 
indicators such as an HA's appeal of its overall rating, adverse 
litigation, a conciliation agreement under Title VI of the Civil Rights 
Act of 1964, fair housing and equal opportunity monitoring and 
compliance review findings, fraud or misconduct, audit findings or 
substantial noncompliance with program requirements.
    (2) Notwithstanding an HA's SEMAP score, if the latest IA report 
submitted for the HA under the Single Audit Act indicates that the 
auditor is unable to provide an opinion as to whether the HA's 
financial statements are presented fairly in all material respects in 
conformity with generally accepted accounting principals, or an opinion 
that the schedule of expenditures of Federal awards is presented fairly 
in all material respects in relation to the financial statements taken 
as a whole, the HA will automatically be given an overall performance 
rating of troubled and the HA will be subject to the requirements at 
Sec. 985.107.
    (3) When HUD modifies or withholds an overall performance rating 
for any reason it shall explain in writing to the HA the reasons for 
the modification or for withholding the rating.


Sec. 985.104  HA right of appeal of overall rating.

    An HA may appeal its overall performance rating to HUD by providing 
justification of the reasons for its appeal. An appeal made to a HUD 
hub or program center or to the HUD Troubled Agency Recovery Center and 
denied may be further appealed to the Assistant Secretary.


Sec. 985.105  HUD SEMAP responsibilities.

    (a) Annual review. HUD shall assess each HA's performance under 
SEMAP annually and shall assign each HA a SEMAP score and overall 
performance rating.
    (b) Notification to HA. No later than 120 calendar days after the 
HA's fiscal year end, HUD shall notify each HA in writing of its rating 
on each SEMAP indicator, of its overall SEMAP score and of its overall 
performance rating (high performer, standard, troubled). The HUD 
notification letter shall identify and require correction of any SEMAP 
deficiencies (indicator rating of zero) within 45 calendar days from 
date of HUD notice.
    (c) On-site confirmatory review. HUD may conduct an on-site 
confirmatory review to verify the HA certification and the HUD rating 
under any indicator.
    (d) Changing rating from troubled. HUD must conduct an on-site 
confirmatory review of an HA's performance before changing any annual 
overall performance rating from troubled to standard or high performer.
    (e) Appeals. HUD must review, consider and provide a final written 
determination to an HA on its appeal of its overall performance rating.
    (f) Corrective action plans. HUD must review the adequacy and 
monitor implementation of HA corrective action plans submitted under 
Sec. 985.106(c) or Sec. 985.107(c) and provide technical

[[Page 48560]]

assistance to help the HA improve program management. If an HA is 
assigned an overall performance rating of troubled, the HA's corrective 
action plan must be approved in writing by HUD.


Sec. 985.106  Required actions for SEMAP deficiencies.

    (a) When the HA receives the HUD notification of its SEMAP rating, 
an HA must correct any SEMAP deficiency (indicator rating of zero) 
within 45 calendar days from date of HUD notice.
    (b) The HA must send a written report to HUD describing its 
correction of any identified SEMAP deficiency.
    (c) If an HA fails to correct a SEMAP deficiency within 45 calendar 
days as required, HUD may then require the HA to prepare and submit a 
corrective action plan for the deficiency within 30 calendar days from 
the date of HUD notice.

(Information collection requirements in this section have been 
approved by the Office of Management and Budget under control number 
2577-0215)


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

    (a) Required on-site review. Upon assigning an overall performance 
rating of troubled, HUD must conduct an on-site review of HA program 
management to assess the magnitude and seriousness of the HA's 
noncompliance with performance requirements.
    (b) HUD written report. HUD must provide the HA a written report of 
its on-site review containing HUD findings of program management 
deficiencies, the apparent reasons for the deficiencies, and 
recommendations for improvement.
    (c) HA corrective action plan. Upon receipt of the HUD written 
report on its on-site review, the HA must write a corrective action 
plan and submit it to HUD for approval. The corrective action plan 
must:
    (1) Specify goals to be achieved;
    (2) Identify obstacles to goal achievement and ways to eliminate or 
avoid them;
    (3) Identify resources that will be used or sought to achieve 
goals;
    (4) Identify an HA staff person with lead responsibility for 
completing each goal;
    (5) Identify key tasks to reach each goal;
    (6) Specify time frames for achievement of each goal, including 
intermediate time frames to complete each key task; and
    (7) Provide for regular evaluation of progress toward improvement.
    (8) Be signed by the HA board of commissioners chairperson and by 
the HA executive director. If the HA is a unit of local government or a 
state, the corrective action plan must be signed by the Section 8 
program director and by the chief executive officer of the unit of 
government or his or her designee.
    (d) Monitoring. The HA and HUD must monitor the HA's implementation 
of its corrective action plan to ensure performance targets are met.
    (e) Use of administrative fee reserve prohibited. Any HA assigned 
an overall performance rating of troubled may not use any part of the 
administrative fee reserve for other housing purposes (see 24 CFR 
982.155(b)).
    (f) Upgrading poor performance rating. HUD shall change an HA's 
overall performance rating from troubled to standard or high performer 
if HUD determines that a change in the rating is warranted because of 
improved HA performance and an improved SEMAP score.

(Information collection requirements in this section have been 
approved by the Office of Management and Budget under control number 
2577-0215)


Sec. 985.108  SEMAP records.

    HUD shall maintain SEMAP files, including certifications, 
notifications, appeals, corrective action plans, and related 
correspondence for at least 3 years.

(Information collection requirements in this section have been 
approved by the Office of Management and Budget under control number 
2577-0215)


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

    HUD may determine that an HA's failure to correct identified SEMAP 
deficiencies or to prepare and implement a corrective action plan 
required by HUD constitutes a default under the ACC.

Subpart C--Physical Assessment Component [Reserved]

    2. Sections 985.102, 985.103, 985.105(a), (b), (d) and (e), and 
985.107 are stayed until further notice.

    Dated: August 28, 1998.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 98-23820 Filed 9-9-98; 8:45 am]
BILLING CODE 4210-33-P