[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]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
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
[[Page 48549]]
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
[[Page 48551]]
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