[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Notices]
[Pages 33700-33706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15739]



[[Page 33699]]

_______________________________________________________________________

Part VII





Department of Housing and Urban Development





_______________________________________________________________________



Public Housing Assessment System, Financial Condition Scoring Process; 
Notice

  Federal Register / Vol. 64, No. 120 / Wednesday, June 23, 1999 / 
Notices  

[[Page 33700]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR 4509-N-08]


Public Housing Assessment System, Financial Condition Scoring 
Process

AGENCY: Office of the Director of the Real Estate Assessment Center, 
HUD.

ACTION: Notice.

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

SUMMARY: This notice provides additional information to public housing 
agencies and members of the public about HUD's process for issuing 
scores under the Financial Condition Indicator of the Public Housing 
Assessment System (PHAS).

FOR FURTHER INFORMATION CONTACT: For further information contact Wanda 
Funk, the Real Estate Assessment Center, Department of Housing and 
Urban Development, 1280 Maryland Avenue, SW, Suite 800, Washington DC, 
20024; telephone Customer Service Center, 1-888-245-4860 (this is a 
toll free number). Persons with hearing or speech impairments may 
access that number via TTY by calling the Federal Information Relay 
Service at (800) 877-8339. Additional information is available from the 
REAC Internet Site http://www.hud.gov/reac.

SUPPLEMENTARY INFORMATION:

Purpose of this Notice

    The purpose of this Notice is to provide additional information 
about the scoring process for PHAS Indicator # 2, Financial Condition. 
Under the PHAS, the financial condition score is based on financial 
information reported to HUD according to generally accepted accounting 
principles (GAAP). GAAP classifies accounting data according to 
standard definitions. Of the total points available for a PHAS score, a 
PHA may receive up to 30 points under the PHAS Indicator #2. The 
financial condition score is included in the aggregate PHAS score.
    The information provided in this notice was originally published on 
May 13, 1999 (64 FR 26222). HUD is publishing this information again 
since it relates to the Public Housing Assessment System proposed rule, 
published in the Federal Register on June 22, 1999. The chart below 
shows the six components that constitute the Financial Condition 
Indicator and their assigned points.

                                          Financial Condition Indicator
----------------------------------------------------------------------------------------------------------------
            Scoring components                                  Measurement                           Points
----------------------------------------------------------------------------------------------------------------
Quick Ratio (QR).........................  Short-term liquidity................................              9
Months Expendable Fund Balance (MEFB)....  Adequacy of reserves................................              9
Days Receivable Outstanding (DRO)........  Ability to collect payments of tenant receivables...              4.5
Occupancy Loss (L).......................  Ability to realize potential rental income..........              4.5
Expense Management (EM)..................  Ability to control various expenses, including                    1.5
                                            utilities, administrative, maintenance, general and
                                            non-routine expenses.
Net Income as a Percentage of Fund         Profitability against the current year's operations.              1.5
 Balance (N).
----------------------------------------------------------------------------------------------------------------

    The values of the six components of the Financial Indicator 
calculated from the financial data comprise the overall financial 
assessment of the PHA. The components and their relative importance to 
the total financial score are the result of studies of PHA financial 
performance and of industry portfolio management techniques to identify 
the most appropriate financial measures to gauge a PHA's financial 
position and financial management. These components represent measures 
that are appropriate benchmarks in any residential real estate 
environment. The scoring assigned within each component is based on the 
distributions of that component's values and the relative relationship 
between the components and the PHA's overall financial performance.
    Under the PHAS, the components that make up the Financial Condition 
Indicator are approached in the same manner for GAAP as they were for 
non-GAAP financial information although the thresholds may change as a 
result of the conversion to GAAP. For example, a good Quick Ratio under 
the current basis of accounting (non-GAAP) for a small PHA may be 6 to 
1 and receive the maximum 9 points. In contrast, under GAAP a good 
Quick Ratio may be 5 to 1 and also get the maximum 9 points. Thus, to 
the extent that a PHA's performance relative to its peers does not 
change, its score will not be affected by the conversion to GAAP. The 
GAAP conversion schedule by PHAs fiscal year end, shown below, is 
reprinted from the PHAS final rule published on September 1, 1999.

                        GAAP Conversion Schedule
------------------------------------------------------------------------
                                          Unaudited GAAP
     Fiscal year end dates for PHAs       financial data   Audit reports
                                             to HUD by     due to HUD by
------------------------------------------------------------------------
9/30/99.................................        11/30/99         6/30/00
12/31/99................................         2/28/00         9/30/00
3/31/00.................................         5/31/00        12/31/00
6/30/00.................................         8/31/00         3/31/01
------------------------------------------------------------------------

GAAP Reporting Method

    Financial data for GAAP scoring is currently collected in paper 
form from audited financial data submitted by PHAs and entered into a 
database by REAC staff. PHAs, with fiscal years ending September 30, 
1999, and later, will submit their unaudited financial data 
electronically using the Financial Data Schedule (FDS), within 60 days 
of their fiscal year end. This submission will be reviewed by REAC for 
reasonableness. To the extent that an audit is required for a PHA under 
OMB Circular A-133, a PHA will submit its audited data using the FDS 
within nine months of the fiscal year end.

Program Funds

    The PHAS financial assessment is based on the entity-wide 
operations of a PHA, which includes financial information on Section 8, 
Community Development Block Grants, and other HUD funding in its 
calculations, as well as funds from non-HUD sources.

GAAP Scoring Approach

    Under PHAS, the components of the PHAS Financial Indicator were 
developed that both fairly and accurately assess a PHA's financial 
performance and financial management. As part of the development, the 
components were tested to establish the correlation between PHA 
performance under each component and the fiscal health of a PHA. As 
part of the development, PHAs were evaluated and assigned scores based 
a PHA's performance relative to its peers. In other words, all PHAs as 
a group determine the mean score and each PHA

[[Page 33701]]

is then ranked accordingly. This peer assessment approach, which was 
formulated following extensive economic and financial analysis, 
examination of well-accepted business principles, and discussions with 
PHA industry representatives and PHA staff, provides an equitable means 
of measuring the financial performance of PHAs.

Comparable Scoring Systems

    HUD's financial scoring process is similar to those already 
undertaken in the mortgage housing and securities industries. Fannie 
Mae, the mortgage housing industry leader, developed an assessment 
system with financial indicators similar to those contained in HUD's 
financial assessment of PHAs, such as vacancy, reserve balances, and 
net income. Like HUD, Fannie Mae uses these indicators to rank 
properties and identify those which require further attention. In the 
securities area, Standard & Poors conducts peer assessment of a 
company's operational capabilities and cash flows relative to their 
peers. Among federal agencies, the Department of Health and Human 
Services (HHS) contracts with state and local entities to perform 
financial audits of nursing homes and hospitals participating in the 
federal Medicare program. Based on these financial audits, HHS 
determines the continued eligibility of these health service providers 
in the Medicare program.

GAAP Scoring Processes

    GAAP-based scores are produced using data contained in the 
Financial Data Schedule (FDS). The GAAP-based financial data are first 
used to calculate six financial components that measure various aspects 
of financial health, such as short-term liquidity, expense management, 
and collection of receivables. Each PHA is awarded points for each 
component according to its performance relative to its peers. Peer 
groupings are established according to the size of the PHA, based on 
the number of public housing units operated. Peer groupings are as 
follows:

Very Small (0-49 units)
Small (50-249 units)
Low Medium (250-499 units)
High Medium (500-1249 units)
Large (1250+ units)

    A PHA is assigned a score for each of the six components of the 
Financial Indicator based on its component value relative to its peers. 
The minimum number of points (zero) and the maximum number of points 
can each be achieved over a range of values. This system allows PHAs to 
target a range of values which they want to avoid and target one value 
which they should strive to achieve. Aside from these extremes, points 
are assigned to component values along a continuous linear function. 
This means that each component value will receive a different number of 
points. This system (``semi-continuous scoring'') ensures that points 
are awarded equitably to PHAs along the distribution of component 
values because, in most cases, small differences in component values 
result in only small differences in the scores of the individual 
components. Therefore, two PHAs of a similar size whose values for its 
financial condition components are in close proximity will receive only 
slightly different scores to capture their performance relative to each 
other.
    The number of points assigned to each component value or range of 
values is based on where the thresholds for that component are set. The 
thresholds separate distinct ranges of scores along the distribution of 
component values. The thresholds and their associated scores are 
estimated based on well-accepted business principles and statistical 
distributions of values within the peer groupings of the PHAs.

Business Principles

    Scoring of certain of the components follows generally recognized 
business principles. These principles indicate that there are certain 
absolute thresholds below which component values are clearly 
financially unacceptable and component values below that point should 
result in a score of zero. These principles are used in scoring the 
Quick Ratio and Months Expendable Fund Balance components. For both of 
these components, a value of less than one is financially unacceptable, 
regardless of PHA size, and therefore merits a score of zero.

Statistical Distributions

    The remaining thresholds are estimated by examining the 
distributions of component values by peer group. For the four most 
significant components (Quick Ratio, Months Expendable Fund Balance, 
Days Receivable Outstanding, and Occupancy Loss), thresholds are set 
such that approximately 50 percent of the distribution receives the 
maximum number of points, as long as 50 percent of the distribution 
have acceptable values for the component. Thus, the highest number of 
points are awarded to the PHAs whose financial measures are most 
reasonable both relative to their peers and in an absolute business 
sense. The specific percentiles that make up this 50 percent of PHAs 
are established by identifying natural breakpoints along the 
distributions. For example, for the Quick Ratio and Months Expendable 
Fund Balance, these breakpoints fall at approximately the 30th and 80th 
percentiles. The remaining two components (Expense Management and Net 
Income as a Percentage of Fund Balance) assign zero points to PHAs that 
fall only in the extreme outer ranges of the distribution of values, 
and award 1.5 points to the remaining PHAs.

Audit Information

    The information collected from the annual audit report pertains to 
the type of audit opinion, details of the audit opinion, and the 
presence of reportable conditions and material weaknesses. This 
information will be used as a basis for accepting or adjusting 
financial component scores. If the auditor's opinion is other than 
unqualified, points will be deducted from the financial components to 
determine the PHA's financial score. The points have been established 
by REAC using a system that considers the seriousness of the audit 
qualification and limits the deducted points to a reasonable portion of 
the PHA's available score.
    Reportable conditions and material weaknesses are considered to be 
audit flags, alerting REAC to an internal control weakness or an 
instance of noncompliance with Federal laws and regulations. These 
flags also have the potential to adjust the PHA's financial component 
scores, based on the seriousness of the reported issue. REAC will 
review the audit and internal control flags to determine the 
significance as it directly pertains to the assessment of the PHA's 
financial condition. If the flag has no effect on the financial 
components or the overall financial condition of the PHA as it relates 
to the PHAS assessment, the score will not be adjusted.
    There are two types of adjustments related to audited financial 
information. The first type deals with material differences between the 
unaudited and audited financial information reported to HUD. The second 
deals with the audit flags and reports that result from the audit 
itself.
    The purpose of a comparison of the ratios and scores resulting from 
the current year's unaudited Financial Data Schedule submission to the 
ratios and scores resulting from the current year's audited submission 
is to:
     Identify material changes in ratio calculation results 
and/or scores from the unaudited submission to the audited submission;

[[Page 33702]]

     Identify PHA's that consistently provide materially 
different data from their unaudited submission to their audited 
submission;
     Assess or alleviate penalties associated with the 
inability to provide reasonably accurate unaudited data within the 
required time period.
    This review process will only be performed for the audited 
submission. In addition, it is only applicable to PHAs whose overall 
PHAS designation (high, standard or troubled) was reclassified to a 
lesser designation based on the audited submission and the 
reclassification was necessary because of a material change in the 
reported financial data affecting one or more of the six components. 
Materiality for purposes of this review is based on a formula within 
PHAS and varies based on the size and funding level of the PHA. 
Therefore, the materiality threshold may vary from PHA to PHA, even 
within the same peer group.
    REAC views the transmission of materially inaccurate unaudited 
financial data as a more serious condition than the late submission of 
unaudited data. Therefore, the penalties assessed for material 
differences between the unaudited and audited submission have been 
designed to encourage PHAs to assure financial data is as reliable as 
possible at the 60 day submission. The penalties to be assessed are 
based on the significance of the reclassification, assuming the 
financial data reported meets the materiality threshold. For each 
designation level that the PHA has been reduced, points will be 
deducted from the PHA's overall FASS score. The following table 
summarizes the point reductions.

------------------------------------------------------------------------
                                                                Percent
                                                                of FASS
                 Designation reclassification                    points
                                                                deducted
------------------------------------------------------------------------
High to Standard.............................................          1
High to Marginal.............................................          2
High to Troubled.............................................          3
Standard to Marginal.........................................          1
Standard to Troubled.........................................          2
Marginal to Troubled.........................................          1
------------------------------------------------------------------------

    The FASS system will automatically deduct the applicable points and 
this reduction will trigger the REAC analyst review.
    The purpose of a review of the audit and internal control flags is 
to adjust the financial score as a result of the audit. These flags are 
collected by using the OMB A-133 Data Collection Form. This form is 
completed by the PHA both for the unaudited and audited submissions. At 
the time of the unaudited submission the form is used as a self-
assessment tool and should reflect the PHA's knowledge of their 
financial and internal control condition and should acknowledge their 
understanding of what the auditor will report. In the PHAS final rule, 
HUD discussed the review of audit and internal control flags as 
follows, and also included the following chart. (See 63 FR 46607, 
September 1, 1998.)
    As part of the analysis of the financial health of the a PHA 
including assessment of the potential or actual waste, fraud or abuse 
at a PHA, HUD will look to the Audit Opinion to provide an additional 
basis for accepting or adjusting financial indicator scores. The 
following is a summary of the types of audit opinions and the number of 
total financial points that will be deducted if a PHA receives such an 
audit opinion from its IPA:

------------------------------------------------------------------------
                                                                  FASS
                         Type of flag                            points
                                                                deducted
------------------------------------------------------------------------
Unqualified Opinion..........................................          0
No audit opinion.............................................         30
Adverse opinion..............................................         30
Disclaimer of opinion........................................         30
Qualified opinion............................................        (*)
Going concern opinion........................................         30
Material weakness in internal control........................        (*)
Reportable condition.........................................        (*)
Findings of non-compliance and/or questioned costs...........        (*)
Indicator outlier analyses...................................       (*)
------------------------------------------------------------------------
* Note: See subsequent table titled ``Audit Flags and Tier
  Classification'' for FASS points to be deducted.

    If the OMB A-133 Data Collection Form indicates that the auditor's 
opinion will be other than unqualified, PHAS will automatically deduct 
the appropriate points based on the above table. The points have been 
established by REAC using a three-tier system. The tiers are meant to 
give consideration to the seriousness of the audit qualification and to 
limit the deducted points to a reasonable portion of the PHA's total, 
actual score. The tiers, as established by REAC, are also defined 
below.

                            Audit Flag Tiers
------------------------------------------------------------------------
             Tier                         PHAS points deducted
------------------------------------------------------------------------
Tier 1.......................  Maximum reduction: Lesser of 30 points or
                                100 percent of the PHA's total
                                unadjusted PHAS score.
Tier 2.......................  Maximum reduction: 3 points or 10 percent
                                of the PHA's total unadjusted PHAS
                                score.
Tier 3.......................  Maximum reduction: 1.5 points or 5
                                percent of the PHA's total unadjusted
                                PHAS score. This maximum is cumulative
                                and not to be assessed for each audit or
                                internal control flag.
------------------------------------------------------------------------


                  Audit Flags and Tier Classifications
------------------------------------------------------------------------
                  Audit flag                      Tier classification
------------------------------------------------------------------------
Unqualified opinion..........................  None.
No audit opinion.............................  Tier 1.
Adverse opinion..............................  Tier 1.
Disclaimer of opinion........................  Tier 1.
Qualified opinion:
    1. GAAP qualifications:
         Change in accounting          Tier 3.
         principle.
         Change in accounting          Tier 3.
         estimate.
         Change in accounting method.  Tier 3.
         Departures from GAAP........  Tier 2.
             Financial statements      Tier 1.
             using basis other than GAAP.
             Exclusion of alternate    Tier 2.
             accounting for an account or
             group of accounts.
         Inconsistently applied GAAP.  Tier 2.
         Omissions/Inadequate          Tier 2.
         Disclosure.

[[Page 33703]]

 
    2. GASS--Scope Limitations...............  Tier 2.
         Imposed by management.......  Tier 2.
         Imposed by circumstance.....  Tier 3.
         Year 2000 (add back)........  Tier 3.
    3. Report on major program compliance....  Tier 3.
    4. Report on internal control............  Tier 3.
Accounting principles used caused the          Tier 2.
 financial statements to be materially
 misstated.
Inadequate records...........................  Tier 2.
Going concern................................  Tier 1.
Material noncompliance disclosed.............  Tier 2.
     Internal control weakness.......  Tier 3.
     Compliance......................  Tier 3.
     Opinion on Supplemental           Tier 3.
     schedules.
Reportable condition:
     Internal control................  Tier 3.
     Compliance......................  Tier 3.
------------------------------------------------------------------------

    The graphs shown in Appendix 1 depict the approximate GAAP-based 
scoring functions used for each of the six components of the Financial 
Indicator.
    Appendix 2 provides estimated GAAP-based threshold values and 
associated scores for each component and peer group, based on the data 
pool as of April 15, 1999. These GAAP thresholds are preliminary and 
are based upon financial data obtained for a limited number of PHAs 
currently reporting under GAAP. The thresholds established for GAAP-
based scores will be re-assessed on a quarterly basis to ensure their 
statistical validity as the data collected indicates a shift in 
distributions and any modifications to the thresholds will be 
communicated through a Notice. However, the financial components and 
component calculations will remain the same and the component scores 
for a PHA will continue to be established on a peer assessment basis. 
Thus, if a PHA's performance remains consistent relative to its peers, 
the PHA's score will not be affected by threshold changes.

    Dated: June 14, 1999.
Donald J. LaVoy,
Acting Director, Real Estate Assessment Center.

BILLING CODE 4210-32-P

[[Page 33704]]

[GRAPHIC] [TIFF OMITTED] TN23JN99.065



BILLING CODE 4210-32-C

    The scoring structure depicted above is established based on the 
distribution of data for each peer group. For both QR and MEFB, a PHA 
receives zero points for indicator values of less than one. With a 
value of one, they receive X points, which is determined by the 
distribution of the data, and therefore varies by size category. The 
maximum number of points is received between approximately the 30th and 
80th percentiles. PHAs with values falling beyond the upper bound of 
this range receive incrementally fewer points because they have 
exceeded the acceptable levels of liquidity or reserves to operate 
optimally.

BILLING CODE 4210-32-P
[GRAPHIC] [TIFF OMITTED] TN23JN99.066


BILLING CODE 4210-32-C

    For OL and DRO, the maximum number of possible points is 4.5, which 
is received up to approximately the 50th percentile. For values beyond 
approximately the 95th percentile, the PHA receives zero points.

BILLING CODE 4210-32-P

[[Page 33705]]

[GRAPHIC] [TIFF OMITTED] TN23JN99.067



BILLING CODE 4210-32-C
    For both EM and NI, a PHA can receive either 1.5 or zero points. 
The Threshold for EM is set at 1.645 standard deviations (approximately 
the 95th percentile) from the mean of each distribution (which means it 
is in the top five percent of values for that distribution), and thus 
varies by size category, whereas for NI it is set at--10% across all 
size categories.

Appendix 2--Threshold Tables for GAAP Scoring

    These tables can be interpreted in the following manner:
     Identify a size category for an indicator;
     The rows under that size category identify ranges of 
possible values for that indicator; and
     The column to the right labeled ``Score'' identifies 
the score or range of scores that is awarded to each range of 
indicator values for that size category.

                           Quick Ratio (QR) *
------------------------------------------------------------------------
                                                       Score
------------------------------------------------------------------------
                Very Small
 
QR<1.....................................  0
QR=1.....................................  2.6
1QR12............  9
12Score>7.5
QR15..........................  7.5
 
                  Small
 
QR<1.....................................  0
QR=1.....................................  2.6
1QR8.............  9
8Score>7.5
QR13..........................  7.5
 
                Low Medium
 
QR<1.....................................  0
QR=1.....................................  2.6
1QR7.5...........  9
7.5Score>7.5
QR11..........................  7.5
 
               High Medium
 
QR<1.....................................  0
QR=1.....................................  3
1Score>7.5
QR8...........................  7.5
 
                  Large
 
QR<1.....................................  0
QR=1.....................................  3.6
1QR5.5...........  9
5.5Score>7.5
QR7...........................  7.5
------------------------------------------------------------------------


                Months Expendable Funds Balance (MEFB) *
------------------------------------------------------------------------
                                                       Score
------------------------------------------------------------------------
                Very Small
 
MEFB<1...................................  0
MEFB=1...................................  1.3
1MEFB15............  9
15Score>7.5
MEFB20........................  7.5
 
                  Small
 
MEFB<1...................................  0
MEFB=1...................................  1.8
1MEFB13............  9
13Score>7.5
MEFB18........................  7.5
 
                Low Medium
 
MEFB<1...................................  0
MEFB=1...................................  2
1MEFB12..........  9
12Score>7.5
MEFB15........................  7.5
 
               High Medium
 
MEFB<1...................................  0
MEFB=1...................................  2
1MEFB11..........  9
11Score>7.5
MEFB13........................  7.5
 
                  Large
 
MEFB<1...................................  0
MEFB=1...................................  3
1MEFB11............  9
11Score>7.5
MEFB13........................  7.5
------------------------------------------------------------------------


                                                                               Days Receivable Outstanding (DRO) *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Very small                            Small                          Low medium                        High medium                         Large                       Score
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DRO2...................  DRO3                   DRO7                   DRO8                   DRO12                 4.5
2Score>0
DRO18..................  DRO20                  DRO23                  DRO23                  DRO25                 0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April 15, 1999. The PHA financial statements
  had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds will be re-assessed to better reflect the data distributions.


[[Page 33706]]


                                                                                      Occupancy Loss (OL) *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Very small                            Small                          Low medium                        High medium                         Large                       Score
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OL4.5%.................  OL4.5%                 OL5.5%                 OL5.5%                 OL7%                  4.5
4.512%..................  OL12%                  OL14.5%                OL15%                  OL15%                 0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April 15, 1999. The PHA financial statements
  had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds will be re-assessed to better reflect the data distributions.


                                                                                        Net Income (NI) *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           Very small                        Small                      Low medium                    High medium                      Large                              Score
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NI<-10%........................  NI<-10%                       NI<-10%                       NI<-10%                       NI<-10%                       0
NI-10%..............  NI-10%             NI-10%             NI-10%             NI-10%             1.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April 15, 1999. The PHA financial statements
  had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds will be re-assessed to better reflect the data distributions.

Expense Management

    The Components of the Expense Management are expressed in 
dollars per unit per month. The REAC is also examining the impact of 
seasonal and geographic variations on the expense indicators. If the 
REAC's analysis finds a significant impact on PHA expenses of these 
regional differences, regional peer groupings may be added to the 
scoring of the expense management indicator.
    Thresholds for four of the six components of the expense 
management indicators are listed below. Thresholds for tenant 
services and protective services will be set as more information is 
submitted.

                                                              Administrative Expense (AE) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Very small                       Small                  Low medium                High medium                 Large                Score
--------------------------------------------------------------------------------------------------------------------------------------------------------
AE<$81..........................  AE<$75                    AE<$65                    AE<$71                    AE<$82                               1.5
AE$81................  AE$75          AE$65          AE$71          AE$82                     0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April
  15, 1999. The PHA financial statements had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds
  will be re-assessed to better reflect the data distributions.


                                                                Utilities Expense (UE) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Very small                       Small                  Low medium                High medium                 Large                Score
--------------------------------------------------------------------------------------------------------------------------------------------------------
UE<$74..........................  UE<$93                    UE<$110                   UE<$120                   UE<$135                              1.5
UE$74................  UE$93          UE$110         UE$120         UE$135                    0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April
  15, 1999. The PHA financial statements had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds
  will be re-assessed to better reflect the data distributions.


                                                           Ordinary Maintenance Expense (AE) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Very small                       Small                  Low medium                High medium                 Large                Score
--------------------------------------------------------------------------------------------------------------------------------------------------------
OE<$89..........................  OE<$88                    OE<$94                    OE<$106                   OE<$129                              1.5
OE$89................  OE$88          OE$94          OE$106         OE$129                    0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April
  15, 1999. The PHA financial statements had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds
  will be re-assessed to better reflect the data distributions.


                                                                 General Expense (GE) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Very small                       Small                  Low medium                High medium                 Large                Score
--------------------------------------------------------------------------------------------------------------------------------------------------------
GE<$54..........................  GE<$59                    GE<$62                    GE<$65                    GE<$70                               1.5
GE$54................  GE$59          GE$62          GE$65          GE$70                     0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The estimated GAAP thresholds were based on data from financial information from a limited number of PHAs currently reporting under GAAP as of April
  15, 1999. The PHA financial statements had fiscal year ends ranging between 1996 and 1998. As more data is entered into the system, these thresholds
  will be re-assessed to better reflect the data distributions.

[FR Doc. 99-15739 Filed 6-22-99; 8:45 am]
BILLING CODE 4210-32-M