[Federal Register Volume 67, Number 157 (Wednesday, August 14, 2002)]
[Proposed Rules]
[Pages 53276-53280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20547]



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Part VI





Department of Housing and Urban Development





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24 CFR Parts 902 et al.



Deregulation for Small Public Housing Agencies; Proposed Rule

  Federal Register / Vol. 67, No. 157 / Wednesday, August 14, 2002 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 902, 903 and 985

[Docket No. FR-4753-P-01]
RIN 2577-AC34


Deregulation for Small Public Housing Agencies

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would simplify and streamline HUD's 
regulatory requirements for small public housing agencies (PHAs) that 
administer the public housing and voucher assistance programs under the 
United States Housing Act of 1937. Specifically, the proposed rule 
would further streamline the PHA Annual Plan requirements for certain 
small PHAs. HUD also proposes to deregulate the assessment and scoring 
of small PHAs under the Public Housing Assessment System (PHAS) and the 
Section 8 Management Assessment Program (SEMAP), consistent with its 
basic regulatory responsibilities. HUD believes that these changes will 
alleviate administrative burden, and better enable small PHAs to focus 
on their core mission of providing decent, safe, and affordable housing 
for the neediest American families. In addition to the changes that 
solely concern small PHAs, this proposed rule would also streamline 
HUD's review of the Annual Plans submitted by all PHAs (large and 
small).

DATES: Comments Due Date: September 13, 2002.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Communications should 
refer to the above docket number and title. Facsimile (FAX) comments 
are not acceptable. A copy of each communication will be available for 
public inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays 
at the above address.

FOR FURTHER INFORMATION CONTACT: Rod Solomon, Deputy Assistant 
Secretary for Policy, Program and Legislative Initiatives, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Room 4116, 
Washington, DC 20410; telephone (202) 708-0713 (this is not a toll-free 
number). Persons with hearing- or speech-impairments may access this 
number via TTY by calling the toll-free Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    This proposed rule would simplify and streamline HUD's regulatory 
requirements for small public housing agencies (PHAs) that administer 
the public housing and voucher assistance programs under the United 
States Housing Act of 1937 (42 U.S.C. 1437 et seq.) (the ``1937 Act''). 
HUD has an obligation to monitor and regulate the use of Federal 
housing funds in order to ensure that taxpayer dollars are well spent. 
HUD is also mindful that compliance with its regulatory requirements 
may impose administrative burdens on PHAs and divert scarce resources. 
The cost of excessive regulation is especially problematic for small 
PHAs, because they often possess the fewest staff and technical 
resources.
    This proposed rule would make several deregulatory changes to 
alleviate the administrative burden imposed on small PHAs, while still 
requiring basic accountability. The proposed rule would further 
streamline the PHA Annual Plan requirements for small PHAs. HUD also 
proposes to deregulate the assessment and scoring of small PHAs under 
the Public Housing Assessment System (PHAS) and the Section 8 
Management Assessment Program (SEMAP) consistent with its basic 
regulatory responsibilities. HUD believes that deregulating small PHAs 
will better enable them to focus on their core mission of providing 
safe, decent, and affordable housing to the neediest American families.
    The specific deregulatory changes that would be made by this 
proposed rule are as follows:

A. Further Streamlining PHA Annual Plan Requirements (24 CFR Part 903)

    The PHA Plan process provides an easily identifiable source by 
which public housing residents, participants in the tenant-based 
assistance programs, and other members of the public may locate basic 
PHA policies rules and requirements concerning the PHA's operations, 
programs, and services. Through these plans--a 5-Year Plan and an 
annual plan--a PHA advises HUD, its residents, and members of the 
public of the PHA's mission for serving low-income and very low-income 
families, and the PHA's strategy for addressing those needs. HUD's 
regulations for the PHA Plans are located at 24 CFR part 903. This 
proposed rule would simplify PHA Annual Plan requirements.
1. Further Streamlining Annual Plan Submission Requirements for Small 
PHAs
    In accordance with section 5A of the 1937 Act (which established 
the PHA Plan process), HUD's PHA Plan regulations at Sec. 903.11(a)(2) 
and (c)(2) currently provide for the submission of streamlined Annual 
Plans by small PHAs (those with less than 250 public housing units) 
that are not designated as troubled or that are not at risk of being 
designated as troubled under section 6(j)(2) of the 1937 Act (see the 
PHAS regulations at Sec. 902.67 for how a PHA is designated as troubled 
or determined to be ``at risk'' of being designated as troubled). On 
September 18, 2000, HUD issued Public and Indian Housing (PIH) Notice 
2000-43, which implemented a new streamlining initiative for small 
PHAs: the ``Small PHA Plan Update.'' The Small PHA Plan Update reduces 
the amount of information contained in a streamlined plan by requiring 
that--for certain plan elements--PHAs need only describe the changes 
made since submission of their last Annual Plan. A copy of PIH Notice 
2000-43 may be obtained via the HUD Internet homepage at http://www.hud.gov.
    HUD proposes to further streamline the PHA Annual Plan submission 
requirements for small PHAs. Specifically, the proposed rule would 
require that the Annual Plan submitted by a small PHA only address 
policies concerning capital improvements (see Sec. 903.7(g)) and the 
civil rights certification (see Sec. 903.7(o)). For the other policies 
and programs that Sec. 903.11(c)(2) currently requires must be 
addressed in a PHA's streamlined plan (such as deconcentration, 
demolition and disposition, housing needs, and financial resources), 
the PHA would only be required to submit a certification listing those 
policies it has revised since submission of its last Annual Plan. In 
addition, the small PHA would also be required to certify that: (i) The 
Resident Advisory Board had an opportunity to review and comment on the 
changes prior to implementation; (ii) the changes were duly approved by 
the PHA board of directors (or similar governing body); and (iii) the 
revised policies and programs are available for review and inspection 
at the principal office of the PHA during normal business hours.
    Every fifth fiscal year, in the same year the PHA submits its 5-
Year Plan, the small PHA would be required to submit a more detailed 
Annual Plan that more fully addresses the elements

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required under Sec. 903.11(c)(2). However, PHAs would not be required 
to provide information concerning pet ownership policies (see 
Sec. 903.7(n)) and fiscal year audit findings (see Sec. 903.7(p)), 
since the PHA is already required to maintain these supporting 
documents and make them available to the public. Further, the 
information concerning housing needs (see Sec. 903.7(a)) need only be 
provided to the extent that it pertains to the housing needs of 
families on the PHA's public housing and tenant-based assistance 
waiting lists. The PHA already provides the other housing needs 
information required under Sec. 903.7(a) through the Consolidated Plan 
process under 24 CFR part 91.
    In order to facilitate HUD review of small PHA 5-Year and 
streamlined Annual Plans, the proposed rule also provides that HUD may 
require that half of all PHAs with less than 250 public housing units 
submit their 5-Year Plan one fiscal year in advance (in the fourth PHA 
fiscal year, rather than the fifth PHA fiscal year). This change will 
split the workload for HUD offices reviewing small PHA plans among two 
years, thus expediting HUD review and approval of the PHA plans.
    In addition to the substantive changes discussed above, this 
proposed rule would also consolidate Annual Plan submission 
requirements for small PHAs in a separate regulatory section 
(Sec. 903.12). This non-substantive, organizational revision is 
designed to improve the clarity of the plan submission requirements and 
the deregulatory changes being proposed by HUD.
2. Streamlining the Scope of HUD Review for All PHAs
    The proposed rule would also streamline HUD's review of Annual 
Plans submitted by all PHAs (large and small), by implementing the 
statutory authority provided by section 5A(i)(2) of the 1937 Act to 
exempt certain plan elements from HUD review and approval. 
Specifically, the proposed rule provides that HUD's review of Annual 
Plans will generally be limited to the PHA policies concerning 
deconcentration (see Sec. 903.7(b)), capital improvements (see 
Sec. 903.7(g)), demolition and disposition (see Sec. 903.7(h)), and the 
civil rights certification (see Sec. 903.7(o)). As required by section 
5A(i)(2), HUD will also review any other plan element that has been 
challenged.

B. Biannual PHAS Assessments for Small PHAs With Less Than 250 Public 
Housing Units (24 CFR part 902).

    HUD's regulations at 24 CFR part 902 describe the policies and 
procedures governing the PHAS. The PHAS provides a management tool for 
effectively and fairly measuring the performance of a PHA. The goals of 
the PHAS are to improve the delivery of services in public housing and 
enhance trust in the public housing system among PHAs, public housing 
residents, HUD, and the general public. This proposed rule would 
streamline and simplify the assessment and scoring of small PHAs under 
the PHAS.
    The proposed rule would provide for the assessment and scoring of a 
small PHA with less than 250 public housing units once every other PHA 
fiscal year (as opposed to the current annual PHAS rating) unless the 
PHA elects to have its performance assessed on an annual basis or is 
designated as troubled. Given the limited number of public housing 
units managed by small PHAs, it is unlikely that there will be 
significant variations in performance from year to year and the risk of 
going to biannual scoring is minimal. Accordingly, HUD has determined 
that, unless the PHA has a history of poor performance and is 
designated as troubled, a biannual PHAS assessment is sufficient to 
monitor its performance.

C. Deregulating SEMAP for Small PHAs (24 CFR part 985).

    HUD's regulations at 24 CFR part 985 describe the policies and 
procedures governing the SEMAP. SEMAP provides for objective 
measurement of the performance of a PHA in key areas of the tenant-
based assistance program. SEMAP enables HUD to ensure program integrity 
and accountability by identifying PHA management capabilities and 
deficiencies and by improving risk assessment to effectively target 
monitoring and program assistance. PHAs can use the SEMAP performance 
analysis to assess their own program operations. The proposed rule 
would make three deregulatory changes to SEMAP concerning small PHAs.
1. Exemption for Small PHAs Not Subject to Single Audit Act 
Requirements
    The proposed rule would exempt PHAs that expend less than $300,000 
in Federal awards in any PHA fiscal year from SEMAP assessment and 
scoring. The current SEMAP regulations exempt these small PHAs from 
assessment under 7 (out of the 16) SEMAP indicators (see Sec. 985.3). 
The exemption is due to the fact that PHAs with such limited Federal 
funding are not subject to the requirements of the Single Audit Act. 
Since HUD uses the annual independent audit to verify the information 
provided by PHAs for these indicators, there is no effective method for 
HUD to assess performance under these factors for PHAs not subject to 
the Single Audit Act. Given the relatively small amount of Federal 
funds expended by these PHAs, and the already limited scope of their 
SEMAP assessments, conducting SEMAP reviews for these small PHAs is not 
beneficial enough to justify the administrative burden. Accordingly, 
HUD proposes to exempt these small PHAs from the requirements of 24 CFR 
part 985.
2. Biannual SEMAP Assessments for Small PHAs
    The proposed rule would also provide for the biannual SEMAP 
assessment of small PHAs with less than 250 assisted units (as opposed 
to the current annual SEMAP rating), unless the PHA elects to have its 
performance assessed on an annual basis or is designated as troubled. 
As was noted above in the discussion of the proposed changes to the 
PHAS, the limited number of units serviced by small PHAs makes it 
unlikely that there will be significant variations in performance from 
year to year and the risk of conducting SEMAP assessments once every 
other fiscal year is minimal. Accordingly, HUD has determined that, 
unless the PHA has a history of poor performance and is designated as 
troubled, a biannual assessment is sufficient to monitor its 
performance under SEMAP.
3. Streamlined On-Site Review Requirements for Small PHAs
    The proposed rule would also streamline the on-site review 
requirements for small PHAs designated as troubled. Under the current 
SEMAP regulations HUD must conduct an on-site review of any PHA that 
receives an overall performance rating of troubled (see 
Sec. 985.107(a)). Since SEMAP ratings are generally calculated based on 
the percentage of the PHA's leased housing units that meet the 
specified criteria, a difference of one or two units can have a 
disproportionate impact on a small PHA's SEMAP score. Accordingly, 
there may be small PHAs designated as troubled for which an on-site 
review is unnecessary to diagnose problems and potential remedies. The 
proposed rule would address this concern by providing that HUD may 
elect not to conduct an on-site review if the PHA has less than 250 
assisted units and

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HUD determines that an on-site review is unnecessary to determine the 
needs of the PHA and the actions required to address the program 
deficiencies. HUD will monitor the performance of a small PHA that is 
designated as troubled, but for which no on-site review is conducted, 
by using available data, such as independent public accountant (IPA) 
audit reports, information derived from the HUD form 50058, and PHA 
year-end statements.

II. Justification for Reduced Comment Period

    It is the general practice of the Department to provide a 60-day 
public comment period on all proposed rules. The Department, however, 
is reducing its usual 60-day public comment period to 30 days for this 
proposed rule. In an effort to have an effective rule in place as close 
as possible to the beginning of Fiscal Year 2003, and given that the 
proposed changes are deregulatory in nature and remove administrative 
burdens thus better enabling small PHAs to focus on their core mission 
of providing decent, safe, and affordable housing, the Department 
believes that a 30-day public comment period is justified under these 
circumstances. All public comments will be considered in the 
development of the final rule.

III. Findings and Certifications

Public Reporting Burden

    The information collection requirements contained in the PHA Plan 
process (24 CFR part 903) and the PHAS (24 CFR part 902) have been 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB 
Control Numbers 2535-0106, 2535-0107, 2507-0001, and 2577-0226, 
respectively. The regulatory amendments contained in Secs. 902.9, 
903.5, 903.11, and 903.12 of this proposed rule merely modify the scope 
and frequency of these currently approved information collection 
requirements to streamline and reduce the paperwork burden imposed on 
small PHAs. HUD invites public comment on the information collection 
requirements contained in this proposed rule. All public comments will 
be considered in the development of the final rule and may result in 
revisions to the information collection requirements at the final rule 
stage. In accordance with the Paperwork Reduction Act, HUD may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a currently 
valid OMB control number.

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not an economically significant 
regulatory action under the Order). Any changes made to the rule as a 
result of that review are identified in the docket file, which is 
available for public inspection in the Office of the Rules Docket 
Clerk, Office of General Counsel, Room 10276, Department of Housing and 
Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This proposed rule does not impose 
any Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of the Unfunded Mandates Reform Act 
of 1995.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This proposed rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

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 (42 U.S.C. 4223). The Finding of No Significant Impact is 
available for public inspection between the hours of 7:30 a.m. and 5:30 
p.m. weekdays in the Office of the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410-0500.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this proposed rule and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. Although the proposed 
rule is exclusively concerned with small PHAs with less than 250 public 
housing or leased housing units, the proposed amendments are 
deregulatory in nature. Specifically, the proposed rule would 
eliminate, simplify and streamline regulatory requirements for these 
small PHAs regarding the PHA Annual Plan process and assessments 
conducted under the PHAS and SEMAP. Further, the proposed deregulatory 
amendments would not change the amount of funding available to these 
PHAs. Accordingly, the economic impact of this rule will not be 
significant, and it will not affect a substantial number of small 
entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

List of Subjects

24 CFR Part 902

    Administrative practice and procedure, Public housing, Reporting 
and recordkeeping requirements.

24 CFR Part 903

    Administrative practice and procedure, Public housing, Reporting 
and recordkeeping requirements.

24 CFR Part 985

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

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR parts 902, 903 and 985 as follows:

PART 902--PUBLIC HOUSING ASSESSMENT SYSTEM

    1. The authority citation for 24 CFR part 902 continues to read as 
follows:

    Authority: 42 U.S.C. 1437d(j), 42 U.S.C. 3525(d).

    2. Add Sec. 902.9 to read as follows:


Sec. 902.9  Frequency of PHAS scoring for small PHAs.

    REAC will assess and score the performance of a PHA with less than

[[Page 53279]]

250 public housing units every other PHA fiscal year, unless the small 
PHA:
    (a) Elects to have its performance assessed on an annual basis; or
    (b) Is designated as troubled, in accordance with Sec. 902.67.
    3. Revise the introductory text of paragraph Sec. 902.33(a) to read 
as follows:


Sec. 902.33  Financial reporting requirements.

    (a) Annual financial report. All PHAs must submit their unaudited 
and audited financial data to HUD on an annual basis. The financial 
information must be:
* * * * *
    4. Revise the first sentence of Sec. 902.60(d) to read as follows:


Sec. 902.60  Data collection.

* * * * *
    (d) Management operations and resident service and satisfaction 
information. A PHA shall provide certification to HUD as to data 
required under subpart D, Management Operations, of this part and 
subpart E, Resident Service and Satisfaction, of this part not later 
than two months after the end of the PHA's fiscal year that is being 
assessed and scored, with no penalty applying, however, until the 16th 
day of the third month after the PHA fiscal year end. ***
* * * * *

PART 903--PUBLIC HOUSING AGENCY PLANS

    5. The authority citation for 24 CFR part 903 continues to read as 
follows:

    Authority: 42 U.S.C. 1437c; 42 U.S.C. 3535(d).

    6. Amend Sec. 903.5(a)(3) by adding a sentence at the end to read 
as follows:


Sec. 903.5  When must a PHA submit the plans to HUD?

    (a) * * *
    (3) * * * However, HUD may require that half of all PHAs with less 
than 250 public housing units submit their 5-Year Plan one fiscal year 
in advance (in the fourth PHA fiscal year rather than the fifth PHA 
fiscal year).
* * * * *
    7. Revise Sec. 903.11(c)(2) to read as follows:


Sec. 903.11  Are certain PHAs eligible to submit a streamlined Annual 
Plan?

* * * * *
    (c) * * *
    (2) For small PHAs that are not designated as troubled (see 
Sec. 902.67(c)) or that are not at risk of being designated as troubled 
(see Sec. 902.67(b)(4)) under section 6(j)(2) of the 1937 Act, the 
requirements for streamlined Annual Plans are described in Sec. 903.12.
* * * * *
    8. Add Sec. 903.12 to read as follows:


Sec. 903.12  What are the streamlined Annual Plan requirements for 
small PHAs?

    (a) General. PHAs with less than 250 public housing units (small 
PHAs) and that have not been designated as troubled (see 
Sec. 902.67(c)) or that are not at risk of being designated as troubled 
(see Sec. 902.67(b)(4)) under section 6(j) of the 1937 Act may submit 
streamlined Annual Plans in accordance with this section.
    (b) Streamlined Annual Plan requirements for fiscal years in which 
5-Year Plan is also due. For the fiscal year in which its 5-Year Plan 
is also due, the streamlined Annual Plan of the small PHA shall consist 
of the information required by Sec. 903.7 (a), (b), (c), (d), (g), (h), 
(k), (o) and (r). The information required by Sec. 903.7(a) must be 
included only to the extent it pertains to the housing needs of 
families that are on the PHA's public housing and Section 8 tenant-
based assistance waiting lists. The information required by 
Sec. 903.7(k) must be included only to the extent that the PHA 
participates in homeownership programs under section 8(y) of the 1937 
Act.
    (c) Streamlined Annual Plan requirements for all other fiscal 
years. For all other fiscal years, the streamlined Annual Plan must 
include the information required by Sec. 903.7(g) and (o) and a 
certification from the PHA that:
    (1) Lists the policies and programs covered by Sec. 903.7(a), (b), 
(c), (d), (h), (k) and (r) that the PHA has revised since submission of 
its last Annual Plan; and
    (2) Provides assurance by the PHA that:
    (i) The Resident Advisory Board had an opportunity to review and 
comment on the changes to the policies and programs before 
implementation by the PHA;
    (ii) The changes were duly approved by the PHA board of directors 
(or similar governing body); and
    (iii) The revised policies and programs are available for review 
and inspection, at the principal office of the PHA during normal 
business hours.
    9. Amend Sec. 903.23 by redesignating paragraphs (b) through (d) as 
paragraphs (c) through (e), respectively and adding new paragraph (b) 
to read as follows:


Sec. 903.23  What is the process by which HUD reviews, approve, or 
disapproves an Annual Plan?

* * * * *
    (b) Scope of HUD review. HUD's review of the Annual Plan (and any 
significant amendments or modifications to the plan) will be limited to 
the information required by Sec. 903.7(b), (g), (h), and (o), and any 
other element of the PHA's Annual Plan that is challenged.
* * * * *

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

    10. The authority citation for 24 CFR part 985 continues to read as 
follows:

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

    11. Add Sec. 985.1(c) to read as follows:


Sec. 985.1  Purpose and applicability.

* * * * *
    (c) Small PHAs exempt from Single Audit Act requirements. A PHA 
that expends less than $300,000 in Federal awards in any PHA fiscal 
year is not subject to this part.
    12. In Sec. 985.3, remove the second undesignated introductory 
paragraph.
    13. Revise Sec. 985.105(a) to read as follows:


Sec. 985.105  HUD SEMAP responsibilities.

    (a) Frequency of SEMAP assessments. (1) Annual review. Except as 
provided in paragraph (a)(2) of this section, HUD shall assess each 
PHA's performance under SEMAP annually and shall assign each PHA a 
SEMAP score and overall performance rating.
    (2) Biannual review for small PHAs. HUD shall assess and score the 
performance of a PHA with less than 250 assisted units once every other 
PHA fiscal year, unless the PHA:
    (i) Elects to have its performance assessed on an annual basis; or
    (ii) Is designated as troubled, in accordance with Sec. 985.103.
* * * * *
    14. Revise Sec. 985.107(a) to read as follows:


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

    (a) On-site reviews. (1) Required reviews for troubled PHAs. Except 
as provided in paragraph (a)(2) of this section, HUD will conduct an 
on-site review of PHA program management for any PHA assigned an 
overall performance rating of troubled to assess the magnitude and 
seriousness of the PHA's noncompliance with performance requirements.
    (2) On-site reviews for small PHAs. Notwithstanding paragraph 
(a)(1) of this section, HUD may elect not to conduct an on-site review 
of a troubled PHA, if:
    (i) The PHA has less than 250 assisted units; and
    (ii) HUD determines that an on-site review is unnecessary to 
determine the

[[Page 53280]]

needs of the PHA and the actions required to address the program 
deficiencies.
* * * * *

    Dated: July 18, 2002.
Michael M. Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 02-20547 Filed 8-13-02; 8:45 am]
BILLING CODE 4210-33-P