[Federal Register Volume 68, Number 121 (Tuesday, June 24, 2003)]
[Rules and Regulations]
[Pages 37664-37672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15815]



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Part IV





Department of Housing and Urban Development





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24 CFR Parts 902, 903 and 985



Deregulation for Small Public Housing Agencies; Final Rule

  Federal Register / Vol. 68 , No. 121 / Tuesday, June 24, 2003 / Rules 
and Regulations  

[[Page 37664]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 902, 903 and 985

[Docket No. FR-4753-F-02]
RIN 2577-AC34


Deregulation for Small Public Housing Agencies

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

ACTION: Final rule.

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SUMMARY: This final rule simplifies and streamlines 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 (1937 Act). Consistent with HUD's basic 
regulatory responsibilities, the final rule further streamlines the PHA 
Annual Plan requirements for certain small PHAs and deregulates the 
assessment and scoring of small PHAs under the Public Housing 
Assessment System (PHAS) and the Section 8 Management Assessment 
Program (SEMAP). 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. The final rule follows publication of an August 14, 2002, 
proposed rule and takes into consideration the public comments received 
on the proposed rule.

DATES: Effective Date: July 24, 2003.

FOR FURTHER INFORMATION CONTACT: Bessy Kong, Deputy Assistant Secretary 
for Policy, Program, and Legislative Initiatives, Department of Housing 
and Urban Development, 451 Seventh Street, SW., Room 4116, Washington, 
DC 20410-0001; 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

    On August 14, 2002 (67 FR 53276), HUD published a proposed rule for 
public comment to simplify and streamline its 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.) (1937 Act). The proposed rule 
would further streamline the PHA Annual Plan requirements for certain 
small PHAs. The proposed rule also would 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 HUD's basic regulatory responsibilities. The proposed changes were 
designed to 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, the proposed rule would 
also streamline HUD's review of the Annual Plans submitted by all PHAs 
(large and small). The preamble to the August 14, 2002, proposed rule 
provides additional details regarding the proposed deregulatory changes 
to HUD's regulations.

II. This Final Rule; Significant Changes to the August 14, 2002, 
Proposed Rule

    This final rule follows publication of the August 14, 2002, 
proposed rule and takes into consideration the public comments received 
on the proposed rule. The most significant differences between this 
final rule and the August 14, 2002, proposed rule are as follows:
    Additional streamlined Annual Plan components. The final rule 
provides that, in addition to information regarding capital 
improvements and the civil rights certification, the streamlined Annual 
Plans submitted by small PHAs must also address any PHA initiatives 
concerning site-based waiting lists (see Sec.  903.7(b)(2)), any 
homeownership programs administered under section 8(y) of the 1937 Act 
(see Sec.  903.7(k)(1), and any project-based voucher assistance (as 
provided in section II.D. of HUD's January 16, 2001, Federal Register 
notice regarding revisions to the PHA Project-Based Assistance Program 
(66 FR 3605 at 3608, middle column) and section III.C. of PIH Notice 
2001-4 issued on January 19, 2001), if applicable. This information 
concerns discretionary PHA programs and policies that are required, 
either by regulation or statute, to be addressed in the PHA Plan, and 
for which no alternative method exists for obtaining prior HUD 
approval.
    SEMAP exemption for non-audit PHAs. The proposed rule would have 
exempted small PHAs not subject to the requirements of the Single Audit 
Act from review under SEMAP. The final rule no longer exempts these 
small PHAs from SEMAP review. Small, non-audit PHAs will continue to be 
subject to SEMAP assessment and scoring, in accordance with the current 
SEMAP regulations.
    Timing of biennial PHAS and SEMAP assessments. The final rule 
continues to provide for biennial PHAS and SEMAP assessments for small 
PHAs. To facilitate compliance with biennial assessments, PHAs with 
fiscal years ending in the first four quarters following the effective 
date of this final rule will not be evaluated under PHAS or SEMAP for 
that fiscal year.

III. Discussion of the Public Comments Received on the August 14, 2002, 
Proposed Rule

    The public comment period on the August 14, 2002, proposed rule 
closed on September 13, 2002. HUD received twenty-one public comments 
on the proposed rule. Comments were received from PHAs, two of the 
major national organizations representing PHAs, and low-income housing 
advocates, and service providers. The majority of the commenters 
supported the rule and applauded HUD's efforts to provide regulatory 
relief for small PHAs. Several commenters, however, had reservations 
about certain elements of the rule and suggested changes for addressing 
these concerns. In many cases, the commenters recommended additional 
deregulatory changes not contained in the proposed rule.
    The summary of comments that follows presents the major issues and 
questions raised by the public commenters on the August 14, 2002, 
proposed rule. The underlined headings present the issue or question 
and are followed by a brief description of the commenter's reasoning. 
The discussion of the public comments is organized as follows:
    Section IV of this preamble discusses the general public comments 
on the proposed rule.
    Section V of the preamble discusses the public comments regarding 
the proposed changes to the PHA Annual Plan requirements.
    Section VI of the preamble discusses the public comments regarding 
the proposed changes to the PHAS.
    Section VII of the preamble discusses the public comments regarding 
the proposed changes to SEMAP.

IV. Discussion of General Public Comments on the Proposed Rule

    Comment: Support for proposed rule. The majority of the public 
commenters supported the proposed rule, applauding HUD's efforts to 
reduce the regulatory burden imposed on small PHAs. The commenters 
wrote that the proposed rule is a ``firm step in the right direction'' 
and ``offers a foundation to

[[Page 37665]]

provide necessary relief for small agencies,'' but ``still not pose a 
risk to the Department, residents or the taxpaying public.''
    HUD response. HUD appreciates the support expressed by the 
commenters. The final rule will alleviate the administrative burden 
imposed on small PHAs, while still requiring basic accountability. 
These deregulatory changes will better enable small PHAs to focus on 
their primary mission of providing housing assistance to low-income 
families.
    Comment: Deregulation of procurement and contracting procedures is 
also required. One commenter wrote that many small PHAs have difficulty 
complying with the multiple regulatory and paperwork requirements 
related to the procurement process and requested that HUD also 
undertake efforts to streamline and simplify these requirements. The 
commenter noted that many contractors in the locality of a small PHA 
are frequently small businesses themselves. The commenter wrote that 
these small businesses are also ill-equipped to deal with the 
procurement requirements and, therefore, not inclined to contract with 
small PHAs. In particular, the commenter wrote that two changes would 
make it more attractive for these small businesses to contract with 
small PHAs: (1) raising the dollar value threshold that triggers Davis-
Bacon wage rates from $2,000 to $10,000; and (2) relaxing the Section 3 
low-income hiring requirements. The commenter noted that these are both 
sensitive issues and would probably require statutory changes, but 
urged that HUD at least consider these points to alleviate procurement 
problems for small PHAs and lower the costs for businesses that wish to 
deal with them.
    HUD response. As the commenter notes, the requested changes involve 
issues that will require further consideration and may require 
statutory changes in order to be implemented. Further, the procurement 
and contracting issues highlighted by the commenter are not regulatory 
in nature and, therefore, outside the scope of this rulemaking. 
Accordingly, the final rule does not adopt the recommendations made by 
the commenter.
    Comment: HUD should exercise its statutory authority to provide 
small PHAs with greater flexibility in the management of the public 
housing Capital and Operating Funds. One commenter noted that section 
9(g)(2) of the 1937 Act authorizes small PHAs to use amounts allocated 
from these funds for eligible capital and operating costs, ``regardless 
of the fund from which the amounts were allocated.'' The commenter 
wrote that, contrary to this statutory flexibility, the current HUD 
regulations require that small PHAs submit a Capital Fund plan for 
using allocations from the Capital Fund solely for capital activities. 
The commenter wrote that implementing section 9(g) would greatly 
benefit small PHAs by providing relief from the administrative burden 
of separately tracking allocations from the two public housing funds.
    HUD response. HUD has not adopted the recommendations made by the 
commenter. The suggested regulatory changes were not included as part 
of the August 14, 2002, proposed rule. Since the changes suggested by 
the commenter are outside the scope of the proposed rule, HUD has not 
revised the rule in response to this comment.
    Comment: High performing PHAs that do not participate in the 
Operating Fund should be granted the ability to use operating funds, 
operating reserves, and funds in excess of operating reserves for 
development and modernization. One commenter submitted this 
recommendation. The commenter wrote that these PHAs create their own 
excess revenues that, due to current HUD regulatory requirements, are 
locked into reserves. The commenter wrote that the suggested 
deregulatory changes would allow these PHAs to perform their housing 
operations, and provide additional improvements and additional 
affordable housing, without imposing any added burden on HUD. The 
commenter agrees with current regulations providing that any additional 
units or developments built with these funds are not eligible for 
future subsidy under the Operating Fund.
    HUD response. HUD has not revised the rule in response to this 
comment. The amendment recommended by the commenter is outside the 
scope of this final rule, which is concerned with deregulatory changes 
designed to assist small PHAs.
    Comment: HUD needs to provide small PHAs with additional assistance 
regarding the use and implementation of automated systems. One 
commenter recommended that HUD develop outreach and technical 
assistance specifically for small PHAs with regard to automated 
systems, and that HUD improve its communication overall with small PHAs 
regarding its plans for information technology. The commenter wrote 
that small PHAs do not possess the best hardware or software for 
connecting with HUD's systems. The commenter wrote that an early-
warning system of several months for changes and new products, coupled 
with appropriate technical assistance, would help small PHAs prepare 
and assimilate to HUD's requirements.
    HUD response. The proposed rule has not been revised to reflect the 
commenter's suggestion. The issue of technical assistance is not 
regulatory in nature and, therefore, outside the scope of this final 
rule. However, HUD currently provides, and will continue to provide, 
technical assistance to PHAs.
    Comment: Further review and streamlining of data collection 
requirements is required. Two commenters wrote that HUD should 
reevaluate the type and amount of information that small PHAs are 
required to collect and report to HUD. The commenters wrote that HUD 
should then assess whether there are duplicative or excessively 
burdensome requirements that should be eliminated. For example, one of 
the commenters wrote that the reporting requirements under the PHAS 
Management Assessment Sub-System (MASS) and the Financial Assessment 
Sub-System (FASS) are administratively burdensome and need to be 
simplified. The commenter also wrote that several of the MASS reporting 
requirements, such as the dates units became vacant, are already 
available through the electronic PIH Information Center (PIC), and are, 
therefore, duplicative.
    HUD response. HUD has not revised the proposed rule in response to 
this public comment. In response to the commenter's statement 
concerning duplicative data, HUD notes that MASS and PIC are concerned 
with different types of information. To use the example of vacancy rate 
data raised by the commenter, MASS collects and measures information 
regarding a PHA's performance in leasing vacant units, while PIC 
collects information on the number of vacant units a PHA has on an 
annual basis. However, HUD will review the PHAS data collection 
requirements and determine whether any can be streamlined or 
consolidated as part of future changes to the PHAS.
    Comment: HUD should monitor PHAs to determine whether the 
deregulatory changes will have an impact on the number of units that a 
PHA operates. One commenter cautioned that the rule might have the 
unintended negative consequence of causing PHAs to reduce the 
availability of public housing or vouchers in their jurisdictions, in 
order to have the benefit of the regulatory relief.
    HUD response. HUD does not anticipate that PHAs will violate their 
mission by intentionally reducing the number of families they serve in 
order to benefit from regulatory relief. As

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stated above in this preamble, the goal of the final rule is to better 
enable small PHAs to focus on their core mission of providing housing 
assistance to poor families. HUD will monitor the impact of the final 
rule on PHAs and will revise the rule as necessary to ensure that the 
deregulatory changes do not conflict with the provision of decent, 
safe, and sanitary housing to families in need.
    Comment: Streamlining changes should be extended to large PHAs and 
high-performing PHAs. One commenter suggested that the deregulatory 
benefits of the proposed rule should be provided to all PHAs, large and 
small alike. The commenter wrote that ``all PHAs, regardless of being 
small or large, would be better able to serve their clients without the 
administrative burdens defined in the proposed rule.'' Another 
commenter suggested that the streamlining changes should be extended to 
high-performing PHAs and to PHAs that do not participate in the 
Operating Fund program. The commenter wrote that these PHAs have 
displayed the ability to operate in an effective manner without 
extensive HUD regulation and monitoring. The commenter wrote that PHAs 
that function with positive revenues and do not take operating subsidy 
from HUD should be regulated differently than those receiving 
allocations from the Operating Fund.
    HUD response. HUD has not revised the proposed rule to incorporate 
these suggestions. HUD is aware that large PHAs may also benefit from 
deregulation and will examine whether there are actions that can be 
taken to alleviate the regulatory burdens currently imposed on these 
PHAs.
    Comment: Small PHAs with less than 250 units should be completely 
exempt from Annual Plan and assessment requirements. Two commenters 
made this suggestion. The commenters wrote that the time and energy 
spent to comply with these requirements impedes PHAs in providing 
services to their clients.
    HUD response. HUD has not adopted the suggestion made by the 
commenter. While the provisions of the 1937 Act establishing the PHAS 
and the PHA Plan process provide HUD with the flexibility to establish 
streamlined requirements for small PHAs, they do not authorize the 
exemption of small PHAs from these requirements altogether.

V. Discussion of the Public Comments on the Proposed Changes to the PHA 
Annual Plan

A. Comments Regarding Definition of Small PHA

    Comment: Applicability of streamlining changes should be clarified. 
Three commenters requested greater clarity on how the streamlining 
changes to the PHA Plan will apply to PHAs that manage both public 
housing and voucher programs. The commenters wrote that the proposed 
rule appears to streamline the Annual Plan process only for small PHAs 
with less than 250 public housing units (regardless of the number of 
voucher units they operate). However, the preamble discussion of the 
Annual Plan refers to Public and Indian Housing (PIH) Notice 2000-43 
(issued on September 18, 2000), which defines small PHA to mean PHAs 
that operate 250 or fewer units of public housing and 250 or fewer 
voucher units. One of the commenters asked whether a PHA with less than 
250 public housing units, but more than 250 voucher units, would 
qualify for the new streamlined Annual Plan procedures.
    HUD response. The streamlined Annual Plan requirements apply to 
PHAs with less than 250 public housing units, irrespective of the 
number of voucher units administered by the PHA.
    Comment: Suggested changes to definition of a small PHA. Three 
commenters suggested a revised definition of a small PHA. One commenter 
wrote that the final rule should define a small PHA as one with less 
than 100 public housing and voucher units combined. The commenter wrote 
that this definition is consistent with the definition contained in 
legislation pending in Congress. Another commenter wrote that the final 
rule should define a small PHA as one with fewer than 100 public 
housing units.
    Yet another commenter wrote that the final rule should revise the 
definition of a small PHA to include only PHAs with less than 250 
assisted units, including both public housing and voucher units. This 
commenter wrote that the proposed rule would create the anomalous 
result that a PHA with 250 public housing units, but potentially 
thousands of voucher units, would be considered ``small'' and have 
fewer planning and reporting requirements than a PHA with 260 public 
housing units and no voucher units at all. In addition, the commenter 
noted that the proposed rule would treat all PHAs that only administer 
vouchers the same, regardless of the size of their voucher programs. 
The commenter wrote that its suggested change would be the fairest and 
easiest to understand, and would treat similar PHAs in a similar 
manner.
    Two other commenters, however, urged HUD to ensure that the final 
rule includes the same definition of small PHA as the proposed rule. 
One of the commenters endorsed the proposed definition, writing that it 
will enable PHAs to ``focus on the delivery of quality services and 
being responsive to their community, rather than worrying about filing 
reports with HUD.''
    HUD response. After careful consideration of all of the suggestions 
offered by the commenters, HUD has decided not to revise the definition 
of a small PHA for purposes of the streamlined Annual Plan 
requirements. The final rule continues to define a small PHA as one 
with less than 250 public housing units. The number of voucher units 
administered by the PHA is not taken into consideration for purposes of 
the definition. This definition of a small PHA is consistent with 
section 5A(k) of the 1937 Act, which authorizes the establishment of 
streamlined Annual Plan requirements.

B. Comments Regarding Resident and Public Participation in the PHA Plan 
Process

    Comment: Existing Resident Council should be allowed to substitute 
for the Resident Advisory Board. One commenter wrote that, given the 
difficulties faced by small PHAs in finding residents interested in 
serving on a Resident Advisory Board (RAB), another way to lessen the 
administrative burden on these small PHAs would be to allow an existing 
PHA Resident Council to substitute for the RAB.
    HUD response. HUD has not revised the proposed rule in response to 
this comment. The PHA Plan regulations at Sec.  903.13(b) already 
provide that if a jurisdiction-wide Resident Council that complies with 
HUD's tenant participation regulations in 24 CFR part 964 exists, the 
PHA shall appoint the Resident Council or the Council's representatives 
to the RAB. Further, as provided in PIH Notice 2000-36 (issued on 
August 21, 2000), if a PHA has made every effort, but has still been 
unsuccessful in finding residents to serve on a RAB, the PHA may 
appoint all its residents as the RAB. Should this occur, the PHA must 
provide adequate notice to the residents that all residents are 
appointed to the RAB. The PHA must ensure that a RAB consisting of all 
the residents is provided the same opportunity to comment on the PHA 
Plans, and the PHA must consider these resident comments when drafting 
the

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final Plan in the same manner as for any other RAB. A copy of PIH 
Notice 2000-36 may be downloaded from HUD's Client Information and 
Policy Systems (HUDCLIPS) Web site at http://www.hudclips.org.
    Comment: Small PHAs should not be required to use a resident 
survey. One commenter wrote that the resident survey is an unnecessary 
administrative requirement for small PHAs. The commenter wrote that the 
low response rate does not justify its use. Further, the high degree of 
interaction between the staff of a small PHA and the residents allows 
for a greater sense of resident satisfaction than any survey can 
provide.
    HUD response. HUD has not adopted this comment. The information 
available to HUD indicates that small PHAs have a high response rate 
for their resident surveys. HUD agrees that residents of small PHAs are 
more easily able to interact with PHA staff than residents of larger 
PHAs. However, HUD also continues to believe that resident surveys 
provide a valuable additional resource for small PHAs in evaluating and 
responding to the needs of their residents.
    Comment: Small PHAs should be required to make reasonable and 
appropriate efforts to ensure participation by the RAB and the public 
in the streamlined PHA Plan process. Three commenters made this 
suggestion. The commenters also suggested that the final rule require 
that a small PHA consider the comments provided by the RAB in the 
development of its Plan submission, and that the PHA provide 
documentation of having done so, as required under the current PHA Plan 
regulations.
    HUD response. HUD has not revised the proposed rule in response to 
this comment. This final rule (as did the August 14, 2002, proposed 
rule) continues to ensure the participation of residents in the 
streamlined Annual Plan process. Specifically, the final rule requires 
that small PHAs submitting a streamlined Plan must provide the RAB with 
an opportunity to review and comment on proposed changes to the PHA's 
policies and programs. Further, the PHA is required to make the revised 
policies and programs available for public review and inspection, which 
will allow the public to confirm RAB participation in the streamlined 
Plan process.
    Comment: PHAs should be required to make certain basic information 
available to the public, regardless of Plan streamlining. One commenter 
wrote that, irrespective of streamlining, PHAs should be required to 
annually provide certain basic information to the RAB, tenants, PHA 
board members, and the public. For public housing, this information 
would consist of the total number of units, the number of vacant units, 
the expected unit turnover rate during the upcoming year, and the 
average time it takes to rent a vacated unit. For vouchers, the 
information would consist of the total number of voucher units 
(adjusted baseline), the number and percentage of ``leased-up'' units, 
the expected turnover rate for the coming year, whether the PHA has 
received a letter from HUD warning that the PHA may lose voucher units 
if it does not increase its voucher utilization rate, and the voucher 
utilization rate that the PHA must achieve in order to qualify for 
additional vouchers. In addition to this information, the commenter 
suggested that PHAs also be required to make their PHAS and SEMAP 
scores available to the public (both the overall score and the scores 
on each indicator), along with an explanation of any plans on how the 
PHA intends to improve its scores.
    HUD response. HUD has not adopted this comment. The information 
requested by the commenter is either available via the Internet or 
through direct request to the PHA or HUD. For example, members of the 
public may obtain information regarding PHA operations and resident 
characteristics via the Internet by accessing http://www.hud.gov/offices/pih and clicking on the ``Online Systems'' link. The reports 
entitled ``Housing Authority Profiles'' and ``Form 50058--Resident 
Characteristics Report'' provide information on, among other things, 
the total number of public and low-rent housing units, the number of 
occupied public housing units, and the number of housing choice 
vouchers operated by the PHA, as well as on the income, tenant payment 
amounts, family status, and age of residents. Further, each PHA is able 
to access its PHAS score through HUD's Internet homepage at http://www.hud.gov/reac. In the near future, HUD also intends to post PHA 
SEMAP scores, overall PHAS grades, and PHAS/SEMAP indicator grades and 
designations on its Web site. For other information regarding program 
utilization, interested persons can submit a written inquiry to their 
PHA or to HUD. Accordingly, since the requested information is already 
readily available to the public, there is no need to revise this rule 
to adopt the commenter's suggestion.
    C. Comments Regarding Civil Rights Requirements
    Comment: The civil rights certification should be submitted under 
penalty of perjury. One commenter suggested that the Annual Plan 
regulations be revised to provide that the Executive Director of the 
PHA sign the required civil rights certification under penalty of 
perjury. The commenter also recommended that designees of the PHA 
governing board and the Resident Advisory Board be required to also 
sign the certification.
    HUD response. HUD has not adopted this comment. PHAs that fail to 
comply with nondiscrimination and fair housing requirements are already 
subject to sanction under the applicable civil rights statute and 
implementing HUD regulations.
    Comment: A PHA should not be eligible to submit a streamlined 
Annual Plan if it does not meet the civil rights ``threshold 
requirements'' contained in HUD's Super Notice of Funding Availability 
(SuperNOFA). One commenter made this recommendation.
    HUD response. HUD has not adopted the suggestion made by the 
commenter. The civil rights review conducted for a PHA submitting an 
Annual Plan should not be comparable to the civil rights threshold 
review conducted for SuperNOFA applicants. The SuperNOFA threshold 
criteria are applied to potential grantees applying for limited funding 
and are used to distinguish between more competitive and less 
competitive applicants. HUD has determined that only those SuperNOFA 
applicants who are in full compliance with certain civil rights 
requirements and do not have unresolved civil rights charges of various 
kinds should be eligible to compete for discretionary HUD funding. The 
submission of an Annual Plan, however, is a statutory requirement and 
does not affect the amount of HUD subsidy for which the PHA is 
eligible. All PHAs (large and small) are required to conduct their 
housing programs in accordance with applicable civil rights and 
nondiscrimination requirements and are required to certify that they 
will comply with these requirements.
    Comment: The PHA Plan template should be revised to ask whether the 
PHA maintains data indicating the level of participation in the PHA's 
programs by members of different racial and ethnic minority groups. One 
commenter made this suggestion. The commenter suggested that the PHA be 
asked to also state whether the PHA makes this data available to 
program participants and other interested parties, maintains and makes 
available similar data regarding the level of participation by persons 
with disabilities, and whether the PHA has determined if there is a 
need for services in languages other than English.

[[Page 37668]]

    HUD response. HUD already collects the data requested by the 
commenter through its form HUD-50058. Specifically, PHAs are required 
to provide information regarding the participation in their public 
housing and voucher programs by members of different racial and ethnic 
groups, as well as by persons with disabilities. This information is 
summarized in the Resident Characteristics Report Module of PIC, which 
HUD makes available to the public.

D. Other Comments Regarding Annual Plan

    Comment: HUD should exempt small PHAs from the requirement of 
submitting their Annual Plans to HUD. One commenter suggested that a 
small PHA be permitted to simply certify that the public (including 
residents) has reviewed its Annual Plan and that the PHA provided 
adequate notice for public review and comment.
    HUD response. HUD does not have the statutory authority to adopt 
the recommendation made by the commenter. The submission of the PHA 
Plans is a statutory requirement mandated by section 5A of the 1937 
Act.
    Comment: All PHAs that administer voucher programs should be 
required to report annually at least on the Annual Plan components 
included in the streamlined Plan for ``voucher only'' PHAs. One 
commenter wrote that small PHAs with 0-249 public housing units, but 
that also operate some vouchers, should be required to report on the 
PHA Plan components that HUD has considered to be important to voucher 
programs. The commenter wrote that it is particularly important that 
PHAs obligated to operate Family Self-Sufficiency programs for voucher 
families be held to the current reporting and planning requirements of 
Sec.  903.7(l). The commenter wrote that if HUD exempts small PHAs from 
some of the reporting requirements that now apply to voucher-only PHAs, 
all of the components of the current streamlined voucher-only Plan 
should have to be included in the more complete 5-year Plan. Another 
commenter wrote that small PHAs that administer a voucher program 
should at least be required to submit on an annual basis the civil 
rights certification (required under Sec.  903.7(o)) and the statement 
of the PHA's rent determination policy (required under Sec.  903.7(d)).
    HUD response. HUD has not revised the rule in response to this 
comment. Section 5A(k) of the 1937 Act authorizes HUD to establish 
streamlined PHA Plan requirements for PHAs with less than 250 public 
housing units, irrespective of the number of vouchers administered by 
the PHA. Accordingly, HUD does not believe that small PHAs that also 
administer tenant-based voucher assistance should be subject to more 
extensive reporting requirements than other small PHAs. The imposition 
of these additional requirements would be inconsistent with the 
statutory language of section 5A and frustrate the purpose of this rule 
to alleviate the administrative burden imposed on PHAs. The information 
supplied by small PHAs in their streamlined Annual and 5-Year Plans 
will supplement other data available to the public and to HUD regarding 
the PHA's performance, programs, and management.
    Comment: Capital improvement data should not be required until 
actual funding amount is provided. One commenter made this suggestion. 
The commenter wrote that all PHAs, large and small, spend time and 
money to prepare an accurate five-year budget, which forms part of the 
PHA Plan submission. However, because these budgets may be due to HUD 
before the actual amount of capital funding is determined (depending on 
the start of the PHA's fiscal year), the PHA may be required to prepare 
a completely revised budget once the funding amount is known.
    HUD response. The commenter's suggestion would require changes in 
the timing and processing of PHA Plan submissions that HUD is not 
prepared to make at this time. Accordingly, HUD has not revised the 
rule in response to this comment.
    Comment: The PHA Plan requirements are already streamlined for 
small PHAs, and further streamlining is not necessary. One commenter 
made this recommendation.
    HUD response. HUD does not agree with the commenter. The additional 
streamlining changes to the PHA Plan requirements made by this final 
rule will reduce administrative burden, eliminate duplicative reporting 
requirements, and better enable small PHAs to focus on their core 
mission of providing affordable housing to poor families. Therefore, 
HUD has not revised the rule in response to this comment.
    Comment: Rather than merely providing a list of the Annual Plan 
policies it has revised, a small PHA submitting a streamlined Plan 
should be required to affirmatively state that it has not revised each 
relevant Plan component, or explain the changes it has made to any of 
the components, since submission of the PHA's last Plan. One commenter 
made this suggestion. The commenter wrote that such a change to the 
rule would ensure that policy changes that have been made are not 
inadvertently overlooked and not reported.
    HUD response. HUD has not adopted the suggestion made by the 
commenter. The final rule contains sufficient safeguards to ensure that 
the PHA's governing board, HUD, residents, and the public are made 
aware of policy changes made by the PHA. Specifically, the PHA must 
provide the RAB with the opportunity to review and comment on the 
policy changes prior to implementation by the PHA. Further, the PHA 
must provide assurance that the changes were duly approved by the PHA 
board of directors (or similar governing body) and must make the 
revised policies available for public review and inspection.
    Comment: A PHA should not be permitted to submit only a 
certification with respect to its policies on demolition and 
disposition that the PHA has revised since submission of its last 
Annual Plan. One of the commenters wrote that demolition and 
disposition are of such great public importance that they should be 
addressed on an annual basis by PHAs. The commenter suggested that, at 
a minimum, small PHAs should be required to certify, under penalty of 
perjury by the Executive Director and the Chairperson of the PHA Board, 
that the PHA will not dispose of or demolish any public housing units 
during the year. Another commenter wrote that the 1937 Act requires HUD 
to review PHA policies concerning demolition and disposition. The 
commenter wrote that for this HUD review to have any meaning, each 
small PHA should be required to affirmatively state that it has not 
changed its policies with respect to demolition and disposition. The 
commenters agreed that it is not enough for the PHA to be silent on 
this issue and for HUD, therefore, to extrapolate that there will be no 
changes to the policies and practices regarding demolition and 
disposition.
    HUD response. HUD has not revised the proposed rule in response to 
this comment. HUD agrees that the demolition and disposition of public 
housing units is of great public interest. However, existing regulatory 
and statutory safeguards are sufficient to ensure that PHAs do not 
undertake such actions without prior HUD approval and appropriate 
consultations with affected residents and the community. In addition to 
the PHA Plan approval process, PHAs wishing to demolish or dispose of a 
development must submit a full demolition/disposition plan to HUD for 
approval, in accordance with

[[Page 37669]]

section 18 of the 1937 Act. Further, as noted above, the PHA must 
provide the RAB with the opportunity to review and comment on proposed 
changes to its policies concerning demolition and disposition. The PHA 
must also provide assurance that these changes were duly approved by 
the PHA board of directors (or similar governing body) and must make 
the revised policies available to the public upon request.
    Comment: The final rule should provide additional guidance 
regarding what constitutes a challenge of a Plan element for purposes 
of triggering HUD review. One commenter made this suggestion. The 
commenter noted the language of the proposed rule providing that HUD 
would limit its review of Annual Plans to certain specified elements, 
and ``[a]s required by section 5A(i)(2) [of the 1937 Act,] . . . any 
other plan element that has been challenged'' (67 FR 53276, 523277, 
first column).
    HUD response. HUD has not revised the rule in response to this 
comment. HUD may issue future additional guidance regarding challenges 
to the Annual Plans should it determine that such guidance is 
necessary.
    Comment: HUD should not eliminate from its review PHA policies on 
rent computation and rent redeterminations. One commenter wrote that 
these policies should be reviewed annually to ensure compliance with 
the law. According to the commenter, evictions often result from 
improper PHA rent computations. The commenter wrote that HUD's 
continued review of these policies would help to ensure that PHAs 
comply with all applicable legal requirements.
    HUD response. HUD has not revised the rule in response to this 
public comment. As with other PHA policies and programs, any changes to 
the rent computation and redetermination policies must be reviewed by 
the RAB, approved by the PHA governing board, and made available to the 
public for inspection. The existence of such changes must be listed in 
the PHA's streamlined Annual Plan and may be flagged by HUD for further 
monitoring and oversight, depending on the scope and nature of the 
changes. Inclusion of this information in the Annual Plan is, 
therefore, unlikely to provide much further assurance that proper rent 
calculations will be made.

E. Questions Regarding Implementation

    Comment: How soon will HUD make available a streamlined electronic 
PHA Annual Plan? One commenter posed this question. The commenter also 
asked whether small PHAs would be expected to continue to use the 
current electronic Plan template, but simply enter ``not applicable'' 
for the reporting requirements eliminated by the regulatory changes.
    HUD response. HUD is working on the necessary modifications to the 
electronic PHA Plan template. HUD is also considering further 
regulatory changes that may affect revisions to the template. When 
completed, the availability of the revised template will be announced 
through PIH Notice or other non-regulatory means.
    Comment: How will staggered review of the 5-Year Plans be 
implemented? One commenter asked this question. Specifically, the 
commenter, a small PHA, asked when its 5-Year Plan would be due. The 
commenter wrote that it is currently preparing its fourth year Annual 
Plan for submission in 2003.
    HUD response. This is an implementation issue that will be 
addressed by HUD in separate non-regulatory guidance. HUD will issue a 
PIH Notice describing how the staggered review provisions of the final 
rule will be implemented. The PIH Notice will provide PHAs with 
sufficient time to bring their policies and procedures governing Annual 
Plan submissions into compliance with the timelines for staggered HUD 
review.

VI. Discussion of Public Comments Regarding the Proposed Changes to the 
PHAS

    Comment: Questions regarding effective date of deregulatory 
changes. Two commenters posed questions regarding the effective date of 
the deregulatory changes being made by HUD. One of the commenters asked 
if small PHAs would still be required to electronically submit the 
currently required PHAS reporting data for Fiscal Year 2002 should the 
final rule become effective by January 1, 2003.
    HUD response. The deregulatory changes made by this final rule will 
become effective on July 24, 2003. The final rule continues to provide 
for biennial PHAS assessments for small PHAs. To facilitate compliance 
with biennial PHAS assessments, PHAs with fiscal years ending in the 
first four quarters following the effective date of this final rule 
will not be evaluated under PHAS for that fiscal year.

VII. Discussion of Public Comments Regarding the Proposed Changes to 
SEMAP

    Comment: HUD should not exempt non-audit PHAs from SEMAP. One 
commenter objected to the proposed exemption from SEMAP assessment and 
scoring of small PHAs not subject to the requirements of the Single 
Audit Act. The commenter objected that the proposed rule would not 
provide any alternative oversight mechanism for assessing whether 
exempt PHAs are complying with federal law in administering their 
voucher programs. The commenter also objected to the number of PHAs 
that would be exempt from SEMAP, writing that approximately one-third 
of all PHAs may be exempt from management oversight as a result of the 
proposed rule. Further, the commenter wrote that if the dollar 
threshold for federal expenditures subject to the Single Audit Act is 
ever raised, even more PHAs might be exempt from SEMAP.
    The commenter wrote that if HUD is concerned about the unfair 
impacts of using a fewer number of indicators to conduct SEMAP 
assessments for non-audit PHAs, there are two alternative solutions 
that are far less drastic than exempting these PHAs altogether from 
federal oversight. The first alternative is to allow these small PHAs 
to self-certify their compliance with the seven SEMAP indicators that 
are independently verified for other PHAs. The second alternative is to 
alter the percentage threshold for designation as troubled for these 
small PHAs. The commenter wrote that either of these alternatives, 
combined with HUD's other proposed changes to SEMAP, would reduce the 
burden on small PHAs and HUD staff, while retaining some federal 
oversight of program integrity and accountability, which is the purpose 
of SEMAP.
    HUD response. Upon reconsideration, HUD agrees with the concerns 
raised by the commenter and has revised the proposed rule accordingly. 
Small, non-audit PHAs will continue to be subject to SEMAP assessment 
and scoring, in accordance with the current SEMAP regulations. Those 
regulations at Sec.  985.3 provide that non-audit PHAs are exempt from 
assessment under seven of the SEMAP indicators (indicators (a) through 
(g)) for which the annual independent audit report is a HUD 
verification method. However, non-audit PHAs must still complete the 
SEMAP certification for these indicators, and performance under the 
indicators is subject to HUD confirmatory review.
    Comment: HUD should consider making SEMAP scores advisory 
altogether. One commenter made this recommendation based on the 
perceived deficiencies with the PIC electronic reporting system. The 
commenter wrote that PIC does not accept records properly due to a 
system failure, that it is difficult to clearly identify on PIC which 
PHA records are being counted towards the PHA's final SEMAP score,

[[Page 37670]]

and that the final SEMAP indicators report is inaccurate.
    HUD response. HUD has not revised the rule in response to this 
comment. Adoption of the commenter's suggestion would restrict HUD's 
ability to require that troubled PHAs undertake remedial action to 
correct identified management deficiencies, thereby negating one of the 
purposes of SEMAP assessment. The final rule continues to provide for 
biennial SEMAP assessments for small PHAs. To facilitate compliance 
with biennial SEMAP assessments, PHAs with fiscal years ending in the 
first four quarters following the effective date of this final rule 
will not be evaluated under SEMAP for that fiscal year.
    Comment: HUD should increase the Housing Choice Voucher Program 
administrative fee or provide a base level of funding for small PHAs. 
One commenter made this recommendation. The commenter wrote that this 
change is necessary to allow small PHAs to hire and retain adequate 
qualified staff, and that this would allow small PHAs to submit the 
required SEMAP certification in a timely manner.
    HUD response. The suggestion made by the commenter is outside the 
scope of this rulemaking, which does not concern funding issues. 
Accordingly, HUD has not revised the proposed rule in response to this 
comment.
    Comment: Late submission of SEMAP certification should not result 
in an automatic designation of ``troubled.'' One commenter wrote that 
SEMAP does not presently establish penalties for late submittal of the 
required SEMAP certification, except to provide that the PHA will be 
designated as ``troubled.'' The commenter wrote that many small PHAs 
have difficulty complying with this deadline due to limited staffing, 
and that the automatic designation of troubled is unduly harsh. As an 
alternative, the commenter suggested that failure of a PHA to submit 
its SEMAP certification should result in a reduction of one point for 
each day the submittal is late.
    HUD response. The change suggested by the commenter is outside the 
scope of the August 14, 2002, proposed rule and, therefore, HUD has not 
revised the rule in response to this comment.

VIII. 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 Sec. Sec.  902.9, 
903.5, 903.11, and 903.12 of this final 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. 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.

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled 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 economically 
significant, as provided in section 3(f)(1) of the Order). Any changes 
made to the rule subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the 
Regulations Division, Room 10276, Office of General Counsel, 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 final 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 final 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 
was made at the proposed rule stage 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. 4332). The Finding remains 
applicable to this final rule and 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 final 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 final 
rule is concerned with small PHAs with less than 250 public housing or 
leased housing units, the amendments made by the rule are deregulatory 
in nature. Specifically, the final rule eliminates, simplifies, and 
streamlines regulatory requirements for these small PHAs regarding the 
PHA Annual Plan process and assessments conducted under the PHAS and 
SEMAP. Further, the deregulatory amendments do 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.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance Numbers for the programs 
affected by this final rule are 14.850 (for the Public Housing Program) 
and 14.871 (for the Housing Choice Voucher Program).

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

[[Page 37671]]

subsidies, Reporting and recordkeeping requirements.

0
Accordingly, HUD amends 24 CFR parts 902, 903 and 985 as follows:

PART 902--PUBLIC HOUSING ASSESSMENT SYSTEM

0
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).


0
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 
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.

0
3. Revise the introductory paragraph 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:
* * * * *

0
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

0
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).


0
6. Revise 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) of this chapter) under section 6(j)(2) of the 1937 
Act, the requirements for streamlined Annual Plans are described in 
Sec.  903.12.
* * * * *

0
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) of this chapter) 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 
its 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). If the PHA wishes to use the project-based 
voucher program, the streamlined Annual Plan of the small PHA must also 
include a statement of the projected number of project-based units and 
general locations and how project basing would be consistent with its 
PHA Plan. 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:
    (1) The information required by Sec.  903.7(g) and (o) and, if 
applicable, Sec.  903.7(b)(2) with respect to site-based waiting lists 
and Sec.  903.7(k)(1)(i) with respect to homeownership programs under 
section 8(y) of the 1937 Act;
    (2) If the PHA wishes to use the project-based voucher program, a 
statement of the projected number of project-based units and general 
locations and how project basing would be consistent with its PHA Plan; 
and
    (3) A certification from the PHA that 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 
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.

0
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, approves, 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)

0
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).

0
11. 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) Biennial review for small PHAs. HUD shall assess and score the 
performance of a PHA with less than

[[Page 37672]]

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.
* * * * *

0
12. 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 needs of the PHA and the actions required to address the 
program deficiencies.
* * * * *

    Dated: June 16, 2003.
Michael M. Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 03-15815 Filed 6-23-03; 8:45 am]
BILLING CODE 4210-33-P