[Federal Register Volume 75, Number 7 (Tuesday, January 12, 2010)]
[Notices]
[Pages 1632-1634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-267]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5322-N-01]


Public Housing Assessment System (PHAS): Asset Management 
Transition Year 2 Information

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

ACTION: Notice.

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SUMMARY: This notice provides new information related to scoring and 
submission requirements for public housing agencies (PHAs) under the 
Public Housing Assessment System (PHAS) for PHA fiscal years ending 
June 30, 2009, September 30, 2009, December 31, 2009, and March 31, 
2010. These fiscal years coincide with the second year of project-based 
budgeting and accounting under asset management, also known as 
``Transition Year 2.''

FOR FURTHER INFORMATION CONTACT: The Office of Public and Indian 
Housing, Real Estate Assessment Center (REAC), Attention: Wanda Funk, 
Department of Housing and Urban Development, 550 12th Street, SW., 
Suite 100, Washington, DC 20410; telephone number (REAC Technical 
Assistance Center) 888-245-4860 (this is a toll-free number). Persons 
with hearing or speech impairments may access this number through TTY 
by calling the toll-free Federal Information Relay Service at 800-877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background

A. Background on PHAS

    PHAS was established by a final rule published on September 1, 1998 
(63 FR 46596). Prior to 1998, PHAs were evaluated by HUD under the 
Public Housing Management Assessment Program (PHMAP), the regulations 
for which are found at 24 CFR part 901. PHAS expanded assessment of a 
PHA to four key areas of a PHA's operations: (1) The physical condition 
of the PHA's properties; (2) the PHA's financial condition; (3) the 
PHA's management operations submitted as a self-certification; and (4) 
the resident service and satisfaction assessment (through a resident 
survey).
    Under the current PHAS, and on the basis of these four indicators, 
a PHA receives a composite score that represents a single score for a 
PHA's entire operation and a corresponding performance designation. 
PHAs that are designated high performers receive public recognition and 
relief from specific HUD requirements. PHAs that are designated 
standard and

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substandard performers shall be required to take corrective action to 
remedy identified deficiencies. PHAs that are designated troubled 
performers are subject to remedial action.
    By final rule published on January 11, 2000 (65 FR 1712), HUD 
amended the PHAS regulations and implemented certain statutory changes 
resulting from enactment of the Quality Housing and Work Responsibility 
Act of 1998 (Pub. L. 105-276, October 21, 1998).

B. Public Housing Operating Fund Program

    The regulations governing the Public Housing Operating Fund program 
are of key relevance to the proper operation of PHAs and, consequently, 
to PHAS. Operating funds are made available to a PHA for the operation 
and management of public housing, and therefore the regulations 
applicable to a PHA's operation and management of public housing must 
be considered in any changes proposed to PHAS. The regulations for the 
Public Housing Operating Fund Program are found at 24 CFR part 990, 
were published on September 19, 2005 (70 FR 54983), followed by a 
correction published on October 24, 2005 (70 FR 61366), and became 
effective on November 18, 2005.
    Subpart H of the part 990 regulations (Sec. Sec.  990.255 to 
990.290), as revised by the September 2005 rule, establishes the 
requirements regarding asset management. Under Sec.  990.260(a), PHAs 
that own and operate 250 or more dwelling rental units must operate 
using an asset management model consistent with the subpart H 
regulations. PHAs with fewer than 250 dwelling rental units may elect 
to transition to asset management, but are not required to do so. In 
addition, Sec.  223 of Title II of Division A of the 2010 Consolidated 
Appropriations Act, Pub. L. 111-117 (Approved December 16, 2009), 
states that PHAs that own and operate 400 or fewer public housing units 
may elect to be exempt from any asset management requirement for the 
remainder of Fiscal Year (FY) 2010, with the exception of PHAs that are 
seeking a discontinuance of a reduction of operating subsidy, i.e., a 
stop-loss. This provision may remain in effect for future years, 
depending on the language in that year's appropriations act.
    PHAs with more than 400 public housing units in CY 2009 and for the 
remainder of FY 2010, PHAs with 250 or more public housing units 
thereafter, and PHAs that elect to transition to asset management are 
required to implement project-based management, project-based 
budgeting, and project-based accounting. All project-based components 
are defined in the regulations at 24 CFR part 990, subpart H, and are 
essential components of asset management.

C. PHAS Scoring During Transition Year 1

    On August 21, 2008, HUD published Federal Register notice FR-5227-
N-01, Public Housing Assessment System (PHAS): Asset Management 
Transition Year Information and Uniform Financial Reporting Standards 
(UFRS) Information (73 FR 49588). In that notice, HUD indicated that, 
for PHAs with fiscal years ending June 30, 2008, through March 31, 
2009, HUD would not issue a new overall PHAS score. Further, PHAs were 
not required to submit their management operations information and were 
not subject to resident satisfaction surveys (other than PHAs with 
fiscal years ending June 30, 2008, for whom the survey results were 
informational only). PHAs still were required to submit their annual 
financial statements (not scored) and were subject to the same physical 
inspection frequencies, the scores from which also were for information 
purposes only.

II. PHAS Scoring During Transition Year 2

    Transition Year 2 includes those PHAs with fiscal years ending June 
30, 2009, September 30, 2009, December 31, 2009, and March 31, 2010. 
This notice also applies to Moving-to-Work PHAs that are not 
specifically exempted from a PHAS assessment in their grant agreements.
    Under the current PHAS rule, small PHAs (fewer than 250 public 
housing units) generally are assessed every other year. During 
Transition Year 2, small PHAs will be assessed pursuant to 24 CFR 
902.9. All other PHAs will be issued a new overall PHAS score under the 
current PHAS rule.
    The following are specific instructions for submissions and 
scoring:
    Physical Condition Inspections. Physical condition inspections will 
be conducted for PHAs during Transition Year 2 in accordance with 
existing protocols. Physical condition inspection scores for projects 
on both the 100-point scale and the 30-point scale will be available in 
Secure Systems, through the Integrated Assessment Subsystem (NASS). HUD 
also will give inspected projects credit for the physical condition and 
neighborhood environment factor. The performance incentive for PHAs 
that score 24 points or more on the 30-point scale that provides for 
physical condition inspections every other year will apply after the 
adjustment for the physical condition and neighborhood environment 
factor. Physical condition inspections of projects will be conducted on 
the same schedule as past inspections, and conducted, if applicable, in 
the quarter prior to a PHA's fiscal year end. Because of scheduling 
logistics, HUD may need to have physical condition inspections 
conducted sooner than one year from the last physical condition 
inspection. However, no physical condition inspections for the purposes 
of PHAS scoring will occur any sooner than 6 months from the last 
physical condition inspection for PHAS scoring, but HUD is not 
prevented from conducting a physical condition inspection of projects 
for purposes other than PHAS scoring. PHAs will continue to be able to 
request a technical review or database adjustment for their physical 
condition inspections during Transition Year 2, in accordance with the 
current PHAS regulations.
    Financial Condition Indicator. PHAs will be required to submit 
their unaudited financial condition information and audited financial 
condition information, if applicable, in accordance with 24 CFR part 5, 
subpart H, and 24 CFR part 902, subpart C. The financial condition then 
will be assessed pursuant to the current PHAS rule.
    Management Operations Indicator. PHAs will be required to submit 
their management operations certification, pursuant to 24 CFR 902, 
subpart D. Small PHAs that are not being assessed in Transition Year 2 
(see above) are not required to submit a management operations 
certification.
    PHAs that are converting to asset management and for which the 
submission of the current management operations certification would 
impose an administrative hardship should request a waiver for their 
management operations certification, pursuant to 24 CFR 5.110, within 
30 days from the date of this notice. Upon a determination of good 
cause, HUD may waive the requirement for a PHA to submit its management 
operations certification. Please send all waiver requests to your local 
field office pursuant to PIH Notice 2009-41.
    If a PHA's waiver request is approved, the most recent management 
operations score of record will be carried over to the fiscal year 
being assessed. If a PHA's waiver request is not approved, it shall 
have 60 days from the date of its notification of denial to submit its 
management operations certification.

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    For PHAs with fiscal years ending June 30, 2009, or September 30, 
2009, their management operations certification is due 2 months after 
the date of this notice.
    Resident Assessment Indicator. HUD will not administer the resident 
service and satisfaction survey during Transition Year 2. A PHA has a 
choice regarding its resident service and satisfaction assessment 
score:
    (1) The most recent resident service and satisfaction assessment 
score will be carried over for PHAs with fiscal years ending June 30, 
2009, September 30, 2009, December 31, 2009, and March 31, 2010; or
    (2) If a PHA believes it would have received a higher resident 
service and satisfaction assessment score if a new resident survey had 
been conducted, it may appeal its resident service and satisfaction 
assessment score pursuant to 24 CFR 902.69 and must include the PHA's 
supporting documentation and reasons for the appeal. Please send all 
appeal requests to the Deputy Assistant Secretary, Real Estate 
Assessment Center, at the following address:

U.S. Department of Housing and Urban Development, Office of Public and 
Indian Housing, Attention: Deputy Assistant Secretary, Departmental 
Real Estate Assessment Center, 550 12th Street, SW., Suite 100, 
Washington, DC 20410.

    HUD will determine if an adjustment is warranted. All other aspects 
of the current PHAS rule will remain in effect during Transition Year 
2.

III. Environmental Review

    This notice provides operating instructions and procedures in 
connection with activities under a Federal Register document that has 
previously been subject to a required environmental review. 
Accordingly, under 24 CFR 50.19(c)(4), this notice is categorically 
excluded from environmental review under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.).

    Dated: January 4, 2010.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 2010-267 Filed 1-11-10; 8:45 am]
BILLING CODE 4210-67-P