[Federal Register Volume 76, Number 36 (Wednesday, February 23, 2011)]
[Notices]
[Pages 10050-10053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2658]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5094-N-05]


Changes to the Public Housing Assessment System (PHAS): 
Management Operations Scoring Notice

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

DATES: Effective Date: March 25, 2011.
    Comment Due Date: April 25, 2011.

ADDRESSES: Interested persons are invited to submit comments on this 
notice to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street, SW., Room 
10276, Washington, DC 20410-0500. Communications must refer to the 
above docket number and title. There are two methods for submitting 
public comments. All submissions must refer to the above docket number 
and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street, SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the

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instructions provided on that site to submit comments electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted through one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-402-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Information Relay 
Service, toll-free, at 800-877-8339. Copies of all comments submitted 
are available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Claudia Yarus, Department of Housing 
and Urban Development, Office of Public and Indian Housing, Real Estate 
Assessment Center (REAC), 550 12th Street, SW., Suite 100, Washington, 
DC 20410 at 202-475-8830 (this is not 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. Additional information is available from the REAC Internet site 
at http://www.hud.gov/offices/reac/.

SUPPLEMENTARY INFORMATION:

I. Purpose of This Notice

    The purpose of this notice is to provide additional information 
about the scoring process for the PHAS management operations indicator. 
The purpose of the management operations indicator is to assess the 
project's and PHA's management operations capabilities. All projects 
will be assessed under the management operations indicator, even if a 
PHA has not converted to asset management.
    This PHAS Management Operations Scoring Notice has been revised to 
reflect research HUD conducted through informal meetings with 
representatives of PHAs, residents, projects, and public housing 
industry groups, and to provide the basis for scoring projects on the 
management operations.

II. Transition to Asset Management and Frequency of Management 
Operations Assessments

    The number of units in a PHA's Low-Rent program and the PHAS 
designation for small PHAs will determine the frequency of management 
operations assessments during and after the transition to asset 
management. PHAs with less than 250 public housing units will receive a 
PHAS assessment, based on its PHAS designation, as follows:
    (1) A small PHA that is a high performer will receive a PHAS 
assessment every 3 years;
    (2) A small PHA that is a standard or substandard performer will 
receive a PHAS assessment every other year; and
    (3) All other small PHAs will receive a PHAS assessment every year, 
including a PHA that is designated as troubled or Capital Fund troubled 
in accordance with Sec.  902.75.
    In baseline year, every PHA will receive an overall PHAS score and 
in all four of the PHAS indicators: physical condition; financial 
condition; management operations; and Capital Fund program. This will 
allow a baseline year for the small deregulated PHAs.

III. Subindicators

    A. Subindicators of the Management Operations Indicator. The three 
subindicators of the management operations indicator are:
     Occupancy;
     Tenant accounts receivable; and
     Accounts payable.
    B. Points for the Management Operations Indicator. This indicator 
assesses the management operations of projects and PHAs. The management 
operations indicator score is based on a maximum of 25 points.
    Subindicator 1, Occupancy. This subindicator measures the 
occupancy for the project's fiscal year, adjusted for allowable 
vacancies pursuant to 24 CFR 990.145.
    A PHA will achieve 16 points if it has an adjusted occupancy rate 
equal to or greater than 98 percent. It will receive 12 points if it 
has an adjusted occupancy rate of less than 98 percent but equal to or 
greater than 96 percent. It will receive 8 points if it has an adjusted 
occupancy rate of less than 96 percent but equal to or greater than 94 
percent. It will receive 4 points if it has an adjusted occupancy rate 
of less than 94 percent but equal to or greater than 92 percent. It 
will receive 1 point if it has an adjusted occupancy rate of less than 
92 percent but equal to or greater than 90 percent. It will receive 0 
points if it has an adjusted occupancy rate of less than 90 percent.

------------------------------------------------------------------------
                        Occupancy value                           Points
------------------------------------------------------------------------
[gteqt]98%.....................................................       16
<98% but [gteqt]96%............................................       12
<96% but [gteqt]94%............................................        8
<94% but [gteqt]92%............................................        4
<92% but [gteqt]90%............................................        1
<90%...........................................................        0
------------------------------------------------------------------------

    Subindicator 2, Tenant accounts receivable. This 
subindicator measures the tenant accounts receivable of a project 
against the tenant charges for the project's fiscal year. Charges 
include rents and other charges to tenants, such as court costs, 
maintenance costs, etc.
    A PHA will receive 5 points if it has a tenant accounts receivable 
ratio of less than 1.5. It will receive 2 points if it has a tenant 
accounts receivable ratio of equal to or greater than 1.5 and less than 
2.5. It will receive zero points if it has a tenant accounts receivable 
ratio of equal to or greater than 2.5.

------------------------------------------------------------------------
                Tenant accounts receivable value                  Points
------------------------------------------------------------------------
<1.5...........................................................        5
[gteqt]1.5 but <2.5............................................        2
[gteqt]2.5.....................................................        0
------------------------------------------------------------------------

    Subindicator 3, Accounts payable. This subindicator 
measures the money that a project owes to vendors at the end of the 
project's fiscal year for products and services purchased on credit 
against total operating expenses.
    A PHA will receive 4 points if it has an accounts payable ratio of 
less than 0.75. It will receive 2 points if it has an accounts payable 
ratio of equal to or greater than 0.75 but less than 1.5. It will 
receive zero points if it has an accounts payable ratio of equal to or 
greater than 1.5.

------------------------------------------------------------------------
                     Accounts payable value                       Points
------------------------------------------------------------------------
<0.75..........................................................        4
[gteqt]0.75 but <1.5...........................................        2
[gteqt]1.5.....................................................        0
------------------------------------------------------------------------

IV. Elements of Scoring

A. Points and Threshold

    The management operations indicator score is based on a maximum of 
25 points. In order to receive a passing score under this indicator, a 
project must achieve at least 15 points or 60 percent of the available 
points available under this indicator.

B. Scoring Elements

    The management operations indicator score provides an assessment of 
a project's management effectiveness. Under the PHAS management 
operations indicator, HUD will calculate a score for each project, as 
well as for the overall management operations of a

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PHA, that reflects weights based on the relative importance of the 
individual management subindicators. The overall management operations 
indicator score for a PHA is a unit-weighted average of the PHA's 
individual project management operations scores. In order to compute 
the score, an individual project management operations score is 
multiplied by the number of units in each project to determine a 
``weighted value.'' The sum of the weighted values is then divided by 
the total number of units in a PHA's portfolio to derive the overall 
PHAS management operations indicator score.
    The computation of the score under this PHAS indicator utilizes 
data obtained from the Financial Data Schedule and requires three main 
calculations for the subindicators, which are:
     Scores are calculated for each subindicator;
     A management operations score is calculated for each 
project; and
     A score is calculated for the overall indicator score, 
which is a unit-weighted average of the individual project management 
operations scores.
    The point values of the subindicators are listed in Table 1.

              Table 1--Management Operations Subindicators
------------------------------------------------------------------------
                                                                  Point
                          Subindicator                            value
------------------------------------------------------------------------
Occupancy......................................................       16
Tenant Accounts Receivable.....................................        5
Accounts Payable...............................................        4
                                                                --------
    Total Points...............................................       25
------------------------------------------------------------------------

C. Example of Score Computations

    The indicator score for each project equals the sum of the 
subindicator scores, as shown in Table 2.

                    Table 2--Example of Project Score
------------------------------------------------------------------------
                          Subindicator                            Points
------------------------------------------------------------------------
Occupancy......................................................       16
Tenant Accounts Receivable.....................................        2
Accounts Payable...............................................        4
                                                                --------
    Total Points...............................................       22
------------------------------------------------------------------------

D. Physical Condition and/or Neighborhood Environment

    The overall management operations score for a project will be 
adjusted upward to the extent that negative conditions are caused by 
situations outside the control of the project. These situations are 
related to the poor physical condition of the project or the overall 
depressed condition of the major census tract in which a project is 
located. The intent of this adjustment is to avoid penalizing projects 
through appropriate application of the adjustment. In addition, the 
overall PHA Management Operations Indicator score will be adjusted 
upward to reflect the individual project adjustments.
    Definitions and application of physical condition and/or 
neighborhood environment factors are:
    (1) A physical condition adjustment applicable to projects at least 
28 years old, based on the unit-weighted average Date of Full 
Availability (DOFA) date.
    (2) A neighborhood environment adjustment applicable to projects in 
census tracts in which at least 40 percent of the families have an 
income below the poverty rate, as documented by the most recent census 
data. If a project is in more than one census tract, the census data 
for the census tract where the majority of units are located shall be 
used. If there is no census tract data available for a project, the 
census data for that project will be based on the county's census data, 
and if county data is not available, then the state census data will be 
used.
     Adjustment for physical condition and/or neighborhood 
environment. HUD will adjust the overall management operations score of 
a project subject to one or both of the physical condition and/or 
neighborhood environment conditions. The adjustments will be made to 
the individual project scores, and then to the overall management 
operations score, so as to reflect the difficulty in managing the 
projects.
    The adjustment for physical condition and/or neighborhood 
environment will be calculated by HUD and applied to all eligible 
projects. The data to determine if a project is eligible for either 
adjustment will be derived from the Public and Indian Housing 
Information Center databases.
    In each instance where the actual management operations score for a 
project is rated below the maximum score of 25 points, one unit-
weighted point each will be added for physical condition and/or 
neighborhood environment, but not to exceed the maximum number of 25 
points available for the management operations indicator for a project. 
Table 3 shows an example of the calculation of physical condition and/
or neighborhood environment points for a hypothetical PHA with four 
projects. The adjustment for physical condition and/or neighborhood 
environment is a unit-weighted average of a PHA's individual project 
physical condition and/or neighborhood environment adjustments.

            Table 3--Calculation of Physical Condition and/or Neighborhood Environment (PCNE) Points
----------------------------------------------------------------------------------------------------------------
                                            Proj. 1           i>2           i>3           i>4       Total  PHA
----------------------------------------------------------------------------------------------------------------
1.............  Units.....................       133            65            89            25           312
2.............  Weight....................        42.6%         20.8%         28.5%          8.0%        100.0%
3.............  Physical Condition Points.         1             1             1             0      ............
4.............  Neighborhood Environment           1             1             0             0      ............
                 Points.
5.............  Total PCNE Points at               2             2             1             0      ............
                 Project Level.
6.............  Weighted Physical                  0.43          0.21          0.29          0.00          0.92
                 Condition Points.
7.............  Weighted Neighborhood              0.43          0.21          0.00          0.00          0.63
                 Environment Points.
8.............  Weighted PCNE Points......         0.85          0.42          0.29          0.00          1.55
----------------------------------------------------------------------------------------------------------------

    This PHA has 312 total units in four projects (see line 1). The 
weight of each project is based on units and is calculated by dividing 
the project units into the total PHA units (see line 2). Project 
1 and project 2 qualify for both points; project 
3 qualifies for only physical condition; and project 
4 does not qualify for any points (see lines 3 through 5). 
Each project contributes its physical condition and/or neighborhood 
environment points to the overall PHA management operations indicator 
score based on its weight. For example, in project 1, the 
weighted physical condition and neighborhood environment point is 0.85 
and is calculated by multiplying the project

[[Page 10053]]

weight of 42.6 percent (line 2) by the physical condition and 
neighborhood environment point of 2 (see line 5). The overall physical 
condition and neighborhood environment adjustment at the PHA level is 
calculated at 1.55 points by adding the individual project weighted 
scores (see line 8 under the Total PHA column).

    Dated: February 1, 2011.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 2011-2658 Filed 2-22-11; 8:45 am]
BILLING CODE 4210-67-P