[Federal Register Volume 79, Number 127 (Wednesday, July 2, 2014)]
[Notices]
[Pages 37766-37767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15586]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5747-N-02]


Public Housing Assessment System (PHAS) Capital Fund Interim 
Scoring Notice: Reinstitution of Five Points for Occupancy Sub-
Indicator and Request for Comment

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

ACTION: Notice.

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SUMMARY: This notice makes final a prior notice reinstating, 
temporarily, the award of 5 points for the occupancy sub-indicator of 
the Capital Fund Program Indicator to all PHAs for the PHAS Capital 
Fund Program Indicator. This award of points is provided as regulatory 
relief from a non-statutory element of PHAS and intended to help lessen 
the impact of decreases in funding in recent appropriations acts. 
Adding automatic points for the occupancy sub-indicator will allow PHAs 
to focus on the statutory criteria for assessing performance under the 
Capital Fund Indicator, which is timely obligation of the Capital Funds 
and will in no way limit HUD's oversight and monitoring of PHAs. This 
notice, in order to ensure there is no confusion on this point, is 
explicit about the fact that the remainder of the Capital Fund Scoring 
Notice of February 23, 2011 remains in effect and unchanged by this 
notice, and if the PHA receives 0 points for the timeliness of 
obligation subindicator, it is not eligible for points for the 
occupancy subindicator.

DATES: Effective Date: July 2, 2014.
    Applicability Dates: This notice applies to PHAs with fiscal years 
ending March 31, 2014, June 30, 2014, September 30, 2014, December 31, 
2014, March 31, 2015, June 30 2015, September 30, 2015, and December 
31, 2015.

FOR FURTHER INFORMATION CONTACT: Claudia J. Yarus, Real Estate 
Assessment Center (REAC), Office of Public and Indian Housing, 
Department of Housing and Urban Development, 550 12th Street SW., Suite 
100, Washington, DC 20410, telephone 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 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. Background

    On December 16, 2013, HUD published a notice proposing for public 
comment its intent to reinstitute, temporarily, the award of 5 points 
for the occupancy sub-indicator of the Capital Fund Program Indicator 
to all PHAs for the PHAS Capital Fund Program Indicator (78 FR 76160). 
This final notice follows that proposed notice.

II. The Public Comments

    The public comment period ended on January 15, 2014. By the end of 
the public comment period, HUD received 12 public submissions on a 
variety of issues. While all commenters except for one agreed with the 
result of the notice, only one stated unqualified agreement; the other 
supportive commenters raised issues notwithstanding their overall 
agreement. A summary of the significant issues raised and HUD's 
response follows.
    Issue: Six commenters agreed with the notice but stated that the 
change should be implemented permanently. Some of these commenters 
stated that, absent this relief, the 40 percent reduction in capital 
funding over the years combined with the elevated standards imposed by 
UPCS, would increase the number of troubled PHAs due to uncontrollable 
circumstances. A commenter stated that given the current financial 
climate, especially in rural areas, the award of five points will make 
a definite difference. Another commenter stated that it is important to 
keep up with the area private housing market and maintain the good will 
of residents.
    Response: HUD has determined at this time to not make this a 
permanent change in the scoring. The purpose of awarding PHAs the full 
five points for the Capital Fund occupancy sub-indicator automatically 
for a two year period allows PHAs to focus on the statutory criteria of 
assessing performance under the Capital Fund Indicator which is the 
timely obligation of Capital Funds. HUD is providing this relief to 
help lessen the impact of some of the automatic across-the-board 
funding cuts on PHAs. Even in times of difficult funding, however, HUD 
believes PHAs must maximize occupancy to the extent possible.
    Issue: Three commenters agreed with the notice but requested that 
the fiscal years covered by the notice be increased. One commenter 
stated that the notice should be retroactive to the previous fiscal 
year. One commenter stated that the notice should include at least 
fiscal years ending December 31, 2013, and possibly September 30, 2013,

[[Page 37767]]

out of fairness because of the negative budget impacts of prior 
Continuing Resolutions and sequestration, which resulted in a full year 
of reduced allocations, which in turn reduced the commenter's ability 
to adequately address vacancies during the entire period.
    One commenter stated that the notice should be applied to fiscal 
year 2013 because of the effect of sequestration cuts, which forced 
them to cut maintenance staff and increased unit turn-around time, and 
that if the commenter had known that HUD would issue the notice, it 
would have waited until 2014 to institute certain policy changes which, 
although good for the future, increased its short-term vacancy rate. 
The commenter stated that ``We had operating reserves recaptured in 
2012 and in 2013 we were only funded at 82 percent. We had to reduce 
our maintenance staff due to the sequestration and budget cuts. At the 
same time our units are older and require a longer `make ready' time 
frame. We have more vacant units than we have ever had. We have 78 
applications on our waiting list and 22 vacant units. Our maximum unit 
turn-around is 4 units a week. Two policy changes contributed to our 
having a much higher vacancy than usual. First on 7/1/13 we implemented 
a `Smoke-Free' policy in our elderly high-rise and some family units 
and we allowed elderly residents to transfer to non-Smoke-Free units. 
We also implemented a Prompt Rent Pay Policy in 2013, whereby residents 
that are late paying rent more than 3 times in 12 months, are sent an 
eviction notice. This caused several evictions in 2013.''
    Response: HUD has determined at this time to neither increase the 
number of fiscal year end dates nor to change the fiscal year end dates 
for which all PHAs will be awarded five points in the Capital Fund 
occupancy sub-indicator assessment. HUD declines to make an adjustment 
in to the applicability date section of the notice because of the 
spending decisions of particular PHAs in prior fiscal years even given 
program-wide budget shortfalls. It is the decision of each PHA, based 
on the funding available in any given year, how to best serve the 
families in their communities and operate their housing agency during 
that year, including how best to allocate their funding between the 
most important capital needs and other programs given the recent 
funding environment. Going forward, this notice will provide relief to 
PHAs for two full fiscal years.
    Issue: Two commenters stated that, while the notice was 
``appreciated'' and ``a welcome and needed form of regulatory relief,'' 
the occupancy sub-indicator under the Capital Fund Indicator should be 
permanently removed from the PHAS scoring regulations. One commenter 
stated that housing agencies are already scored in occupancy under the 
Management Indicator, and the occupancy sub-indicator under the Capital 
Fund Indicator deters housing agencies from having vacant units 
necessary to perform construction work to preserve their public housing 
stock. The other commenter stated that ``as the occupancy is already 
applied in the Management Indicator,'' this subindicator is a double 
penalty.
    Response: Removal of the Capital Fund occupancy sub-indicator from 
PHAS is outside the scope of this notice. This notice is limited to the 
temporary award to PHAs of the full five points for the Capital Fund 
occupancy sub-indicator for PHA fiscal years ending March 31, 2014, 
through and including December 31, 2015. Removal of the occupancy sub-
indicator would require a regulatory revision of 24 CFR 902.50(c).
    HUD remains concerned about the time dwelling units are in 
modernization status. The scoring of the Capital Fund occupancy sub-
indicator allows up to 4 percent of a PHA's dwelling units to be vacant 
at any one time for non-dwelling uses and modernization for the PHA to 
receive the full 5 points and up to 7 percent to receive partial 
points. To achieve a higher occupancy rate, which in turn results in a 
higher Capital Fund occupancy score, HUD encourages PHAs to continue 
ongoing proactive capital projects, to strategize and stage 
modernization projects minimizing the number of off-line units, as well 
as the time they are off-line, and, because not all modernization 
requires a family to vacate, to consider performing modernization work 
in occupied units. With the Capital Fund occupancy measure based on 
data the PHA enters in the Public and Indian Housing Information Center 
(PIC) as of the last day of the PHA's fiscal year, HUD believes PHAs 
can effectively plan modernization projects early each fiscal year as 
preparation for the calculation of the occupancy percentage that will 
be performed at the end of the PHA's fiscal year.
    Issue: One commenter opposed the notice, stating that 
``reinstatement of this scoring sub indicator is duplicative and 
unfair, and therefore should not occur. PHAs are already rated on 
occupancy as part of the scoring under management. It makes no sense to 
score twice on exactly the same criteria, especially since the outcomes 
are often out of control of the PHA. Further, occupancy rates are in no 
way linked to the capital fund. The Capital Fund is currently scored 
based on timely obligation of funds and completion of work. This should 
remain in place as these are the only factors of any relevance to the 
Capital Fund.''
    Response: It appears this commenter misinterpreted the notice as 
reinstating the Capital Fund subindicator for occupancy. This notice 
does not reinstate this subindicator, which is established by 
regulation at 24 CFR 902.50(c). This notice grants relief to scores 
under this subindicator. PHAs are reminded that the remainder of the 
Capital Fund Scoring Notice of February 23, 2011 remains in effect and 
unchanged by this notice, and if the PHA receives 0 points for the 
timeliness of obligation subindicator, it is not eligible for points 
for the occupancy subindicator (see 76 FR 10054).

III. Action

    For the foregoing reasons this notice makes final the proposed 
notice issued on December 16, 2013. Accordingly, this notice advises 
that HUD is awarding an automatic 5 points for the Capital Fund 
occupancy sub-indicator for fiscal years ending March 31, 2014, June 
30, 2014, September 30, 2014, December 31, 2014, March 31, 2015, June 
30, 2015, September 30, 2015, and December 31, 2015.

    Dated: June 26, 2014.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 2014-15586 Filed 7-1-14; 8:45 am]
BILLING CODE 4210-67-P