[Federal Register Volume 64, Number 92 (Thursday, May 13, 1999)]
[Notices]
[Pages 26160-26163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11911]
[[Page 26159]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
Public Housing Assessment System (PHAS) Information About PHAS Scoring:
Introduction; Notice
Federal Register / Vol. 64, No. 92 / Thursday, May 13, 1999 /
Notices
[[Page 26160]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4509-N-01]
Public Housing Assessment System (PHAS) Information About PHAS
Scoring: Introduction
AGENCY: Office of the Director of the Real Estate Assessment Center,
HUD.
ACTION: Notice.
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SUMMARY: HUD's Public Housing Assessment System (PHAS), established by
final rule published on September 1, 1998, provides for a new system
for the assessment of America's public housing. Under the PHAS, HUD
evaluates a public housing agency (PHA) based on four key indicators:
(1) The physical condition of the PHA's properties; (2) the PHA's
financial condition; (3) the PHA's management operations; and (4) the
resident's assessment (through a resident survey) of the PHA's
performance. This notice, together with five other notices published in
today's Federal Register, provide additional information about the PHAS
scoring process under each of the four indicators and other relevant
information about PHAS scoring.
FOR FURTHER INFORMATION CONTACT: For further information contact, Wanda
Funk, Real Estate Assessment Center, Department of Housing and Urban
Development, 1280 Maryland Avenue, SW, Suite 800, Washington, DC 20024;
telephone Customer Service Center at 1-888-245-4860 (this is a toll-
free number). Persons with hearing or speech impairments may access
that number via TTY by calling the Federal Information Relay Service at
1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background--The Public Housing Assessment System (PHAS)
A. Overview of the PHAS
On September 1, 1998 (63 FR 46596), HUD published a final rule,
codified at 24 CFR part 902, that established a new system for the
assessment of America's public housing. The PHAS is designed to enhance
public trust by creating a comprehensive oversight tool that
effectively and fairly measures a PHA based on standards that are
objective and uniform. The PHAS becomes effective for all PHAs with
fiscal years ending on and after September 30, 1999. HUD's Real Estate
Assessment Center (REAC) is charged with the responsibility for
assessing and scoring the performance of PHAs under the PHAS.
This notice provides an overview of the PHAS. The information
provided in this notice is based largely on the preamble to the PHAS
final rule published on September 1, 1998. Although the Quality Housing
and Work Responsibility Act of 1998 (title V of the FY 1999 HUD
Appropriations Act, Pub. L. 105-276, 112 Stat. 2461, approved October
21, 1998) (QHWRA) makes changes to the U.S. Housing Act of 1937 (1937
Act) that affect the PHAS, these changes will be the subject of future
proposed rulemaking.
Under the PHAS, HUD examines four essential areas of public housing
operations to determine a PHA's performance in delivering HUD programs
and services. These areas of operations (or indicators of a PHA's
performance) are:
(1) The physical condition of a PHA's public housing properties;
(2) The PHA's financial condition;
(3) The PHA's management operations; and
(4) The resident's satisfaction (through a resident survey) with
the PHA's services.
1. PHAS Indicator #1--Physical Condition of PHA Properties
The Physical Condition Indicator, PHAS Indicator #1, provides for
the assessment of the physical condition of the PHA's properties. A PHA
must maintain its public housing in a manner that meets HUD's Uniform
Physical Condition Standards, established in a September 1, 1998 final
rule of the same name (63 FR 46566) and incorporated in the PHAS final
rule. These standards are intended to ensure that public housing (as
well as other HUD assisted housing) are maintained in a condition that
is decent, safe, sanitary and in good repair. The standards address six
major areas of the housing to be evaluated:
(1) Site;
(2) Building exterior;
(3) Building systems;
(4) Dwelling units;
(5) Common areas; and
(6) Health and safety.
In establishing uniform physical condition standards, HUD believed
that housing assisted under its programs should be subject to uniform
standards, and that the source of the HUD subsidy should not determine
the standards to which the housing is subject. Additionally, HUD
believes that the physical inspection procedures by which the standards
will be assessed should be uniform and consistent. To provide for
uniformity in inspection, HUD developed and has implemented a new
computer-driven physical inspection protocol. The computer program
guides an inspector through the inspection prompting the necessary
observations to be made regarding the condition of the property. The
computer program is based on substantially objective observations,
which significantly minimize the possibility for subjective
interpretation of the physical condition standards. The results of the
inspection are electronically transferred to HUD.
To ensure the independence of the physical inspection, HUD has
entered into contracts with private inspection firms to perform the
inspection. All inspectors are trained under HUD auspices in the use of
the inspection protocol. Upon becoming certified, inspectors obtain
their PHA inspection assignment from the REAC. The inspector downloads
the property profile information on the selected PHA's development via
the internet from the HUD Home page. The inspector then completes the
inspection using a hand-held computer that uses the HUD software. After
the inspection is completed, the inspector will upload the inspection
results to HUD's central information data repository (CIDR) where it
will be verified for accuracy and then scored.
Total Points for PHAS Indicator #1. The total point value of the
Physical Condition Indicator is 30 of the 100 points available under
the PHAS. In order to receive a passing score on the Physical Condition
Indicator, a PHA must receive a score of at least 60 percent of the 30
points available.
2. PHAS Indicator #2--Financial Condition
The Financial Condition Indicator, PHAS Indicator #2, provides for
the assessment of the PHA's financial condition. Specifically, this
indicator measures whether a PHA has sufficient financial resources and
is managing those financial resources effectively to support the
provision of decent, safe, and sanitary housing to its residents. A
PHA's financial condition is measured on the basis of uniform financial
reporting standards.
In a final rule published on September 1, 1998 (63 FR 46582), HUD
issued uniform financial reporting standards for HUD housing programs.
This final rule requires PHAs and owners of multifamily properties to
prepare the financial information that these entities already submit to
HUD annually, in accordance with generally accepted accounting
principles (GAAP) and to submit these reports electronically. While the
September 1, 1998 final rule titled ``Uniform
[[Page 26161]]
Financial Reporting Standards for HUD Housing Programs'' applies to
PHAs, the September 1, 1998 PHAS final rule incorporates these
standards and requirements.
The key indicators used to determine a PHA's financial condition
include:
(1) Current Ratio--current assets divided by current liabilities;
(2) Number of Months Expendable Fund Balance--number of months a
PHA can operate on the Expendable Fund Balance without additional
resources; Expendable Fund Balance is the portion of the fund balance
representing expendable available financial resources; unreserved and
undesignated fund balance;
(3) Days Receivable Outstanding--average number of days tenant
receivables are outstanding;
(4) Vacancy Loss--loss of potential rent due to vacancy;
(5) Expense Management/Energy Consumption--expense per unit for key
expenses, including energy consumption, and other expenses such as
utilities, maintenance, security; and
(6) Net Income or Loss divided by the Expendable Fund Balance--
measures how the year's operations have affected the PHA's viability.
Additional components may be used to identify circumstances in
which there exists the possibility of higher risk of waste, fraud and
abuse. These components will be used to detect fraud and will be used
to generate ``flags'' that will signal field staff, Enforcement Center
staff, or fraud investigators to take appropriate action. These
components will primarily relate to financial management, but may also
be used to provide a PHA with benchmarking information to allow the PHA
to measure its own performance against its peers. For example, HUD will
look to the Audit Opinion to provide an additional basis for accepting
or adjusting financial indicator scores.
Total Points for PHAS Indicator #2. The total point value of the
Financial Condition Indicator is 30 of the 100 points available under
the PHAS. In order to receive a passing score on the Financial
Condition Indicator, a PHA must receive a score of at least 60 percent
of the 30 points available.
3. PHAS Indicator #3--Management Operations.
The Management Operations Indicator, PHAS Indicator #3, provides
for the assessment of a PHA's management operations. This indicator
basically reflects the requirements of the Public Housing Management
Assessment Program (PHMAP), the predecessor to the PHAS.
The PHAS preserves the statutory indicators found in section 6(j)
of the U.S. Housing Act of 1937 Act (1937 Act), with some minor
reorganization (from that in the PHMAP) which is designed to reflect
their integration into the broader PHAS assessment and to establish
their new point values within the PHAS. The statutory indicators are:
(1) Vacancy rate;
(2) Unexpended Section 14 (of the 1937 Act) funds; 1
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\1\ Note that although unexpended section 14 funds was a
statutory indicator at the time of issuance of the PHAS final rule,
section 522 of QHWRA repeals section 14 of the 1937 Act. QHWRA
replaces the unexpended section 14 funds indicator with amount and
percentage of funds provided to the PHA from the Capital Fund which
remains unobligated by the PHA after 3 years. HUD is currently
undergoing negotiated rulemaking to develop a proposed rule for the
Capital Fund. The change in indicators will be addressed by the
proposed rule, to be published later, that will make changes to the
PHAS.
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(3) Rents uncollected;
(4) Energy consumption; 2
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\2\ The QHWRA replaces energy consumption with utility
consumption. Again this change will be made in the upcoming PHAS
proposed rule.
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(5) Unit turn-around time;
(6) Outstanding work orders; and
(7) Annual inspection of units.
The Management Operations Indicator of the PHAS incorporates the
seven statutory indicators of section 6(j) of the 1937 Act. As is the
case under PHMAP, statutory indicators (1) and (5) are combined under
the new PHAS. The statutory energy consumption indicator is part of
PHAS Indicator #2 (Financial Condition). Under PHMAP, the energy
consumption indicator is part of the financial management indicator.
The energy/utility consumption expenses faced by a PHA on an annual
basis will be part of the PHA's annual financial report to HUD.
With respect to PHMAP non-statutory indicators, the security
indicator remains part of the Management Operations assessment under
the PHAS. The resident services and community building indicator is now
replaced by a separate indicator (PHAS Indicator #4--Resident Service
and Satisfaction). Similarly, the financial condition indicator is now
replaced by a separate indicator (PHAS Indicator #2, Financial
Condition).
The analysis of the individual statutory management indicators will
not deviate significantly from the existing assessment system. Scores
will continue to be based on a PHA's certification to the various
management operations indicators. As under PHMAP, for the Management
Operations Indicator of the PHAS, a PHA will submit certifications as
to its performance under each of the management indicators, and a PHA's
certifications will be subject to independent verification. Appropriate
sanctions for intentional false certification will be imposed,
including civil penalties, suspension or debarment of the signatories.
Total Points for PHAS Indicator #3. The total point value of the
Management Operations Indicator is 30 of the 100 points available under
the PHAS. In order to receive a passing score on the Indicator #3
(Management Operations), a PHA must receive a score of at least 60
percent of the 30 points available.
4. PHAS Indicator #4--Resident Service and Satisfaction.
The Resident Service and Satisfaction Indicator, PHAS Indicator #4,
assesses the level of resident satisfaction with PHA housing and
services. This PHAS Indicator consists of existing PHMAP Indicator #7,
resident services and community building, revised to (1) be consistent
with the framework of the new PHAS, and (2) provide a separate resident
services satisfaction survey. The objective of PHAS Indicator #4 is to
measure the level of resident satisfaction with living conditions at
the PHA's properties.
To achieve an acceptable score under this indicator, a PHA must
obtain a response from a statistically significant sample of public
housing residents. The PHA will be responsible for developing a follow-
up plan to address issues resulting from the survey. The resident
service and satisfaction assessment score will include two components
of the survey process, plus a threshold requirement.
(1) The first component will be the score of the survey results.
The survey content will focus on resident evaluation of overall living
conditions to include topics such as: (i) maintenance and repair (i.e.,
work order response); (ii) communications (i.e. perceived
effectiveness); (iii) safety (i.e., perceived perception of personal
security; (iv) services (i.e., recreation and personal programs); and
(v) neighborhood appearance.
(2) The second component will be a score based on the PHA's level
of implementation and its follow-up or corrective actions based on the
results of the survey.
(3) The third component, the threshold requirement, which is not
scored, is verification that the survey process was managed in a manner
consistent with guidance provided by HUD, or if the survey results are
determined to be altered by the PHA.
[[Page 26162]]
Total Points for PHAS Indicator #4. The total point value of the
Resident Service and Satisfaction Indicator is 10 of the 100 points
available under the PHAS. A PHA will not receive any points if the
survey is not conducted in accordance with HUD prescribed methodology
or if the survey results are determined to be altered by the PHA.
B. PHAS Assessment Periods and Reporting Dates
The September 1, 1998 PHAS final rule provides for the new PHAS to
become effective for PHAs with fiscal years ending September 1999 and
later. Financial reports due for PHAs with fiscal years ending in
September 1999 and later must be prepared on a GAAP basis.
The first scores under PHAS will be issued not later than December
1999 for PHAS with fiscal years ending September 1999. From the date of
the September 1, 1998 PHAS final rule, PHAs are provided one year
before the new PHAS scores are issued. Until September 30, 1999, PHAs
will continue to be scored under the current PHMAP. The implementation
schedule for PHAS reporting by PHAs is described on the following
table:
Real Estate Assessment Center (REAC) Assessment Periods and Reporting Dates
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REAC assessment results Financial Physical Management Resident survey
--------------------------------------------------------------------------------- reporting inspection operations -----------------
Period covered ------------------------------------------------------
Score issued Fiscal Year End Inspection dates Submission due Survey dates \5\
\1\ Due date \2\ \3\ date \4\
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12/1999....................................................... 9-30-99 11-30-99 7/99-9/99 11-30-99 4/99-9/99
03/2000....................................................... 12-31-99 2-28-2000 10/99-12/99 2-28-2000 10/99 12/99
06/2000....................................................... 3-31-2000 5-31-2000 1/2000-3/2000 5-31-2000 1/2000-3/2000
09/2000....................................................... 6-30-2000 8-31-2000 4/2000-6/2000 8-31-2000 4/2000-6/2000
12/2000....................................................... 9-30-2000 11-30-2000 7/2000-9/2000 11-30-2000 7/2000-9/2000
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Notes:
\1\ The period covered for each indicator will be the PHA's entire fiscal year ending on dates shown above. Once the new PHAS is effective, a PHA cannot
change its fiscal year for a period of 3 years.
\2\ PHAs with fiscal years ending 9-30-99 and later must provide GAAP financial reports. These reports must be provided by electronic submission not
later than 60 days after the end of the PHA's FY. Audited GAAP reports (due 9 months after the close of the FY in accordance with the Single Audit Act
and OMB Circular A-133) will be used to update and confirm unaudited financial results. If significant differences are noted between unaudited and
audited results, scoring penalties will apply. For those PHAs that spend less than $300,000 of Federal funds, HUD cannot require or pay for an audit
in accordance with the Single Audit Act. HUD, however, can require and pay for an ``Agreed-Upon Procedures'' report that could be specifically
directed at verifying calculations.
\3\ Physical inspections will be scheduled to approximate the new PHAS calculation dates; i.e. within the final quarter of the PHA's fiscal year.
\4\ The certifications and supporting documentation required for the Management Operations Indicator will be due 60 days after the end of the PHA's
fiscal year.
\5\ Resident surveys will be required to be conducted during the course of a PHA's fiscal year and will be required to be submitted by a PHA at the time
that the PHA submits the certifications required under the Management Operations Indicator.
C. PHAS Advisory Scores
During this one year transition period, the September 1, 1998 final
rule advised that advisory scores for physical condition and financial
management may be issued to provide guidance to PHAs. On December 31,
1998 (63 FR 72319), HUD published a notice that advised of REAC's
intent to issue advisory scores. The notice provided in relevant part
as follows:
The REAC intends to provide every PHA with an advisory score
before the PHA receives its official PHAS score. The REAC, however,
will issue advisory PHAS scores only after it has a complete set of
data for all four indicators. With respect to Indicator #1 (Physical
Condition), the REAC is responsible for assessing the physical
condition of PHA properties and therefore receives this indicator
information firsthand. Information regarding the other indicators is
provided to the REAC by the PHAs (as for example, the PHA annual
financial reports). If the PHA fails to timely submit this
information to the REAC, then issuance of the PHAS advisory score
will be delayed until the REAC receives the necessary information.
(63 FR 72319)
The December 31, 1998 Notice also presented the schedule for providing
advisory scores to PHAs.
D. Scoring Performance Under the PHAS and Consequences of the Score
In order to determine a composite score for each PHA, the four PHAS
Indicators will be individually scored and then combined to present a
composite score that reflects the overall performance of PHAS for a
total of 100 possible points. Again, the 100 points are distributed
among the four PHAS Indicators as follows:
(1) Physical Condition--Maximum 30 Points: The PHA's score is based
on the results of physical inspections of PHA properties performed by
REAC contractors. The results are electronically transmitted to the
REAC.
(2) Financial Condition--Maximum 30 Points: The PHA's score is
based on unaudited generally accepted accounting principles (GAAP)
electronically submitted by the PHA to the REAC. The PHA's submission
is audited by an Independent Public Accountant (IPA), as required under
the Office of Management and Budget Circular A-133, and the audit
results electronically transmitted to the REAC.
(3) Management Operations--Maximum 30 Points: The PHA's score is
based on an electronic certification made by the PHA and verified by an
IPA. This performance indicator uses six of the same indicators as the
current Public Housing Management Assessment Program.
(4) Resident Service and Satisfaction--Maximum 10 Points: The PHA's
score is based, in part, on responses to a resident survey managed by
the PHA and collected by the REAC. The PHA's score is also based on the
PHA's implementation of the resident survey and the PHA's follow-up
actions on survey results. This part of the score is an electronic
certification made by the PHA and verified by an IPA.
On the basis of these four indicators, HUD's REAC calculates a
composite score for each PHA. The PHAS composite score represents a
single score for a PHA's entire operation under the four indicators.
The PHAS composite score will determine whether a PHA is performing
well or is not performing well. The PHAS composite
[[Page 26163]]
score is derived from the scores calculated for each of the four
indicators. The composite PHAS score will be issued by the REAC for
each PHA 60 to 90 calendar days after the end of a PHA's fiscal year.
Adjustments to the PHAS score may be made after a PHA's audit report
for the year being assessed is transmitted to the REAC. If significant
differences (as defined in GAAP guidance materials provided to PHAs)
are noted between the unaudited and audited results, a PHA's PHAS score
will be raised or lowered, as applicable, in accordance with the
audited results.
Based on its overall PHAS score, a PHA will fall into one of three
categories:
High Performer. A PHA that achieves a score of at least 60 percent
of the points available under each of the four PHAS Indicators, and
achieves an overall PHAS score of 90 percent or greater shall be
designated a high performer. A PHA shall not be designated a high
performer if it scores below the threshold established for any
indicator. High performers will be afforded incentives that include
relief from reporting and other requirements.
Standard Performer. A PHA that achieves a total score of less than
90% but not less than 60% shall be designated as a standard performer.
All standard performers must correct reported deficiencies. A standard
performer PHA that receives a score of less than 70% but not less than
60% will be referred to the appropriate HUD area HUB/Program Center and
will be required to submit an improvement plan to correct and eliminate
deficiencies in the PHA's performance. Standard performers that receive
a score over 70% may also be required to submit an improvement plan to
correct or eliminate any deficiency. A PHA that achieves a score of
less than 60 percent of the total points available under PHAS
Indicators #1, #2, or #3 shall not be designated a standard performer,
but shall be designated a troubled performer.
Troubled Performer. A PHA that achieves a total PHAS score of less
than 60 percent, or achieves a score of less than 60 percent of the
total points available under PHAS Indicators #1, #2, or #3, shall be
designated as troubled, and referred to HUD's Troubled Agency Recovery
Center (TARC) for oversight and remedial action. A PHA that does not
correct identified deficiencies within a maximum of two years will be
referred to HUD's Departmental Enforcement Center for further action.
In accordance with section 6(j)(2) of the 1937 Act, a PHA that receives
less than 60 percent of the maximum calculation for the modernization
indicator under the PHAS Management Indicator (Indicator #3) may be
subject to certain sanctions as provided in 24 CFR 902.67.
II. Information About the PHAS Scoring Process
Section I of this notice provided an overview of the new PHAS. More
detailed information about the PHAS is available in the preamble to the
PHAS final rule published on September 1, 1998, and in the PHAS
regulations, codified in 24 CFR part 902. In the preamble to the
September 1, 1998 PHAS final rule, HUD stated that before the PHAS
became fully operational in October 1999, HUD would make available
additional documents, guidance, and assistance about the processes of
the new PHAS (63 FR 46598). HUD's December 31, 1998 notice provided
information about the advisory score process. The notices that follow
this introductory notice are specifically directed to providing further
information about the PHAS scoring process for each of the four
indicators. The notices, published in today's Federal Register, and
that immediately follow this introductory notice are:
Notice of PHAS Physical Condition Scoring
Notice of PHAS Appeals and Technical Review of Physical
Inspection Results
Notice of PHAS Financial Condition Scoring
Notice of Management Operations Scoring
Notice of Resident Service and Satisfaction Scoring
As the notices describing the processes will show, the PHAS is
designed to provide relevant and verifiable measures that directly
relate to PHA performance.
Dated: May 6, 1999.
Barbara L. Burkhalter,
Deputy Director, Real Estate Assessment Center.
[FR Doc. 99-11911 Filed 5-12-99; 8:45 am]
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