Public Housing Assessment System (PHAS): Asset Management Transition Year Information and Uniform Financial Reporting Standards (UFRS) Information, 49588-49589 [E8-18751]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 73, Number 163 (Thursday, August 21, 2008)]
[Notices]
[Pages 49588-49589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18751]



Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / 
Notices

[[Page 49588]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5227-N-01]


Public Housing Assessment System (PHAS): Asset Management 
Transition Year Information and Uniform Financial Reporting Standards 
(UFRS) Information

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

ACTION: Notice.

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SUMMARY: This notice provides certain 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, 2008, September 30, 2008, December 31, 2008, and March 31, 
2009. These fiscal years coincide with the first year of project-based 
budgeting and accounting under asset management, also known as the 
``transition year.'' Much of the information contained in this Federal 
Register notice was presented in PIH Notice 2008-18, Information on 
Upcoming Rulemaking Associated with the Public Housing Assessment 
System as a Result of the Conversion to Asset Management, dated March 
27, 2008. That information is reiterated in this notice in order to 
inform the broader public of these actions.
    This notice also provides information related to the current 
Uniform Financial Reporting Standards (UFRS) for PHAs with fiscal years 
ending June 30, 2008, September 30, 2008, December 31, 2008, and March 
31, 2009. This notice provides that HUD, on a one-time basis, will not 
enforce the regulatory 60-day deadline for reporting unaudited 
financial condition information for most PHAs.

FOR FURTHER INFORMATION CONTACT: Contact the Office of Public and 
Indian Housing, Real Estate Assessment Center (REAC), Attention: Wanda 
Funk, 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; telephone REAC Technical 
Assistance Center at 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, a PHA was evaluated by HUD with respect 
only to its management operations. 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 
residents' 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, 
relief from specific HUD requirements, and may qualify for bonus 
funding pursuant to applicable program regulations. PHAs that are 
designated standard and substandard performers may 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, and 
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, 
except for PHAs eligible for a discontinuation of reduction of 
operating subsidy, i.e., ``stop-loss'' agencies (see PIH Notice 2007-16 
dated June 18, 2007 for more information on stop-loss). In addition, 
section 225 of Title II of Division K of the Consolidated 
Appropriations Act, 2008, Public Law 110-161 (approved December 26, 
2007), states that PHAs that own and operate 400 or fewer public 
housing units may elect to be exempt from any asset management 
requirement for Calendar Year (CY) 2008, with the exception of PHAs 
that are seeking a discontinuance of a reduction of operating subsidy, 
i.e., stop-loss.
    PHAs with more than 400 public housing units in CY 2008, 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.

II. Transition Year Changes to the Current PHAS

    The transition year includes those PHAs with fiscal years ending 
June 30, 2008, September 30, 2008, December 31, 2008, and March 31, 
2009. This notice also applies to Moving-to-Work PHAs that are not 
specifically exempted from a PHAS assessment in their grant agreements.

A. Overall PHAS Score

    During the transition year, PHAs will not be issued a new overall 
PHAS score. HUD will not issue any overall PHAS scores under the 
proposed PHAS until a final rule is effective.
    During the transition year, PHAs will not be required to submit 
their management operations information and will not be required to 
submit Resident Assessment Sub-System (RASS) information, including the 
implementation and follow-up plans. However, PHAs will be required to 
submit their unaudited financial condition information and audited 
financial information, if applicable, in accordance with 24 CFR part 5, 
subpart H.
    A troubled PHA and/or Capital Fund Program troubled PHA that 
believes it would no longer be designated as troubled if a new PHAS 
assessment had

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been completed may petition for the removal of troubled designation in 
accordance with 24 CFR 902.69 at any time after its fiscal year end.

B. Physical Condition Inspections

    Physical condition inspections will be conducted for certain PHAs 
during the transition year in accordance with existing protocols. For 
PHAs that receive a passing score on the physical condition indicator 
under 24 CFR 902.25(e)(2), the score will be considered advisory. 
However, for PHAs that score less than a passing physical condition 
score under Sec.  902.25(e)(2), the score shall be considered for the 
physical condition portion alone, as HUD will not be calculating an 
overall PHAS score for PHAs in their transition year, and HUD may take 
action accordingly. In such cases, where appropriate, HUD will give 
inspected PHAs in their transition year credit for the physical 
condition and neighborhood environment factor. The physical condition 
of projects is of utmost importance to HUD, and providing safe, decent, 
sanitary housing, and housing in good repair is the primary 
responsibility of PHAs. 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. These 
physical condition inspection scores for projects on a 100 point scale 
will be available in Secure Systems, through the Integrated Assessment 
Sub-system (NASS). Physical condition inspection scores for projects on 
a 30 point scale will be available in Secure Systems, through NASS, 
beginning September 30, 2008.
    PHAs will continue to be able to request a technical review or 
database adjustment for their physical condition inspections during the 
transition year in accordance with the current PHAS regulations.

C. Financial Condition Information Submission

1. Unaudited Financial Condition Information Submission
    During the transition year, in accordance with 24 CFR part 5, 
subpart H, PHAs are still required to submit their unaudited financial 
information and audited financial information, if applicable. Although 
an overall PHAS score will not be issued during the transition year, 
HUD will still be reviewing the unaudited financial condition 
submission. HUD may take appropriate action based on the submission.
    For low-rent, low-rent combined (low-rent and section 8 units), and 
section 8 only PHAs with fiscal years ending June 30, 2008, HUD, on a 
one-time basis, will not enforce the regulatory 2-month deadline for 
reporting unaudited financial condition information. Instead, HUD will 
accept, without penalty (see Sec.  902.60(e)(2) for the penalty 
provision), these reports within a 3-month time frame. Thus, these PHAs 
will have 3 months from the release of the software for the Financial 
Data Schedule (FDS) under asset management to submit their unaudited 
financial condition information. Notification of the FDS software 
release date and the submission due date will be posted on HUD's 
Financial Assessment of Public Housing Agencies (FASS PH) Web site at: 
https://www.hud.gov/offices/reac/products/prodpha.cfm.
    For low-rent and low-rent combined PHAs with fiscal years ending 
September 30, 2008, December 31, 2008, and March 31, 2009, HUD, on a 
one-time basis, will not enforce the regulatory 2-month deadline for 
reporting unaudited financial condition information. These PHAs will 
have 3 months after their fiscal year end dates to submit their 
unaudited financial condition information.
    For section 8 only PHAs with fiscal years ending September 30, 
2008, December 31, 2008, and March 31, 2009, HUD will enforce the 
regulatory 2-month deadline for reporting unaudited financial condition 
submissions. These PHAs will submit their unaudited financial condition 
information within 2 months after their fiscal year ends.
2. Audited Financial Condition Information Submission
    All PHAs will submit their audited financial information, if 
applicable, within 9 months after their fiscal year end dates in 
accordance with 24 CFR part 5, subpart H.

D. Management Operations Certification

    PHAs with fiscal years ending June 30, 2008, September 30, 2008, 
December 31, 2008, and March 31, 2009, will not be required to submit 
their management operations certification.

E. Resident Surveys

    During the transition year, resident service and satisfaction 
surveys will be conducted only for PHAs with fiscal years ending June 
30, 2008, for informational purposes. These PHAs will not be issued 
resident survey scores, implementation plan scores, follow-up plan 
scores, or resident indicator scores. They will not be required to 
submit and certify to their implementation plans, and will not be 
required to develop follow-up plans and certify that they have done so. 
Resident survey response information will be available in Secure 
Systems, through the Resident Assessment Sub-System (RASS).

III. Transition Year Changes to the Uniform Financial Reporting 
Standards (UFRS)

    This notice provides that HUD, on a one-time basis, will not 
enforce the regulatory 2-month deadline for reporting unaudited 
financial condition information for most PHAs under 24 CFR part 5, 
subpart H, UFRS. For low-rent, low-rent combined, and section 8 only 
PHAs with fiscal year end June 30, 2008, HUD will accept, without 
penalty, these reports within a 3-month time frame. Thus, these PHAs 
will have 3 months from the release of the new FDS asset management 
software to submit their unaudited financial condition information. For 
low-rent and low-rent combined PHAs with fiscal years ending September 
30, 2008, December 31, 2008, and March 31, 2009, HUD will accept, 
without penalty, unaudited financial information within a 3-month time 
frame.
    For section 8 only PHAs with fiscal years ending September 30, 
2008, December 31, 2008, and March 31, 2009, HUD will enforce the 
regulatory 2-month deadline for reporting unaudited financial condition 
submissions. These section 8 only PHAs shall continue to submit the 
unaudited financial information within 2 months of their fiscal year 
end, in accordance with 24 CFR part 5, subpart H.

V. 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: August 7, 2008.
Paula O. Blunt,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. E8-18751 Filed 8-20-08; 8:45 am]
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