Real Estate Assessment Center; Notice of Issuance of Advisory Scores Under the Public Housing Assessment System

HUD developed the new Public Housing Assessment System (PHAS) to replace the existing Public Housing Management Assessment Program (PHMAP) and provide for a more comprehensive monitoring system of public housing operations. The PHAS final rule was published on September 1, 1998, and is codified at 24 CFR part 902. The PHAS uses four (4) indicators to assess a PHA's housing operations and determine a PHA's performance in delivering HUD programs and services. These indicators are: (1) the physical condition of the PHA's properties; (2) the financial condition of the PHA; (3) the management operations of the PHA; and (4) the resident services provided by the PHA and the residents' satisfaction with these services. On the basis of these four indicators, HUD's Real Estate Assessment Center (REAC) calculates a composite PHAS score for each PHA. The PHAS composite score represents a single score or grade for a PHA's entire operation. The PHAS score is derived from the scores calculated for each of the four indicators. Each of the four indicators is assigned a maximum value as follows: (1) Physical condition--maximum 30 points; (2) Financial condition--maximum 30 points; (3) Management operations--maximum 30 points; and (4) Resident service and satisfaction--maximum 10 points.

The PHAS composite score will determine whether a PHA is performing well or is not performing well. Under the PHAS, a PHA that receives an official composite PHAS score below 60 points, or achieves a score of less than 60 percent of the points available under PHAS Indicators 1, 2, or 3, will be designated as troubled and will be referred to HUD's Office of Troubled Agency Recovery for oversight and remedial action. In the PHAS final rule, HUD stated that it may issue advisory scores to PHAs before the PHAS becomes fully operational (see 63 FR 46601). The advisory score will provide a PHA with a reasonable facsimile of the score that the PHA would receive if the PHAS was fully operational now. The advisory score also will provide a PHA with the opportunity to evaluate its standing in comparison to the present day PHMAP process and to prepare for full implementation of the new PHAS. The PHAS becomes effective for all PHAs with fiscal years ending on and after September 30, 1999. 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. A significant delay by the PHA in submitting the necessary information may result in the REAC being unable to issue any advisory score. To assure an accurate official PHAS score, the REAC will continue to confirm and corroborate the results of the advisory scores. Toward this end, the REAC welcomes feedback from PHAs as they receive and review their advisory scores. Since the advisory scores, however, are based on data that

is similar but not identical to the official PHAS data, there will be variances that cannot be removed from the calculations. For example, the PHAS advisory score will be based on financial information that was not prepared in accordance with generally accepted accounting principles (GAAP). The official PHAS score will be based on financial information prepared in accordance with GAAP, as required by the new PHAS. During the period in which the REAC is calculating and issuing PHAS advisory scores, the REAC will solicit comments and recommendations from PHAs that will assist HUD and the REAC in identifying any necessary technical adjustments that may need to be made to the new PHAS before it becomes fully operational in Federal fiscal year 2000. REAC plans to distribute additional information and details about PHAS advisory scores to PHAs within the next several weeks.

Dated: December 24, 1998. Barbara L. Burkhalter, Deputy Director, Real Estate Assessment Center

Public Housing Assessment System Advisory Score Schedule -------------------------------------------------------------------------------------------------------------------------------------------------------- PHA regular Field office submission Field office submission REAC advisory REAC unaudited REAC audited dates to field regular date to REAC scpre date\4\ official score official score office process date \3\ date date -------------------------------------------------------------------------------------------------------------------------------------------------------- FIRST QUARTER (9-30-98 YEAR ENDS): PHYSICAL \1\............................................ N/A N/A N/A 12/31/98 12/31/99 7/31/2000 FINANCIAL \5\........................................... 11-15-98 1/31/99 11/30/98 12/31/98 12/31/99 7/31/2000 MANAGEMENT.............................................. 11-30-98 1/31/99 12/7/98 12/31/98 12/31/99 7/31/2000 RESIDENT \2\............................................ 11-30-98 1/31/99 12/7/98 12/31/98 12/31/99 7/31/2000 SECOND QUARTER (12-31-98 YEAR ENDS): PHYSICAL \1\............................................ N/A N/A N/A 3-31-99 3-31-2000 10-31-2000 FINANCIAL \5\........................................... 2-15-99 4-30-99 2-28-99 3-31-99 3-31-2000 10-31-2000 MANAGEMENT.............................................. 3-1-99 4-30-99 3-15-99 3-31-99 3-31-2000 10-31-2000 RESIDENT \2\............................................ 3-1-99 4-30-99 3-15-99 3-31-99 3-31-2000 10-31-2000 THIRD QUARTER (3-31-99 YEAR ENDS): PHYSICAL \1\............................................ N/A N/A N/A 6-30-99 6-30-2000 1-31-2001 FINANCIAL \5\........................................... 5-15-99 7-31-99 5-30-99 6-30-99 6-30-2000 1-31-2001 MANAGEMENT.............................................. 5-31-99 7-31-99 6-14-99 6-30-99 6-30-2000 1-31-2001 RESIDENT \2\............................................ 5-31-99 7-31-99 6-14-99 6-30-99 6-30-2000 1-31-2001 FOURTH QUARTER (6-30-99 YEAR ENDS): PHYSICAL \1\............................................ N/A N/A N/A 9-30-99 9-30-2000 4-31-2001 FINANCIAL \5\........................................... 8-14-99 10-31-99 8-30-99 9-30-99 9-30-2000 4-31-2001 MANAGEMENT.............................................. 8-29-99 10-31-99 9-13-99 9-30-99 9-30-2000 4-31-2001 RESIDENT \2\............................................ 8-29-99 10-31-99 9-13-99 9-30-99 9-30-2000 4-31-2001 -------------------------------------------------------------------------------------------------------------------------------------------------------- Notes: \1\ Physical inspections are performed by the REAC; no PHA or field office submissions are required. Weather conditions in the second quarter could delay inspections. \2\ Resident satisfaction advisory scores are based on the resident indicator in PHMAP. Official scores will be based on resident surveys. \3\ Field office processing dates have been accelerated in order to meet the requirement to produce advisory score due dates. \4\ REAC will produce advisory scores by these due dates to the extent data is received from the PHAs and forwarded to the REAC by the due dates in note 3 above. To the extent data is received after the due date, REAC will produce advisory scores periodically thereafter (generally in two week increments after the original advisory score due dates). \5\ Financial advisory scores will be based on the current HUD accounting standards; whereas the official scores will be based on GAAP accounting standards because PHAs do not report GAAP based information to HUD until 9-30-99 fiscal year ends. Financial advisory scores will be based on the low rent program only; whereas the official scores will be based on a PHA entity-wide financial assessment because PHAs do not submit entity-wide financial reports to HUD. Financial advisory scores will be based on unaudited data because audits are not due until 13 months (9 months beginning with June 30, 1999 year-end) after year end.

[FR Doc. 98-34667 Filed 12-30-98; 8:45 am] BILLING CODE 4210-32-P