Transcript Document

Revisions to the Public Housing
Assessment System (PHAS)
Overview
August 21, 2008
1
Introduction
This week, the Department will publish in the Federal Register
a proposed rule that would make revisions to Title 24 of the
Code of Federal Regulations (CFR) Part 902—Public
Housing Assessment System. This presentation provides an
overview of the changes included in that proposed
rulemaking, along with key implementation dates.
2
Purpose
There are two main purposes of this proposed
rulemaking.
1.
The first is to align the PHAS with public housing’s
conversion to asset management under 24 CFR
Part 990 and, in particular, to focus on project-level
performance.
2.
The second is to establish, in a separate part of the
CFR, the criteria by which a Public Housing Agency
(PHA) would be determined to be in substantial
default, the procedures for a PHA to respond to such
a determination or finding, and the sanctions
available to HUD to address and remedy substantial
default by a PHA.
3
Goal/Statutory Foundation

The goal of PHAS is to
 Improve the delivery of services in public housing
 Enhance trust in the public housing system
 Provide a management tool for measuring performance

PHAS addresses Section 6(j) of the United States Housing
Act of 1937, requiring HUD to establish by rulemaking
specific indicators to assess the management performance
of PHAs
4
Timelines

Current PHAS was published January 11, 2000

Proposed rule published August 21, 2008

Public comment period ends October 2008

HUD published for public comments draft form
HUD-5834

5834 comment period ends September 30, 2008
5
Changes to PHAS
6
Transition Year Scoring

Under 24 CFR 990, Part G, Asset Management,
PHAs must implement project-based budgeting
and accounting beginning with fiscal years ending
June 30, 2008, what is also known as the
“transition year.”

In accordance with Federal Register Notice, as
well as PIH Notice 2008-18, PHAs will not be
assessed in the transition year. Consequently,
PHAs will not be assessed under the new PHAS
until fiscal years ending June 30, 2009.
7
Implementation of New PHAS
Pre Transition Year PHAS
Scoring –
Last PHAS score
Implement Project
Based Accounting
and Budgeting
(Transition Year)
Implementation of New
Scoring
6/30
7/1/06 - 6/30/07
7/1/07 - 6/30/08
7/1/08 - 6/30/09
9/30
10/1/06 – 9/30/07
10/1/07 – 9/30/08
10/1/08 – 9/30/09
12/31
1/1/07 – 12/31/07
1/1/08 – 12/31/08
1/1/09 – 12/31/09
3/31
4/1/07 – 3/30/08
4/1/08 – 3/30/09
4/1/09 – 3/30/10
PHA FYE
8
Current vs. Proposed Indicators
Current PHAS
Proposed PHAS
1. Physical
1. Physical
2. Financial
2. Financial
3. Management Operations 3. Management Operations
4. Resident Service and
Satisfaction
4. Capital Fund
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Scoring
Current PHAS
Proposed PHAS
Indicator
Points
Indicator
Points
Physical
30
Physical
30
Financial
30
Financial
20
Management
Operations
30
Management
Operations
40
Resident
Service and
Satisfaction
10
Capital Fund
10
Total
100
Total
100
10
Scoring




Scoring appendices were published along with
the proposed rule
Physical, financial and management operations
scores are based on unit-weighted average of
project scores
Capital Fund score is based on PHA-wide
performance
Scores for management reviews, like physical
inspections, are carried over when no review is
conducted during subject year
11
Weighted Average Calculation
(Financial, Physical, Management Operations)
Project 1
Total
Units
Project 2
Total
Units
Project 3
Total
Units
Project 4
Total
Units
Total
PHA
Units
X
Project
Score
X
Project
Score
X
Project
Score
X
Project
Score
=
Unit
Weighted
Score
=
Unit
Weighted
Score
=
Unit
Weighted
Score
=
Unit
Weighted
Score
Total
Unit
Weighted
Score
/
Total
PHA
Units
Indicator
Score
=
12
Scoring Example
500 Unit PHA
Physical
Management
Operations
Financial
Units
Score
Unit
Weighted
Score
1
100
28
2800
19
1900
35
3500
2
200
20
4000
20
4000
30
6000
3
150
25
3750
15
2250
33
4950
4
50
25
1250
10
500
32
1600
Project
Total
Units
Indicator/
PHAS
Score
500
11800
23.6
Score
Unit
Weighted
Score
Score
Unit
Weighted
Score
8650
Cap
Fund
PHAS
Score
10
83
16050
17.3
32.1
13
Scoring Example
1025 unit PHA
Physical
Project
Total Units
Indicator/PHAS
score
Units
Score
Management
Operations
Financial
Unit
Weighted
Score
Score
Unit
Weighted
Score
Score
PHAS
Score
Unit
Weighted
Score
1
25
30
750
20
500
40
1000
2
40
30
1200
20
800
40
1600
3
400
22
8800
25
10000
29
11600
4
60
25
1500
18
1080
30
1800
5
100
28
2800
19
1900
35
3500
6
200
20
4000
20
4000
30
6000
7
150
25
3750
15
2250
33
4950
8
50
25
1250
10
500
32
1600
1025
Cap
Fund
24050
21030
32050
23.5
20
31.2
10
85
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Classifications
24 CFR 902.11




High Performing: PHA overall score of 90% or
greater
Standard: PHA overall score of at least 60%
and at least 60% for each of the four PHAS
indicators
Substandard: PHA overall score of at least
60% and a score of less than 60% under one or
more of the physical, financial or management
operations indicators
Troubled: PHA overall score of less than 60%
or fail the Capital Fund indicator
15
Classifications (con’t)

Substandard is no longer troubled

No “overall” PHAS score for each project, only
separate indicator scores for physical, financial,
and management operations

No “troubled” projects
16
Physical Indicator

No change in the protocol for independent
inspections

No change in the frequency of inspections;
projects (not PHAs) that score 80 would be
inspected every other year

Inspections performed based on AMPs
(projects)
17
Financial Indicator

Measures financial condition of projects






Quick Ratio (QR)
Months Expendable Net Assets Ratio (MENAR)
Debt Service Coverage Ratio (DSCR)
No entity-wide scoring (LR and Cap Fund only)
No peer ratios
Accounts receivable, rent collection, and
expense management moved to management
operations indicator
18
Financial Indicator
Quick Ratio (QR)

Compares quick (unrestricted current)
assets to current liabilities



Quick assets are cash and assets that are
easily convertible to cash and do not include
inventory
Current liabilities are those liabilities that are
due within the next 12 months
A quick ratio of less than 1 indicates that the
project’s ability to make payments on a timely
manner may be at risk
19
Financial Indicator
Months Expendable Net Assets Ratio (MENAR)



Measures a project’s ability to operate using its
net available, unrestricted resources without
relying on additional funding
Ratio compares the net available unrestricted
resources to the average monthly operating
expenses
Shows how many months of operating
expenses can be covered with currently
available unrestricted resources
20
Financial Indicator
Debt Service Coverage Ratio (DSCR)
Net operating income available to make debt payments
Amount of the debt payments




Used if a PHA has taken on long-term obligations
A debt service coverage ratio of less than 1 would
indicate that the project does not have revenues to cover
both its expenses and its debt obligations
The operating reserve level is not measured
If no long term debt, project receives full scoring credit
21
Management Operations Indicator





Based on information obtained from the on-site
management review, form HUD-5834
Eliminates PHA self certification
Scores performance, not compliance
Review could generate findings
Adjustment for Physical Condition and
Neighborhood Environment (PCNE) applied at
project level using existing HUD data
22
Management Operations Indicator
(con’t)





Includes all section 6(j) items, other than the Capital
Fund
The proposed management review for Public Housing
projects, form HUD-5834, conforms to multifamily form
HUD-9834
Uses monthly or yearly activity for measures
Uses A, F; A, C, F or A, B, C, D, F for measures, which
are then scored
Considers primary vs. secondary measures, per ARI
recommendations


High PASS score/ “A” for unit inspections, work orders
Low Vacancy Rate/ “A” for unit turnaround
23
Management Operations Scoring
Sub Indicator
Points
General Appearance and Security
6
Appearance and Market Appeal
5
Security
1
Maintenance and Modernization
6
Unit Inspections
1
Work Orders
3
Preventive Maintenance
1
Energy Conservation/Utility Consumption
1
Financial Management
8
Accounts Payable
4
Rents Collected
4
Leasing and Occupancy
18
Vacancy Rate
16
Turnaround Time
2
Tenant/Management Relations
2
Economic Self Sufficiency
1
Resident Involvement in Project Administration
1
Total Points
40
24
25
Management Operations Indicator

Appearance and Market Appeal (scored)


Appearance and Market Appeal
Security
26
Management Operations Indicator
General Appearance and Security
Appearance and Market Appeal (scored)
Evaluates the appearance of exterior and common areas in 12
categories

Categories







Project Entrance
Landscaping
Building Exterior
Graffiti
Paved Surfaces
Public Spaces and
Amenities
Fencing, Rails, Porches,
Overhangs, and Ramps





Windows
Overall Project
Appearance
Project Debris
Trash
Units
27
Management Operations Indicator
General Appearance and Security
Security (scored)
 Performance in tracking crime-related
problems on project property
 Adoption and implementation of applicant
screening and resident eviction policies and
procedures
 Coordination with local officials and residents
to implement anti-crime strategies
28
Management Operations Indicator
Follow-Up and Monitoring of Project Inspections

Exigent Health and Safety (EHS)
Deficiencies (not scored)


Performance in correcting/abating EHS deficiencies
identified during UPCS inspections
Lead-Based Paint (LBP)Inspection
Deficiencies (not scored)


Maintenance of LBP certifications for pre 1978
buildings
Completion of risk assessments and hazard reduction
for reported EIBLLs
29
Management Operations Indicator

Maintenance and Modernization






Unit Inspections
Work Orders
Preventive Maintenance
Energy Conservation/Utility Consumption
Modernization
First four components are scored
30
Management Operations Indicator
Maintenance and Modernization
Unit Inspections (scored)






PASS scores of 90 or better receive an “A”
Evaluates the percentage of units a project
inspected for a 12 month period prior to the
review (not the PHA’s FYE)
Inspections are to determine short- and longterm maintenance needs
Inspection program must be adequate
Occupied units are to be inspected
Some units are exempted
31
Management Operations Indicator
Maintenance and Modernization
Work Orders (scored)





PASS scores of 90 or better receive an “A”
Measures the average number of days that tenant
generated work orders are outstanding
Choose either a one month or twelve month assessment
period at the project’s option
Does not assess open work orders, only those that are
closed
For a grade C, the assessment can compare
performance at the end of the month three years prior to
the review to the current performance to measure
improved performance
32
Management Operations Indicator
Maintenance and Modernization
Preventive Maintenance (scored)
 Evaluates implementation of a written
preventive maintenance plan
 Examples include critical systems,
building elements, grounds care and
equipment
 Plan items must include a schedule for
conducting preventive maintenance
33
Management Operations Indicator
Maintenance and Modernization
Energy Conservation/Utility Consumption
(scored)
 Looks at energy conservation measures
 Has an energy audit been completed?
 Has an implementation plan been
developed?
 Is plan on schedule?
34
Management Operations Indicator
Maintenance and Modernization
Modernization (not scored)

Examines project’s management of modernization
and non-routine maintenance through the physical
needs assessment, project plans and budgets for
modernization activities
35
Management Operations Indicator

Financial Management





Accounts Payable
Percentage of rents collected
Budget Management
Procurement
The first two components are scored
36
Management Operations Indicator
Financial Management
Accounts Payable (scored)




Project timeliness in paying invoices not in dispute
One-month assessment period
Invoices should be paid in 30 days
Adequate system for tracking accounts payable
37
Management Operations Indicator
Financial Management
Rents Collected (scored)




Percentage of rents collected
One- or twelve-month assessment period
Rents include rental charges only
Project must have an adequate tracking system
38
Management Operations Indicator
Financial Management
Budget Management (not scored)
 Examines actual year-to-date performance on
income and expenses compared to the budget
Procurement (not scored)
 Project ability to plan for and implement
procurement actions in accordance with laws and
regulations
39
Management Operations Indicator

Leasing and Occupancy




Vacancy Rate
Turnaround Time
Occupancy Review
The first two components are scored
40
Management Operations Indicator
Leasing and Occupancy
Vacancy Rate (scored)

Measures average adjusted vacancy rate

Allows for unit exemptions

Assessment period of 12 calendar months
41
Management Operations Indicator
Leasing and Occupancy
Turnaround Time (scored)




If the adjusted vacancy rate is 2% or less,
turnaround time will be graded “A”
Examines the amount of time required to
turn around units
Uses 12-month assessment period
Project must have an adequate tracking
system
42
Management Operations Indicator
Leasing and Occupancy
Occupancy Review (not scored)
Addresses compliance activities and procedures
necessary to house and retain eligible low-income
families
 Application process
 Tenant Selection
 Leasing process
 Lease enforcement
 Income and rent computation
43
Management Operations Indicator

Tenant/Management Relations


Economic Self-Sufficiency
Resident Involvement in Project
Administration
44
Management Operations Indicator
Tenant/Management Relations
Economic Self-Sufficiency (scored)



Evaluates employment, self-sufficiency
participation, self-sufficiency opportunities
provided for adult residents
12-month assessment period
Measures whether the project offers or
coordinates at least 1 economic self- sufficiency
activity
45
Management Operations Indicator
Tenant/Management Relations
Resident Involvement in Project
Administration (scored)
 Project must offer at least one opportunity for
tenants to be involved in the administration of
the project.
 Examples: Newsletters, Contracts with
Resident-Owned Businesses, Neighborhood
Watch Programs, Substance Abuse Counseling,
Regular Tenant Meetings, Service Coordinator,
Resident Participation on Committees,
Neighborhood Networks Center. Tenant
Management
46
Management Operations Indicator
General Management Practices



Management Review Findings (not scored)
Other Prior Review Findings (not scored)
Insurance (not scored)
47
Capital Fund Indicator

Separate, PHA-wide indicator

Measures
 Timeliness of Obligation
 Timeliness of Expenditure
48
Benefits







Ease of administration/minimize PHA submissions
Isolate performance of individual projects
Score only the public housing and Capital Fund
programs (not entity-wide activity)
Separate performance from compliance
(management review)
Consistency with multifamily housing
MOAs only for troubled agencies (not applicable
to Substandard)
Corrective Action Plans address noted
deficiencies
49
Substantial Default
50
Substantial Default
24 CFR 907



New Part 907 – Substantial Default by a Public
Housing Agency
Provides criteria and procedures for determining
and declaring substantial default by a PHA
Does not limit the discretion of HUD to address
and remedy substantial default by a PHA
51
Public Housing Assessment
System
Send written comments to:
Regulations Division, Office of the General Counsel,
Department of Housing and Urban Development,
451 Seventh Street, SW, Room 10276, Washington,
DC 20410-0001.
Submit comments electronically through the
Federal eRulemaking Portal at
www.regulations.gov. (recommended)
52