HUD treats multifamily housing much differently than public housing Properties to get better incentives, less intervention HUD has emphasized in the various rules being put forth that it is using a uniform physical assessment system for both the public housing and the multifamily programs. The rule concerning the assessment of the multifamily properties -- a November, 1999 proposed rule, titled "Administrative Process for Assessment of Insured and Assisted Properties" -- stresses this concept. In this proposed rule, HUD writes, "The uniform inspection protocols are intended to assure that, to the greatest extent possible, there is uniformity and objectivity in the evaluation of the physical condition of HUD properties." However, PHADA's comparison of the assessment systems finds that although the rules call for uniformity, HUD treats multifamily and public housing properties quite differently. These differences, which are described in detail below, are especially noticable when comparing the incentives provided to well run properties and the degree of HUD intervention for those scoring poorly.
Incentives In public housing, however, HUD takes a different approach, "If the PHA fails to receive a passing score on the Physical Condition Indicator, the PHA shall be classified as a substandard (emphasis added) physical agency." A substandard physical agency is designated as troubled. One result of being troubled is that a PHA is subject to potential "home rule." The home rule provision, part of the 1998 housing act, allows a local government to petition HUD for authority to assume housing funding which would normally go directly to a PHA. The local entity would then operate the low-income housing itself. In multifamily, (which includes all Section 8 project-based assistance, Section 202 housing for the elderly, Section 221 housing, as well as various insured programs) the standard classification is then broken down into three levels, standard one, standard two and standard three. These three levels are based on a curve, so that the top 20 percent of the properties are standard one, the ones which fall between 20 and 50 percent are standard two, and the bottom 50 percent is standard three. Standard one and standard two properties benefit from privileges which do not extend to the public housing program. Standard one properties will only be inspected once every three years, while standard two properties will be inspected every other year. Since there is no actual score defining a standard one or a standard two property, only one's place on a curve, it means that some standard one properties may score below a 90, while standard two properties will extend well below 90. In contrast, public housing properties which score above 90 are exempt from inspection for only one year. Thus, they are not granted the same exemption as those in multifamily. There will be public housing properties inspected every other year which score higher than multifamily properties inspected every third year. Also, no standard public housing properties will be exempt from inspection for a year, while many multifamily properties scoring below 90 will receive that exemption.
Scoring Below 60 In the public housing final rule, there is a detailed discussion of what happens to housing authorities which score below 60 in one indicator or overall, how they are referred to the Troubled Agency Recovery Center (TARC) and what happens to them once they are sent there. In multifamily housing, HUD issued a memorandum in September, 1999 to the field offices providing guidance for dealing with properties scoring below 60, but a memorandum has far less significance than a rule. A memorandum can be followed or not depending on circumstances, and it can be changed without the public comment and scrutiny required to change a rule. There are a great many differences as well in how HUD deals with problem properties between the system outlined in HUD's multifamily memorandum and the one spelled out in the public housing final rule. For one thing, in public housing, a standard performer that receives a total score of less than 70, but not less than 60, shall be required to submit an "improvement plan" to eliminate deficiencies in the PHA's performance. There is no equivalent requirement for multifamily properties. In fact, no HUD action is taken on the multifamily side until a property falls below 60. The differences become even greater for properties which fall below 60. Multifamily properties which fall in the 45-59 scoring range are given an opportunity simply to correct the deficiencies found in the inspection. Within ninety days of receiving the score, the owner must have all the units inspected and self-certify to the HUD field office that the deficiencies have been corrected. If the field office believes the property owner has the capacity to correct the deficiencies, no further action is required. For properties falling in the 30-44 range, a "management improvement plan" must be negotiated with the HUD field office, not with a specially created center, with timetables established to correct deficiencies. In public housing the process is quite different. A PHA scoring below 60 is taken away from the field office and assigned to the TARC, although one of its options is to refer the authority back to the field office for oversight and monitoring. HUD then "initiates activity to develop a Memorandum of Agreement." The MOA sets performance targets, "which the PHA must commit to take all actions within its control to achieve." The PHA has ten days to review the MOA, which must be executed within fifteen days of its issuance. The public housing evaluation is clearly much more stringent than that of multifamily. All of these actions by the TARC must take place for an authority which scores 59 on its physical inspection. Compare HUD's response to a PHA with this score to a multifamily property. HUD develops a contractually binding MOA which a PHA must sign within fifteen days while the multifamily property simply self-certifies to the field office that it has corrected the deficiencies found in the REAC inspection. Once a PHA has been referred to the TARC, a rigorous timetable is set in motion. If the PHA does not reduce by half the difference between its score and 60 in the first year, it is referred to the Enforcement Center. If it has not fully raised its score to 60 by the second year, it is also referred to the Enforcement Center. For multifamily, however, no such timetable exists. It is not mentioned in the proposed rule, nor in the memorandum to the field offices. At least in theory, a multifamily property could continue to score in the 30-60 point range year after year with HUD taking no further action or referring it to the Enforcement Center. Without further instructions from HUD, presumably the field offices will continue simply to require self-certifying letters saying the deficiencies have been corrected. Thus, the difference in approach to the two programs is dramatic.
Department Enforcement Center A multifamily property appears to have an easier time in the Enforcement Center than a PHA. First of all, a property owner is given thirty days to submit a corrective action plan showing how it will correct deficiencies. Secondly, the Enforcement Center puts together an evaluation team, which includes a representative from the HUD field office. The multifamily HUB Director also has the authority to resolve conflicts between the multifamily staff and the Enforcement Center. At the conclusion of the evaluation, the Enforcement Center makes a decision as to whether to keep the property in the center or send it back to the field office. If the multifamily property is kept in the Enforcement Center, the center prepares a "compliance plan," which must be approved by multifamily staff. Once it is approved, the owner gets thirty days to respond (in contrast to the fifteen days a PHA has to execute an MOA) after which point the owner can submit a counter compliance plan, and enter into negotiations with the Enforcement Center. Going to the Enforcement Center for multifamily is similar to going to the TARC for PHAs, except it only happens after a property has scored 30 points worse than in public housing. PHAs referred to the Enforcement Center have a very different set of options facing them. The center is told that "it shall initiate, (i) the judicial appointment of a receiver, or (ii) an administrative receivership ..." or (iii) limited interventions to one or more of a PHA's specific operational areas or to a single development or a group of developments including an alternative management entity to assume management responsibility for a specific development, group of developments or a specific operational area. Overall, PHAs and multifamily properties are treated very differently by HUD in the physical inspection evaluation process. From the symbolic denomination of all multifamily properties as standard versus troubled for PHAs, to the better incentives offered multifamily properties than PHA developments, to the more relaxed requirements for multifamily properties scoring under 60 compared to PHA referral to the TARC, to the options available to the Enforcement Center, the public housing program is subject to much harsher regulations than the multifamily program. Since HUD writes in the in the PHAS final rule that "all properties and property owners are treated fairly and equally," it does not appear that HUD is meeting its own standard. Please distribute as needed. Members are encouraged to forward this comparison and other analyses developed by PHADA on the Public Housing Assessment System to their Members of Congress. Also, refer to PHADA's review of the PHAS final rule (http://www.phada.org/01phasf.html), the analysis of the physical inspection scoring process (http://www.phada.org/01phass.html) and the analysis of the financial assessment scoring process (http://www.phada.org/02phasf.html). | ||||||||||||||||||||||||||||||||||||||
