Linkage to the HUD 2020 Management Reform Plan
The regulatory plan of the Department of Housing and Urban Development for fiscal year 1999 continues to reflect the revitalized mission that Secretary Andrew Cuomo established for HUD upon assuming the leadership of HUD and further reflects the fundamental redesign of HUD under the HUD 2020 Management Reform Plan. On June 26, 1997, Secretary Cuomo released his plan for significant management reforms at HUD--the ``HUD 2020 Management Reform Plan.'' The HUD 2020 Management Reform Plan is directed to (1) empowering people and communities to improve themselves and (2) restoring HUD's reputation and credibility by improving the efficiency and effectiveness of the Department's programs, operations, and delivery of services.
To improve the efficiency and effectiveness of HUD's programs, operations, and delivery of services, the HUD 2020 Management Reform Plan calls for the restructuring of HUD's internal operations to reallocate resources and consolidate major functions. The HUD 2020 Management Reform Plan also calls for the resources to be allocated in a way that is designed to align HUD's resources with its long-term mission of empowering people and communities to improve themselves and succeed in today's world. Consolidation of functions is designed to avoid duplication of effort, achieve consistency and uniformity in the performance of those functions, and ensure fairness.
In fiscal year 1998, HUD began implementing the management reforms called for by the HUD 2020 Management Reform Plan. These reforms include the establishment of several centers at which key functions and operations have been consolidated and are now being carried out. Since issuance of the HUD 2020 Management Reform Plan, HUD has moved from discussion of the reforms to on-the-ground operations. The following describes some of the new HUD centers.
The Real Estate Assessment Center is charged with responsibility for assessing and scoring the condition of properties in which HUD has an interest and the performance of entities that manage and own those properties. The Enforcement Center assumes responsibility for the majority of HUD's existing enforcement operations. The Enforcement Center is the central departmental focus for taking aggressive action against HUD's troubled housing and public housing portfolios. The Troubled Agency Recovery Center will assist public housing agencies designated as troubled to reach improved performance through development and implementation of sustainable solutions. The Section 8 Financial Management Center provides a unified center for Section 8 payments processing. HUD also has established a new Office of Procurement and Contracts which will perform all operational contracting activities except simplified acquisitions and contract ordering. The consolidation of all operational activity within a single office, which reports directly to the Chief Procurement Officer will assure the Department's procurement reform initiatives and policies are implemented in a consistent manner. These are some of the key management reform changes that have already been instituted under the HUD 2020 Management Reform Plan.
Consolidation of functions and the resulting consistency and uniformity that is brought about through the consolidation not only make these functions easier for HUD employees to perform but make the HUD programs simpler, more comprehensible, and more fair for HUD's program participants. Several regulations issued by HUD in fiscal year 1998 reflect how consolidation of functions has achieved a key objective of HUD 2020 Management Reform and that is to strive to treat program participants fairly, on the basis of uniform standards, not on the basis of which HUD program office administers the program. Examples of such regulations are as follows:
Public Housing Assessment System. In FY 1998, HUD issued regulations to establish a revised performance evaluation system for public housing that expanded and improved on the previous assessment system--the Public Housing Management Assessment Program (PHMAP). The new system--the Public Housing Assessment System (PHAS) provides for the evaluation of the performance of public housing agencies (PHAs) in four critical areas: (1) The physical condition of the public housing; (2) the financial stability of the PHA; (3) the management capabilities of the PHA; and (4) the resident satisfaction with PHA services. This new system answers criticisms of the former PHMAP by placing greater emphasis on the physical condition of properties, objective evidence and third-party verification, basic real estate functions, and input from those served directly by the system (the ``customers''). This new assessment system for public housing should increase the confidence of everyone involved--HUD, PHAs, residents, the Congress, the public--that it accurately determines whether PHAs are doing an acceptable or outstanding job and are providing decent, safe, and sanitary housing to their residents. This is critical because the consequences of that determination are significant--less scrutiny and additional flexibility for PHAs to be determined performing well and intensive technical assistance and short term deadlines to show improvement for those PHAs determined to be troubled. The new system should better indicate to everyone the degree of success of the public housing program under current levels.
Uniform Physical Condition Standards for Certain HUD Housing. This rule establishes for housing assisted under certain HUD programs uniform physical condition standards. These standards are intended to ensure that such housing is decent, safe, sanitary, and in good repair. HUD's Section 8 housing, public housing, HUD-insured multifamily housing, and other HUD assisted housing must currently meet certain standards and must undergo an annual physical inspection to determine that the housing qualifies as decent, safe, sanitary, and in good repair. Before issuance of this rule, the description or components of what constitutes acceptable physical housing quality varied from HUD program to HUD program. To the extent possible, HUD's position is that housing assisted under its programs should be subject to uniform physical standards regardless of the source of the subsidy or assistance. Additionally, to the extent feasible, HUD believes that the physical inspection procedures by which the standards will be assessed should be uniform in the covered programs. This rule provides for certain HUD housing to meet uniform physical condition standards to ensure that the housing is decent, safe, sanitary, and in good repair.
Uniform Financial Reporting Requirements. This rule establishes for HUD's public housing, Section 8 housing, and multifamily insured housing programs uniform annual financial reporting standards. The rule requires public housing agencies and project owners of HUD-assisted housing to submit electronically to HUD, on an annual basis, certain financial information in a standardized format. Electronic submission was determined necessary because the manual submission of annual financial information to HUD has become a significant administrative burden to housing authorities, project owners, and mortgagees, as well as to HUD. This rule also provides that the annual financial information to be submitted to HUD must be prepared in accordance with generally accepted accounting principles.
Section 8 Certificate and Voucher Conforming Rule. This final rule completed the process of combining and conforming the regulations for tenant-based rental assistance under the Section 8 Certificate and Voucher programs. The merger of the Section 8 Certificate and Voucher programs and implementation of steamlining measures will make tenant-based assistance easier for HUD, housing authorities, and private landlords to administer.
These are some of the rules issued in fiscal year 1998 that reflect the HUD 2020 management reforms already instituted and underway at HUD.
Implementation of the HUD 2020 Management Reform Plan ensures HUD's relevance and effectiveness for the 21st century and focuses HUD resources and energy on two distinct yet interrelated missions:
The Departmental Mission: Empower communities and their residents, particularly the poor and disadvantaged, so that, together with HUD, they can develop viable urban communities, provide decent housing and suitable living environment for all citizens, without discrimination, in order to improve themselves, both as individuals and as a community, to succeed in today's time of transition.
The Secretary's Personal Mission: Restore the public trust by achieving and demonstrating competence.
Under the empowerment mission, HUD focuses on shifting: (1) From top-down programs with flexible mandates to bottom-up, community-driven partnerships that demonstrate a comprehensive community development strategy, (2) from long-term dependence programs to those that nurture self-sufficiency and self-reliance, (3) from working in isolation to collaboration with other Federal agencies to provide vital community resources, (4) from working against the free market to harnessing market forces wherever possible to use these forces to help people become self-sufficient.
Under the public trust mission, HUD focuses on moving from process and perpetuation to performance and product. HUD will continue to consolidate programs and reorganize and retrain staff to align the agency's resources; develop and implement stringent internal controls; and increase program monitoring and measurement to ensure higher performance.
To continue efforts directed at accomplishing these two revitalizing missions, the Secretary has directed HUD to focus on the following strategic objectives that are designed to reflect the core business of HUD:
1. Fight for fair housing.
2. Increase affordable housing and homeownership.
3. Reduce homelessness.
4. Promote jobs and economic opportunity.
5. Empower people and communities.
6. Restore public trust.
The regulatory priorities in HUD's regulatory plan for fiscal year 1999 and the regulations in HUD's semiannual regulatory agenda are designed to implement HUD's mission and address the core business of HUD. HUD's regulatory priorities for fiscal year 1999 may change if new legislation affecting HUD programs is enacted.
Regulatory Action: CDBG National Objective to Eliminate Slums or Blighting Conditions
This rule is designed to facilitate the redevelopment of underutilized property for housing or economic development purposes. The rule will increase CDBG recipients' flexibility to undertake activities which meet the national objective of preventing or eliminating slums or blighting conditions. The criteria for meeting the slum/blight national objective will be revised to specifically recognize economic obsolescence of buildings and the presence of environmental contaminants as blighting influences on an area or property.
(Furthers Strategic Objectives 2 and 4)
Regulatory Action: Clarification of the Nature of Required CDBG Expenditure Documentation
The rule will clarify the level of expenditure documentation that is needed to meet the financial management requirement that grantees and subrecipients maintain adequate records to identify the use of funds provided for assisted activities. This rule ensures better grantee and subrecipient accounting for all CDBG expenditures, as well as applicable credits to those expenditures.
(Furthers Strategic Objective 5)
Regulatory Action: Sanctions for Underreporting of Income in the Assisted Housing Programs
This rule is designed to promote program integrity and encourage housing assistance recipients to accurately report their income by imposing sanctions on them when they underreport their income. The entities that administer the low rent public housing program, the Section 8 housing assistance payments programs, and other HUD-subsidized housing programs will be required to take action against program participants when there is a discrepancy between the amount of income reported by the participant and by another source that exceeds a threshold amount. The actions to be taken will range from reporting the deficiency in rental payment based on the underreported income to a credit bureau to garnishment of wages of the amount owed. Action will be taken only after the program participant has been given an opportunity to contest the existence and amount of a reported discrepancy in income, as well as being given the opportunity to execute a repayment agreement. The purpose of this rule is to prevent potential losses to HUD and taxpayers from substantial underreported income and to assure that worthy participants benefit from HUD housing programs.
(Furthers Strategic Objective 6)
Regulatory Action: Assessment of the Reasonable Revitalization of Certain Public Housing
On September 26, 1996, the Department published at 61 FR 50632 a notice to implement section 202 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. 104-134, approved April 26, 1996) (OCRA). Section 202 requires PHAs to identify certain distressed public housing developments that cost more than Section 8 rental assistance and cannot be reasonably revitalized. Households in occupancy that will be affected by the activities will be offered tenant-based or project-based assistance (that can include other public housing units) and will be relocated to other decent, safe, sanitary, and affordable housing which is, to the maximum extent practicable, housing of their choice. After residents are relocated, the distressed developments (or affected buildings) for which no reasonable means of revitalization exists will be removed from the public housing inventory. The September 26, 1996, notice invited public comments, which were taken into consideration in the interim rule published on September 22, 1997. The interim rule also invited public comments. The final rule to be issued in fiscal year 1999 will take into consideration the public comments received on the September 22, 1997, interim rule.
(Furthers Strategic Objectives 2 and 5)
Regulatory Action: Multifamily Housing Restructuring Program (Mark-to-Market)--Preserving Low-Income Rental Housing While Reducing Long-Term Costs of Project-Based Rental Assistance
This rule implements the FHA-Insured Multifamily Housing Mortgage and Housing Assistance Restructuring Program. This program was enacted in the Department's FY 1998 Appropriations Act. The legislation gives HUD permanent authority to address the problem of expiring project based Section 8 assistance contracts. The program, which provides for mortgage restructuring plans, is intended to reduce long-term costs while maintaining the units as affordable housing.
(Furthers Strategic Objectives 2 and 6)
Regulatory Action: Public Housing Admission and Occupancy Reforms and Streamlining
This rule includes provisions that help make public housing a more desirable place to live. It provides Public Housing Agencies (PHAs) the authority to screen out applicants and to terminate tenancies of tenants who are engaged in criminal and antisocial behavior. Specifically, PHAs will take action against those involved in drug or alcohol abuse that ``may interfere with the health, safety, or right to peaceful enjoyment of the premises by other residents of the project'' or who have been evicted previously for drug-related criminal activity. The screening process is to include appropriate criminal background checks. These changes implement the Housing Opportunity Program Extension Act of 1996 (Pub. L. 104-120, 110 Stat. 834). Additional changes are being made to streamline the rule and to respond to relevant recommendations contained in the report issued by the statutorily created Public and Assisted Housing Occupancy Task Force.
(Furthers Strategic Objectives 2, 5, and 6)
Regulatory Action: Strengthening the Title I Property Improvement Loan Insurance Program
This rule would amend the Department's title I regulations to require that a certain amount of the proceeds of property improvement loans must be used for correcting code violations, health and safety defects, accessibility improvements, or energy improvements. This rule would establish time limits for completing improvements.
(Furthers Strategic Objectives 2 and 6)
Regulatory Action: Disclosure of Fees Paid to Mortgage Brokers
This rule would provide consumers with increased disclosure concerning the mortgage broker's function and fees and would provide mortgage brokers with greater clarity regarding application of the Real Estate Settlement Procedures Act (RESPA) to mortgage broker fees. The mortgage brokers would be encouraged to enter into a contract with the consumer early in a mortgage financing transaction in order to provide the consumer with information about the mortgage broker's duties and compensation.
(Furthers Strategic Objectives 2 and 6)
Regulatory Action: Fair Housing Planning Performance Standard
This rule will assist communities in complying with the legal requirement to certify that they are affirmatively furthering fair housing. It will provide a standard by which the Department will assess grantees' performance in affirmatively furthering fair housing. Thus, communities will have a clear idea of what is expected of them and the standards HUD will use in reviewing their certifications.
(Furthers Strategic Objectives 1 and 5)
Regulatory Action: Lead-Based Paint Poisoning Prevention in Certain Residential Structures
This rule will implement sections 1012 and 1013 of the Residential Lead-Based Paint Hazard Reduction Act of 1992, which establishes significant new requirements concerning lead-based paint hazard notification, evaluation, and reduction for federally owned residential property and housing receiving Federal assistance.
(Furthers Strategic Objective 2)