[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR902.35]

[Page 277-278]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 902_PUBLIC HOUSING ASSESSMENT SYSTEM--Table of Contents
 
            Subpart C_PHAS Indicator #2: Financial Condition
 
Sec. 902.35  Financial condition scoring and thresholds.

    (a) Scoring. Under PHAS Indicator 2, REAC will calculate a 
score based on the values of financial condition components, as well as 
audit and internal control flags. Each financial condition component has 
several levels of performance, with different point values for each 
level. A PHA's score for a financial condition component depends upon 
both the level of the PHA's performance under a component, and the PHA's 
size, based on the number of public housing and section 8 units and 
other units the PHA operates.
    (1) Under PHAS Indicator 2, REAC will calculate a score 
following the procedures described in the PHAS Notice on the Financial 
Condition Scoring Process (PHAS FASS Notice 3), which will be published 
in the Federal Register. HUD may revise this notice in the future, but 
HUD will publish for comment any significant proposed amendments to this 
notice. After comments have been considered, HUD will publish a notice 
adopting a final notice or amendment. The PHAS Notice on the Financial 
Condition Scoring Process that is currently in effect can be found at 
the REAC Internet site at http://www.hud.gov/reac or obtained from 
REAC's Technical Assistance Center at 888-245-4860 (this is a toll free 
number).
    (2) PHAs with fiscal years ending on or before June 30, 2000, will 
receive an advisory score based on the PHA's entity-wide operations. 
PHAs with fiscal years ending March 31, 2000, and June 30, 2000, will 
also receive a score under this subpart C. These PHAs will receive a 
PHAS financial condition score on the basis of their public housing 
operating subsidies program. PHAs with fiscal years ending after June 
30, 2000, will receive PHAS financial condition scores on the basis of 
their entity-wide operations.

[[Page 278]]

    (3) High liquidity or reserves. (i) Under the scoring process for 
the Financial Condition Indicator, no points will be deducted under the 
Current Ratio or Monthly Expenditure Fund Balance components for a PHA 
that has too high liquidity or reserves if the PHA has achieved at least 
90 percent of the points available under the Physical Condition 
Indicator, and is not required to prepare a follow-up survey plan under 
the Resident Service and Satisfaction Indicator.
    (ii) A PHA that has too high liquidity or reserves but does not meet 
the qualifications described in paragraph (a)(3)(i) of this section may 
appeal point deductions under the Current Ratio or Monthly Expenditure 
Fund Balance components based on mitigating circumstances if the PHA's 
physical condition score is at least 60 percent of the total available 
points under the Physical Condition Indicator.
    (A) The appeal may be made without regard to change in designation.
    (B) To adjust a financial condition score based on mitigating 
circumstances, the PHA must submit a request to the applicable HUD HUB/
Program Center within 15 days of the issuance of the financial condition 
score to the PHA and must be accompanied by a description of the 
mitigating circumstances. Based on the recommendation of the applicable 
HUD HUB/Program Center following its review of the PHA's evidence or 
documentation, HUD may determine that a point adjustment for the 
financial condition score is acceptable.
    (b) Components of PHAS Indicator 2. The components of PHAS 
Indicator 2 are:
    (1) Current Ratio is current assets divided by current liabilities.
    (2) Number of Months Expendable Fund Balance is expendable fund 
balance (Expendable Fund Balance) divided by monthly operating expenses. 
The Expendable Fund Balance is the portion of the fund balance 
representing expendable available financial resources, that is, the 
unreserved and undesignated fund balance.
    (3) Tenant Receivable Outstanding is the average number of days 
tenant receivables are outstanding and it is calculated by dividing 
tenant accounts receivable by Daily Tenant Revenue (rental revenue/365).
    (4) Occupancy Loss is one minus unit months leased divided by unit 
months available.
    (5) Expense Management/Utility Consumption is the expense per unit 
for key expenses, including utility consumption, and other expenses such 
as maintenance and security.
    (6) Net Income or Loss divided by the Expendable Fund Balance 
measures how the year's operations have affected the PHA's viability.
    (c) Thresholds. In order to receive a passing score under the 
Financial Condition Indicator, the PHA must achieve a score of at least 
18 points, or 60 percent of the available points under this indicator. 
If the PHA fails to receive a passing score on the Financial Condition 
Indicator, the PHA shall be categorized as a substandard financial 
agency.

[65 FR 1738, Jan. 11, 2000, as amended at 65 FR 36044, June 6, 2000]