[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: 24CFR902.75]

[Page 290-292]
 
                 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 G_PHAS Incentives and Remedies
 
Sec. 902.75  Referral to a Troubled Agency Recovery Center (TARC).

    (a) General. Upon a PHA's designation of troubled (including 
troubled in one area), in accordance with the requirements of section 
6(j)(2)(B) of the Act and in accordance with this part (or part 901, of 
this chapter if applicable), REAC shall refer each troubled PHA to the 
PHA's area TARC for remedial action. Remedial action by the TARC may 
include referral to the HUB/Program Center for oversight and monitoring. 
The actions to be taken by HUD and the PHA will include actions 
statutorily required, and such other actions as may be determined 
appropriate by HUD.
    (b) Memorandum of Agreement (MOA). Within 30 days of notification of 
a PHA's designation as a troubled performer (including substandard 
categorization), HUD will initiate activities to develop a MOA. The 
final MOA is a binding contractual agreement between HUD and a PHA. The 
scope of the MOA may vary depending upon the extent of the problems 
present in the PHA, but shall include:
    (1) Baseline data, which should be raw data but may be the PHA's 
score in each of the PHAS indicators, sub-indicators or components 
identified as a deficiency;
    (2) Performance targets for such periods specified by HUD (e.g., 
annual, semi-annual, quarterly, monthly), which may be the attainment of 
a higher score within an indicator, sub-indicator or component that is a 
problem, or the description of a goal to be achieved;
    (3) Strategies to be used by the PHA in achieving the performance 
targets within the time period of the MOA;
    (4) Technical assistance to the PHA provided or facilitated by HUD, 
for example, the training of PHA employees in specific management areas 
or assistance in the resolution of outstanding HUD monitoring findings;
    (5) The PHA's commitment to take all actions within its control to 
achieve the targets;
    (6) Incentives for meeting such targets, such as the removal of 
troubled designation or troubled with respect to the program for 
assistance from the Capital Fund under section 9(d) and Departmental 
recognition for the most improved PHAs;
    (7) The consequences of failing to meet the targets include but are 
not limited to, such sanctions as the imposition of budget and 
management controls by HUD, declaration of substantial default and 
subsequent actions, including referral to the DEC for judicial 
appointment of a receiver, limited denial of participation, suspension, 
debarment, or other actions deemed appropriate by the DEC; and
    (8) A description of the involvement of local public and private 
entities, including PHA resident leaders, in carrying out the agreement 
and rectifying the PHA's problems. A PHA shall have

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primary responsibility for obtaining active local public and private 
entity participation, including the involvement of public housing 
resident leaders, in assisting PHA improvement efforts. Local public and 
private entity participation should be premised upon the participant's 
knowledge of the PHA, ability to contribute technical expertise with 
regard to the PHA's specific problem areas and authority to make 
preliminary/tentative commitments of support, financial or otherwise.
    (c) PHA review of MOA. The PHA will have 10 days to review the MOA. 
During this 10-day period, the PHA shall resolve any claimed 
discrepancies in the MOA with HUD, and discuss any recommended changes 
and target dates for improvement to be incorporated in the final MOA. 
Unless the time period is extended by HUD, the MOA is to be executed 15 
days following issuance of the preliminary MOA.
    (d) Maximum recovery period. (1) Expiration of one-year recovery 
period. Upon the expiration of the one-year period beginning on the date 
on which the PHA receives initial notice of troubled designation 
(including notice of substandard status) or October 21, 1998, whichever 
is later, the PHA shall improve its performance, as measured by the PHAS 
Indicators, by at least 50 percent of the difference between the most 
recent performance measurement and the measurement necessary to remove 
the PHA's designation as troubled or substandard status.
    (2) Expiration of two-year recovery period. Upon the expiration of 
the two-year period beginning on the later of the date on which the PHA 
receives initial notice of troubled designation (including notice of 
substandard status) or October 21, 1998, the PHA shall improve its 
performance and achieve an overall PHAS score of at least 60 percent, 
and achieve a score of at least 60 percent of the total points available 
under each of PHAS Indicators 1, 2 and 3.
    (e) Parties to the MOA. An MOA shall be executed by:
    (1) The PHA Board Chairperson (supported by a Board resolution), or 
a receiver (pursuant to a court ordered receivership agreement, if 
applicable) or other AME acting in lieu of the PHA Board;
    (2) The PHA Executive Director, or a designated receiver (pursuant 
to a court ordered receivership agreement, if applicable) or other AME-
designated Chief Executive Officer;
    (3) The Director of the area TARC; and
    (4) The appointing authorities of the Board of Commissioners, unless 
exempted by the TARC.
    (f) Involvement of resident leadership in the MOA. HUD encourages 
the inclusion of the resident leadership in the execution of the MOA.
    (g) Failure to execute MOA or make substantial improvement under 
MOA. (1) If a troubled PHA fails or refuses to execute a MOA within the 
period provided in paragraph (b) of this section, or a troubled PHA 
operating under an executed MOA does not show a substantial improvement, 
as provided in paragraph (d) of this section, toward a passing PHAS 
score following the issuance of the failing PHAS score by REAC, the TARC 
shall refer the PHA to the DEC in accordance with Sec. 902.77, and the 
DEC shall take the actions required by Sec. 902.77(a)(2).
    (2) For purposes of this paragraph (g), substantial improvement is 
defined as the improvement required by paragraphs (d)(1) and (d)(2) of 
this section. The maximum period of time for remaining in troubled 
status before being referred to the DEC is two years. Therefore, the PHA 
must make substantial improvement in each year of this two year period.
    (3) The following example illustrates the provisions of paragraph 
(g)(1) of this section:

    Example: A PHA receives a score of 50 percent; 60 percent is a 
passing score. The PHA is referred to the TARC. Within one year after 
the score is issued to the PHA, the PHA must achieve a 55 (50% of the 
points necessary to achieve a passing score of 60 points) to continue 
recovery efforts in the TARC. In the second year, the PHA must achieve a 
minimum score of 60 points (a passing score). If in the first year, the 
PHA fails to achieve the five-point increase,the PHA will be referred to 
the DEC. If in the first year, the PHA achieves the five-point increase 
but fails to achieve a passing score in the second year, the PHA will be 
referred to the DEC. The maximum period of time for

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remaining in troubled status before being referred to the DEC is two 
years.

    (h) Audit review. For a PHA designated as troubled, REAC will 
perform an audit review and may, at its discretion, select the audit 
firm that will perform the audit of the PHA and REAC may, at its 
discretion, serve as the audit committee for the audit in question.
    (i) Continuation of services to residents. To the extent feasible, 
while a PHA is under a referral to a TARC, all services to residents 
will continue uninterrupted.