[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: 24CFR968.335]

[Page 531-533]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 968_PUBLIC HOUSING MODERNIZATION--Table of Contents
 
Subpart C_Comprehensive Grant Program (for PHAs That Own or Operate 250 
                      or More Public Housing Units)
 
Sec. 968.335  HUD review of PHA performance.

    (a) HUD determination. At least annually, HUD shall carry out such 
reviews of the performance of each PHA as may be necessary or 
appropriate to make the determinations required by this paragraph, 
taking into consideration all available evidence.
    (1) Conformity with comprehensive plan. HUD will determine whether 
the PHA has carried out its activities under this subpart in a timely 
manner and in accordance with its comprehensive plan.
    (2) Continuing capacity. HUD will determine whether the PHA has a 
continuing capacity to carry out its comprehensive plan in a timely 
manner. After the first full operational year of CGP, CIAP experience 
will not be taken into consideration except where the PHA has not yet 
had comparable experience under the CGP.
    (3) Reasonable progress. HUD shall determine whether the PHA has 
satisfied, or has made reasonable progress towards satisfying, the 
following performance standards:
    (i) Conformity with its comprehensive plan, including its annual 
statement and latest HUD-approved five-year action plan, and other 
statutory and regulatory requirements;
    (ii) Continuing capacity to carry out its comprehensive plan in a 
timely manner and expend the annual grant funds; and
    (iii) Reasonable progress toward bringing all of its developments to 
the modernization and energy conservation standards and toward 
implementing the work specified in the annual statement or five-year 
action plan designed to address management deficiencies.
    (b) Notice of deficiency. Based on HUD reviews of PHA performance 
and findings of any of the deficiencies in paragraph (d) of this 
section, HUD may issue to the PHA a notice of deficiency stating the 
specific program requirements which the PHA has violated and requesting 
the PHA to take any of the actions in paragraph (e) of this section.
    (c) Corrective action order. (1) Based on HUD reviews of PHA 
performance and findings of any of the deficiencies in paragraph (d) of 
this section, HUD may issue to the PHA a corrective action order, 
whether or not a notice of deficiency has previously been issued in 
regard to the specific deficiency on which the corrective action order 
is based. HUD may order corrective action at any time by notifying the 
PHA of the specific program requirements which the PHA has violated, and 
specifying that any of the corrective actions listed in paragraph (e) of 
this section must be taken. HUD shall design corrective action to 
prevent a continuation of the deficiency, mitigate any adverse effects 
of the deficiency to the extent possible, or prevent a recurrence of the 
same or similar deficiencies;
    (2) Before ordering corrective action, HUD will notify the PHA and 
give it an opportunity to consult with HUD regarding the proposed 
action;
    (3) Any corrective action ordered by HUD shall become a condition of 
the grant agreement;
    (4) If HUD orders corrective action by a PHA in accordance with this 
section, the PHA's Board of Commissioners must notify affected residents 
of HUD's determination, the bases for the determination, the 
conditioning requirements imposed under this paragraph, and the 
consequences to the PHA if it fails to comply with HUD's requirements.
    (d) Basis for corrective action. HUD may order a PHA to take 
corrective action only if HUD determines:
    (1) The PHA has not submitted a performance and evaluation report, 
in accordance with Sec. 968.330;
    (2) The PHA has not carried out its activities under the CGP program 
in a timely manner and in accordance with

[[Page 532]]

its comprehensive plan or HUD requirements, as determined in paragraph 
(a)(1) of this section;
    (3) The PHA does not have a continuing capacity to carry out its 
comprehensive plan in a timely manner or in accordance with its 
comprehensive plan or HUD requirements, as determined in paragraph 
(a)(2) of this section;
    (4) The PHA has not satisfied, or has not made reasonable progress 
towards satisfying, the performance standards specified in paragraph 
(a)(3) of this section;
    (5) An audit conducted in accordance with 24 CFR part 44, or 
pursuant to other HUD reviews (including monitoring findings) reveals 
deficiencies that HUD reasonably believes require corrective action; or
    (6) The PHA has failed to repay HUD for amounts awarded under the 
CGP program that were improperly expended.
    (e) Types of corrective action. HUD may direct a PHA to take one or 
more of the following corrective actions:
    (1) Submit additional information:
    (i) Concerning the PHA's administrative, planning, budgeting, 
accounting, management, and evaluation functions, to determine the cause 
for a PHA not meeting the standards in paragraph (a)(1), (a)(2), or 
(a)(3) of this section;
    (ii) Explaining any steps the PHA is taking to correct the 
deficiencies;
    (iii) Documenting that PHA activities were not inconsistent with the 
PHA's annual statement or other applicable laws, regulations, or program 
requirements; and
    (iv) Demonstrating that the PHA has a continuing capacity to carry 
out the comprehensive plan in a timely manner;
    (2) Submit detailed schedules for completing the work identified in 
its Annual Statements and report periodically on its progress on meeting 
the schedules;
    (3) Notwithstanding 24 CFR 85.36(g), submit to HUD the following 
documents for prior approval, which may include, but are not limited to:
    (i) Proposed agreement with the architect/engineer (prior to 
execution);
    (ii) Complete construction and bid documents (prior to soliciting 
bids);
    (iii) Proposed award of contracts, including construction and 
equipment contracts and management contracts; or
    (iv) Proposed contract modifications prior to issuance, including 
modifications to construction and equipment contracts, and management 
contracts;
    (4) Submit additional material in support of one or more of the 
statements, resolutions, and certifications submitted as part of the 
PHA's Comprehensive Plan, Five-Year Action Plan, or Performance and 
Evaluation Report;
    (5) Not incur financial obligations, or to suspend payments for one 
or more activities;
    (6) Reimburse, from non-HUD sources, one or more program accounts 
for any amounts improperly expended;
    (7) Submit to an alternative management strategy which may involve 
third-party oversight or administration of the modernization function; 
and
    (8) Take such other corrective actions HUD determines appropriate to 
correct PHA deficiencies.
    (f) Failure to take corrective action. In cases where HUD has 
ordered corrective action and the PHA has failed to take the required 
actions within a reasonable time, as specified by HUD, HUD may take one 
or more of the following steps;
    (1) Withhold some or all of the PHA's grant;
    (2) Declare a breach of the ACC grant amendment with respect to some 
or all of the PHA's functions; or
    (3) Any other sanction authorized by law or regulation.
    (g) Reallocation of funds that have been withheld. Where HUD has 
withheld for a prescribed period of time some or all of a PHA's annual 
grant, HUD may reallocate such amounts to other PHAs/IHAs under the CGP 
program, subject to approval in appropriations acts. The reallocation 
shall be made to IHAs which HUD has determined to be administratively 
capable under Sec. 950.135, and to PHAs under the CGP program which are 
not designated as either troubled or mod troubled under the PHMAP at 24 
CFR part 901, based upon the relative needs of these IHAs and PHAs, as 
determined under the formula at Sec. 968.103(e) and (f).

[[Page 533]]

    (h) Right to appeal. Before withholding some or all of the PHA's 
annual grant, declaring a breach of the ACC grant amendment, or 
reallocating funds that have been withheld, HUD will notify the PHA and 
give it an opportunity, within a prescribed period of time, to present 
to the Assistant Secretary for Public and Indian Housing any arguments 
or additional facts and data concerning the proposed action.
    (i) Notification of residents. The PHA's Board of Commissioners must 
notify affected residents of HUD's final determination to withhold 
funds, declare a breach of the ACC grant amendment, or reallocate funds, 
as well as the basis for, and the consequences resulting from, such a 
determination.
    (j) Recapture. In addition, HUD may recapture for good cause any 
grant amounts previously provided to an PHA, based upon a determination 
that the PHA has failed to comply with the requirements of the CGP 
program. Before recapturing any grant amounts, HUD will notify the PHA 
and give it an opportunity to appeal in accordance with paragraph (h) of 
this section. Any reallocation of recaptured amounts will be reallocated 
in accordance with paragraph (g) of this section. The PHA's board of 
Commissioners must notify affected residents of HUD's final 
determination to recapture any funds.
    (k) Cumulative remedies. The authority to condition, withhold, 
reallocate or recapture a PHA's grant, as provided in this section, is 
in addition to the authority contained in Sec. 968.310(c) to reduce a 
PHA's formula allocation based upon its designation as a mod troubled 
PHA.

(Approved by the Office of Management and Budget under control number 
2577-0157)

[57 FR 5575, Feb. 14, 1992, as amended at 59 FR 44843, Aug. 30, 1994. 
Redesignated and amended at 61 FR 8748, Mar. 5, 1996; 62 FR 27126, May 
16, 1997]