[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR941.501]

[Page 381-382]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
 
PART 941_PUBLIC HOUSING DEVELOPMENT--Table of Contents
 
                      Subpart E_Performance Review
 
Sec.  941.501  HUD review of PHA performance; sanctions.


    (a) HUD determination. 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 (a), taking into consideration 
all available evidence.
    (1) Conformity with PHA proposal. HUD shall determine whether the 
PHA has carried out its activities under this subpart in a timely manner 
and in accordance with its approved proposal.
    (i) In making this determination, HUD shall review the PHA's 
performance under previous inspections, audit findings and other sources 
to determine whether the development activities undertaken during the 
period under review conform substantially to the activities specified in 
the approved PHA proposal. HUD also shall review a PHA's development 
schedule to determine whether the PHA has carried out its development 
activities in a timely manner;
    (ii) HUD shall review a PHA's performance to determine whether the 
activities carried out comply with the requirements of the Act, and 
other applicable laws and regulations.
    (2) Continuing capacity. HUD shall determine whether the PHA has a 
continuing capacity to carry out its development plan in a timely 
manner. The primary factors to be considered in arriving at a 
determination that a PHA has a continuing capacity are those described 
in paragraph (a)(1) of this section (``conformity with PHA proposal''). 
HUD shall give particular attention to PHA efforts to accelerate the 
progress of the program and to prevent the recurrence of past 
deficiencies or noncompliance with applicable laws and regulations.
    (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 that the PHA has violated and requesting 
the PHA to take any of the actions specified 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 been issued previously with 
respect 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 that 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 shall notify the PHA and 
give it an opportunity to consult with HUD regarding the proposed 
action;

[[Page 382]]

    (3) Any corrective action ordered by HUD shall become a condition of 
the grant agreement (ACC);
    (d) Basis for corrective action. HUD may order a PHA to take 
corrective action only if it determines:
    (1) The PHA has not carried out its activities under the development 
program in a timely manner and in accordance with its approved proposal, 
or HUD requirements, as determined in paragraph (a)(l) of this section;
    (2) The PHA does not have a continuing capacity to carry out its 
proposal in a timely manner or in accordance with its proposal or HUD 
requirements, as determined in paragraph (a)(2) of this section;
    (3) The PHA has failed to repay HUD for amounts awarded under the 
development programs 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 paragraphs (a)(1) or (a)(2) 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 proposal or other applicable laws, regulations or program 
requirements; and
    (iv) Demonstrating that the PHA has a continuing capacity to carry 
out the proposal in a timely manner;
    (2) Submit schedules for completing the work identified in its 
proposal and report periodically on its progress in meeting the 
schedules;
    (3) Notwithstanding 24 CFR 941.205(c), 24 CFR 941.402(a) and 24 CFR 
85.36(g), submit to HUD documents for prior approval, which may include, 
but are not limited to:
    (i) Complete design, construction and bid documents (prior to 
soliciting bids);
    (ii) Complete rehabilitation drawings/specifications or work write-
ups;
    (iii) Development budgets, including modifications;
    (iv) Proposed award of contracts, including construction contracts, 
turnkey contracts of sale, letters of commitment, and contracts with the 
architect/engineer (prior to execution);
    (4) Submit additional material in support of one or more of the 
statements, resolutions, and certifications submitted as part of the PHA 
proposal, or periodic performance 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;
    (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) Terminate future draw downs and/or advances to the PHA. In such 
case, the amount of advances made to the PHA shall be repaid by the PHA 
from any funds or assets available for that purpose;
    (2) Require alternative management of development functions by an 
entity other than the PHA;
    (3) Cancel the fund reservation if the PHA fails to start (begin 
construction or rehabilitation), or complete (acquisition) within 30 
months from the date of the fund reservation pursuant to section 5(k) of 
the Act;
    (4) Recapture for good cause any grant amounts previously provided 
to a PHA, based upon a determination that the PHA has failed to comply 
with the requirements of the development program.
    (g) Right to appeal. Before taking any of the actions described in 
paragraph (f) of this section, HUD shall notify the PHA and give it an 
opportunity, within a prescribed period of time, to present any 
arguments or additional facts and data concerning the proposed action.

[61 FR 38021, July 22, 1996]

[[Page 383]]