PART 902—PUBLIC HOUSING ASSESSMENT SYSTEM Authority: 42 U.S.C. 1437d(j), 42 U.S.C. 3535(d), 1437z-10. Source: 76 FR 10149, Feb. 23, 2011, unless otherwise noted. Subpart A—General Provisions § 902.1 Purpose, scope, and general matters. (a) Purpose. (b) Scope. (c) PHAS indicators. (d) Assessment tools. (e) Small PHAs. (f) HUD's s coring procedures Federal Register § 902.3 Definitions. As used in this part: Act et seq. Alternative management entity (AME) Assessed fiscal year Assistant Secretary Capital Fund-troubled Corrective Action Plan Days Decent, safe, sanitary housing and in good repair (DSS/GR) Deficiency Dictionary of Deficiency Definitions Federal Register Direct Funded RMC Inspectable areas ( area) Inspectable item Memorandum of Agreement (MOA) Resident Management Corporation Unit-weighted average [76 FR 10149, Feb. 23, 2011, as amended at 88 FR 30500, May 11, 2023] § 902.5 Applicability. (a) PHAs, RMCs, AMEs. (1) Scoring of RMCs and AMEs. (ii) AMEs are not issued PHAS scores. The performance of the AME contributes to the PHAS score of the project(s)/PHA(s) for which they assumed management responsibilities. (2) ACC. (i) Because the PHA and not the RMC or AME is ultimately responsible to HUD under the ACC, the PHAS score of a PHA will be based on all of the projects covered by the ACC, including those with management operations assumed by an RMC or AME (including a court-ordered or administrative receivership agreement, if applicable). (ii) A PHA's PHAS score will not be based on projects managed by a DF-RMC. (3) This part does not apply to Moving-to-Work (MTW) agencies that are specifically exempted in their grant agreement. (b) Implementation of PHAS. § 902.9 PHAS scoring. (a) Indicators and subindicators. (b) Overall PHAS score and indicators. (1) The physical condition indicator is weighted 40 percent (40 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart B of this part. (2) The financial condition indicator is weighted 25 percent (25 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart C of this part. (3) The management operations indicator is weighted 25 percent (25 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart D of this part. (4) The Capital Fund program indicator is weighted 10 percent (10 points) of the overall PHAS score for all Capital Fund program grants for which fund balances remain during the assessed fiscal year. The score for this indicator is obtained as indicated in subpart E of this part. § 902.11 PHAS performance designation. All PHAs that receive a PHAS assessment shall receive a performance designation. The performance designation is based on the overall PHAS score and the four indicator scores, as set forth below. (a) High performer. (2) High performers will be afforded incentives that include relief from reporting and other requirements, as described in § 902.71. (b) Standard performer. (2) At HUD's discretion, a standard performer may be required by the field office to submit and operate under a Corrective Action Plan. (c) Substandard performer. (d) Troubled performer. (2) In accordance with section 6(j)(2)(A)(i) of the Act (42 U.S.C. 1437d(j)(2)(A)(i)), a PHA that receives less than 50 percent under the Capital Fund program indicator under subpart E of this part will be designated as a troubled performer and subject to the sanctions provided in section 6(j)(4) of the Act (42 U.S.C. 1437(d)(j)(4)). § 902.13 Frequency of PHAS assessments. The frequency of a PHA's PHAS assessments is determined by the size of the PHA's Low-Rent program and its PHAS designation. HUD may, due to unforeseen circumstances or other cause as determined by HUD, extend the time between assessments by direct notice to the PHA and relevant resident organization or resident management entity, and any other general notice that HUD deems appropriate. (a) Small PHAs. (1) A small PHA that is a high performer may receive a PHAS assessment every 3 years; (2) A small PHA that is a standard or substandard performer may receive a PHAS assessment every other year; and (3) All other small PHAs may receive a PHAS assessment every year, including a PHA that is designated as troubled or Capital Fund-troubled in accordance with § 902.75. (b) Frequency of scoring for PHAs with 250 units or more. (2) The physical condition score for each project will determine the frequency of inspections of each project in accordance with the inspection cycle laid out in 24 CFR 5.705(c). The PHAS physical condition indicator score for an assessment period shall be calculated by taking the unit-weighted average of the most recent physical condition score for each project, except that, starting July 1, 2023, no new physical condition indicator will be issued for a PHA until every project under the PHA has been inspected on or after July 1, 2023. (3) If a PHA is designated as a troubled performer, all projects will receive a physical condition inspection regardless of the individual project physical condition score. (4) In the baseline year, every PHA will receive an overall PHAS score and in all four of the PHAS indicators: Physical condition; financial condition; management operations; and Capital Fund program. This will allow a baseline for the physical condition inspections and the 3-2-1 inspection schedule, as well as a baseline year for the small deregulated PHAs. (c) Financial submissions. [76 FR 10149, Feb. 23, 2011, as amended at 88 FR 30500, May 11, 2023] Subpart B—Physical Condition Indicator § 902.20 [Reserved] § 902.21 Physical condition standards for public housing. Public housing must be maintained in a manner that meets the physical condition standards set forth in 24 CFR part 5, subpart G. [88 FR 30500, May 11, 2023] § 902.22 Inspection of PHA projects. The PHA's score for the physical condition indicator is based on an independent inspection of a PHA's project(s) provided by HUD and using the requirements and timelines laid out in 24 CFR part 5, subpart G, to ensure projects meet acceptable basic housing conditions. Mixed-finance projects will be subject to the physical condition inspections. [88 FR 30501, May 11, 2023] § 902.24 [Reserved] § 902.25 Physical condition scoring and thresholds. (a) Scoring. (b) Overall PHA physical condition indicator score. (c) Thresholds. (2) In order to receive a passing score under the physical condition indicator, the PHA must achieve a score of at least 24 points, or 60 percent. (3) A PHA that receives fewer than 24 points will be categorized as a substandard physical condition agency. § 902.26 [Reserved] Subpart C—Financial Condition Indicator § 902.30 Financial condition assessment. (a) Objective. (b) Financial reporting standards. (c) Exclusions. § 902.33 Financial reporting requirements. (a) Annual financial report. (1) Prepared in accordance with Generally Accepted Accounting Principles (GAAP), as further defined by HUD in supplementary guidance; and (2) Submitted electronically in the format prescribed by HUD using the Financial Data Schedule (FDS). (b) Annual unaudited financial information report filing dates. (c) Annual audited financial information compliance dates. (d) Year-end audited financial information. (e) Submission of information. [76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015] § 902.35 Financial condition scoring and thresholds. (a) Scoring. (2) The financial condition score for projects will be based on the annual financial condition information submitted to HUD for each project under 24 CFR 990.280 and 990.285. The financial condition score for PHAs will be based on a unit-weighted average of project scores. (b) Subindicators of the financial condition indicator. (1) Quick Ratio (QR). (2) Months Expendable Net Assets Ratio (MENAR). (3) Debt Service Coverage Ratio (DSCR). (c) Overall PHA financial condition indicator score. (d) Thresholds. (2) In order for a PHA to receive a passing score under the financial condition indicator, the PHA must achieve a score of at least 15 points, or 60 percent of the available points under this indicator. (3) A PHA that receives fewer than 15 points available under this indicator will be categorized as a substandard financial condition agency. Subpart D—Management Operations Indicator § 902.40 Management operations assessment. (a) Objective. (b) Exclusions. § 902.43 Management operations performance standards. (a) Management operations subindicators. (1) Occupancy. (2) Tenant accounts receivable. (3) Accounts payable. (b) Assessment under the Management Operations Indicator. § 902.44 Adjustment for physical condition and neighborhood environment. (a) General. (b) Definitions. (1) Physical condition adjustment applies to projects at least 28 years old, based on the unit-weighted average Date of Full Availability (DOFA) date. (2) Neighborhood environment adjustment applies to projects located in census tracts where at least 40 percent of the families have an income below the poverty rate, as documented by the most recent census data. If a project is located in more than one census tract, the census data for the census tract where the majority of the project's units are located shall be used. (c) Adjustment for physical condition and neighborhood environment. (d) Application of adjustment. § 902.45 Management operations scoring and thresholds. (a) Scoring. (b) Overall PHA management operations indicator score. (c) Thresholds. (2) In order to receive a passing score under the management operations indicator, a PHA must achieve a score of at least 15 points or 60 percent. (3) A PHA that receives fewer than 15 points will be categorized as a substandard management operations agency. Subpart E—Capital Fund Program Indicator § 902.50 Capital Fund program assessment. (a) Objective. (b) Applicability. (c) Capital Fund subindicators. (1) Timeliness of fund obligation. This subindicator examines the period of time it takes for a PHA to obligate funds from the Capital Fund program under section 9(j)(1) of the 1937 Act (42 U.S.C. 1437g(9)(j)). (2) Occupancy rate. This subindicator measures the PHA's occupancy rate as of the end of the PHA's fiscal year. (d) Method of assessment. (1) PHAs are responsible to ensure that their Capital Fund program information is submitted to eLOCCS by the submission due date. (2) A PHA may not appeal its PHAS score, Capital Fund program score, or both, based on the fact that it did not submit its Capital Fund program information to eLOCCS and/or the PIC systems by the submission due date. § 902.53 Capital Fund program scoring and thresholds. (a) Scoring. (b) Thresholds. (2) In order to receive a passing score under the Capital Fund program indicator, a PHA must achieve a score of at least 5 points, or 50 percent. Subpart F—PHAS Scoring § 902.60 Data collection. (a) Fiscal year reporting period—limitation on changes after PHAS effective date. (b) Request for extension of time to submit unaudited financial information. (c) Request for waiver of due date for PHA submission of audited financial information. (2) A waiver of the due date for the submission of audited financial information to HUD does not relieve a PHA of its responsibility to submit its audited information to OMB's Federal Audit Clearinghouse no later than 9 months after the end of its fiscal year. (d) Rejected unaudited financial submissions. (e) Late points and late presumptive failure. (f) Score change. [76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015] § 902.62 Failure to submit data. (a) Failure to submit data by due date. (2) If the unaudited year-end financial information is not received within 3 months past the due date, or extended due date, the PHA will receive a presumptive rating of failure for its unaudited information and shall receive zero points for its unaudited financial information and the final financial condition indicator score. The subsequent timely submission of audited information does not negate the score of zero received for the unaudited year-end financial information submission. (3) The PHA's audited financial statement must be received no later than 9 months after the PHA's fiscal year-end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F. If the audited financial statement is not received by that date, the PHA will receive a presumptive rating of failure for the financial condition indicator. (b) Verification of information submitted. (2) A PHA that cannot provide justifying documentation to HUD for the assessment under any indicator(s) or subindicator(s) shall receive a score of zero for the relevant indicator(s) or subindicator(s) and its overall PHAS score shall be lowered accordingly. (c) Failure to submit. [76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015] § 902.64 PHAS scoring and audit reviews. (a) Adjustments to PHAS score. (2) A PHA's PHAS score under individual indicators or subindicators, or its overall PHAS score, may be changed by HUD in accordance with data included in the audit report or obtained through such sources as HUD project management and other reviews, investigations by HUD's Office of Fair Housing and Equal Opportunity, investigations or audits by HUD's Office of Inspector General, or reinspection by HUD, as applicable. (b) Issuance of a score by HUD. (2) Each PHA (or RMC) shall post a notice of its final PHAS score and designation in appropriate conspicuous and accessible locations in its offices within 2 weeks of receipt of its final PHAS score and designation. In addition, HUD will post every PHA's PHAS score and designation on HUD's Internet site. (c) Review of audit. Quality control review. (2) Determination of deficiency. (i) Deficient financial statements. (ii) Deficient electronic submission. (iii) Deficient audit. (3) HUD actions. [76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75942, Dec. 7, 2015] § 902.66 Withholding, denying, and rescinding designation. (a) Withholding designation. (1) Is operating under a special agreement with HUD ( e.g., (2) Is involved in litigation that bears directly upon the physical, financial, or management performance of a PHA; (3) Is operating under a court order; (4) Demonstrates substantial evidence of fraud or misconduct, including evidence that the PHA's certifications, submitted in accordance with this part, are not supported by the facts, as evidenced by such sources as a HUD review, routine reports, an Office of Inspector General investigation/audit, an independent auditor's audit, or an investigation by any appropriate legal authority; or (5) Demonstrates substantial noncompliance in one or more areas of a PHA's required compliance with applicable laws and regulations, including areas not assessed under PHAS. Areas of substantial noncompliance include, but are not limited to, noncompliance with civil rights, nondiscrimination and fair housing laws and regulations, or the ACC. Substantial noncompliance casts doubt on the capacity of a PHA to preserve and protect its public housing projects and operate them consistent with federal laws and regulations. (b) High performer and standard designations. (c) Effect on score. § 902.68 [Reserved] § 902.69 PHA right of petition and appeal. (a) Appeal of troubled performer designation and petition for removal of troubled performer designation. (1) Appeal its troubled performer designation (including Capital Fund program troubled performer designation); (2) Appeal its final overall PHAS score; (3) Petition for removal of troubled performer designation; (4) Appeal any refusal of a petition to remove troubled performer designation; and (5) Appeal actions under § 902.66. (b) Appeal of PHAS score. (2) A PHA may not appeal its PHAS score, physical condition score, or both, based on the subsequent correction of deficiencies identified as a result of a project's physical inspection or the denial of a technical review request. (3) A PHA may not appeal its PHAS score, Capital Fund program score, or both, based on the fact that it did not submit its Capital Fund program information to eLOCCS by the submission due date. (c) Appeal and petition procedures. (2) To appeal the denial of a petition to remove a troubled performer designation, a PHA must submit a written request to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days after HUD's decision to refuse to remove the PHA's troubled performer designation. (3) To appeal the petition for the removal of a troubled performer designation, or appeal the denial of a petition to remove a troubled performer designation, a PHA shall submit its request in writing to the Deputy Assistant Secretary of the Real Estate Assessment Center. (4) An appeal of a troubled performer designation, the petition for removal of a troubled performer designation, or the appeal of a refusal of a petition to remove a troubled performer designation must include the PHA's supporting documentation and reasons for the appeal or petition. An appeal of a PHAS score must be accompanied by the PHA's evidence that a material error occurred. An appeal or petition submitted to HUD without supporting documentation will not be considered and will be returned to the PHA. (d) Denial, withholding, or rescission. (e) Consideration of petitions and appeals. (2) Consideration of an appeal of refusal to remove a troubled performer designation. Upon receipt of an appeal of refusal to remove a troubled performer designation, HUD will evaluate the appeal and its merits for the purposes of determining whether a reassessment of the PHA is warranted. The HUD staff initially evaluating an appeal of refusal to remove a troubled performer designation will not be the same HUD staff who evaluated the PHA's petition to remove the troubled performer designation. The Assistant Secretary will render the final determination of such an appeal. (f) Notice and finality of decisions. (2) HUD will issue a written decision on all appeals and petitions made under this section. Subpart G—PHAS Incentives and Remedies § 902.71 Incentives for high performers. (a) Incentives for high performer PHAs. (1) Relief from specific HUD requirements. e.g., (2) Public recognition. (3) Bonus points in funding competitions. (b) Compliance with applicable federal laws and regulations. (c) Audits and reviews not relieved by designation. (1) Regular independent auditor audits; (2) Office of Inspector General audits or investigations as circumstances may warrant; and (3) Reviews identified by the regional or field office in its current Risk Assessment of PHAs and projects. [76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75942, Dec. 7, 2015] § 902.73 PHAs with deficiencies. (a) Oversight and action. (1) A standard performer that receives a total score of at least 60 percent shall be required to correct the deficiencies in performance within the time period for correction, as stated in § 902.73(c). If the PHA fails to correct the deficiencies, HUD may either require the PHA to enter into a Corrective Action Plan, or HUD may take other action, as appropriate. (2) A substandard performer, i.e., (3) A PHA with a project(s) that receives less than 60 percent of the points available for the physical condition, management operations, or financial condition PHAS indicators, or less than 50 percent of the points available for the capital fund indicator, shall be required to correct the deficiencies in performance within the time period for correction, as stated in § 902.73(b). If the PHA fails to correct the deficiencies within the time period allowed, HUD may either require the PHA to enter into a Corrective Action Plan, or take other action, as appropriate. (b) Correction of deficiencies. Time period for correction. (2) Notification and report to regional or field office. (c) Failure to correct deficiencies. (2) The PHA (or DF-RMC or RMC) will provide the field office with its reasons for lack of progress in negotiating, executing, or carrying out the Corrective Action Plan, within 30 days of the PHA's receipt of the noncompliance notification. HUD will advise the PHA as to the acceptability of its reasons for lack of progress. (3) If HUD finds the PHA's (or DF-RMC or RMC's) reasons for lack of progress unacceptable, HUD will notify the PHA (or DF-RMC or RMC) that it will take such actions as it may determine appropriate in accordance with the provisions of the 1937 Act and other statutes, the ACC, this part, and other HUD regulations, including, but not limited to, the remedies available for substantial default. § 902.75 Troubled performers. (a) General. (b) Memorandum of agreement (MOA). (1) Baseline data, which should be data without adjustments or weighting but may be the PHA's score in each of the PHAS indicators or subindicators identified as a deficiency; (2) Performance targets for such periods specified by HUD ( e.g., (3) Strategies to be used by the PHA in achieving the performance targets within the time period of the MOA, including the identification of the party responsible for the completion of each task and for reporting progress; (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 a troubled performer designation or troubled with respect to the program for assistance from the Capital Fund program under section 9(d) of the Act (42 U.S.C. 1437g(d)) and HUD recognition for the most-improved PHAs; (7) The consequences of failing to meet the targets, which include, but are not limited to, the interventions stated in 24 CFR part 907 and in section 6(j)(3) of the Act (42 U.S.C. 1437d(j)(3)); 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 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 commitments of support, financial or otherwise. (c) PHA review of MOA. (d) Maximum recovery period. Expiration of the first-year improvement period. (2) Expiration of 2-year recovery period. (e) Parties to the MOA. (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; and (3) The field office (f) Involvement of resident leadership in the MOA. (g) Failure to execute MOA or make substantial improvement under MOA. (2) For purposes of paragraph (g) of this section, substantial improvement is defined as the improvement required by paragraph (d) of this section. The maximum period of time for remaining in troubled performer status before being referred to the Assistant Secretary is 2 years after the initial notification of the troubled performer designation. Therefore, the PHA must make substantial improvement in each year of this 2-year period. (3) The following example illustrates the provisions of paragraph (g)(1) of this section: Example: A PHA receives a score of 50 points on the physical condition, management operations, or financial condition PHAS indicators; 60 points is a passing score. Upon the expiration of the one-year period that started on the date on which the PHA received the initial notification of the troubled performer designation, the PHA must achieve at least 55 points (50 percent of the 10 points necessary to achieve a passing score of 60 points) to continue recovery efforts. In the second year, the PHA must achieve a minimum score of 60 points (a passing score). If, in the first year that started on the date on which the PHA received the initial notification of the troubled designation, the PHA fails to achieve the 5-point increase, or if the PHA achieves the 5 point increase within the first year that started on the date on which the PHA received the initial notification of the troubled designation, but fails to achieve the minimum passing score of 60 points after the second year after the initial notification, HUD will notify the PHA that it will take such actions as it may determine appropriate in accordance with the provisions of the ACC and other HUD regulations, including, but not limited to, the remedies available for substantial default. (h) Audit review. (i) Continuation of services to residents. § 902.79 Verification and records. All project and PHA certifications, year-end financial information, and supporting documentation are subject to HUD verification at any time, including review by an independent auditor. All PHAs must retain supporting documents for any certifications and for asset management reviews for at least 3 years. Failure to maintain and provide supporting documentation for a period of 3 years for any indicator(s), subindicator(s), or other methods used to assess performance shall result in a score of zero for the indicator(s) or subindicator(s), and a lower overall PHAS score for the applicable assessment period. § 902.81 Resident petitions for remedial action. Residents of a PHA designated as troubled pursuant to section 6(j)(2)(A) of the Act (42 U.S.C. 1437d(j)(2)(A)) may petition HUD in writing to take one or more of the actions referred to in section 6(j)(3)(A) of the Act (42 U.S.C. 1437d(j)(3)(A)). HUD will consider any petition from a group of residents totaling at least 20 percent of the PHA's residents, or from an organization or organizations of residents whose membership equals at least 20 percent of the PHA's residents. HUD shall respond to such petitions in a timely manner with a written description of the actions, if any, HUD plans to take and, where applicable, the reasons why such actions differ from the course proposed by the residents. Nothing in this section shall limit HUD's discretion to determine whether a substantial default has occurred or to select the appropriate intervention upon such determination. § 902.83 Sanctions for troubled performer PHAs. (a) If a troubled performer PHA fails to make substantial improvement, as set forth in § 902.75(d), HUD shall: (1) In the case of a troubled performer PHA with 1,250 or more units, declare substantial default in accordance with § 907.3(b)(3) of this chapter and petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the Act (42 U.S.C. 1437d(j)(3)(A)(ii)); or (2) In the case of a troubled performer PHA with fewer than 1,250 units, declare substantial default in accordance with § 907.3(b)(3) of this chapter and either petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the Act (42 U.S.C. 1437d(j)(3)(A)(ii)), or take possession of the PHA (including all or part of any project or program of the PHA) pursuant to section 6(j)(3)(A)(iv) of the Act (42 U.S.C. 1437d(j)(3)(A)(iv)), and appoint, on a competitive or noncompetitive basis, an individual or entity as an administrative receiver to assume the responsibilities of HUD for the administration of all or part of the PHA (including all or part of any project or program of the PHA). (3) In the case of substantial default by a troubled performer PHA, nothing in this section shall be construed to limit the courses of action available to HUD under this part, 24 CFR part 907, or section 6(j)(3)(A) of the Act (42 U.S.C. 1437d(j)(3)(A)) for any other substantial default by a PHA. (b) If a troubled performer PHA fails to execute or meet the requirements of an MOA in accordance with § 902.75, other than as specified in paragraph (a) of this section, the PHA may be deemed to be in substantial default by HUD and any remedy available therefore may be invoked in the discretion of HUD. Subpart H—Assessment of Small Rural Public Housing Agencies Source: 88 FR 30501, May 11, 2023, unless otherwise noted. § 902.101 Definition of small rural PHAs. (a) Definition. (1) Has a primary administrative building as determined with a physical address in a rural area as described in 12 CFR 1026.35(b)(2)(iv)(A); or (2) More than 50 percent of its combined public housing units and voucher units under section 8(o) are in rural areas as described in 12 CFR 1026.35(b)(2)(iv)(A). (b) Determination. (2) HUD will determine if a PHA qualifies as a small rural PHA under paragraph (a) of this section every 3 years. (c) Appeals. § 902.103 Public housing assessment of small rural PHAs. (a) Small rural public housing assessment. (b) Triennial assessment. (c) Initial public housing assessment. (2) For PHAs not subject to small PHA deregulation, the first inspection is based on the PHA's overall weighted project physical condition indicator score (e.g., a PHA with a physical condition indicator score of 90 or greater would receive the first inspection three years after most recent PHAS assessment). § 902.105 Troubled small rural PHAs. (a) Definition of troubled small rural PHA. (b) Referral to the local field office. (c) Corrective Action Agreement (CAA). (1) Baseline data, which should be data without adjustments or weighting but may be the PHA's score identified as a deficiency; (2) Performance targets for such periods specified by HUD (e.g., annual, semiannual, quarterly, monthly), which may be the attainment of a higher score or the description of a goal to be achieved; however, safety, health, and environmental performance targets and deadlines otherwise specified by regulation, including the lead safety regulations at 24 CFR part 35, are not superseded by the CAA performance targets; (3) Strategies to be used by the PHA in achieving the performance targets within the time period of the CAA, including the identification of the party responsible for the completion of each task and for reporting progress; (4) Technical assistance to the PHA provided or facilitated by HUD; (5) The PHA's commitment to take all actions within its control to achieve the targets; (6) The consequences of failing to meet the targets; and (7) 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 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 commitments of support, financial or otherwise. (d) PHA review of the CAA. (e) Maximum recovery period. (f) Parties to the CAA. (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; and (3) The field office. (g) Involvement of resident leadership in the CAA. (h) Failure to execute CAA or make substantial improvement under CAA. (i) Continuation of services to residents. § 902.107 Withholding, denying, and rescinding troubled designation. (a) Withholding designation. (1) Is operating under a special agreement with HUD (e.g., a civil rights Conciliation or Voluntary Compliance Agreement); (2) Is involved in litigation that bears directly upon the physical performance of a PHA; (3) Is operating under a court order; (4) Demonstrates substantial evidence of fraud or misconduct, including evidence that the PHA's certifications, submitted in accordance with this part, are not supported by the facts, as evidenced by such sources as a HUD review, routine reports, an Office of Inspector General investigation/audit, an independent auditor's audit, or an investigation by any appropriate legal authority; or (5) Demonstrates substantial noncompliance in one or more areas of a PHA's required compliance with applicable laws and regulations, including areas not assessed under the small rural assessment. Areas of substantial noncompliance include, but are not limited to, noncompliance with civil rights, nondiscrimination and fair housing laws and regulations, or the ACC. Substantial noncompliance casts doubt on the capacity of a PHA to preserve and protect its public housing projects and operate them consistent with Federal laws and regulations. (b) High performer and standard designations. (c) Effect on score. § 902.109 Right to petition and appeal troubled designation. (a) Appeal of troubled performer designation and petition for removal of troubled performer designation. (1) Appeal its troubled performer designation; (2) Petition for removal of troubled performer designation; and (3) Appeal any refusal of a petition to remove troubled performer designation. (b) Appeal of small rural Assessment score. i.e., (2) A PHA may not appeal its score or designation based on the subsequent correction of deficiencies identified as a result of a project's physical inspection. (c) Appeal and petition procedures. (2) To appeal the denial of a petition to remove a troubled performer designation, a PHA must submit a written request to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days after HUD's decision to refuse to remove the PHA's troubled performer designation. (3) An appeal of a troubled performer designation or an appeal of the denial of a petition for removal of a troubled performer designation must include the PHA's supporting documentation and reasons for the appeal or petition. An appeal of an assessment score must be accompanied by the PHA's evidence that a material error occurred. An appeal or petition submitted to HUD without supporting documentation will not be considered and will be returned to the PHA. (d) Denial, withholding, or rescission. (e) Consideration of petitions and appeals. (2) Consideration of an appeal of refusal to remove a troubled performer designation. Upon receipt of an appeal of refusal to remove a troubled performer designation, HUD will evaluate the appeal and its merits for the purposes of determining whether a reassessment of the PHA is warranted. The HUD staff initially evaluating an appeal of refusal to remove a troubled performer designation will not be the same HUD staff who evaluated the PHA's petition to remove the troubled performer designation. The Assistant Secretary will render the final determination of such an appeal. (f) Notice and finality of decisions. (2) HUD will issue a written decision on all appeals and petitions made under this section. § 902.111 Sanctions for troubled small rural PHAs. The sanctions for small rural PHAs with troubled public housing programs that remain troubled as required by § 902.108 will be the same as those sanctions for PHAs assessed under PHAS as described in § 902.83. § 902.113 Incentives for small rural PHAs high-performers. (a) High performer. (b) Incentives.