Testimony of Harold Lucas
March 21, 2000
Assistant Secretary for
Public and Indian Housing
Senate Committee on Banking, Housing and Urban Affairs
Subcommittee on Housing and Transportation
The Public Housing Assessment System
Good afternoon, Chairman Allard,
Ranking Member Kerry and Members of the Committee. Thank you
for allowing us this opportunity to testify on the Department's
new public housing evaluation tool - the Public Housing Assessment
For the first time in the history
of public housing, we have the ability to tell the true story.
Over the years, myths surrounding public housing have fostered
an erroneous perception of this vital service -- that all public
housing was run down and dangerous, unfit for human habitation.
The press regaled us with horror stories of mismanagement, dilapidated
conditions, drug- and crime-ridden neighborhoods, and people
without hope. Although we knew the work that the majority of
our public housing partners were doing was good, we could not
provide credible evidence of their good works, nor focus our
resources on those PHAs that needed help. The public did not
believe that public housing worked.
Frankly, the Department's old
system of assessing PHAs truly did the industry and the residents
of public housing a disservice; we had an evaluation system that
did not tell the whole truth about public housing. That system
-- the Public Housing Management Assessment Program or PHMAP
- only measured a few areas of the management operations of a
housing agency and although each was important, they did not
tell the whole story. PHMAP failed to address the key elements
needed to measure the condition of the portfolio: an independent
physical inspection to provide an objective picture of the condition
of units and developments; an assessment of the comprehensive
financial management; and a means of getting feedback from the
customers of public housing -- the residents. The result? There
was a disconnect between what PHMAP was reporting and the reality
of public housing, and it was hurting the public housing industry,
it was hurting HUD, and it was ultimately hurting the residents.
As the former Executive Director
of the Newark (NJ) Housing Authority and a housing professional
for over 25 years, I understand the need to tell the true story
and the importance of focusing resources on troubled agencies.
During my tenure at the Newark Housing Authority, we went from
a troubled PHA to a high-performer. Initially, when we graduated
from the troubled list, the Newark Housing Authority while no
longer designated as "troubled" was still in trouble.
We were able to get very high marks and yet have poor housing
stock. We still needed to do significant work to improve our
systems and bring the Agency into the 21st century. Gradually,
over the next few years, we were able to demolish that housing
stock which was unsalvageable and build new housing to provide
homes to our residents. In addition, we became "computer
literate" --- our computer systems tracked units, people
and issues, thus enabling us to identify and resolve problem
areas before they became unmanageable. By 1996, the Newark Housing
Authority was designated as a high-performing agency and had
truly earned this distinction.
In 1997, Secretary Andrew Cuomo
introduced the HUD 2020 Management Reform Plan -- a plan designed
to restore the public trust in the competence of the Department
to monitor housing programs and ensure the delivery of safe,
sanitary, and decent housing in good repair, and when a housing
authority is in trouble, a plan that provides them with relief.
For the first time in the history of public housing, Public Housing
Authorities are assessed on their physical, financial, and management
condition, as well as resident satisfaction, through objective,
nationwide standards. When PHAs are determined to be in trouble
and need assistance we refer them to our specialized centers
--- the Troubled Agency Recovery Centers - for intensive care.
Now HUD is able to score and rank PHAs in a way that tells the
true story about public housing - the good and the bad -- and
in a way that enables HUD to recognize high performers and to
devote more time and energy to those PHAs that truly need help.
This new tool is the Public Housing Assessment System, or PHAS.
PHAS effectively and fairly measures
each PHA based on objective, uniform standards. We can distinguish
which PHAs are physically and financially healthy, which PHAs
have sound management practices, and which PHAs are responsive
to their residents. We are able to identify for each PHA their
critical health and safety violations and physical deficiencies
in their housing stock and community areas - smoke alarms that
wouldn't work during a fire, a roof that could cave in on children
playing in a child care center - hazards which could cause harm
to the residents if left undetected and unaddressed. PHAS works.
We saw a large decrease in the number of deficiencies for PHAs
who have traveled with us through the PHAS cycle two years in
PHAS was developed in consultation
with public housing agencies, residents, and industry groups.
The Department published the first PHAS rule on September 1,
1998 after nearly 9 months of consultation, with a one-year delayed
implementation date to allow PHAs an opportunity to become familiar
with and make the transition to the new assessment system. HUD's
Real Estate Assessment Center (REAC) surveyed the residents and
assessed the physical and financial conditions of PHAs across
the nation and issued "advisory scores". We did this
with a new technically advanced system. We put information on
the web, required PHAs to utilize Generally Accepted Accounting
Procedures (GAAP), and worked to have PHAs upgrade their reporting
systems. This experience provided us with much needed data to
determine how the new system was working and to benefit from
"lessons learned." We learned that in Florida bathroom
vents are not required if there are windows for ventilation;
we learned that in Philadelphia stoves are not required in all
housing units; and we learned that inspecting vacant units could
unfairly penalize the performance of an agency. In short, we
listened to industry and we learned. Further, in response to
industry concerns, we have instituted additional training for
our contract inspections and a quality control program to affirm
the consistent application of the physical inspection protocol.
Based upon the advisory score
data and lessons learned, HUD made extensive changes to PHAS.
A new proposed rule and detailed notices were published on June
22, 1999. Changes included more information about PHAS scoring
systems; revised or new procedures for assessing physical condition,
financial health, management operations and resident service
and satisfaction; and processes for technical review of inspection
results and appeals of PHAS scores.
As we have developed and refined
PHAS, HUD has met continuously with PHAs and industry groups
to discuss PHAS, its implementation, and to gather additional
ideas about changes and refinements. Working groups were formed
with PHAs, industry and HUD staff representatives to examine
issues on the physical condition and financial condition indicators.
These consultations were designed to combine the best practical,
professional experience with the results from test inspections,
thus enabling us to modify the rule to reflect a fair evaluation
of public housing. Additionally, HUD staff consulted with representatives
of the multi-family housing industry to ensure that the Department's
national physical assessment was a truly comprehensive system.
As a result of the consultations with the public and multi-family
housing industries, we modified 65% of the physical deficiency
definitions, ensuring clarity and uniformity of results.
This continuing analysis and
consultation was in keeping with HUD's commitment, to work closely
with PHAs and residents in making the transition to PHAS. Further,
the Department was mindful of the direction provided us in the
FY 2000 Appropriations Conference Report that HUD delay implementation
of PHAS and publication of a final rule until we had conducted
a thorough analysis - in consultation with PHAs and their representatives
- of all advisory PHAS assessments and reviewed GAO's analysis
of PHAS. The final rule, published January 11, 2000, reflects
input from this consultation and review process, as well as the
29 public comments received. Further, we discovered that the
GAO planned review of the physical inspections focused on multi-family
housing - not public housing as envisioned by the appropriators.
Although GAO subsequently expanded the scope of its' review to
include PHAs in December, the report was not expected to be completed
for a number of months. This would have caused a significant
unintended delay in the implementation of PHAS. HUD conferred
with Committee staff before proceeding with its implementation
plans. When the GAO report is complete, HUD will incorporate
its findings into the PHAS inspection protocol as part of its
ongoing refinement and improvement on the inspections system.
In the Public Housing Reform
Act, the Congress directed that a housing authority provide basic
acceptable living conditions for its residents. The Act further
provided guidance on an assessment of physical conditions, effective
programs, activities to promote resident self-sufficiency, and
effective screening and eviction policies. The Act also incorporated
incentives for high performers and certain remedies for PHAs
that were troubled or not performing at the highest level. PHAS
makes the 1998 Act a reality.
The development of an assessment
system is an evolutionary process. The evolution will continue
as we collect and analyze more information over time. We are
now, with the assistance of our industry partners, in the process
of demonstrating and testing the new physical inspection consensus
protocol. Once all the data is collected and analyzed, we will
make any necessary adjustments to the system. The actual inspections
and scoring will begin after the testing is completed and the
inspectors are trained. We estimate that the inspections for
March 31 PHAs will begin by the end of April. Given this timeline,
there will be still sufficient time to complete the inspections
for the quarter and issue PHAS scores by the beginning of July.
The result of the consultations,
demonstrations and testing has been to demystify the PHAS. PHA
staff have expressed to us that they have a greater level of
understanding of the purpose of PHAS and feel challenged to make
positive improvements. In one instance, a PHA employee stated
that their properties are better maintained than the have been
in the history of the housing authority because of PHAS.
We understand the anxiety of
many PHAs who are uncomfortable with a new system, particularly
one which concurrently introduces them to a new technology like
the Internet. We are determined to make the transition to PHAS
as smooth as possible, but we know there will be glitches and
imperfections, and we will work to remedy those. And because
no system is fail-safe, there is appellate process to address
issues that would net an unfair result. The housing authority
can appeal, if its designation is adversely affected because
of our error or failure to consider a particular circumstance
or issue. The PHAS rule provides for the timely processing of
all appeals. Given the tremendous information that PHAS can provide,
PHA's now have the ability to plan their future better. From
any objective vantage point, PHAS represents a major improvement
This process of testing, analyzing
and re-visiting issues as our experience with PHAS unfolds is
a common and continuing one essential to the development of any
credible assessment system. But despite the challenges, we are
committed to develop the best assessment tool possible - one
that tells the truth about public housing.
Content Archived: January 20, 2009