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 System (PHAS).

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 a row.

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 over PHMAP.

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