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HUD Hosts Meeting with Industry Representatives on Physical Needs Assessments

Last week, HUD hosted industry groups and housing authorities at the second of four meetings regarding their plans to institute a mandatory requirement for PHAs to complete Physical Needs Assessments (PNAs). The meeting provided an update on HUD’s progress on the PNA tool design, their plans for implementation and how those will affect PHA operations. They also gathered additional industry input on improving the tool.

As CLPHA reported last year, HUD included as a stipulation that PHAs receiving Recovery Act funds must submit a PNA. At the first meeting, in July 2009, HUD asked for information on how PHAs used PNAs for long-term planning, what types of standards should be used to estimate capital needs, and how the completed PNAs should be used by HUD.

Industry representatives made it clear that the PNA tool should be user friendly; that standards should include green building elements, elderly and disabled accessibility upgrades, and marketability improvements; and, that the PNA requirement should be a tool for PHAs and not just another reporting burden. Industry representatives asked for assurance that PNAs not be used to score housing agencies, and that agencies continue to have local flexibility in using capital funds. They also asked for additional funding to pay for the extensive costs of conducting PNAs.

PNA Timing

HUD plans to have all PHAs complete a 20-year PNA in 2012, and then conduct a new 20-year PNA every five years. HUD will use the results of PNAs from each of the more than 3,100 housing agencies to produce a national estimate of the current and projected capital needs in public housing.

Pre-Assessments

Prior to the actual PNA, each PHA will complete a pre-assessment, documenting building types/counts, obtaining data on the age and type of many different property systems, determining the proper sample size for each property, interviewing staff on un-observable items, and scheduling PNAs.

The actual PNA will follow present industry standards, where trained assessors physically observe property systems and record future needs. After the PNA is completed, each PHA will complete a post-assessment to receive the PNA report, view the data and provide any necessary feedback.

PNA Components

The PNA will assess current and future capital needs in each PHA property based on a sample of units and common areas in each building. It will consist of a mandatory base assessment, and three optional supplements for green, marketability and livability, and accessibility. The PNA will serve as a baseline of capital needs and provide a snapshot of the existing conditions of all basic building and site components. It will use the ‘repair or replace with comparable items standard’, and may include accessibility components when required by law. As currently designed, the base excludes energy efficiency or marketability upgrades.

PHAs may choose to include a green supplement and/or marketability supplement. The green supplement would include information on cost effective green measures and payback information based on the PHA’s energy audit. The marketability supplement will provide a list of the most common marketability improvements.    

Industry Questions & Concerns

Cost and Staff Burden

One of the primary concerns regarding the PNA is the cost to housing authorities. HUD claims that the average cost of a PNA is between $45 and $75 per unit. However, they have not described how they arrived at these estimates, nor what is included. One CLPHA member reported a recent PNA costing more than $1 million -- nearly $120 a unit – not including green measures.

Even using HUD’s estimated low per-unit cost, nationally PNAs would cost $50 to $90 million,  about 3-5% of the average annual capital fund appropriation. At the upper end of this cost, PHAs would see an average annual reduction of 1% of their capital funding, unless HUD incorporates the cost of the PNA when projecting capital needs. Meeting participants expressed concern that this will be another unfunded mandate, and believe that if HUD and Congress want mandatory PNAs, they should be funded.

Industry representatives raised questions about the staff time required to complete the pre-assessment work, particularly in the first year. Concern was also raised about the staff time and money it will take update the system every year on capital work needed. HUD responded by saying that the initial year implementation would likely be time consuming, particularly as PHAs document the age and configuration of their property systems, but that subsequent years would be less of a burden. Pressed by meeting participants, HUD said they have no plans to ask for additional funding to pay for these associated costs.

Use of PNA Data

Industry representatives remain concerned that HUD or Congress will begin to score housing authorities on their ability to address capital needs with available capital funding. Some participants said it would be unfair for HUD to alter the existing capital fund formula on the basis of PNAs. HUD responded by saying they had no plans to alter the existing formula, and that their only planned use of the PNA data was to project an annual national estimate of capital needs for budget request purposes.

Standards Setting

The last major concern centered on the standards being used in the base PNA. Several participants pointed out that separating green and marketability supplements from the base might have the unintended consequence of making the additional costs of green seem superfluous to modernization needs. That could result in underfunding for properties that would like to implement such measures. In fact, many participants asked for including cost-effective green measures in the base PNA because of the potential cost savings to both the housing authority and HUD. HUD said they would consider the suggestion.

Planned PNA Implementation Timeline:

·        HUD will host two additional meetings in 2010 to fine tune the PNA tool with industry representatives.

·        PNA components, standards, and protocols will be reviewed and finalized by HUD management and congressional staff in early 2011.

·        PNA will be pilot tested by volunteer PHAs in summer of 2011.

·        PNA will be ready for use by all PHAs in early 2012.

CLPHA will continue to participate in and provide updates about the PNA development process. If you have any preferences or concerns about the tool, please contact Todd Thomas, CLPHA Housing Policy and Research Analyst.


 

 

 


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