For the second straight year, the Mobile Housing Board received a substandard management designation from U.S. Department of Housing and Urban Development and for the second straight year, MHB Executive Director Dwayne Vaughn blames low occupancy rates for the poor score.

A Dec. 12 letter addressed to MHB Chairman Clarence Ball from Robert Kenner, HUD director of public housing, noted that the board received a score of 14 out of 25 through the Public Housing Assessment System (PHAS), which is a failure.

The board received an overall score of 68 out of 100 through the end of fiscal year 2013.

MHB was also given a substandard designation through the end of fiscal year 2012. In both years, Vaughn said the score was hurt by vacancies at Josephine Allen Homes and the Roger Williams community, which are largely blighted and unsuitable for habitation.

An MHB request to demolish 292 units at Josephine Allen is still pending through HUD, Vaughn said, adding that they’ve also made a similar request for the Roger Williams community.

“As the 292 units of Josephine Allen have been vacant for more than two years, unless HUD approves the request, these vacancies continue to count against MHB and make it difficult to achieve higher occupancy scores,” Vaughn said. “Thus, there was no real change in MHB’s position from 2012 to 2013 as HUD approval of Josephine Allen holds the key to the designation increase. If that request is approved, MHB anticipates a satisfactory designation score.”

Vaughn said the board is hopeful they’ll get demolition approval from HUD this year. If the delay continues, he said, they’d seek appeals and waivers to keep it from counting against them.

HUD spokeswoman Gloria Shanahan confirmed in an email message that HUD is still reviewing a demolition request for a total of 599 units at Josephine Allen and Roger Williams. Approval of those requests will dramatically increase MHB’s occupancy rates.

“Mobile Housing Board is working closely with HUD to finalize the application,” Shanahan wrote. “Subject to approval from HUD, the proposed occupancy rates would increase from 67 percent to approximately 85 percent.”

Shanahan said MHB could take advantage of HUD’s Rental Assistance Demonstration program “for long-term repositioning of its public housing portfolio.”

The occupancy rate at MHB communities has fluctuated over the past three years. The rate was 64 percent in 2011, 69 percent in 2012, 70 percent in 2013 and 66 percent as of Sept. 8, 2014. Vaughn said outside of Roger Williams and Josephine Allen, MHB communities are close to 90 percent occupied.

MHB also requested and received approval from HUD for the modernization of 105 units at Thomas James and Central Plaza Tower, Shanahan wrote.

In the designation letter, Kenner provided suggestions on how to improve the low occupancy rates, outside of demolition. Among the suggestions were to evaluate its waiting list, tenant selection and initial certification processes to ensure coordination with property managers and timely preparation for move-ins. Additionally, Kenner suggested the MHB consider contracting property management of public housing to another entity or public housing agency.

Kenner’s letter also advised Ball that HUD “may initiate actions to develop a Recovery Agreement for (MHB) … to document and ensure recovery efforts have been put in place.”

The substandard designation also affects HUD funding, Shanahan wrote. High performing agencies are eligible for a 3 percent funding increase to use toward capital needs.

“Additionally, all housing authorities with an occupancy rate below 95 percent are subject to HUD oversight in the submission of a Standard Action Plan, which provides a detailed summary of vacant units and the housing authorities plan for re-occupation, or other HUD-approved designation,” Shanahan wrote. “The (MHB) is currently under a monthly Standard Action Plan and our office works with them to note any variance or delays in their leasing potential.”

The news comes on the heels of a decision by the board last month to choose three developers for a $750 million revitalization of public housing properties on the city’s south side corridor. The communities affected include R.V. Taylor Plaza, Boykin Tower and Thomas James Place.

The project would turn those public housing communities into mixed-use, mixed-income developments with 3,000 to 4,000 units. Vaughn said previously as many as one-third, or 1,000 of those units could be set aside for low-income renters.

HUD requires all residents displaced by revitalization projects be relocated by the responsible housing authority. Vaughn said right now, the plans would affect about 956 households.

It will take three to six months to develop a master plan for the new developments. After that, the board will begin giving 90-day notices to the appropriate residents affected by the plans. HUD will also have to approve the development plans.