[Federal Register Volume 60, Number 213 (Friday, November 3, 1995)]
[Rules and Regulations]
[Pages 55934-55957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27262]
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Part IV
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Secretary
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24 CFR Part 888
Section 8 Housing Assistance Payments Program--Contract Rent Annual
Adjustment Factors; Final Rule
Federal Register / Vol. 60, No. 213 / Friday, November 3, 1995 /
Rules and Regulations
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Part 888
[Docket No. FR-3952-N-01]
Section 8 Housing Assistance Payments Program--Contract Rent
Annual Adjustment Factors
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of revised contract rent annual adjustment factors.
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SUMMARY: The United States Housing Act of 1937 requires that the
assistance contracts signed by owners participating in the Department's
Section 8 Housing Assistance Payments programs provide for annual or
more frequent adjustment in the maximum monthly rentals for units
covered by the contract to reflect changes based on fair market rents
prevailing in a particular market area, or on a reasonable formula.
This document announces revised Annual Adjustment Factors (AAFs) for
assistance contract anniversaries from October 1, 1995. The factors are
based on a formula using data on residential rent and utilities cost
changes from the most current Bureau of Labor Statistics Consumer Price
Index (CPI) and the HUD Random Digit Dialing (RDD) rent change surveys.
EFFECTIVE DATE: October 1, 1995.
FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Rental Assistance
Division, Office of Public and Indian Housing [(202) 708-0477 (TDD) or
(202) 708-0850 (voice)], for questions relating to the Section 8
Voucher, Certificate, and Moderate Rehabilitation programs; Barbara
Hunter, Program Management Division, Office of Multifamily Asset
Management and Disposition [(202) 708-3944 (TDD) or (202) 708-4594
(voice)], for questions relating to all other Section 8 programs; for
technical information regarding the development of the schedules for
specific areas or the method used for calculating the AAFs, Michael R.
Allard, Economic and Market Analysis Division, Office of Policy
Development and Research [(202) 708-0577 (TDD) or (202) 708-0770
(voice)]. Mailing address for above persons: Department of Housing and
Urban Development, 451 Seventh Street SW, Washington, DC 20410. (The
above-listed telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION: The fiscal year 1995 Department of Housing
and Urban Development Appropriations Act (Pub. L. 103-327, approved
September 28, 1994) contained special requirements for adjustment of
Section 8 contract rents. Congress stipulated that,
For any unit occupied by the same family at the time of the last
annual rental adjustment, where the assistance contract provides for
the adjustment of the maximum monthly rent by applying an annual
adjustment factor and where the rent for a unit is otherwise
eligible for an adjustment based on the full amount of the factor,
0.01 shall be subtracted from the amount of the factor, except that
the factor shall not be reduced to less than 1.0.
Under the terms of the fiscal year 1995 appropriation, these
amendments modified requirements for adjustment of Section 8 contract
rents (under Section 8(c)(2)(A) of the United States Housing Act of
1937, 42 U.S.C. 1437f(c)(2)(A)) in fiscal year 1995 (i.e., until
September 30, 1995). Thus these amendments sunset at the end of fiscal
year 1995. At this time, the Congress has not yet enacted the regular
HUD appropriation for fiscal year 1996. However, the Congress has
enacted a continuing resolution to provide temporary funding for
continuation of government activities carried out during fiscal year
1996 (until November 13 or enactment of a regular appropriation).
During the period of the continuing resolution, funds must be used
in accordance with the same ``authority and conditions'' provided in
the HUD appropriation act for fiscal year 1995.
Since the special rent adjustment requirements were contained in
HUD's fiscal year 1995 appropriation act, and affect the use of
available funds under the continuing resolution, the adjustment
requirements are extended during the period of the continuing
resolution. The legislative history of the fiscal year 1996 continuing
resolution specifically confirms that the fiscal year 1995 adjustment
requirements apply during the period of the fiscal year 1996 continuing
resolution. (Colloquy of Senators Feinstein and Hatfield at
Congressional Record, p. S 14638, September 29, 1995.)
For all Section 8 programs other than the Section 8 certificate
program, HUD expects that the fiscal year 1996 appropriation, when
enacted, will probably include the same Section 8 rent adjustment
requirements in fiscal year 1996 that applied in fiscal year 1995 (and
which were extended during the period of the fiscal year 1996
continuing resolution). For the Section 8 certificate program (both the
tenant-based certificate program (24 CFR Part 982) and the project-
based certificate program (24 CFR Part 983)), adjustment requirements
may be amended to provide that:
In the case of assistance under the certificate program, 0.01
shall be subtracted from the amount of the annual adjustment factor
(except that the factor may not be reduced to less than 1.0), and
the adjusted rent shall not exceed the rent for a comparable
unassisted unit of similar quality, type, and age in the same market
area.
(Section 204(b) of H.R. 2099 as passed by the Senate, September 27,
1995.)
During the continuing resolution period, rents will be adjusted by
applying the fiscal year 1996 AAFs published in this notice. However,
contract rents will be adjusted under the same procedures that were
used in fiscal year 1995 under the terms of the fiscal year 1995
appropriation act. These procedures will be used for HAP contract
anniversaries that fall during the period of the fiscal year 1996
continuing resolution--the period of fiscal year 1996 before enactment
of the regular appropriation. For contract anniversaries that fall
after enactment of the regular HUD appropriation for fiscal year 1996,
contract rents will be adjusted in accordance with requirements of the
appropriation as enacted.
In fiscal year 1995 HUD published two separate AAF tables. In this
AAF notice for fiscal year 1996, HUD is again publishing two separate
AAF tables. The AAFs for fiscal year 1996 are contained in Schedule C,
tables 1 and 2 of this notice. Each AAF in table 2 is computed by
subtracting 0.01 from the amount of the annual adjustment factors in
table 1.
Applicability of AAFs to Various Section 8 Programs
AAFs established by this Notice are used to adjust contract rents
for Section 8 Housing Assistance Payments Program units. However, the
specific application of the AAFs should be determined by reference to
the HAP contract and to appropriate program regulations or
requirements.
AAFs are not used for the Section 8 voucher program. Contract rents
for some projects receiving Section 8 subsidies under the loan
management provisions of 24 CFR part 886, subpart A, and for projects
receiving Section 8 subsidies under the property disposition provisions
of 24 CFR part 886, subpart C, are adjusted, at HUD's option, either by
applying the AAFs or by adjusting rents in accordance with 24 CFR
207.19(e).
Under the Section 8 moderate rehabilitation program, the public
housing agency (PHA) applies the AAF to the base rent component of the
contract rent, not the full contract rent.
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Adjustment Procedures Under Fiscal Year 1996 Appropriation
This section briefly summarizes procedures for contract rent
adjustment:
(1) During the period of the fiscal year 1996 continuing
resolution, and
(2) Under the appropriation for fiscal year 1996, when enacted.
The discussion of adjustment under the fiscal year 1996
appropriation assumes that:
--Except for the certificate program, the fiscal year 1996
appropriation will extend to fiscal year 1996 the same adjustment
requirements that were contained in the fiscal year 95 appropriations
(108 Stat. 2315).
--For the Section 8 certificate program, the fiscal year 96
appropriation will enact the special certificate program adjustment
requirements as quoted above (from the Senate-passed appropriation
bill).
If the enacted appropriation differs from these assumptions,
contract rent adjustments will be made in accordance with requirements
of the law as enacted.
The discussion in this Federal Register notice is intended to
provide a broad orientation on procedures for adjustment under the
fiscal year 1996 appropriations. Technical details and requirements
will be described in HUD notices (by the HUD office of housing and the
HUD office of public and Indian housing).
Because of statutory and structural distinctions between the
various Section 8 programs, there are separate procedures for three
program categories:
Category 1: Section 8 New Construction, Substantial Rehabilitation and
Moderate Rehabilitation Programs
For category 1 programs, comparability applies if the pre-
adjustment gross rent is above the published FMR. The Table 1 AAF
factor is applied before determining comparability (rent
reasonableness). If the comparable rent level (plus any initial
difference) is lower than the adjusted contract rent amount (by
application of the table 1 AAF), the comparable rent level (plus any
initial difference) will be applied. (However, the pre-adjustment
contract rent will not be decreased by application of comparability.)
In all other cases (i.e., unless contract rent is reduced by
comparability):
--The table 1 AAF is used for a unit occupied by a new family since the
last annual contract anniversary.
--The table 2 AAF is used for a unit occupied by the same family since
the last annual anniversary.
Category 2: The Loan Management Program (Part 886, Subpart A) or
Property Disposition Program (Part 886 Subpart C), Where Rents Are
Adjusted by Applying the AAF
At this time, rent adjustment in the Category 2 programs is not
subject to comparability. (Comparability will again apply if HUD
establishes regulations for conducting comparability studies under 42
U.S.C. 1437f(c)(2)(C).) Rents are adjusted by applying the full amount
of the applicable AAF under this notice.
The applicable AAF is determined as follows:
--The table 1 AAF is used for a unit occupied by a new family since the
last annual contract anniversary.
--The table 2 AAF is used for a unit occupied by the same family since
the last annual anniversary.
Category 3: Section 8 Certificate Program
3.A Adjustment During Period of Continuing Resolution: Tenant-Based
Certificate Program (Part 982)
In the tenant-based certificate program:
--Comparability always applies, and
--The unit is always occupied by the same family since the last annual
anniversary of the HAP contract (since a separate HAP contract is
executed for each family).
In the tenant-based certificate program, the following procedures
are used for adjustment of contract rents for anniversaries that fall
during the period of the continuing resolution:
--The table 1 AAF factor is applied before determining comparability
(rent reasonableness). If the comparable rent level is lower than the
adjusted amount (by application of the table 1 AAF), the comparable
rent level will be applied.
--The table 2 AAF is used in all other cases (i.e., unless contract
rent is reduced by comparability).
3.B Adjustment During Period of Continuing Resolution: Project-Based
Certificate Program
During the period of the continuing resolution, use same adjustment
procedures as Category 2.
3.C Adjustment After Enactment of Regular Appropriation Tenant-Based
and Project-Based Certificate Programs
After the enactment of the regular appropriation, the same
adjustment procedure is used for rent adjustment in the tenant-based
and project-based certificate programs. The following procedures are
used:
--The table 2 AAF factor is always applied before determining
comparability (rent reasonableness).
--Comparability always applies.
If the comparable rent level is lower than the adjusted amount (by
application of the table 2 AAF), the comparable rent level will be
applied.
AAF Tables
The AAFs for fiscal year 1996 are contained in Schedule C, tables 1
and 2 of this notice.
AAF Areas
Each AAF applies to a specified geographical area and to units of
all bedroom sizes. AAFs are provided:
(1) for the metropolitan parts of the ten HUD regions exclusive of
CPI areas;
(2) for the nonmetropolitan parts of these regions, and
(3) for 102 separate metropolitan AAF areas for which local CPI
survey data are available.
With the several exceptions discussed below, the AAFs shown in
Schedule C use the Office of Management and Budget's (OMB) most current
definitions of metropolitan areas. HUD uses the OMB Metropolitan
Statistical Area (MSA) and Primary Metropolitan Statistical Area (PMSA)
definitions for AAF areas because of their close correspondence to
housing market area definitions.
The exceptions are for large metropolitan areas, where HUD
considers the area covered by the OMB definitions to be larger than
appropriate for use as a housing market area definition. HUD therefore
modified the definitions for these areas by deleting some of the
counties that OMB had added to its revised definitions. The following
counties are deleted from the HUD definitions of AAF areas:
Metropolitan Area--Deleted Counties
Atlanta, GA--Carroll, Pickens, and Walton Counties.
Chicago, IL--DeKalb, Grundy and Kendall Counties.
Cincinnati-Hamilton, OH-KY-IN--Brown County, Ohio; Gallatin, Grant and
Pendleton Counties in Kentucky; and Ohio County, Indiana.
Dallas, TX--Henderson County.
Flagstaff, AZ-UT--Kane County, UT.
New Orleans, LA--St. James Parish.
Washington, DC-VA-MD-WV--Berkeley and Jefferson Counties in West
Virginia; and Clarke, Culpeper, King George and Warren counties in
Virginia.
Separate AAFs are listed in this publication for the above
counties. They and the metropolitan area of which they are a part are
identified with an asterisk
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(*) next to the area name. The asterisk denotes that there is a
difference between the OMB metropolitan area and the HUD AAF area
definitions for these areas.
Program participants should refer to the area definitions section
at the end of Schedule C to make certain that they are using the
correct AAFs. Units located in metropolitan areas with a local CPI
survey must use the corresponding AAFs listed separately for those
metropolitan areas. Units that are located in areas without a local CPI
survey must use the appropriate HUD regional Metropolitan or
Nonmetropolitan AAFs.
The AAF area definitions shown in Schedule C are listed in
alphabetical order by State. The associated HUD region is shown next to
each State name. Areas whose AAFs are determined by local CPI surveys
are listed first. All CPI defined areas have separate AAF schedules and
are shown with their corresponding county definitions or as
metropolitan counties. Listed after the CPI defined areas (in those
states that have such areas) are the metropolitan and nonmetropolitan
counties of each State. In the six New England States, the listings are
for counties or parts of counties as defined by towns or cities.
Puerto Rico and the Virgin Islands use the Southeast AAFs. All
areas in Hawaii use the AAFs identified in the table as STATE: Hawaii,
which are based on the CPI survey for the Honolulu metropolitan area.
The Pacific Islands use the Pacific/Hawaii Nonmetropolitan AAFs. The
Anchorage metropolitan area uses the AAFs based on the local CPI
survey. All other areas in Alaska use the Northwest/Alaska
Nonmetropolitan AAFs.
Section 8 Certificate Program AAFs for Manufactured Home Spaces
The AAFs in this publication identified as ``Highest Cost Utility
Excluded'' are to be used to adjust manufactured home space contract
rents. The applicable AAF is determined by reference to the geographic
listings contained in Schedule C, as described in the preceding
section.
How Factors Are Calculated
AAF Formula
AAFs for each area were calculated as follows:
For Areas With CPI Surveys:
(1) Changes in the shelter rent and utilities components were
calculated based on the most recent CPI annual average change data;
(2) The shelter rent factor was calculated by eliminating the
effect of heating costs that are included in the rent of some of the
units included in the CPI surveys; and
(3) The gross rent factors were calculated by weighing the rent and
utility components with the 1990 Census corresponding components.
For Areas Without CPI Surveys:
(1) HUD used RDD regional surveys to calculate AAFs. The RDD survey
method is based on a sampling procedure that uses computers to select a
statistically random sample of rental housing, dial and keep track of
the telephone calls and process the responses. RDD surveys are
conducted to determine the rent change factors for the metropolitan
parts (exclusive of CPI areas) and nonmetropolitan parts of the 10 HUD
regions, a total of 20 surveys.
(2) the change in gross rent was calculated using the most recent
RDD survey median gross rent for the respective metropolitan or
nonmetropolitan parts of the HUD region; and
(3) the change in shelter rent was calculated by subtracting median
value of utilities costs from the median gross rent. The median cost of
utilities was determined from the units in the RDD sample reporting
that all utilities were paid by the tenant.
Other Matters
An environmental assessment is unnecessary, since revising Annual
Adjustment Factors is categorically excluded from the Department's
National Environmental Policy Act procedures under 24 CFR 50.200(l).
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this Notice do not have federalism implications and, thus,
are not subject to review under the Order. The Notice merely announces
the adjustment factors to be used to adjust contract rents in the
Section 8 Housing Assistance Payment programs, as required by the
United States Housing Act of 1937.
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has also determined that this Notice does not
have potential significant impact on family formation, maintenance, and
general well-being and, thus, is not subject to review under the Order.
The Notice merely announces the adjustment factors to be used to adjust
contract rents in the Section 8 Housing Assistance Payment programs, as
required by the United States Housing Act of 1937.
The Catalog of Federal Domestic Assistance program number for
Lower Income Housing Assistance programs (Section 8) is 14.156.
Accordingly, the Department publishes these Annual Adjustment
Factors for the Section 8 Housing Assistance Payments Programs as set
forth in the following tables:
Dated: September 21, 1995.
Henry Cisneros,
Secretary.
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[FR Doc. 95-27262 Filed 11-2-95; 8:45 am]
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