[Federal Register Volume 61, Number 242 (Monday, December 16, 1996)]
[Rules and Regulations]
[Pages 66132-66156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31641]
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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, Fiscal Year 1997; Final Rule
Federal Register / Vol. 61, No. 242 / Monday, December 16, 1996 /
Rules and Regulations
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Part 888
[Docket No. FR-4157-N-01]
Section 8 Housing Assistance Payments Program; Contract Rent
Annual Adjustment Factors Fiscal Year 1997
AGENCY: Office of the Secretary, HUD.
ACTION: 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
(FMRs) 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, 1996. 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) survey and from HUD Random Digit Dialing
(RDD) rent change surveys.
EFFECTIVE DATE: October 1, 1996.
FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Rental Assistance
Division, Office of Public and Indian Housing [(202) 708-0477], for
questions relating to the Section 8 Voucher, Certificate, and Moderate
Rehabilitation programs; Barbara D. Hunter, Program Management
Division, Office of Multifamily Asset Management and Disposition [(202)
708-4162], for questions relating to all other Section 8 programs; Alan
Fox, Economic and Market Analysis Division, Office of Policy
Development and Research [(202) 708-0590; e-mail alan_fox@hud.gov],
for technical information regarding the development of the schedules
for specific areas or the methods used for calculating the AAFs.
Mailing address for above persons: Department of Housing and Urban
Development, 451 Seventh Street SW, Washington, DC 20410. Hearing-or
speech-impaired persons may contact the Federal Information Relay
Service at 1-800-877-8339 (TTY) (Other than the ``800'' TDD number, the
above-listed telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
A special requirement for determining the AAF used for the
adjustment of Section 8 contract rents is applicable in Federal Fiscal
Year 1997 (October 1, 1996 to September 30, 1997.) In FY 1997, the law
provides (42 U.S.C. 1437f(c)(2)(A), as amended in 108 Stat. 2315 (9/28/
94) and 110 Stat 2874 (9/26/96)):
Except for assistance under the certificate program, 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. 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 shall 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 market area.
This provision was amended by the FY 1997 appropriation
(Departments of Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act of 1997, Pub. L. 104-204,
approved September 26, 1996, 110 Stat. 2874). To implement the law, HUD
is again publishing two separate AAF tables, contained in Schedule C,
tables 1 and 2 of this document. Each AAF in table 2 is computed by
subtracting 0.01 from the annual adjustment factor in table 1.
Applicability of AAFs to Various Section 8 Programs
AAFs established by this document are used to adjust contract rents
for Section 8 Housing Assistance Payments Program units. However, the
specific application of the AAFs is determined by the law, the HAP
contract, and 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 program (24 CFR part 886, subpart A) and for
projects receiving Section 8 subsidies under the property disposition
program (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 (both the
regular program and the single room occupancy program), the public
housing agency (PHA) applies the AAF to the base rent component of the
contract rent, not the full contract rent.
Adjustment Procedures Under Fiscal Year 1997 Appropriation
The discussion in this Federal Register document is intended to
provide a broad orientation on procedures for adjustment under the FY
1997 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, separate procedures are used for three
program categories:
Category 1: Section 8 New Construction, Substantial Rehabilitation and
Moderate Rehabilitation Programs
In the Section 8 New Construction and Substantial Rehabilitation
programs, the published AAF factor is applied to the pre-adjustment
contract rent. In the Section 8 Moderate Rehabilitation program, the
published AAF is applied to the pre-adjustment base rent.
For category 1 programs, the Table 1 AAF factor is applied before
determining comparability (rent reasonableness.) Comparability applies
if the pre-adjustment gross rent (pre-adjustment contract rent plus any
allowances for tenant-paid utilities) is above the published FMR.
If the comparable rent level (plus any initial difference) is lower
than the contract rent as adjusted by application of the table 1 AAF,
the comparable rent level (plus any initial difference) will be the new
contract rent. 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 as at
the time of the last annual contract 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
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the applicable AAF under this document.
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 as at
the time of the last annual contract anniversary.
Category 3: Section 8 Certificate Program
The same adjustment procedure is used for rent adjustment in both
the tenant-based and project-based certificate programs. The following
procedures are used:
--The Table 2 factor is always used in the Section 8 certificate
program; the Table 1 factor is not used in this program.
--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 contract rent as adjusted (by application of the Table 2 AAF),
the comparable rent level will be the new contract rent. However, under
the old form of HAP contract the housing authority may not reduce the
rent below the initial rent.
AAF Tables
The AAFs for fiscal year 1996 are contained in Schedule C, tables 1
and 2 of this document. Two columns are shown in this table. The first
column is to be used for units where the highest cost utility is
included in the contract rent. The second column is to be used where it
is excluded from the contract rent.
AAF Areas
Each AAF applies to a specified geographic 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 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 certain large metropolitan areas, where HUD
considers the area covered by the OMB definition to be larger than
appropriate for use as a housing market area definition. In those
areas, HUD has deleted 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 and 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 (*) next to the area name. The asterisk
denotes that there is a difference between the OMB metropolitan area
and the HUD AAF area definition for these areas.
To make certain that they are using the correct AAFs, users should
refer to the area definitions section at the end of Schedule C. For
units located in metropolitan areas with a local CPI survey, AAFs are
listed separately. For units located in areas without a local CPI
survey, the appropriate HUD regional Metropolitan or Nonmetropolitan
AAFs are used.
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 metropolitan CPI areas have separate AAF
schedules and are shown with their corresponding county definitions or
as metropolitan counties. Listed after the metropolitan CPI areas (in
those states that have such areas) are the non-CPI 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
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 ``Highest Cost Utility Excluded'' column in Schedule C 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.
(3) The Highest Cost Utility Included'' column in Schedule C was
calculated by weighing the rent and utility components with the
corresponding components from the 1990 Census.
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 rent including the highest cost utility was
calculated using the ratio of the most recent RDD survey median gross
rents for the respective metropolitan or nonmetropolitan parts of the
HUD region.
(3) The change in rent excluding the highest cost utility was
calculated by subtracting the median value of utilities costs from the
median gross rent. The median cost of utilities was determined from the
units in the RDD sample which reported that all utilities were paid by
the tenant.
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Other Matters
Environmental Impact
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).
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this document do not have federalism implications and,
thus, are not subject to review under the Order. The document 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.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has also determined that this document 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 document 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: December 2, 1996.
Henry Cisneros,
Secretary.
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[FR Doc. 96-31641 Filed 12-13-96; 8:45 am]
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