[Federal Register Volume 60, Number 44 (Tuesday, March 7, 1995)]
[Rules and Regulations]
[Pages 12594-12628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5457]




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Part II





Department of Housing and Urban Development





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Office of the Secretary



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24 CFR Part 888



Section 8 Housing Assistance Payment Programs: Contract Rent Annual 
Adjustment Factors; Final Rule

  Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules 
and Regulations   
[[Page 12594]] 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 888

[Docket No. N-95-3875; FR-3807-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 notice announces revised Annual Adjustment Factors (AAFs), which 
are based on a formula using data on residential rent and utilities 
cost changes from the Bureau of Labor Statistics Consumer Price Index 
(CPI) and the HUD Random Digit Dialing (RDD) rent change surveys.

EFFECTIVE DATE: March 7, 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 Planning Division, Office of Multifamily Housing 
Management [(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 Department of Housing and Urban 
Development Appropriations Act, 1995 (Pub. L. 103-327, approved 
September 28, 1994) provides 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''. 
Schedule C, tables 1 and 2 contain separate AAFs for a unit occupied by 
the same family at the last annual adjustment (Table 2), and for a unit 
occupied by a new family since the last annual adjustment since (Table 
1).
    The revised AAFs are applicable for adjusting Contract Rents for 
contract anniversaries falling on or after November 8, 1994, the 
anniversary date for publication of a new annual adjustment factor.

Applicability of AAFs to Various Section 8 Programs

    In general, 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 many 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, not the Contract 
Rent.

AAF Tables

    The AAFs for FY 1995 are contained in Schedule C, tables 1 and 2 of 
this notice.

AAF Areas

    With 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 they closely correspond to housing 
market area definitions.
    The exceptions are for six 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.
New Orleans, LA--St. James Parish.
Washington, DC--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 definitions for these areas.
    Based on an evaluation of information submitted by local officials, 
HUD has determined that Spalding County is part of the Atlanta housing 
market area. Program units in Spalding County, therefore, will use the 
Atlanta, GA AAFs.
    Each AAF applies to a specified geographical area and to units of 
all bedroom sizes. AAFs are provided for the metropolitan parts 
(exclusive of CPI areas) and the nonmetropolitan parts of the ten HUD 
regions, which, under HUD's reorganization plan have been renamed and 
are referred to as follows:

Region I (Boston) is now New England
Region II (New York) is now New York/New Jersey
Region III (Philadelphia) is now the Mid-Atlantic
Region IV (Atlanta) is now the Southeast
Region V (Chicago) is now the Midwest
Region VI (Fort Worth) is now the Southwest
Region VII (Kansas City) is now the Great Plains
Region VIII (Denver) is now Rocky Mountain
Region IX (San Francisco) is now Pacific/Hawaii
Region X (Seattle) is now Northwest/Alaska

AAFs, developed from local CPI surveys, also are provided for 103 
separate metropolitan AAF areas.
    Program participants should refer to the area definitions section 
at the end of [[Page 12595]] 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. Reflecting a decrease in the local CPI survey, 
the AAFs for the San Diego, CA MSA are shown as 1.00.

Section 8 Certificate Program AAFs for Manufactured Home Spaces

    The AAFs in this publication identified as ``Highest Cost Utility 
Excluded'' are to be used for updating 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.

Retroactivity

    Retroactivity is permitted to avoid any detriment to owners because 
of HUD's delay in the annual publication of the factors, as required by 
24 CFR 888.202. Owners of Section 8 units (other than units assisted 
under the Section 8 Certificate, Moderate Rehabilitation, regular and 
SRO, Project-based Assistance Certificates, and FmHA programs) who have 
HAP Contracts with anniversary dates falling on November 8, 1994 
through March 7, 1995 may request that the AAFs be applied 
retroactively to the anniversary date of their HAP Contracts.
    The AAFs are not applied retroactively for units assisted under the 
Section 8 Certificate, Moderate Rehabilitation (both regular and SRO), 
Project-based Assistance Certificates, and the FmHA programs. The 
annual adjustments for these units are determined as of any anniversary 
date using the AAFs most recently published in the Federal Register 
(see 24 CFR 882.108(a)(1)(i) and 884.109(b)(2)).

RDD Factors

    HUD uses the RDD regional surveys for calculating 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.

AAF Formula

    The formula for calculating the AAFs for each area is 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 using RDD surveys: (1) 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 
(2) 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 Contract Rent Annual 
Adjustment Factors for the Section 8 Housing Assistance Payments 
Program as set forth in the following tables:

    Dated: February 7, 1995.
Henry Cisneros,
Secretary
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[FR Doc. 95-5457 Filed 3-6-95; 8:45 am]
BILLING CODE 4210-32-C