[Federal Register Volume 61, Number 85 (Wednesday, May 1, 1996)]
[Notices]
[Page 19466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10689]




[[Page 19465]]


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Part VI

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Department of Housing and Urban Development





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Utility Allowances for Use by the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation; Notice

  Federal Register / Vol. 61, No. 85 / Wednesday, May 1, 1996 / 
Notices  

[[Page 19466]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4057-N-01]


Office of the Secretary; Utility Allowances for Use by the 
Federal National Mortgage Association and the Federal Home Loan 
Mortgage Corporation

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of utility allowances.

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SUMMARY: This notice issues the utility allowances established in 
accordance with the Secretary's authority to regulate the Federal 
National Mortgage Association (``Fannie Mae'') and the Federal Home 
Loan Mortgage Corporation (``Freddie Mac'') (each enterprise is also 
referred to as a ``Government-Sponsored Enterprise'' or ``GSE''). These 
allowances are used to determine whether rental units financed by GSE 
mortgage purchases are affordable and may count toward the achievement 
of the income-based housing goals established by the Secretary. For 
these purposes, the allowances in this notice shall be added to the 
contract rent for rental units in which: (1) tenant income is not 
available; (2) contract rent does not include the cost of utilities; 
and (3) the GSE does not use the HUD Section 8 utility allowances.

EFFECTIVE DATE: April 23, 1996.

FOR FURTHER INFORMATION CONTACT: Janet Tasker, Director, Office of 
Government-Sponsored Enterprises Oversight, Department of Housing and 
Urban Development, Room 6154, 451 Seventh Street, S.W., Washington, 
D.C. 20410, telephone (202) 708-2224 (this is not a toll-free number). 
For hearing- and speech-impaired persons, this number may be accessed 
via TTY (text telephone) by calling the Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(l) of the HUD regulations, 
the policies and procedures contained in this notice relate only to 
cost determinations that do not affect the physical condition of any 
building and, therefore, are categorically excluded from the 
requirements of the National Environmental Policy Act.

Background

    The Federal Housing Enterprise Financial Safety and Soundness Act 
of 1992, enacted as Title XIII of the Housing and Community Development 
Act of 1992 (Pub. L. 102-550, approved October 28, 1992; codified 
generally at 12 U.S.C. 4501-4561) (``the Act''),1 requires the 
Secretary, inter alia, to establish and monitor the performance of the 
GSEs in meeting annual goals for mortgage purchases on housing for low- 
and moderate-income families and special affordable housing, i.e., 
housing meeting the needs of and affordable to low-income families in 
low-income areas and very low-income families. On January 2, 1996, the 
Secretary's new regulation of the GSEs, codified at 24 CFR part 81, 
became effective. See 60 FR 61846 (Dec. 1, 1995).
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    \1\ Unless otherwise specified, all sections cited herein are in 
the Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992. Sections 1331-1336 of that Act are codified at 12 U.S.C. 
4561-66.
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    Under the Act and regulations, in considering whether a rental 
dwelling unit that is financed by a GSE mortgage purchase is affordable 
and counts toward any housing goal, the Secretary must consider the 
income of tenants if income information is available. Where income 
information is not available, rent on the dwelling unit is used as a 
proxy and compared to the rent levels affordable to very-low-, low-, 
and moderate-income families and families whose incomes do not exceed 
50 percent of the area median income (``especially low-income 
families'').2 To be considered affordable and count under the 
goal, the rent cannot exceed 30 percent of the maximum income level of 
the family's classification, i.e., especially low-, very-low-, low-, or 
moderate-income, with adjustments for unit size.3
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    \2\ Sections 1332(c) and 1333(c).
    \3\ Sections 1332(c)(2) and 1333(c)(2).
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    Under the regulation, ``rent'' is defined as contract rent, but 
only where the contract rent includes the cost of all utilities.4 
In all other instances, rent is contract rent plus either: the actual 
cost of utilities, or a utility allowance.5 The regulation allows 
the GSEs to choose from two different utility allowances--the 
allowances used in the HUD Section 8 Program or the utility allowances 
derived from the American Housing Survey (AHS) and issued annually by 
the Secretary.6
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    \4\ 24 CFR 81.2.
    \5\ Id.
    \6\ Id.
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    This notice issues the AHS-derived utility allowances for 1996 and 
1997. In establishing these allowances, the Department analyzed AHS 
data on the median costs,7 based on unit type, paid by renters in 
both multifamily and single family properties for electricity, gas, 
oil, water, and other utilities.
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    \7\ The AHS medians have been adjusted for the percentage change 
in the Consumer Price Index for Fuel and Other Utilities between 
July-December 1993 (the period when the AHS was conducted) and 
November 1995, and have been projected forward using the Data 
Resources Incorporated (DRI) predicted increase from November 1995 
through the fourth quarter of 1996.
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    The GSEs were advised by letter dated March 22, 1996, that these 
allowances were to be issued in the Federal Register.

The Utility Allowances

    In accordance with sections 1321, 1331-33, and 1336 of the Federal 
Housing Enterprise Financial Safety and Soundness Act (12 U.S.C. 4541, 
4561-63, and 4566), and as provided in paragraph (1) under the 
definition of ``utility allowance'' in section 81.2(b) of Title 24 of 
the Code of Federal Regulations, the AHS-derived utility allowances for 
1996 and 1997 are as follows:

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                                                Number of bedrooms      
                                        --------------------------------
            Type of property                                        3 or
                                         Efficiency    1      2     more
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Multifamily............................        $51     $59    $78   $102
Single family..........................         67      78    104    134
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Effect of Notice Beyond 1997

    For 1998 and thereafter, the Secretary shall establish AHS-derived 
utility allowances by subsequent notice. Pending establishment of such 
allowances for 1998 and thereafter, the allowances in this notice shall 
continue to be used by the GSEs.

    Dated: April 23, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-10689 Filed 4-30-96; 8:45 am]
BILLING CODE 4210-32-P