[Federal Register Volume 67, Number 170 (Tuesday, September 3, 2002)]
[Notices]
[Pages 56472-56473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22328]



[[Page 56471]]

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Part VI





Department of Housing and Urban Development





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

  Federal Register / Vol. 67, No. 170 / Tuesday, September 3, 2002 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4771-N-01]


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

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: This notice announces that the Department has established 
monthly utility allowances 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 
(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.

FOR FURTHER INFORMATION CONTACT: Sandra Fostek, Director, Office of 
Government-Sponsored Enterprises Oversight, Department of Housing and 
Urban Development, Room 6182, 451 Seventh Street, SW., Washington, DC 
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:

I. Environmental Review

    This notice involves the establishment of a rate and cost 
determination similar to interest rates, loan limits, building cost 
limits, prototype costs or fair market rent schedules which does not 
constitute a development decision affecting the physical condition of 
specific project areas or building sites. Accordingly, under 24 CFR 
50.19(c)(6), this notice is categorically excluded from environmental 
review under the National Environmental Policy Act of 1969 (42 U.S.C. 
4321).

II. Background

    The Federal Housing Enterprises 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 regulation on the GSEs, codified at 24 CFR, part 81 
(regulation), became effective. (See 60 FR 61846, December 1, 1995). 
This regulation was modified by new regulations that became effective 
on January 1, 2001. (See 65 FR 65044, October 31, 2000).
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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, with adjustments for unit size.\3\
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    \2\ Sections 1332(c) and 1333(c); 1333(d)(3) and 24 CFR 
81.14(d).
    \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 (1) the actual cost of 
utilities or (2) 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 by the Secretary.\6\
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    \4\ 24 CFR 81.2.
    \5\ Id.
    \6\ Id.
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    On July 8, 1998 (63 FR 36931), a notice was issued establishing the 
utility allowances for 1998 and 1999. Those utility allowances were 
based on the Department's analysis of data from the 1995 AHS.
    This notice announces that the Department has established the AHS-
derived utility allowances for 2002 and 2003. In establishing these 
allowances, the Department analyzed 1999 AHS data on the mean costs, 
based on unit type (i.e., number of bedrooms), paid by renters in both 
multifamily and single-family properties for electricity, gas, fuel 
oil, other fuel, water and sewerage, and garbage and trash removal.\7\
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    \7\ The utility allowances reported for 2002 and 2003 reflect an 
adjustment to the 1999 AHS means for the 16.6 percent increase in 
the Consumer Price Index for All Urban Consumers (CPI-U) for Fuels 
and Other Utilities from 1999 to 2001 and the 2.0 percent projected 
decrease from 2001 to 2002 as forecast by DRI-WEFA.
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    The GSEs were advised by letter dated May 9, 2002, that these 
allowances were to be published in the Federal Register and that they 
would become effective on July 1, 2002, but could be implemented sooner 
at each GSE's option.

III. The Utility Allowances

    In accordance with sections 1321, 1331-33, and 1336 of the Federal 
Housing Enterprises 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 monthly utility 
allowances for 2002 and 2003 are as follows:

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                                                                        Number of bedrooms
                Type of property                 ---------------------------------------------------------------
                                                    Efficiency           1               2           3 or more
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Multifamily.....................................             $41             $57             $80            $112
Single Family...................................              41              73             113             155
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    The utility allowances for 2002 and 2003 are less than the 
previously published allowances for 1998 and 1999 for efficiency and 
one-bedroom units, approximately the same for two-bedroom units, and 
somewhat greater for units with three or more bedrooms. This is the 
result of changes in mean utility expenditures on particular utilities 
that are separately billed (which is the basis for the utility 
allowances) for different bedroom sizes and of changes in billing 
patterns. Based on the AHS, the mean electricity expenditures were 
lower in 1999 than in 1995, with the largest decreases seen for 
efficiency and one-bedroom units. With respect to billing patterns, a 
lower proportion of renters in 1999 paid separately for trash in each 
of the unit categories, a lower proportion paid separately for gas in 
each of the unit categories except single-family efficiency, and the 
proportion of renters paying separately for electricity was lower or 
the same in each of the unit categories except single-family and 
multifamily efficiency units. The net result was lower estimated 
average utility costs in 1999 than in 1995 for all categories of units. 
The inflation adjustment to convert the 1999 estimates into 2002 
utility allowances was sufficiently higher than the inflation 
adjustment previously used to adjust 1995 figures to 1998 as to cause 
the 2002 allowances for 2- and 3+-bedroom units to be greater than the 
previously published 1998 allowances. The mean utility costs for 
efficiency and one-bedroom units decreased more than for the larger 
bedroom-size categories between the AHS of 1995 and 1999, causing the 
inflation-adjusted 2002 utility allowances for efficiency and one-
bedroom units to remain below the corresponding previously published 
allowances.

IV. Effect of Notice Beyond 2003

    For 2004 and thereafter, the Secretary shall establish AHS-derived 
utility allowances by subsequent notice. Pending establishment of such 
allowances for 2004 and thereafter, the allowances in this notice shall 
continue to be used by the GSEs.

    Dated: August 26, 2002.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 02-22328 Filed 8-30-02; 8:45 am]
BILLING CODE 4210-27-P