[Federal Register Volume 71, Number 146 (Monday, July 31, 2006)]
[Notices]
[Pages 43228-43249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6568]


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OFFICE OF PERSONNEL MANAGEMENT


Nonforeign Area Cost-of-Living Allowance; General Population 
Rental Equivalence Survey Report

AGENCY: Office of Personnel Management.

ACTION: Notice.

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SUMMARY: This notice publishes the ``Nonforeign Area General Population 
Rental Equivalence Survey Report.'' The General Population Rental 
Equivalence Survey (GPRES) was a special research project in which the 
Office of Personnel Management (OPM) collected data on homeowner 
estimates of the rental value of their homes and market rents in the 
nonforeign area cost-of-living allowance (COLA) areas and in the 
Washington, DC area. OPM conducted GPRES to determine whether rental 
survey data collected in the COLA surveys should be adjusted to account 
for homeowner shelter costs. Based on the GPRES results, OPM has 
determined that no adjustment is appropriate. OPM is publishing this 
report to inform interested parties of the research results and provide 
an opportunity for comment.

DATES: Comments on this report must be received on or before September 
29, 2006.

ADDRESSES: Send or deliver comments to Jerome D. Mikowicz, Acting 
Deputy Associate Director for Pay and Performance Policy, Strategic 
Human Resources Policy Division, Office of Personnel Management, Room 
7H31, 1900 E Street NW., Washington, DC 20415-8200; fax: (202) 606-
4264; or e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838; fax: 
(202) 606-4264; or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) 
conducted the General Population Rental Equivalence Survey (GPRES) to 
determine whether OPM should adjust the rent indexes it computes from 
data collected in the nonforeign area cost-of-living allowance (COLA) 
surveys. The Federal Government pays COLAs to certain white collar 
Federal and U.S. Postal Service employees in Alaska, Hawaii, Guam and 
the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. 
As provided by subpart B of title 5, Code of Federal Regulations, OPM 
conducts living-cost surveys to set COLA rates.
    One of the items OPM surveys during the COLA surveys is market 
rents for detached houses, duplexes and triplexes, town and row houses, 
and apartments. We use rental data to estimate the relative price of 
shelter for both homeowners and renters between the COLA areas and the 
Washington, DC area. (For an example, see the 2004 Pacific COLA survey 
report published at 70 FR 44989-45023.) As applied to homeowners, this 
approach is called ``rental equivalence'' because it estimates the 
shelter value of owned homes rather than surveying homeowner costs 
directly.
    OPM adopted the rental equivalence approach pursuant to the 
settlement in Caraballo, et al. v. United States, No. 1997-0027 
(D.V.I), August 17, 2000. The settlement provides for several 
significant changes in the COLA methodology, including the use of 
rental equivalence. The settlement also established the Survey 
Implementation Committee (SIC), composed of seven plaintiffs' 
representatives and two OPM representatives, and the Technical Advisory 
Committee (TAC), composed of three economists with expertise in living-
cost analysis. The TAC advises the SIC and OPM on living-cost issues. 
The SIC and the TAC agreed OPM could use, on an interim basis, market 
rents collected in the COLA surveys to estimate homeowner costs. The 
TAC noted, however, that the relative price of shelter for homeowners 
could differ compared with the relative price of market rents between 
the COLA areas and the DC area. If this were the case, it would be 
appropriate for OPM to adjust COLA survey market rent indexes before 
applying them to homeowners.
    Therefore, OPM conducted a special research project, i.e., GPRES, 
to collect information on market rents and homeowner estimates of the 
rental value of their homes in the COLA areas and in the Washington, DC 
area. The SIC and the TAC were involved heavily in the design of the 
survey, and the TAC analyzed the survey results. The TAC also compared 
GPRES results with the results of the 1998 Federal Employee Housing and 
Living Patterns Survey (FEHLPS), which Joel Popkin and

[[Page 43229]]

Company conducted as part of the research leading to the Caraballo 
settlement.
    Using the GPRES results, the TAC found that no adjustment to the 
COLA survey market rents was appropriate because there were no 
statistically significant differences between homeowner estimated rents 
and market rents in the COLA areas compared with the DC area. The TAC 
found essentially the same results using FEHLPS. Therefore, the TAC 
recommended no rental equivalence adjustment be made. However, the TAC 
noted some differences between GPRES results and FEHLPS results and 
speculated these differences could reflect trends in relative rent 
prices/rental price estimates. Therefore, the TAC recommended OPM 
consider conducting additional GPRES-type surveys if OPM were to adopt 
a rental equivalence adjustment. Because OPM agrees that no rental 
equivalence adjustment is warranted, we do not plan to conduct 
additional GPRES-type surveys at this time.

Office of Personnel Management.
Linda M. Springer,
Director.

Nonforeign Area General Population Rental Equivalence Survey Report

TABLE OF CONTENTS

1. Introduction.
2. Purpose of GPRES.
    2.1 Rental Equivalence and Rents.
    2.2 Caraballo Settlement and Rental Equivalence.
3. Planning GPRES.
    3.1 Consultation with the SIC and TAC.
    3.2 Survey Instrument, Sampling Methodology, and Sample Size.
4. Conducting the Survey.
    4.1 Survey Period.
    4.2 Efforts To Ensure Quality Participation.
    4.3 Survey Complications.
    4.3.1 Home Size.
    4.3.2 Prevalence of Subsidized Housing in Some Areas.
5. Survey Results and Response Rates.
    5.1 GPRES Survey Results and Response Rates.
    5.2. FEHLPS Survey Results and Response Rates.
6. Survey Analyses
    6.1 Homeowner Factors: Comparison of Owner Rent Estimates and 
Market Rents.
    6.2 Regional Comparisons.
    6.3 COLA Survey Area Comparisons.
7. Summary and Conclusions.

List of Appendices

A. GPRES Survey Questionnaire.
B. GPRES Sample Size.
C. GPRES Data Collection Guidelines.
D. GPRES Number of Responses and Response Rates.
E. FEHLPS Samples Size, Responses, and Response Rates.
F. FEHLPS Survey Questionnaire--Housing Portion.
G. GPRES SAS Regression Results--Regional Analyses.
H. FEHLPS SAS Regression Results--Regional Analyses.
I. GPRES SAS Regression Results--Survey Area Analyses.
J. FEHLPS SAS Regression Results--Survey Area Analyses.

1. Introduction

    This report provides the results of the General Population Rental 
Equivalence Survey (GPRES), which Westat, Incorporated, conducted for 
OPM in the winter of 2004/2005. In addition, the report provides for 
comparison purposes the results of the 1998 Federal Employee Housing 
and Living Patterns Survey (FEHLPS), which Joel Popkin and Company 
conducted for plaintiffs' representatives and Government 
representatives who were working collaboratively to resolve long-
contested issues in the nonforeign area cost-of-living allowance (COLA) 
program. The collaborative work lead to the settlement of Caraballo, et 
al. v. United States, No. 1997-0027 (D.V.I.), August 17, 2000, and to 
major changes in the nonforeign area cost-of-living allowance (COLA) 
program. Therefore, although this report is principally about GPRES, it 
also covers the FEHLPS as it applies to rental equivalence analyses.
    The report describes how OPM planned and prepared for the conduct 
of GPRES. In planning the survey, OPM consulted closely with the Survey 
Implementation Committee (SIC) and the Technical Advisory Committee 
(TAC), both established pursuant to the Caraballo settlement. The SIC 
has seven members--five plaintiffs' representatives from the COLA areas 
and two OPM representatives. The TAC has three members--economists who 
have expertise in living-cost measurement. The TAC performs research 
for and advises the members of the SIC.
    The purpose of GPRES was two-fold. First, it was to determine 
whether there are statistically significant ``homeowner factors'' (HFs) 
that reflect the difference between homeowners' estimates of the rental 
value of their homes compared with market rents, holding rental unit 
characteristics constant. (The HF is the estimated rental value of 
owned homes divided by the market rent for homes of equivalent observed 
quality and quantity.) Second, GPRES was to determine whether HFs 
varied between the COLA areas and the Washington, DC area to a 
statistically significant degree. If so, OPM could use the results to 
adjust the market rents it collects during the COLA surveys to reflect 
homeowner shelter costs.
    FEHLPS was used to look at the same two questions. The purpose of 
FEHLPS was to collect a wide range of information on Federal 
employees--much more than housing data. However, among the data FEHLPS 
collected were homeowner estimates of the rental value of their homes, 
so it was possible to use the survey to compute HFs and to examine 
whether these varied to a statistically significant degree between the 
COLA areas and the Washington, DC area. The scope of FEHLPS was more 
limited than GPRES. It had approximately a third fewer housing 
observations and was limited to Federal employees--a subset of the 
general population.
    Comparing GPRES and FEHLPS results was very informative. This 
report describes those comparisons and why, based on the results and 
comparisons, no adjustment to rental indexes to account for homeowner 
shelter costs appears warranted at this time.

2. Purpose of GPRES

2.1 Rental Equivalence and Rents

    There are two commonly accepted approaches for measuring the 
shelter value of owned homes. One is the user-cost approach. The other 
is rental equivalence. In simplistic terms, user costs are the costs of 
owning and maintaining a home minus the annual discounted expected 
capital gains that the owner will realize when he or she sells the 
home. Rental equivalence is what an owned home would rent for if it 
were available for rent in the rental market.
    Rental equivalence is a well-known approach and is used by the 
Bureau of Labor Statistics (BLS) in the computation of the Consumer 
Price Index. Instead of measuring the change in owner user costs, which 
tend to be volatile, BLS attributes the change in market rents to 
homeowner shelter costs. This approach is supported by research that 
BLS conducted in the 1990's. Economists advising the plaintiffs' and 
Government representatives prior to the Caraballo settlement 
recommended that OPM adopt a similar approach for the COLA program, and 
the Caraballo settlement and OPM regulations adopted pursuant to the 
settlement prescribe that OPM use a rental equivalence approach to 
estimate the ``price'' of homeowner shelter.
    Economic theory suggests that homeowners'' estimates of the rental 
value of their homes will on average be higher than market rents for 
housing with equivalent observed characteristics (i.e., of equivalent 
observed quantity

[[Page 43230]]

and quality). (See Akerlof, George A., 1970. ``The Market for `Lemons': 
Quality Uncertainty and the Market Mechanism,'' The Quarterly Journal 
of Economics, MIT Press, vol. 84(3), pages 488-500.) Imperfect market 
knowledge on the part of potential renters' and homeowners' awareness 
of unobserved amenities of their homes cause owner rent estimates to be 
higher than market rents. In other words, the HF should be greater than 
one. The size of the HF, however, could vary between one or more COLA 
areas and the Washington, DC area if owned homes in some areas have 
more unobserved amenities than owned homes in other areas.
    Other factors could also affect owner rent estimates of the rental 
value of their homes, such as the owner's limited knowledge of local 
rental markets. Although some owners might have an excellent knowledge 
of rental markets and the rental value of their homes, most owners have 
little reason to pay much attention to the rental market, and their 
estimates might well be less accurate. In fact, GPRES results suggest 
that homeowners often relied on their mortgage payments to estimate the 
rental value of their homes, and mortgage payments are not necessarily 
correlated with market rents.
    Although homeowner estimates may be somewhat inaccurate, the 
expectation is that the inaccurate estimates would be distributed 
normally in any area--some too high and some too low. Once again, it is 
possible that the effect might not be constant across all areas. Owners 
might overestimate in areas where home values are rising rapidly, even 
though market rents were trailing. On the other hand, owners might 
estimate more accurately in areas with a higher proportion of transient 
population because owners might have a greater opportunity to acquire 
rental market knowledge if homes near to them become available for 
rent. Variation in the accuracy of owner estimates among areas would 
make it difficult to compare differences between owner estimates and 
market rents from one area to the next.
    Another factor that might lead to inaccurate homeowner estimates 
could be the pride of ownership. It is conceivable that home owners 
systematically might estimate high rental values because the owners 
take pride in their homes and think they should be worth more, 
regardless of any unobserved amenities. This could further contribute 
to the ``noise'' in the survey--i.e., undermine the survey's ability to 
reflect higher owner shelter values attributable to unobserved 
amenities. Whether the effect of this ``pride factor'' might vary among 
areas is speculative.
    GPRES was designed to collect information that could be used to 
compare homeowner estimated rents with market rents. It also obtained 
information on many of the characteristics and amenities of the 
respondents' homes to allow the comparison of estimated rents and 
market rents while holding observed quality and quantity constant.

2.2 Caraballo Settlement and Rental Equivalence

    As stated in the previous section, pursuant to the Caraballo 
settlement OPM adopted a rental equivalence approach to measure the 
shelter value of owner-occupied housing. Appendix A of the stipulation 
for settlement provides 26 ``Safe Harbor Principles'' (SHPs) concerning 
the operation of the COLA program. One of the key principles, SHP-18, 
describes how OPM will measure the relative cost of shelter:

    18. Hedonic Housing Model and Rental Equivalence: Shelter price 
relatives will be estimated for owners and renters from the 
triennial regional sample. The sample for the region will be pooled 
with the comparison sample from the base area and price relatives 
for the COLA areas will be estimated using hedonic regression models 
to adjust for quality differences.
    Discussion: OPM will adopt a rental-equivalence approach to 
estimate shelter costs and a hedonic regression approach to compare 
housing of similar quality. To identify the living communities to be 
surveyed, OPM will use the results of the 1992/93 employees survey, 
JPC's [Joel Popkin and Company] survey, and/or other appropriate 
information. How the housing data will be collected is not known or 
stipulated. OPM may survey Federal employees, collect the data on 
its own or through a contractor, enter into an interagency agreement 
with another Federal agency (e.g., the Department of Interior), or 
use some other appropriate approach.

    OPM adopted this principle when it published final regulations at 
67 FR 22339. Section 591.219 of title 5, Code of Federal Regulations, 
prescribes how OPM will compute shelter price indexes based on rental 
and rental equivalence prices and/or estimates. As noted in Section 
2.1, rental equivalence compares the shelter value (rental value) of 
owned homes rather than total owner costs because the latter are 
influenced by capital gains (i.e., the investment value of a home). 
Most living-cost surveys do not compare how consumers invest their 
money.
    In the COLA surveys, OPM surveys market rents in each of the COLA 
areas and in the Washington, DC area, obtaining over 80 characteristics 
of the rental units for use in the hedonic regression equations. (A 
hedonic regression is a statistical technique, specifically a form of 
multiple linear regression. For an explanation of how OPM applies these 
regressions, see ``2004 Nonforeign Area Cost-of-Living Allowance Survey 
Report: Pacific and Washington, DC Areas,'' published at 70 FR 44989.) 
The SIC and the TAC agreed that OPM could use market rents as an 
estimate for rental equivalence until the issue of rental equivalence 
could be explored more fully through a GPRES-type survey.
    GPRES explored two questions. The first question was whether the 
rental value of owned homes in the COLA and DC areas differed to a 
statistically significant degree from market rents in the same area 
holding observed quality and quantity constant. To do this, the TAC 
computed homeowner factors, as described in Section 6.1. The second 
question was whether the COLA area homeowner factors differed to a 
statistically significant degree compared with the DC area homeowner 
factor. If the homeowner factors were significantly different, it might 
be appropriate for OPM to make a rental equivalence adjustment to 
account for homeowner shelter costs. As it turned out, no adjustment 
was appropriate because we did not find statistically significant 
differences between the COLA and DC areas.

3. Planning GPRES

3.1 Consultation With the SIC and TAC

    OPM worked closely with the SIC and TAC to plan and develop GPRES. 
In August 2001, OPM provided the SIC and TAC with a rough draft of a 
survey questionnaire that could be used with homeowners and renters to 
obtain and compare information about estimated rental values and market 
rents. The SIC and TAC subsequently met on several occasions to refine 
the questionnaire and begin planning GPRES. The goal was to design a 
survey that was sufficiently brief as to encourage renters and owners 
to participate but sufficiently detailed so that OPM could compare 
market rents and rental equivalence estimates for comparable housing. 
By early 2002, the SIC and TAC had developed such a questionnaire. 
Later that year, at the request of the SIC and TAC, the Caraballo 
trustee entered into a contract with Joel Popkin and Company (JPC) to 
review draft plans for GPRES, review current literature regarding 
rental equivalence, and to make recommendations to the SIC and TAC

[[Page 43231]]

concerning GPRES. JPC's research emphasized the importance of 
conducting GPRES. The SIC and TAC reviewed JPC's findings, incorporated 
them as appropriate in the survey, and recommended that OPM proceed 
with the conduct of GPRES. This OPM did.
    OPM continued to consult with the SIC and TAC as it finalized plans 
for GPRES and kept them apprised during the conduct of GPRES. The TAC 
analyzed GPRES results, and OPM and the TAC discussed those results 
with the SIC.

3.2 Survey Instrument, Sampling Methodology, and Sample Size

    In the fall of 2002, OPM contracted with Westat, Inc., a 
statistical research firm, to review JPC's research, propose a survey 
methodology, develop a survey instrument, and recommend sample sizes 
and sampling strategies for GPRES. In terms of a survey methodology, 
Westat recommended the use of Computer Assisted Telephone Interviews 
(CATIs). This approach appeared to offer the probability of greater 
response rates at reasonable cost compared with other approaches, such 
as mail-out questionnaires. Appendix A shows the GPRES questionnaire 
that Westat developed as modified by OPM.
    To develop sample sizes, Westat used the results of FEHLPS and 
OPM's 2002 Caribbean and DC area COLA rental survey, applying standard 
sample size calculations. (See Cochran, W.G., Sampling Techniques: 
third edition, New York: John Wiley & Sons, Inc., 1977) Westat used 
FEHLPS to estimate the standard deviation of homeowner estimated rents 
for each COLA area and the Washington, DC area. Westat also used the 
results of the survey to estimate the standard deviation of market 
rents by area, except for the Caribbean and DC areas. For these areas, 
Westat used the results of the 2002 COLA survey because that survey had 
more observations and covered the general population, not just Federal 
employees. From the surveys, Westat developed sample sizes for owner 
and renters for the COLA areas and the Washington, DC area. Westat 
developed two sets each for owners and renters. One set was the sample 
size necessary for estimating rent or rental equivalence within a 
margin of error of +/- $500 in annual rent with 90 percent confidence 
level, and the other was the sample size for estimating rent or rental 
equivalence at the same margin of error at the 95 percent confidence 
level. Subsequent to the 2003 Alaska COLA survey, OPM modified the 
renter sample sizes for the Alaska and DC areas based on the additional 
rental data that OPM had collected in these areas. Appendix B shows the 
sample sizes Westat recommended, as modified by OPM.
    Within each area, OPM limited the geographic scope of GPRES to the 
zip code areas in which OPM collected rental data in the annual COLA 
surveys. In the Washington, DC area, OPM further allocated the sample 
among the District of Columbia and the Counties of Montgomery, MD; 
Prince Georges, MD; Arlington, VA; Fairfax, VA; and Prince William, VA; 
and the independent cities therein, based on the relative numbers of 
owners and renters within these areas as reflected by the 2000 Census.
    OPM obtained approval for GPRES from the Office of Management and 
Budget (OMB) as required by 5 CFR Part 1320, and OMB assigned GPRES an 
information collection number. Federal surveys and other information 
collections that Federal agencies conduct are covered by the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.). Participation in GPRES was 
voluntary, and any identifying information regarding the respondents is 
protected under the Privacy Act (5 U.S.C. 552a) and the Freedom of 
Information Act (5 U.S.C. 552).

4. Conducting the Survey

4.1 Survey Period

    In the fall of 2004, OPM awarded a second contract to Westat to 
conduct GPRES. Using CATI, Westat began collecting data in October 2004 
and finished in March 2005. Although Westat started data collection in 
some areas before others, Westat essentially collected data in all of 
the areas throughout this entire time period. Westat provided OPM with 
interim deliverables throughout the survey so that OPM and the TAC 
could begin testing analyses prior to receiving the final deliverable. 
Westat provided the final deliverable in early April 2005.

4.2 Efforts to Ensure Quality Participation

    Westat used commercially available lists of phone numbers and 
addresses of owners and renters for the Washington, DC area and all of 
the COLA areas, except Guam, Puerto Rico, and the U.S. Virgin Islands 
for which such lists were unavailable. Using the sampling strategy 
described in Section 3.2, Westat drew the sample using commercial data 
bases where available. Westat then mailed letters to the prospective 
respondents informing them of the survey and asking for their 
cooperation. The letter was prepared by OPM on OPM letterhead and 
signed by Donald J. Winstead, who at that time was OPM's Deputy 
Associate Director for Pay and Performance Policy, Strategic Human 
Resources Policy Division. For those areas where commercial mailing/
phone lists were unavailable, Westat was unable to mail advance 
letters; and Westat used simple random sampling to select potential 
participants.
    At the beginning of each telephone interview, Westat surveyors 
explained the purpose of the survey, that the survey was voluntary, and 
provided the respondent the OMB-provided information collection number. 
Westat made certain that the respondent was a knowledgeable adult who 
could answer questions relating to the housing unit. If the adult was 
not available, Westat made arrangements to call back at a more 
convenient time to conduct the interview. The complete interview took 
approximately 8 minutes.
    It was critically important that GPRES collect accurate information 
from persons who either owned their own homes or rented homes at 
current market rents. To this end, some GPRES questions were designed 
to eliminate respondents who did not meet these criteria. For example, 
Westat discontinued the survey if the respondent lived in rent-
subsidized or rent-controlled housing, occupied military housing, or 
rented from relatives or other persons at rates other than market 
rates. Likewise, Westat discontinued the survey if the respondent was 
renting a room in a home or was living in a mobile home or similar 
lodging.
    In addition, OPM identified for Westat several ``threshold'' 
questions that were critical to the survey and instructed Westat to 
discontinue the survey if the respondent could not or would not answer 
these questions. For example, if the respondent did not know or refused 
to answer how many bathrooms or bedrooms were in the home, Westat was 
instructed to discontinue the survey. The questionnaire in Appendix A 
shows the threshold questions. They are identified by the interview 
instruction ``GO TO END.'' Similarly, OPM provided Westat with 
guidelines to help ensure that respondents did not provide frivolous 
responses or occupied housing so atypical as to be outside the scope of 
the survey. Appendix C shows the Guidelines that Westat used to help 
identify frivolous and highly atypical responses.

4.3 Survey Complications

    Westat encountered two unexpected complications in conducting 
GPRES. One involved the respondent's lack of knowledge concerning home 
size. The

[[Page 43232]]

other involved an unexpectedly high proportion of the population in 
certain areas residing in subsidized or rent-controlled housing.
4.3.1 Home Size
    One problem that Westat encountered was that respondents often did 
not know and could not estimate or guess the number of square feet in 
their home. As shown in Appendix A, OPM had identified this as a 
critical threshold question; and as shown in Appendix C, OPM provided 
guidelines concerning acceptable data. Westat noted that invalidating 
these responses was increasing the non-response rate and the cost of 
the survey. Westat suggested that OPM reconsider whether home size 
should be a threshold question and/or subject to the guidelines.
    OPM discussed the issue with the TAC. The TAC was not surprised and 
noted that BLS, the Bureau of the Census, and other housing surveys 
encountered the same problem and dropped home size as a question in 
their surveys. The TAC suggested that OPM use room count and a limited 
number of other characteristics to impute home size for respondents who 
were unknowledgeable or provided atypical responses. OPM tested this 
approach using the rental data it had collected in the COLA surveys and 
found it feasible. Therefore, OPM informed Westat to continue survey 
interviews even when respondents did not know and could not estimate 
home size and instructed Westat not to apply guidelines to flag 
atypical responses. OPM and the TAC later tested whether to use imputed 
home sizes but decided against it because the imputation process had a 
systematic error in estimating the size of relatively small and 
relatively large homes.
4.3.2 Prevalence of Subsidized Housing in Some Areas
    Westat also discovered difficulties obtaining the desired sample of 
renters in certain areas because an unexpectedly large portion of the 
renter population appear to occupy subsidized or rent-controlled 
housing. This was most noticeable in Guam, Puerto Rico, and the U.S. 
Virgin Islands (USVI), as well as in the District of Columbia. Under 
the contract, OPM paid Westat on a price-per-completed-survey-response 
basis. When Westat began encountering unexpectedly high respondent 
invalidation rates, Westat informed OPM that it would not be able to 
provide the desired sample sizes in certain areas because the company 
had reached the breakeven point at which further data collection would 
not be profitable.
    Therefore, OPM modified the price schedule in the contract to 
ensure that Westat could obtain at least the ``minimum'' sample size 
shown in Appendix B in all areas. As shown in Appendix D, Westat 
exceeded this level in several areas, but it was unable to obtain the 
minimum number of renter samples in Guam and Puerto Rico.

5. Survey Results and Response Rates

5.1 GPRES Survey Results and Response Rates

    Appendix D shows the number of renter and owner observations that 
Westat obtained by area. Except in Guam and Puerto Rico, Westat 
obtained a sample that equaled or exceeded the sample size necessary 
for estimating rent or rental equivalence within a margin of error of 
+/-$500 in annual rent with a 90 percent confidence level. In all, 
Westat obtained 6,170 observations.
    To do this, Westat made more than 152,000 phone calls. Therefore, 
one simplistic measure of the response rate might be 4 percent (i.e., 
6,170 divided by 152,000). Many of those calls, however, particularly 
in the areas for which commercial phone list data as described in 
Section 4.2 were unavailable, were screening calls to businesses, 
facsimile machines, and other non-residential phone numbers. Also, many 
of the residential respondents (e.g., those occupying rent-controlled 
or subsidized housing) were not eligible to be part of the survey 
universe. Therefore, another and perhaps more meaningful way to look at 
the response rate is to compare the number of respondents with the 
total number of those who were determined, after the screening 
questions, to be part of the survey universe. According to Westat, a 
total of 23,662 respondents passed the screening questions. Using this 
as a basis, the response rate was 26.1 percent (i.e., 6,170 divided by 
23,662). This does not, however, include respondents who become 
ineligible in the ``extended interview,'' i.e., the main part of the 
interview that followed the screening questions. Taking this into 
consideration, the overall GPRES response rate according to Westat was 
28 percent. Appendix D shows this type of response rate for each COLA 
area and the for Washington, DC area.

5.2 FEHLPS Survey Results and Response Rates

    JPC conducted FEHLPS in cooperation with OPM in 1998. It was a 
survey of a sample of non-U.S. Postal Service Federal employees in the 
COLA areas and in the Washington, DC area. JPC selected a sample size 
of approximately 15,800, of which 11,478 were to be drawn from the COLA 
areas and 4,324 were to come from the Washington, DC area. The sample 
was drawn from OPM's Central Personnel Data File (CPDF), which is 
essentially a census of non-Postal Federal employees. According to the 
CPDF, there were approximately 44,027 non-Postal Federal employees in 
1998 in the COLA areas and 258,304 in the DC area.
    JPC collected 5,662 responses from the COLA areas, which makes the 
average response rate for those areas 49.3 percent. JPC collected 1,081 
responses from the Washington, DC area, which makes the DC area 
response rate 25 percent. Appendix E shows the FEHLPS sample sizes, 
responses, and response rates by COLA area and for the Washington, DC 
area. Not all of the respondents provided usable housing data. 
Therefore, the TAC could use only 4,275 FEHLPS observations in its 
analyses.
    The survey was a ``mail out'' survey, delivered to employees at 
their worksite. Agencies were encouraged to grant employees time at 
work to complete the survey. FEHLPS covered numerous topics, including 
transportation and travel, K-12 private education, college education, 
medical costs, and housing. Appendix F shows the housing related 
portion of the survey.

6. Survey Analyses

    The TAC performed most of the analyses of the GPRES results, with 
OPM's support and oversight. OPM also contracted with JPC to review the 
GPRES results and analyses. JPC concurred with the TAC's analyses, 
findings, and recommendations.

6.1 Homeowner Factors: Comparison of Owner Rent Estimates and Market 
Rents

    As discussed in Section 2, one purpose for conducting GPRES was to 
compare owner estimates of the rental value of their homes with market 
rents for comparable housing in terms of quality and quantity. The goal 
was to express mathematically the relationship of rents and rent 
estimates within each COLA area and the Washington, DC area. The second 
purpose was to examine whether those relationships varied significantly 
between the COLA areas and the Washington, DC area.
    The TAC computed homeowner factors (HFs) to express the 
relationship of homeowner rent estimates and market rents in and among 
the COLA

[[Page 43233]]

areas and the Washington, DC area. The HF is the estimated rental value 
of owned homes divided by the market rent for homes of equivalent 
observed quality and quantity. To compute the HF, the TAC used hedonic 
regressions to hold quality and quantity constant.
    The TAC used two distinctly different approaches to analyze HFs. 
One approach involved comparing HFs by COLA region with the DC area HF. 
The other involved estimating HFs for each COLA survey area and 
comparing these with the DC area HF. The results of the two approaches 
were quite different but lead to the same conclusion.

6.2. Regional Comparisons

    The COLA areas are divided into three regions--the Alaska, Pacific, 
and Caribbean regions. The Alaska region is composed of the Anchorage, 
Fairbanks, and Juneau COLA survey areas. The Pacific region is composed 
of the Honolulu County; Hilo and Kailua Kona, Hawaii County; Kauai 
County; Maui County; and Guam COLA survey areas. The Caribbean region 
is composed of the Puerto Rico; St. Croix, USVI, and St. Thomas/St. 
John, USVI, COLA survey areas.
    The TAC noted that there were virtually no previous studies to 
serve as a guide on how to analyze HFs by area and compare them between 
areas. The TAC believed if there were systematic differences in HFs 
across areas, the TAC would need as many observations as possible to 
identify these relationships. Pooling the data by region allowed the 
use of all of the survey observations (GPRES or FEHLPS) at one time.
    The TAC applied semi-logarithmic hedonic regressions to compute 
rental equivalence indexes and market rent indexes for the COLA regions 
relative to the Washington, DC area, holding quantity and quality of 
housing constant. The dependent variable of the regression was the 
logarithm of rent. Appendix G shows the SAS GPRES regression results 
that the TAC used. (SAS is a proprietary statistical analysis computer 
software package.) The independent variables for the GPRES regression 
are listed below:

Type of dwelling (e.g., detached house, townhouse, apartment),
Whether the unit had central air conditioning,
Number of baths,
Number of bedrooms,
Number of baths crossed with type of dwelling, and
Tenure (i.e., owned or rented) by the COLA region or DC area in which 
unit is located.

    The parameter of interest in this regression was tenure by COLA 
region and the results are shown in the table below. The HF is shown in 
column (1). (The logarithmic form of the HFs and standard errors and t 
values are shown in columns (2) through (4).) An HF of 1.223 for Alaska 
means that homeowner estimates of the rental value of their homes are 
on average 22.3 percent higher than market rents holding observed 
quality and quantity of the housing unit characteristics constant. The 
critical values of ``t'' at the 5 percent and 1 percent levels are 1.96 
and 2.58 respectively. In other words, HFs with t-values equal to or 
greater than 2.58 are significant at a 99 percent confidence level or 
higher.

                                   Table 1.--GPRES Homeowner Factors by Region
----------------------------------------------------------------------------------------------------------------
                                                                                           Standard
                         COLA region                             HF      Logarithmic HF     error       t-value
----------------------------------------------------------------------------------------------------------------
                                                                   (1)              (2)          (3)         (4)
----------------------------------------------------------------------------------------------------------------
Alaska......................................................     1.223            0.201        0.027        7.50
Pacific.....................................................     1.171            0.158        0.018        8.74
Caribbean...................................................     1.117            0.111        0.023        4.94
Washington, DC Area.........................................     1.153            0.142        0.031        4.62
----------------------------------------------------------------------------------------------------------------

    The TAC also computed homeowner factors on a regional basis using 
the results of FEHLPS. Again, the dependent variable was the log of 
rent, but the independent variables were somewhat different than those 
used in the GPRES analyses. Appendix H shows the TAC's regression 
results using the FEHLPS data. The homeowner factors are shown in Table 
2, below:

                                  Table 2.--FEHLPS Homeowner Factors by Region
----------------------------------------------------------------------------------------------------------------
                                                                                           Standard
                         COLA region                             HF      Logarithmic HF     error       t-value
----------------------------------------------------------------------------------------------------------------
                                                                   (1)              (2)          (3)         (4)
----------------------------------------------------------------------------------------------------------------
Alaska......................................................     1.274            0.242       0.0301        8.03
Pacific.....................................................     1.092            0.088       0.0195        4.49
Caribbean...................................................     1.168            0.155       0.0326        4.75
Washington, DC Area.........................................     1.254            0.226       0.0479        4.71
----------------------------------------------------------------------------------------------------------------

    The HFs from both surveys are statistically significant and greater 
than 1 when the results are analyzed on a regional basis. HFs greater 
than one is what economic theory would predict. The key question is 
whether there are statistically significant differences between the HFs 
for the COLA regions compared with the DC area HF. To do this, the TAC 
again used a t-test where the standard error is the difference between 
HFs calculated from a covariance matrix of the regression coefficients 
on owners and renters. Tables 3 and 4 below show the results for GPRES 
and FEHLPS respectively.

[[Page 43234]]



                     Table 3.--GPRES Test of Difference Between Regional HFs and DC Area HF
----------------------------------------------------------------------------------------------------------------
                                                     COLA region HF    Logarithmic COLA    Standard
                   COLA region                       divided by DC        region HF         error       t-value
----------------------------------------------------------------------------------------------------------------
                                                                 (1)                (2)          (3)         (4)
----------------------------------------------------------------------------------------------------------------
Alaska...........................................              1.061             0.0595       0.0375        1.58
Pacific..........................................              1.016             0.0161       0.0328        0.49
Caribbean........................................              0.970            -0.0301       0.0353       -0.85
----------------------------------------------------------------------------------------------------------------


                     Table 4.--FEHLPS Test of Difference Between Regional HFs and DC Area HF
----------------------------------------------------------------------------------------------------------------
                                                     COLA region HF    Logarithmic COLA
                   COLA region                       divided by DC      region HF -DC      Standard     t-value
                                                        Area HF            Area HF          error
----------------------------------------------------------------------------------------------------------------
Alaska...........................................              1.016             0.0161       0.0548        0.29
Pacific..........................................              0.871            -0.1379       0.0500       -2.76
Caribbean........................................              0.932            -0.0705       0.0560       -1.26
----------------------------------------------------------------------------------------------------------------

    As shown in Table 3, the TAC found, based on the GPRES results, the 
differences between the COLA region HFs and the DC area HF were not 
statistically significant. Similarly, as shown in Table 4, the TAC 
found, based on the FEHLPS results, there was no statistically 
significant difference between the COLA region HFs and the DC area HF. 
Therefore, no adjustment to the COLA survey rental index was 
appropriate to account for homeowner shelter values (rental 
equivalence).
    Although analyses of both surveys found no statistically 
significant differences between the COLA and DC area HFs, the TAC also 
noted the significant differences between the GPRES results compared 
with the FEHLPS results. For example, GPRES showed the Pacific region 
HF was slightly higher than the DC area HF, but FEHLPS show the Pacific 
region HF to be somewhat lower than the DC area HF. Unless Federal 
employees were atypical of the general population with regard to market 
rents and homeowner estimates, it appeared that the HFs changed 
substantially over the 6-year interval between FEHLPS and GPRES. The 
TAC found the apparent lack of stability over time troubling.

6.3 COLA Survey Area Comparisons

    The second approach the TAC used to analyze GPRES and FEHLPS 
results was to compute HFs by COLA survey area and compare these with 
the DC HF. The advantage of this approach was more consistency with the 
COLA program, which sets COLA rates by COLA area, not COLA region. It 
also allowed the HFs to be computed separately for each area, using 
different equations as appropriate. The disadvantage was that each 
regression used far less data than in the regional analyses.
    To compute HFs for each of the COLA survey areas, the TAC pooled 
the survey data by region and computed HFs for each of the COLA survey 
areas within the region. Appendix I has an example of the SAS 
regression results for one of the survey areas--the Pacific region--
using GPRES. Appendix J has an example of the SAS regression results 
for one of the survey areas--the Caribbean region--using FEHLPS. Table 
5 shows the HFs by area and their relationship to the DC HF using 
GPRES. Table 6 shows the same results using FEHLPS.

                                     Table 5.--GPRES HFs by COLA Survey Area
----------------------------------------------------------------------------------------------------------------
                                                                                           Standard
                         Survey area                             HF      Logarithmic HF     error       t ratio
----------------------------------------------------------------------------------------------------------------
                                                                   (1)              (2)          (3)         (4)
----------------------------------------------------------------------------------------------------------------
Anchorage...................................................     1.025           0.0250       0.0354        0.70
Fairbanks...................................................     0.958          -0.0434       0.0416       -1.04
Juneau......................................................     0.935          -0.0667       0.0392       -1.70
Honolulu....................................................     1.061           0.0588       0.0321        1.81
Hilo........................................................     0.986          -0.0141       0.0499       -0.28
Kailua Kona.................................................     0.957          -0.0440       0.0546       -0.81
Kauai.......................................................     0.930          -0.0728       0.0396       -1.84
Maui........................................................     1.013           0.0134       0.0355        0.38
Guam........................................................     0.997          -0.0030       0.0351       -0.09
Puerto Rico.................................................     1.002           0.0018       0.0495        0.04
St. Croix...................................................     1.141           0.1321       0.0395        3.35
St. Thomas/St. John.........................................     1.124           0.1166       0.0442        2.64
DC Area.....................................................     1.110           0.1040       0.0415        2.51
----------------------------------------------------------------------------------------------------------------

    Unlike the COLA region analyses, the GPRES results in Table 5 show 
that the HFs are less than 1 in half of the COLA survey areas. This is 
contrary to what economic theory would predict. In addition, 10 of the 
13 COLA survey area HFs are not statistically significant at a 95 
percent confidence level. By comparison, the results using FEHLPS are 
quite different. (See Table 6.) All of the HFs are greater than 1, 
which conforms with economic theory, and only four of the HFs are not 
significant at a 95 percent confidence level.

[[Page 43235]]



                                    Table 6.--FEHLPS HFs by COLA Survey Area
----------------------------------------------------------------------------------------------------------------
                                                                                           Standard
                         Survey area                             HF      Logarithmic HF     error       t ratio
----------------------------------------------------------------------------------------------------------------
                                                                   (1)              (2)          (3)         (4)
----------------------------------------------------------------------------------------------------------------
Anchorage...................................................     1.278           0.2451       0.0397        6.17
Fairbanks...................................................     1.011           0.0106       0.0623        0.17
Juneau......................................................     1.222           0.2006       0.0707        2.84
Honolulu....................................................     1.120           0.1130       0.0240        4.71
Hawaii County...............................................     1.011           0.0108       0.0424        0.25
Kauai.......................................................     1.083           0.0798       0.0587        1.36
Maui........................................................     1.176           0.1618       0.0495        3.27
Guam........................................................     1.168           0.1549       0.0488        3.17
Puerto Rico.................................................     1.208           0.1888       0.0497        3.80
St. Croix...................................................     1.045           0.0440       0.0784        0.56
St. Thomas/St. John.........................................     1.468           0.3842       0.0839        4.58
DC Area.....................................................     1.279           0.2461       0.0450        5.46
----------------------------------------------------------------------------------------------------------------

    As with the regional analysis, the key question is whether the COLA 
survey area HFs are statistically significantly different from the DC 
area HF. The TAC used the same approach it used to produce Tables 3 and 
4 in the region analyses. As shown in Table 7, the GPRES results 
indicate that the HFs in the COLA survey areas are lower than the DC 
area HF except in the USVI. The t-ratios, however, show that these 
results are not significant at the 95 percent confidence level in 8 out 
of 12 cases. (Keep in mind that 10 of the 13 HFs were not statistically 
significant at that level, which further weakens the statistical 
validity of the comparison.). Table 8, which shows the FEHLPS results, 
also shows that the COLA survey area HFs are lower than the DC area HF, 
except in St. Thomas/St. John, USVI. (Note: Unlike GPRES, it was not 
possible using FEHLPS data to split Hawaii County into the Hilo and 
Kailua Kona survey areas.) In addition, the FEHLPS differences are not 
statistically significant at a 95 percent confidence level in 7 out of 
13 areas.

                    Table 7.--GPRES Test of Difference Between Survey Area HFs and DC Area HF
----------------------------------------------------------------------------------------------------------------
                                                                   COLA area HF     Logarithmic COLA
                          Survey area                             divided by DC     area HF- DC area    t ratio
                                                                     area HF               HF
----------------------------------------------------------------------------------------------------------------
                                                                              (1)                (2)         (3)
----------------------------------------------------------------------------------------------------------------
Anchorage.....................................................              0.924            -0.0790       -1.45
Fairbanks.....................................................              0.863            -0.1474       -2.51
Juneau........................................................              0.843            -0.1707       -2.99
Honolulu......................................................              0.956            -0.0452       -0.86
Hilo..........................................................              0.889            -0.1181       -1.82
Kailua Kona...................................................              0.862            -0.1480       -2.16
Kauai.........................................................              0.838            -0.1768       -3.09
Maui..........................................................              0.913            -0.0906       -1.66
Guam..........................................................              0.899            -0.1070       -1.97
Puerto Rico...................................................              0.903            -0.1022       -1.58
St. Croix.....................................................              1.028             0.0281        0.49
St. Thomas/St. John...........................................              1.013             0.0126        0.21
DC Area.......................................................              1.000                0.0
----------------------------------------------------------------------------------------------------------------


                   Table 8.--FEHLPS Test of Difference Between Survey Area HFs and DC Area HF
----------------------------------------------------------------------------------------------------------------
                                                                   COLA area HF     Logarithmic COLA
                          Survey area                             divided by DC     area HF-DC Area     t ratio
                                                                     area HF               HF
                                                                              (1)                (2)         (5)
----------------------------------------------------------------------------------------------------------------
Anchorage.....................................................              0.999            -0.0010       -0.02
Fairbanks.....................................................              0.790            -0.2355       -3.06
Juneau........................................................              0.956            -0.0455       -0.54
Honolulu......................................................              0.875            -0.1331       -2.61
Hawaii County.................................................              0.790            -0.2353       -3.80
Kauai.........................................................              0.847            -0.1663       -2.25
Maui..........................................................              0.919            -0.0843       -1.26
Guam..........................................................              0.913            -0.0912       -1.37
Puerto Rico...................................................              0.944            -0.0573       -0.85
St. Croix.....................................................              0.817            -0.2021       -2.23
St. Thomas/St. John...........................................              1.148             0.1381        1.45
DC Area.......................................................              1.000                0.0  ..........
----------------------------------------------------------------------------------------------------------------


[[Page 43236]]

    As with the regional analyses, the TAC found troubling the 
significant differences between the GPRES and FEHLPS results. Once 
again, the question was whether there were trends over the 6-year 
period between the surveys that could explain these differences or the 
differences were simply inherent in the populations surveyed and/or 
survey techniques used. The TAC recommended that OPM not implement any 
adjustments to the rental data based on the COLA survey area analyses 
without first conducting additional GPRES-like surveys.

7. Summary and Conclusions

    OPM conducted GPRES to determine whether OPM should adjust rental 
data that it collects during its annual COLA surveys. In these annual 
surveys, OPM collects prices on market rents on various types of 
housing units. OPM uses rental data to estimate the relative price of 
shelter for both homeowners and renters between the COLA areas and the 
Washington, DC area.
    The TAC analyzed the GPRES results and compared them with similar 
analyses using rental data and estimates from an earlier survey of 
Federal employees--FEHLPS. Using regression analyses, the TAC computed 
homeowner estimated rent and market rent indexes and from these 
computed homeowner factors (HFs), which were homeowner indexes divided 
by the market rent indexes for units of equivalent observed quality and 
quantity. Economic theory suggests that HFs will be greater than 1.
    The TAC conducted two significantly different analyses--one pooled 
the COLA region and DC area data and the other treated each COLA area 
separately. The TAC conducted these analyses using GPRES results and 
then using FEHLPS results for comparison. For both surveys, the 
regional analyses showed that the HF were greater than 1 for all areas, 
which means that homeowner rent estimates are higher than market rents, 
holding observed housing characteristics constant. This is as economic 
theory would predict. But the TAC also found that for both surveys, the 
COLA area HFs did not differ to a statistically significant degree 
compared with the DC area HF. Therefore, no adjustments to the COLA 
survey rent index to account for rental equivalence are appropriate. In 
addition, the differences between the results using GPRES and those 
using FEHLPS raised questions of whether HFs are changing over time.
    The TAC also analyzed the results of both surveys on a COLA survey 
area basis. These analyses showed that the COLA area HFs were generally 
less than 1, which is the opposite of the findings from the regional 
analyses and what economic theory would predict. Most of these HFs were 
not statistically significant using GPRES, and many were not 
significant using FEHLPS. For both surveys, the COLA area HFs were 
lower than the DC area HF, with the exception of the USVI HFs, but 
several of the COLA area HFs did not differ to a statistically 
significant degree from the DC area HF. As with the regional analyses, 
the COLA survey area analyses indicates that no adjustments to the COLA 
survey rent index are appropriate. In addition, the differences between 
the results using GPRES and those using FEHLPS were even more extreme 
and raised more questions of whether HFs are changing over time.
    Based on these analyses, the TAC recommended that no adjustments be 
made in the COLA survey rent index to account for homeowner shelter 
costs. The TAC further recommended that OPM conduct additional GPRES-
like surveys before considering any such adjustment. OPM hired JPC to 
review the TAC's analyses. JPC found the TAC's analyses to be 
appropriate and comprehensive and concurred with the TAC's 
recommendations. Therefore, OPM will not adjust COLA survey rent 
indexes to account for homeowner shelter costs. OPM does not see a need 
to conduct additional GPRES surveys at this time.

Appendix A--GPRES Survey Questionnaire

    The interviewer must provide the following information to each 
respondent: My name is {INTERVIEWER'S NAME{time}  and I am calling 
on behalf of the U.S. Office of Personnel Management. We are 
conducting a study to determine housing costs in your area. Although 
the results of the study may be public, we will not divulge any 
information that would allow someone to identify you or your home.
    Your participation is voluntary and very important to the 
success of this study. This study should take approximately 8 
minutes. You may send any comments concerning this study to the 
Office of Personnel Management. [IF NEEDED: The address is office of 
Personnel Management, Forms Officer, Washington, DC 20415-8900]. We 
invite comments about how long the study takes and how this time 
could be reduced.
    The Office of Management and Budget has approved this study and 
assigned it a collection number of 3206-0247. We would not be able 
to conduct this study without this approval. The approval expires 5/
31/2007.
1. Do you own or rent your home?
    OWN--1 GO TO Q8a
    RENT--2 GO TO 2
    OTHER (SPECIFY ------------)--91 GO TO END
    REFUSED---7 GO TO END
    DON'T KNOW--8 GO TO END

RENTERS ONLY

2. Which of the following best describes your rental agreement? 
Would you say . . .
    You live in subsidized or rent controlled housing--1 GO TO END
    You live in military housing--2 GO TO END
    You rent from a family member or friend who does not charge you 
market rate for your home--3 GO TO END
    You pay the market rate for renting your home--4
    REFUSED---7 GO TO END
    DON'T KNOW---8 GO TO END
3. What is the length of your lease?
    YEAR--1
    6 MONTHS--2
    NO LEASE (e.g., month-to-month)--3
    OTHER--91
    (SPECIFY)--
    REFUSED---7
    DON'T KNOW---8
4a. What is your monthly rent?
    $----,------ MONTHLY RENTAL AMOUNT
    REFUSED---7 GO TO END
    DON'T KNOW---8 GO TO END
4b. Are any utilities included in the rent?
    YES--1
    NO--2 GO TO Q5
    REFUSED---7 GO TO Q5
    DON'T KNOW---8 GO TO Q5
4c. Which of the following utilities are included in the rent? Does 
it include . . .

------------------------------------------------------------------------
                                                                  Don't
                                           YES     NO      REF     know
------------------------------------------------------------------------
     4ca  Water?.......................       1       2      -7       -8
     4cb  Electric?....................       1       2      -7       -8
     4cc  Gas?.........................       1       2      -7       -8
     4cd  Heat?........................       1       2      -7       -8
------------------------------------------------------------------------

5. Are any of the following included in the rent? How about . . .

[[Page 43237]]



------------------------------------------------------------------------
                                                                  Don't
                                           YES     NO      REF     know
------------------------------------------------------------------------
      5a  Maintenance, e.g. faucet/           1       2      -7       -8
           appliance repair?...........
      5b  Lawn care?...................       1       2      -7       -8
      5c  Snow removal?................       1       2      -7       -8
      5d  Trash removal?...............       1       2      -7       -8
      5e  Parking in covered public           1       2      -7       -8
           style garage?...............
      5f  Furnishings?.................       1       2      -7       -8
------------------------------------------------------------------------

6a. Are pets allowed at your rental unit?
    YES--1
    NO--2 GO TO 7a
    REFUSED---7 GO TO 7a
    DON'T KNOW---8 GO TO 7a
6b. Is there an additional fee for pets?
    YES--1
    NO--2 GO TO 7a
    REFUSED---7 GO TO 7a
    DON'T KNOW---8 GO TO 7a
6c How much is the additional fee?
    $------------ AMOUNT OF PET FEE
    MONTHLY--1
    ANNUALLY--2
    ONE-TIME DEPOSIT--3
    OTHER (SPECIFY) --------------91
    REFUSED---7
    DON'T KNOW---8
7a. Approximately how long have you rented at this location?
    NOTE: LESS THAN 1 MONTH = 1 MONTH
    ------------ TIME RENTED AT THIS ADDRESS MONTHS
    ------------ TIME RENTED AT THIS ADDRESS YEARS
    REFUSED---7
    DON'T KNOW---8
7b. Would you consider the place that you're renting a permanent 
rental property, that is, the property is consistently rented out, 
or is it a temporary rental, for example the owner is abroad and 
intends to return?.
    PERMANENT--1 GO TO 11a
    TEMPORARY--2 GO TO 11a
    REFUSED---7 GO TO 11a
    DON'T KNOW---8 GO TO 11a

OWNERS ONLY

8a. If you were to rent your home on a long term basis, not as a 
vacation rental, what do you think your home would rent for per 
month? We are not asking you whether you want to rent it, only to 
estimate what it might rent for if it were for rent.
    $------------ MONTHLY RENTAL AMOUNT--SKIP TO 8c
    REFUSED---7 GO TO 8b
    DON'T KNOW---8 GO TO 8b
8b. Would you estimate that your home would rent for . . .
    Less than $200 per month--1 GO TO END
    $201 to $500 per month--2 GO TO 8c
    $501 to $1,000 per month--3 GO TO 8c
    $1,001 to $1,500 per month--4 GO TO 8c
    $1,501 to $2,000 per month--5 GO TO 8c
    $2,001 to $2,500 per month--6 GO TO 8c
    $2,501 to $3,000 per month--7 GO TO 8c
    $3,001 to $6000 per month--or 8 GO TO 8c
    Over $6000 per month?--9 GO TO END
    REFUSED---7 GO TO END
    DON'T KNOW---8 GO TO END
8c. How did you arrive at the rental amount? Was it based on . . .

----------------------------------------------------------------------------------------------------------------
            NOTE: ALL RESPONDENTS WILL BE ASKED                         Don't
                     ABOUT EACH REASON             YES     NO    REF    know
----------------------------------------------------------------------------------------------------------------
     8ca  Other neighborhood rentals?...........      1      2     -7      -8  GO TO 10a
     8cb  Rental ads in newspapers, etc?........      1      2     -7      -8  GO TO 10a
     8cc  Realtor or property manager advide?...      1      2     -7      -8  GO TO 10a
     8cd  Previous experience renting this home?      1      2     -7      -8  GO TO 9a
     8ce  Cost incurred, for example, receiving       1      2     -7      -8  GO TO 10a
           enough to cover your mortgage?.
     8cf  Something else? (Specify):------------      1      2     -7      -8  GO TO 10a
----------------------------------------------------------------------------------------------------------------

9a. How long ago did you rent it?
    ------------ TIME SINCE RENTED MONTHS
    ------------ TIME SINCE RENTED YEARS
    REFUSED---7
    DON'T KNOW---8
9b. How much rent did you charge?
    $------------ PER
    9b.1 MONTH--1
    WEEK--2
    YEAR--3
    REFUSED---7
    DON'T KNOW---8
10a. What is the approximate monthly mortgage payment on your home?
    $------------ MORTGAGE PAYMENT
    REFUSED---7
    DON'T KNOW---8
10b. Given current market conditions in your area, at what price 
would your home sell?
    $----------------
    REFUSED---7
    DON'T KNOW---8

OWNERS AND RENTERS

11a. Which one of the following best describes where you currently 
live? Do you live in a . . .
    One-family detached house--1 GO TO Q12a
    Duplex or triplex--2 GO TO Q12a
    Townhouse or rowhouse--3 GO TO Q12a
    Apartment--4 GO TO Q11b
    Rented room in a house--5 GO TO END
    Trailer, or--6 GO TO END
    Somewhere else?--91 GO TO END
    REFUSED---7 GO TO END
    DON'T KNOW---8 GO TO END
11b. Would you say that your home is . . .
    An apartment in a home--1
    An apartment in a building without an elevator or--2
    An apartment in a building with an elevator--3
    REFUSED---7
    DON'T KNOW---8
12a. Approximately how many square feet of living space do you have?
    --,---------- LIVING SPACE IN SQUARE FEET GO TO NOTE 1
    REFUSED---7 GO TO 12b
    DON'T KNOW---8 GO TO 12b
12b. Would you estimate that your living space is
    Less than 250 square feet,--1 GO TO END
    250 to less than 500 square feet,--2 SEE PROGRAMMER NOTE, ABOVE
500 to 1,000 square feet,--3 GO TO NOTE 1
1,001 to 1,500 square feet,--4 GO TO NOTE 1
1,501 to 2,000 square feet,--5 GO TO NOTE 1
2,001 to 2,500 square feet,--6 GO TO NOTE 1
2,501 to 3,000 square feet,--7 GO TO NOTE 1
3,001 to less than 6,000 square feet, or--8 GO TO NOTE 1
Over 6,000 square feet,--9 GO TO NOTE 1
REFUSED---7 GO TO END
DON'T KNOW---8 GO TO END
13. What is the lot size of your property?
    ----,--------.---- PROPERTY LOT SIZE
    13.1 ACRES--1
    SQUARE FEET--2
    REFUSED---7
    DON'T KNOW---8
    14. Does your home have an exceptional view, for example, 
overlooking a body of water or a city skyline?
    YES--1
    NO--2
    REFUSED---7
    DON'T KNOW---8
15a. How old is your home?
    LESS THAN 1 YEAR = 1 YEAR
    -------- TIME IN YEARS
    REFUSED---7

[[Page 43238]]

    DON'T KNOW---8
15b. How many years has it been since it was remodeled/renovated?
    LESS THAN 1 YEAR = 1 YEAR
    -------- TIME IN YEARS
    NOT REMODELED/RENOVATED--N
    REFUSED---7
    DON'T KNOW---8
16a. Do you live in a studio or efficiency apartment?
    YES--1 GO TO 17A.
    NO--2 GO TO 16
    REFUSED---7 GO TO 16
    DON'T KNOW---8 GO TO 16
16. Please tell us how many bedrooms you have?
    -- NUMBER OF BEDROOMS
    REFUSED---7 GO TO END
    DON'T KNOW---8 GO TO END
17a. How many full bathrooms are in your home?
    ---- NUMBER OF FULL BATHS
    REFUSED---7 {time}  GO TO END
    DON'T KNOW---8 {time}  GO TO END
17b. How many \1/2\ bathrooms are in your home?
    ---- NUMBER OF HALF BATHS
    REFUSED---7 {time}  GO TO END
    DON'T KNOW---8 {time}  GO TO END
18. Excluding the bedrooms and bathrooms you just mentioned, how 
many other rooms are there? (Note: Closets and hallways are not 
rooms.)
    ---- NUMBER OF OTHER ROOMS
    REFUSED---7
    DON'T KNOW---8
19. Do you have a security system or live in a gated or guarded 
community?
    YES--1
    NO--2
    REFUSED---7
    DON'T KNOW---8
20a. Do you have air conditioning?
    YES--1
    NO--2 GO TO Q21a
    REFUSED---7 GO TO Q21a
    DON'T KNOW---8 GO TO Q21a
20b. Is it central air or individual room units?
    CENTRAL AIR--1
    ROOM UNIT--2
    BOTH--3
    REFUSED---7
    DON'T KNOW---8
21a. How do you mainly heat your home?
    SPACE HEATERS [electric or kerosene]--1
    WALL UNIT [gas, electric]--2
    BASEBOARD [electric, hot water]--3
    CENTRAL HEAT [forced air]--4
    NONE--5 GO TO Q22
    OTHER--91
(SPECIFY)--------------------------------------------------------------
REFUSED---7 GO TO Q22--------------------------------------------------
DON'T KNOW---8 GO TO Q22-----------------------------------------------
21b. What type of fuel does it use?
    GAS [Includes LP/ Propane]--1
    ELECTRIC--2
    OIL--3
    OTHER--91
(SPECIFY)--------------------------------------------------------------
    REFUSED---7
    DON'T KNOW---8
22. What type of water system do you have? Is your water provided 
via* * *
    Municipal water system,--1
    Well,--2
    Cistern, or--3
    Something else?--91
(SPECIFY)--------------------------------------------------------------
    REFUSED---7
    DON'T KNOW---8
23. Do you have a garage? By this I mean your own garage, not a 
large public style parking garage.
    YES--1
    NO--2
    REFUSED---7
    DON'T KNOW---8
24. Do you have a carport?
    YES--1
    NO--2
    REFUSED---7
    DON'T KNOW---8
25a. Do you work outside of the home either full or part time?
    YES--1
    NO--2 GO TO 26
    REFUSED---7 GO TO 26
    DON'T KNOW---8 GO TO 26
25b. What is the one-way distance, in miles, from your home to your 
work?
    LESS THAN ONE MILE--1
    1-5 MILES--2
    6-10 MILES--3
    11-15 MILES--4
    16-20 MILES--5
    21-25 MILES--6
    26-30 MILES--7
    MORE THAN 30 MILES--8
    REFUSED---7
    DON'T KNOW---8
26. Do you or a member of your household work for the Federal 
Government?
    YES--1
    NO--2
    REFUSED---7
    DON'T KNOW---8
27. What is your zip code?
    [msqu][msqu][msqu][msqu][msqu]ZIP CODE--
    REFUSED---7
    DON'T KNOW---8

END.

Appendix B--GPRES Sample Sizes

----------------------------------------------------------------------------------------------------------------
                                                                       ``Target'' Quantity
                                 ``Minimum'' ----------------------------------------------------------------------
        Geographic area            Quantity     Renter       Owner       Total      Renter       Owner      Total
                                               quantity    quantity    quantity    quantity    quantity   quantity
-------------------------------------------------------------------------------------------------------- ----------
Area A: District of Columbia...          105          43         148         151          61         212
Area B: Montgomery Co., MD.....           72          88         160         103         126         229
Area C: Prince Geo. Co., MD....           78          75         153         112         107         219
Area D: Arlington Co., VA......           35          16          51          50          23          73
Area E: Fairfax Co., VA........           82         108         190         116         155         271
Area F: Prince William Co., VA.           20           7          27          28           9          37
Area G: Anchorage, AK..........          239         182         421         342         260         602
Area H: Fairbanks, AK..........          122         126         248         174         179         353
Area I: Juneau, AK.............          174         114         288         249         162         411
Area J: Honolulu County, HI....          412         279         691         587         398         985
Area K: Hilo Area, HI..........          112         107         219         159         153         312
Area L: Kailua Kona Area, HI...           85          69         154         121          98         219
Area M: Kauai County, HI.......          187         155         342         268         221         489
Area N: Maui County, HI........          237         246         483         337         352         689
Area O: Guam...................          278         246         524         396         351         747
Area P: Puerto Rico............          256         361         617         365         515         880
Area Q: St. Croix, USVI........          185         295         480         264         422         686
Area R: St. Thomas, USVI.......          219         234         462         312         346         658
Area T: St. John, USVI.........           17          25          42          25          35          61
                                --------------------------------------------------------------------------------
    Totals.....................        2,915       2,776       5,700       4,159       3,973       8,133
----------------------------------------------------------------------------------------------------------------


    Note: The ``Minimum'' set was the sample size necessary for 
estimating rent or rental equivalence within a margin of error of +/
-$500 in annual rent with 90 percent confidence level, and the 
``Target'' set was the sample size for estimating rent or rental 
equivalence at the same margin of error at the 95 percent confidence 
level.


[[Page 43239]]



Appendix C--Guidelines for Possible Flags to Identify Potentially 
Spurious or Highly Atypical Responses

    Responses outside the range are assumed to be spurious and/or 
highly atypical and are not acceptable.

4a. Monthly Rent........................  $200 to $5000.
6c. Typical Pet fees....................  Suggest this field not be flagged.
7a. Time at this address................  Suggest this field not be flagged.
8a. Rental equivalence..................  $200 to $6000.
9a. Time since last rented..............  Suggest this field not be flagged.
9b. Rent charged........................  $200 to $5000.
10a. Mortgage payment...................  $0 to $6000.
10b. Market Price.......................  $10,000 to $1,000,000.
12a. Home square footage................  Apartments: 250 to 3000; Houses: 500 to 6000.
13. Lot size............................  One-Family Detached House: Greater than home square footage and 5
                                           acres or less. All other homes: Suggest this field not be flagged.
15a. Age in years.......................  0 to 200.
15b. Years since remodeled..............  0 to 50.
16. Bedrooms............................  Apartments: 0 to 4; All others: 1 to 8.
17a. Full baths.........................  1 to the number of bedrooms plus 1.
17b. Half baths.........................  0 to the number of bedrooms minus 1.
18. Other rooms.........................  Apartments: 1 to 5; All other: 2 to 8.
 

Appendix D--General Population Rental Equivalence Survey--Final 
Response Rates

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Screener                              Extended                           Respondents
                                                                            --------------------------------------------------------------------------------------------------------------------
                        Area                         Wrkd  Hsehlds                                   Response             Response                                            Combined*
                                                                             Refusals  Ineligible  Eligible  (percent)  Refusals  (percent)  Ineligible    Total    Owners    Renters  (percent)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
A--DC..............................................          820        594       231          3        360         61        72         80        122        166        61       105         49
B--Mont Co.........................................          858        676       302          3        371         55        77         79         95        199       126        73         44
C--PG Co...........................................          795        581       247          3        331         57        63         81         80        188       109        79         47
D--Arlington.......................................          320        252       148          3        101         41        25         75         20         56        21        35         31
E--Fairfax.........................................        1,016        798       365          2        431         54        77         82        109        245       155        90         45
F--PW..............................................          178        123        69          4         50         44         5         90         15         30        10        20         40
G--Anchorage.......................................        4,054      2,869     1,640         70      1,159         43       208         82        454        497       248       249         35
H--Fairbanks.......................................        1,436      1,135       444         47        644         61        90         86        282        272       150       122         52
I--Juneau..........................................       12,878      5,225     2,638        351      2,236         50       315         86      1,597        324       163       161         43
J--Honolulu........................................       10,563      7,908     5,313         16      2,579         33       427         83      1,445        707       288       419         27
K--Hilo............................................        2,953      2,339     1,382         57        900         41       167         81        505        228       123       105         33
L--Kona............................................        9,454      4,009     2,857         19      1,133         29       238         79        723        172        87        85         23
M--Kauai...........................................       14,862      9,261     7,064        263      1,934         24       310         84      1,243        381       210       171         20
N--Maui............................................       11,239      6,489     4,660         23      1,806         28       429         76        894        483       246       237         21
O--Guam............................................       20,791      2,638     1,249          2      1,387         53       136         90        781        470       247       223         47
Puerto Rico........................................       39,613     18,788    14,127          1      4,660         25       477         90      3,718        465       363       102         22
Q-St. Croix........................................       10,004      3,178     1,405          1      1,772         56       392         78        662        718       533       185         43
R-St. Thomas.......................................        7,020      1,797       611          5      1,181         66       418         65        238        525       278       247         43
T-St. John.........................................        3,672      1,931     1,304          0        627         32       352         44        231         44        27        17         14
                                                         152,526     70,591    46,056        873     23,662         35     4,278         82     13,214      6,170     3,445     2,725        28
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Combined response rate.

Appendix E--1998 Federal Employee Housing and Living Patterns Survey 
Sample Size, Responses, and Response Rates

----------------------------------------------------------------------------------------------------------------
                                                  Number of non-
                   Survey area                    postal federal    Sample size      Responses     Response rate
                                                     employees                                       (percent)
----------------------------------------------------------------------------------------------------------------
Anchorage.......................................           7,549           1,379             748            54.2
Fairbanks.......................................           1,625             519             320            61.7
Juneau..........................................             814             412             248            60.2
Rest of AK......................................           2,413             524             336            64.1
Honolulu County.................................          16,073           3,768           1,923            51.0
Hawaii County...................................             728             577             378            65.5
Kauai County....................................             332             332             182            54.8

[[Page 43240]]

 
Maui County.....................................             471             471             216            45.9
Guam............................................           2,026             820             338            41.2
Puerto Rico.....................................          11,195           1,875             629            33.5
U.S. Virgin Islands.............................             801             801             344            42.9
St. Croix.......................................  ..............  ..............             155  ..............
St. Thomas/St. John.............................  ..............  ..............             184  ..............
COLA Areas Subtotal.............................          44,027          11,478           5,662            49.3
Washington DC Area..............................         258,304           4,324           1,081            25.0
                                                 ---------------------------------------------------------------
        Total...................................         302,331          15,802           6,743            42.7
----------------------------------------------------------------------------------------------------------------

BILLING CODE 6325-39-P

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[FR Doc. 06-6568 Filed 7-28-06; 8:45 am]
BILLING CODE 6325-39-C