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Section 8 Housing Assistance Payments Program; Contract Rent Annual Adjustment Factors, Fiscal Year 2001
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: November 7, 2000 (Volume 65, Number 216)]
[Rules and Regulations]
[Page 66887-66912]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07no00-19]
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Part III
Department of Housing and Urban Development
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24 CFR Part 888
Section 8 Housing Assistance Payments Program; Contract Rent Annual
Adjustment Factors, Fiscal Year 2001; Final Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 888
[Docket No. FR-4626-N-01]
Section 8 Housing Assistance Payments Program; Contract Rent
Annual Adjustment Factors, Fiscal Year 2001
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of Revised Contract Rent Annual Adjustment Factors.
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SUMMARY: This Notice announces revised Annual Adjustment Factors (AAFs)
for adjustment of Section 8 contract rents on housing assistance
payment contract anniversaries from October 1, 2000. The AAFs are based
on a formula using data on residential rent and utilities cost changes
from the most current Bureau of Labor Statistics Consumer Price Index
(CPI) survey and from HUD's Random Digit Dialing (RDD) rent change
surveys.
EFFECTIVE DATE: October 1, 2000.
FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Operations Division,
Office of Rental Assistance, Office of Public and Indian Housing [(202)
708-0477], for questions relating to the Section 8 Voucher,
Certificate, and Moderate Rehabilitation programs; Allison Manning,
Office of Special Needs Assistance Programs, Office of Community
Planning and Development, (202) 708-1234, for questions regarding the
Single Room Occupancy Moderate Rehabilitation program; Frank M. Malone,
Acting Director, Office of Asset Management and Disposition, Office of
Housing (202) 708-3730, for questions relating to all other Section 8
programs; and Lynn A. Rodgers, Economic and Market Analysis Division,
Office of Policy Development and Research, (202) 708-0590, for
technical information regarding the development of the schedules for
specific areas or the methods used for calculating the AAFs. Mailing
address for above persons: Department of Housing and Urban Development,
451 Seventh Street, SW, Washington, DC 20410. Hearing-or speech-
impaired persons may contact the Federal Information Relay Service at
1-800-877-8339 (TTY). (Other than the ``800'' TTY number, the above-
listed telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION: This Notice explains how AAFs are applied to
various Section 8 programs.
The first section of the Notice identifies to which programs and
under what circumstances AAFs apply. The second section explains when
and how to apply the statutory 1 percent reduction to AAFs. The third
section describes the actual adjustment procedures.
Next the Notice explains the content and applicability of the two
AAF tables included in this Notice and provides detailed information on
the geographical coverage of each AAF area. The Notice then explains
how to apply AAFs to manufactured home space rentals in the Section 8
tenant-based certificate program.
The Notice closes with a brief explanation of how HUD calculates
AAFs.
I. Applicability of AAFs to Various Section 8 Programs
AAFs established by this Notice are used to adjust contract rents
for units assisted in certain Section 8 housing assistance payments
programs, during the term of the HAP contract. There are three
categories of Section 8 programs that use the AAFs:
Category 1--The Section 8 new construction and substantial
rehabilitation programs and the moderate rehabilitation program.
Category 2--The Section 8 loan management (LM) and property
disposition (PD) programs.
Category 3--The Section 8 tenant-based certificate program, the
project-based certificate program and the project-based voucher
program.
Each Section 8 program category uses the AAFs differently. The specific
application of the AAFs is determined by the law, the HAP contract, and
appropriate program regulations or requirements.
AAFs are not used in the following cases:
AAFs are not used to determine renewal rents after
expiration of the original Section 8 HAP contract (either for projects
where the Section 8 HAP contract is renewed under a restructuring plan
adopted under 24 CFR part 401; or renewed without restructuring under
24 CFR part 402). In general, renewal rents are based on the applicable
state-by-state operating cost adjustment factor (OCAF) published by
HUD; the OCAF is applied to the previous year's contract rent minus
debt service.
AAFs are not used for the Section 8 tenant-based voucher
program. (However, AAFs are used for the Section 8 project-based
voucher program and project-based certificate program.)
AAFs are not used for budget-based rent adjustments.
Contract rents for projects receiving Section 8 subsidies under the
loan management program (24 CFR part 886, subpart A) and for projects
receiving Section 8 subsidies under the property disposition program
(24 CFR part 886, subpart C) are adjusted, at HUD's option, either by
applying the AAFs or by budget-based adjustments in accordance with 24
CFR 207.19(e). Budget-based adjustments are used for most Section 8/202
projects.
Under the Section 8 moderate rehabilitation program (both the
regular program and the single room occupancy program), the public
housing agency (PHA) applies the AAF to the base rent component of the
contract rent, not the full contract rent. For the other covered
programs, the AAF is applied to the whole amount of the contract rent.
II. Use of Reduced AAF
In accordance with Section 8(c)(2)(A) of the United States Housing
Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF is reduced by .01:
For all tenancies in the Section 8 tenant-based
certificate program. (This program is being converted to the Section 8
tenant-based voucher program. See 24 CFR 982.502. The last tenancies
under the tenant-based certificate program will terminate by September
29, 2001.)
For all tenancies assisted in the Section 8 project-based
certificate program.
In other Section 8 programs, for a unit occupied by the
same family at the time of the last annual rent adjustment (and where
the rent is not reduced by application of comparability (rent
reasonableness)).
The law provides that:
Except for assistance under the certificate program, for any
unit occupied by the same family at the time of the last annual
rental adjustment, where the assistance contract provides for the
adjustment of the maximum monthly rent by applying an annual
adjustment factor and where the rent for a unit is otherwise
eligible for an adjustment based on the full amount of the factor,
0.01 shall be subtracted from the amount of the factor, except that
the factor shall not be reduced to less than 1.0. In the case of
assistance under the certificate program, 0.01 shall be subtracted
from the amount of the annual adjustment factor (except that the
factor shall not be reduced to less than 1.0), and the adjusted rent
shall not exceed the rent for a comparable unassisted unit of
similar quality, type, and age in the market area. 42 U.S.C.
1437f(c)(2)(A).
To implement the law, HUD publishes two separate AAF Tables,
contained in Schedule C, Tables 1 and 2 of this notice. Each AAF in
Table 2 has been computed by subtracting 0.01 from the annual
adjustment factor in Table 1.
[[Page 66889]]
III. Adjustment Procedures
This section of the notice is intended to provide a broad
description of adjustment procedures. Technical details and
requirements are described in HUD notices. The notices are issued by
the Office of Housing and the Office of Public and Indian Housing.
Because of statutory and structural distinctions among the various
Section 8 programs, there are separate rent adjustment procedures for
three program categories:
The Section 8 new construction and substantial
rehabilitation programs (including the Section 8 state agency program);
and the moderate rehabilitation programs (including the moderate
rehabilitation single room occupancy program).
The Section 8 loan management (LM) Program (Part 886,
Subpart A) and property disposition (PD) Program (Part 886 Subpart C).
The Section 8 certificate program (including the tenant-
based certificate and the project-based certificate program) and the
Section 8 project-based voucher program.
HUD has not yet issued regulations for the Section 8 project-based
voucher program. At this time, the project-based voucher program is
administered in accordance with the PBC program regulations, and
contract rents are adjusted in the same manner as in the Section 8 PBC
program.
Category 1: Section 8 New Construction, Substantial Rehabilitation and
Moderate Rehabilitation Programs
In the Section 8 New Construction and Substantial Rehabilitation
programs, the published AAF factor is applied to the pre-adjustment
contract rent. In the Section 8 Moderate Rehabilitation program, the
published AAF is applied to the pre-adjustment base rent.
For category 1 programs, the Table 1 AAF factor is applied before
determining comparability (rent reasonableness). Comparability applies
if the pre-adjustment gross rent (pre-adjustment contract rent plus any
allowance for tenant-paid utilities) is above the published FMR.
If the comparable rent level (plus any initial difference) is lower
than the contract rent as adjusted by application of the Table 1 AAF,
the comparable rent level (plus any initial difference) will be the new
contract rent. However, the pre-adjustment contract rent will not be
decreased by application of comparability.
In all other cases (i.e., unless the contract rent is reduced by
comparability):
The Table 1 AAF is used for a unit occupied by a new
family since the last annual contract anniversary.
The Table 2 AAF is used for a unit occupied by the same
family as at the time of the last annual contract anniversary.
Category 2: The Loan Management Program (LM; Part 886, Subpart A) and
Property Disposition Program (PD; Part 886 Subpart C)
At this time, rent adjustment by the AAF in the Category 2 programs
is not subject to comparability. (Comparability will again apply if HUD
establishes regulations for conducting comparability studies under 42
U.S.C. 1437f(c)(2)(C).) Rents are adjusted by applying the full amount
of the applicable AAF under this notice.
The applicable AAF is determined as follows:
The Table 1 AAF is used for a unit occupied by a new
family since the last annual contract anniversary.
The Table 2 AAF is used for a unit occupied by the same
family as at the time of the last annual contract anniversary.
Category 3: Section 8 Certificate Program (tenant-based and project-
based) and the Section 8 Project-based Voucher Program
The same adjustment procedure is used for rent adjustment in
(1) The tenant-based certificate program (24 CFR 983.519),
(2) The project-based certificate program (24 CFR part 983),
(3) The project-based voucher program (24 CFR part 983). The
following procedures are used:
The Table 2 AAF is always used; the Table 1 AAF is not
used.
The Table 2 AAF is always applied before determining
comparability (rent reasonableness).
Comparability always applies. If the comparable rent level
is lower than the rent to owner (contract rent) as adjusted by
application of the Table 2 AAF, the comparable rent level will be the
new rent to owner.
AAF Tables
The AAFs are contained in Schedule C, Tables 1 and 2 of this
notice. There are two columns in each table. The first column is used
to adjust contract rent for units where the highest cost utility is
included in the contract rent--i.e., where the owner pays for the
highest cost utility. The second column is used where the highest cost
utility is not included in the contract rent--i.e., where the tenant
pays for the highest cost utility.
AAF Areas
Each AAF applies to a specified geographic area and to units of all
bedroom sizes. AAFs are provided:
For the metropolitan parts of the ten HUD regions
exclusive of CPI areas;
For the nonmetropolitan parts of these regions; and
For separate metropolitan AAF areas for which local CPI
survey data are available.
With the exceptions discussed below, the AAFs shown in Schedule C
use the Office of Management and Budget's (OMB) most current
definitions of metropolitan areas. HUD uses the OMB Metropolitan
Statistical Area (MSA) and Primary Metropolitan Statistical Area (PMSA)
definitions for AAF areas because of their close correspondence to
housing market area definitions.
The exceptions are for certain large metropolitan areas, where HUD
considers the area covered by the OMB definition to be larger than
appropriate for use as a housing market area definition. In those
areas, HUD has deleted some of the counties that OMB had added to its
revised definitions. The following counties are deleted from the HUD
definitions of AAF areas:
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Metropolitan area Deleted counties
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Chicago, IL.................. DeKalb, Grundy and Kendall Counties.
Cincinnati-Hamilton, OH-KY-IN Brown County, Ohio; Gallatin, Grant and
Pendleton Counties in Kentucky; and Ohio
County, Indiana.
Dallas, TX................... Henderson County.
Flagstaff, AZ-UT............. Kane County, UT.
New Orleans, LA.............. St. James Parish.
Washington, DC-VA-MD-WV...... Berkeley and Jefferson Counties in West
Virginia; and Clarke, Culpeper, King
George and Warren counties in Virginia.
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Separate AAFs are listed in this publication for the above
counties. They and the metropolitan area of which they are a part are
identified with an asterisk (*) next to the area name. The asterisk
indicates that there is a difference between the OMB metropolitan area
and the HUD AAF area definition for these areas.
To make certain that they are using the correct AAFs, users should
refer to the area definitions section at the end of Schedule C. For
units located in metropolitan areas with a local CPI survey, AAFs are
listed separately. For units located in areas without a local CPI
survey, the appropriate HUD regional Metropolitan or Nonmetropolitan
AAFs are used.
The AAF area definitions shown in Schedule C are listed in
alphabetical order by State. The associated HUD region is shown next to
each State name. Areas whose AAFs are determined by local CPI surveys
are listed first. All metropolitan CPI areas have separate AAF
schedules and are shown with their corresponding county definitions or
as metropolitan counties. Listed after the metropolitan CPI areas (in
those states that have such areas) are the non-CPI metropolitan and
nonmetropolitan counties of each State. In the six New England States,
the listings are for counties or parts of counties as defined by towns
or cities.
Puerto Rico and the Virgin Islands use the Southeast AAFs. All
areas in Hawaii use the AAFs identified in the Table as ``STATE:
Hawaii,'' which are based on the CPI survey for the Honolulu
metropolitan area. The Pacific Islands use the Pacific/Hawaii
Nonmetropolitan AAFs. The Anchorage metropolitan area uses the AAFs
based on the local CPI survey; all other areas in Alaska use the
Northwest/Alaska Nonmetropolitan AAFs.
Section 8 Certificate Program AAFs for Manufactured Home Spaces
For a manufactured home space rental in the Section 8 tenant-based
certificate program, the AAFs in this publication identified as
``Highest Cost Utility Included'' are to be used to adjust the rent to
owner for the manufactured home space. The applicable AAF is determined
by reference to the geographic listings contained in Schedule C, as
described in the preceding section.
How Factors Are Calculated
For Areas With CPI Surveys
(1) Changes in the shelter rent and utilities components were
calculated based on the most recent CPI annual average change data.
(2) The ``Highest Cost Utility Included'' column in Schedule C was
calculated by weighting the rent and utility components with the
corresponding components from the 1990 Census.
(3) The ``Highest Cost Utility Excluded'' column in Schedule C was
calculated by eliminating the effect of heating costs that are included
in the rent of some of the units in the CPI surveys.
For Areas Without CPI Surveys
(1) HUD used random digit dialing (RDD) regional surveys to
calculate AAFs. The RDD survey method is based on a sampling procedure
that uses computers to select a statistically random sample of rental
housing, dial and keep track of the telephone calls, and process the
responses. RDD surveys are conducted to determine the rent change
factors for the metropolitan parts (exclusive of CPI areas) and
nonmetropolitan parts of the 10 HUD regions, a total of 20 surveys.
(2) The change in rent with the highest cost utility included in
the rent was calculated using the average of the ratios of gross rent
in the current year RDD survey divided by the previous year's for the
respective metropolitan or nonmetropolitan parts of the HUD region.
(3) The change in rent with the highest cost utility excluded
(i.e., paid separately by the tenant) was calculated in the same
manner, after subtracting the median values of utilities costs from the
gross rents in the two years. The median cost of utilities was
determined from the units in the RDD sample which reported that all
utilities were paid by the tenant.
Other Matters
Environmental Impact
An environmental assessment is unnecessary, since revising Annual
Adjustment Factors is categorically excluded from the Department's
National Environmental Policy Act procedures under 24 CFR 50.19(c)(6).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance program number for Lower
Income Housing Assistance programs (Section 8) is 14.156.
Accordingly, the Department publishes these Annual Adjustment
Factors for the Section 8 Housing Assistance Payments Programs as set
forth in the following tables which will not appear in the Code of
Federal Regulations.
Dated: October 25, 2000.
Andrew Cuomo,
Secretary.
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[FR Doc. 00-28458 Filed 11-6-00; 8:45 am]
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