federal register - hud user(hattiesburg), new hampshire (boston), new york (buffalo-niagara falls),...

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Part IV

Department ofHousing and UrbanDevelopment24 CFR Part 888Section 8 Housing Assistance PaymentsProgram-Contract Rent AnnualAdjustment Factors, Fiscal Year 2000;Final Rule

VerDate 15-DEC-99 15:51 Dec 27, 1999 Jkt 190000 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\A28DE0.071 pfrm08 PsN: 28DER4

72730 Federal Register / Vol. 64, No. 248 / Tuesday, December 28, 1999 / Rules and Regulations

DEPARTMENT OF HOUSING ANDURBAN DEVELOPMENT

24 CFR Part 888

Section 8 Housing AssistancePayments Program-Contract RentAnnual Adjustment Factors, FiscalYear 2000

AGENCY: Office of the Secretary, HUD.ACTION: Notice of Revised Contract RentAnnual Adjustment Factors; correction.

SUMMARY: This document corrects theSchedule C area definitions formetropolitan statistical areas (MSAs) inthe following States: Alabama (Auburn-Opelika), Arizona (Flagstaff), Colorado(Grand Junction), Idaho (Pocatello),Maine (Portland), Mississippi(Hattiesburg), New Hampshire (Boston),New York (Buffalo-Niagara Falls),Oregon (Corvallis), Tennessee (Jackson),and Utah. It also clarifies the names ofselected places in Connecticut andFlorida. All had been incorrectlycategorized or named in Schedule C ofthe document published in the FederalRegister on September 24, 1999.

None of the AAFs published in theSeptember 24, 1999 document are beingchanged by this document; however, forclarity the entire document is beingreprinted, and the September 24, 1999document should be replaced with thisone. The Annual Adjustment Factors(AAFs) contained in this document arefor adjustment of Section 8 contractrents on housing assistance paymentcontract anniversaries from October 1,1999. The AAFs are based on a formulausing data on residential rent andutilities cost changes from the mostcurrent Bureau of Labor StatisticsConsumer Price Index (CPI) survey andfrom HUD’s Random Digit Dialing(RDD) rent change surveys.EFFECTIVE DATE: October 1, 1999.FOR FURTHER INFORMATION CONTACT:Gerald J. Benoit, Rental AssistanceDivision, Office of Public and IndianHousing [(202) 708–0477], for questionsrelating to the Section 8 Voucher,Certificate, and Moderate Rehabilitationprograms; Allison Manning, Office ofSpecial Needs Assistance Programs,Office of Community Planning andDevelopment [(202) 708–1234], forquestions regarding the Single RoomOccupancy Moderate Rehabilitationprogram; Frank M. Malone, ActingDirector, Office of Asset Managementand Disposition, Office of Housing[(202) 708–3730], for questions relatingto all other Section 8 programs; andAlan Fox, Economic and MarketAnalysis Division, Office of PolicyDevelopment and Research [(202) 708–

0590; e-mail [email protected]], fortechnical information regarding thedevelopment of the schedules forspecific areas or the methods used forcalculating the AAFs. Mailing addressfor above persons: Department ofHousing and Urban Development, 451Seventh Street, SW, Washington, DC20410. Hearing- or speech-impairedpersons may contact the FederalInformation Relay Service at 1–800–877–8339 (TTY). (Other than the ‘‘800’’TTY number, the above-listed telephonenumbers are not toll-free.)SUPPLEMENTARY INFORMATION: ThisNotice explains how AAFs are applied.The first section identifies to whichprograms and under what circumstancesAAFs apply. The second sectionprovides an explanation of when andhow the statutory 1 percent reduction toAAFs should be applied. The thirdsection describes the actual adjustmentprocedures. For this purpose, Section 8programs affected by AAFs are groupedinto three categories, each of which usesAAFs differently:

Category 1.—The Section 8 newconstruction and substantialrehabilitation programs and themoderate rehabilitation program.

Category 2.—The Section 8 loanmanagement (LM) and propertydisposition (PD) programs.

Category 3.—The Section 8 certificateprogram and the project-based voucherprogram.

Next the Notice explains the contentand applicability of the two AAF tablesincluded in this Notice and providesdetailed information on thegeographical coverage of each AAF area.The Notice then explains how to applyAAFs to manufactured home spacerentals in the Section 8 tenant-basedcertificate program.

The Notice closes with a briefexplanation of how HUD calculatesAAFs.

I. Applicability of AAFs to VariousSection 8 Programs

AAFs established by this Notice areused to adjust contract rents for unitsassisted in certain Section 8 housingassistance payments programs, duringthe term of the HAP contract. However,the specific application of the AAFs isdetermined by the law, the HAPcontract, and appropriate programregulations or requirements.

AAFs are not used for the Section 8tenant-based voucher program.

AAFs are not used for budget-basedrent adjustments. Contract rents forprojects receiving Section 8 subsidiesunder the loan management program (24CFR part 886, subpart A) and forprojects receiving Section 8 subsidies

under the property disposition program(24 CFR part 886, subpart C) areadjusted, at HUD’s option, either byapplying the AAFs or by budget-basedadjustments in accordance with 24 CFR207.19(e). Budget-based adjustments areused for most Section 8/202 projects.

Under the Section 8 moderaterehabilitation program (both the regularprogram and the single room occupancyprogram), the public housing agency(PHA) applies the AAF to the base rentcomponent of the contract rent, not thefull contract rent.

II. Use of Reduced AAFIn accordance with Section 8(c)(2)(A)

of the United States Housing Act of1937 (42 U.S.C. 1437f(c)(2)(A)), the AAFis reduced by .01:—For regular tenancy in the Section 8

certificate program, for all units.—In other Section 8 programs, for a unit

occupied by the same family at thetime of the last annual rentadjustment (and where the rent is notreduced by application ofcomparability (rent reasonableness)).The law provides that:Except for assistance under the certificate

program, for any unit occupied by the samefamily at the time of the last annual rentaladjustment, where the assistance contractprovides for the adjustment of the maximummonthly rent by applying an annualadjustment factor and where the rent for aunit is otherwise eligible for an adjustmentbased on the full amount of the factor, 0.01shall be subtracted from the amount of thefactor, except that the factor shall not bereduced to less than 1.0. In the case ofassistance under the certificate program, 0.01shall be subtracted from the amount of theannual adjustment factor (except that thefactor shall not be reduced to less than 1.0),and the adjusted rent shall not exceed therent for a comparable unassisted unit ofsimilar quality, type, and age in the marketarea. 42 U.S.C. 1437f(c)(2)(A).

This statutory language is nowpermanent law. Section 2004 of theBalanced Budget Act of 1997 providesthat these provisions are in effectthrough fiscal year 2000 and thereafter(Pub. L. 105–33, approved August 5,1997).

To implement the law, HUD is againpublishing two separate AAF Tables,contained in Schedule C, Tables 1 and2 of this notice. Each AAF in Table 2 iscomputed by subtracting 0.01 from theannual adjustment factor in Table 1.

III. Adjustment ProceduresThe discussion in this Federal

Register Notice is intended to provide abroad orientation on adjustmentprocedures. Technical details andrequirements will be described in HUDnotices (issued by the Office of Housing


72731Federal Register / Vol. 64, No. 248 / Tuesday, December 28, 1999 / Rules and Regulations

and the Office of Public and IndianHousing).

Because of statutory and structuraldistinctions among the various Section8 programs, there are separate rentadjustment procedures for threeprogram categories:—The Section 8 new construction and

substantial rehabilitation programs(including the Section 8 state agencyprogram); and the moderaterehabilitation programs (including themoderate rehabilitation single roomoccupancy program).

—The Section 8 loan management (LM)Program (Part 886, Subpart A) andproperty disposition (PD) Program(Part 886 Subpart C).

—The Section 8 certificate program(including the project-basedcertificate [PBC] program) and theproject-based voucher program.

Category 1: Section 8 New Construction,Substantial Rehabilitation andModerate Rehabilitation Programs

In the Section 8 New Constructionand Substantial Rehabilitationprograms, the published AAF factor isapplied to the pre-adjustment contractrent. In the Section 8 ModerateRehabilitation program, the publishedAAF is applied to the pre-adjustmentbase rent.

For category 1 programs, the Table 1AAF factor is applied beforedetermining comparability (rentreasonableness). Comparability appliesif the pre-adjustment gross rent (pre-adjustment contract rent plus anyallowance for tenant-paid utilities) isabove the published FMR.

If the comparable rent level (plus anyinitial difference) is lower than thecontract rent as adjusted by applicationof the Table 1 AAF, the comparable rentlevel (plus any initial difference) will bethe new contract rent. However, the pre-adjustment contract rent will not bedecreased by application ofcomparability.

In all other cases (i.e., unless contractrent is reduced by comparability):—The Table 1 AAF is used for a unit

occupied by a new family since thelast annual contract anniversary.

—The Table 2 AAF is used for a unitoccupied by the same family as at thetime of the last annual contractanniversary.

Category 2: The Loan ManagementProgram (LM; Part 886, Subpart A) andProperty Disposition Program (PD; Part886 Subpart C)

At this time, rent adjustment by theAAF in the Category 2 programs is notsubject to comparability. (Comparability

will again apply if HUD establishesregulations for conductingcomparability studies under 42 U.S.C.1437f(c)(2)(C).) Rents are adjusted byapplying the full amount of theapplicable AAF under this notice.

The applicable AAF is determined asfollows:—The Table 1 AAF is used for a unit

occupied by a new family since thelast annual contract anniversary.

—The Table 2 AAF is used for a unitoccupied by the same family as at thetime of the last annual contractanniversary.

Category 3: Section 8 CertificateProgram

The same adjustment procedure isused for rent adjustment in the tenant-based certificate program, in the project-based certificate program, and theproject-based voucher program. Thefollowing 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 thecomparable rent level is lower thanthe rent to owner (contract rent) asadjusted by application of the Table 2AAF, the comparable rent level willbe the new rent to owner.

AAF TablesThe AAFs are contained in Schedule

C, Tables 1 and 2 of this notice. Thereare two columns in each table. The firstcolumn is used to adjust contract rentfor units where the highest cost utilityis included in the contract rent. Thesecond column is used where thehighest cost utility is not included inthe contract rent—i.e., where the tenantpays for the highest cost utility.

AAF AreasEach AAF applies to a specified

geographic area and to units of allbedroom 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 96 separate metropolitan AAF

areas for which local CPI survey dataare available.With the exceptions discussed below,

the AAFs shown in Schedule C use theOffice of Management and Budget’s(OMB) most current definitions ofmetropolitan areas. HUD uses the OMBMetropolitan Statistical Area (MSA) andPrimary Metropolitan Statistical Area(PMSA) definitions for AAF areasbecause of their close correspondence tohousing market area definitions.

The exceptions are for certain largemetropolitan areas, where HUDconsiders the area covered by the OMBdefinition to be larger than appropriatefor use as a housing market areadefinition. In those areas, HUD hasdeleted some of the counties that OMBhad added to its revised definitions. Thefollowing counties are deleted from theHUD definitions of AAF areas:

Metropolitan Area and Deleted CountiesChicago, IL: DeKalb, Grundy and

Kendall CountiesCincinnati-Hamilton, OH–KY–IN:

Brown County, Ohio; Gallatin, Grantand Pendleton Counties in Kentucky;and Ohio County, Indiana

Dallas, TX: Henderson CountyFlagstaff, AZ–UT: Kane County, UTNew Orleans, LA: St. James ParishWashington, DC–VA–MD–WV: Berkeley

and Jefferson Counties in WestVirginia; and Clarke, Culpeper, KingGeorge and Warren counties inVirginiaSeparate AAFs are listed in this

publication for the above counties. Theyand the metropolitan area of which theyare a part are identified with an asterisk(*) next to the area name. The asteriskindicates that there is a differencebetween the OMB metropolitan area andthe HUD AAF area definition for theseareas.

To make certain that they are usingthe correct AAFs, users should refer tothe area definitions section at the end ofSchedule C. For units located inmetropolitan areas with a local CPIsurvey, AAFs are listed separately. Forunits located in areas without a localCPI survey, the appropriate HUDregional Metropolitan orNonmetropolitan AAFs are used.

The AAF area definitions shown inSchedule C are listed in alphabeticalorder by State. The associated HUDregion is shown next to each Statename. Areas whose AAFs aredetermined by local CPI surveys arelisted first. All metropolitan CPI areashave separate AAF schedules and areshown with their corresponding countydefinitions or as metropolitan counties.Listed after the metropolitan CPI areas(in those states that have such areas) arethe non-CPI metropolitan andnonmetropolitan counties of each State.In the six New England States, thelistings are for counties or parts ofcounties as defined by towns or cities.

Puerto Rico and the Virgin Islands usethe Southeast AAFs. All areas in Hawaiiuse the AAFs identified in the Table as‘‘STATE: Hawaii,’’ which are based onthe CPI survey for the Honolulumetropolitan area. The Pacific Islandsuse the Pacific/Hawaii Nonmetropolitan



AAFs. The Anchorage metropolitan areauses the AAFs based on the local CPIsurvey; all other areas in Alaska use theNorthwest/Alaska NonmetropolitanAAFs.

Corrected AAF Area DefinitionsAlabama: Lee County (which

constitutes the newly-designatedAuburn-Opelika, Alabama MSA) is nowlisted as a metropolitan county andremoved from the list ofnonmetropolitan counties.

Arizona: Coconino County (Flagstaff,Arizona MSA) is now listed as ametropolitan county and removed fromthe list of nonmetropolitan counties.

Colorado: Mesa County (whichconstitutes the Grand Junction,Colorado MSA) is now listed as ametropolitan county and removed fromthe list of nonmetropolitan counties.

Connecticut: The following placenames have been changed from ‘‘town’’to ‘‘city:’’ Ansonia, Bridgeport, Danbury,Derby, Hartford, Middletown, Milford,New Britain, New London, Norwich,Shelton, and Waterbury. Naugatuck isnow listed as a borough. Newingtontown and Plainville town in HartfordCounty, and Colchester town andLebanon town in New London Countyare now listed as metropolitan.

Florida: Dade County has beenrenamed Miami-Dade.

Idaho: Bannock County (the Pocatello,Idaho MSA) is now listed as ametropolitan county and removed fromthe list of nonmetropolitan counties.

Maine: Long Island town, a part of thePortland, Maine MSA, has been addedto the Cumberland County metropolitanpart.

Mississippi: Forrest and LamarCounties (the Hattiesburg, MississippiMSA) are now listed as metropolitanand removed from the list ofnonmetropolitan counties.

New Hampshire: The RockinghamCounty towns of Seabrook and SouthHampton which are part of the BostonMA–NH PMSA are now listed amongthe CPI areas.

New York: The Buffalo-Niagara Falls,New York PMSA has been removedfrom the list of CPI areas, and itscomponent counties, Erie and Niagara,are listed as metropolitan counties. Thisresults from the Bureau of LaborStatistics removing the Buffalo-NiagaraFalls MSA from its Consumer PriceIndex survey sample.

Oregon: Benton County (whichconstitutes the newly-designated

Corvallis, Oregon MSA) is now listed asa metropolitan county and removedfrom the list of nonmetropolitancounties.

Tennessee: Chester County (which ispart of the Jackson, Tennessee MSA) isnow listed as a metropolitan county andremoved from the list ofnonmetropolitan counties.

Utah: Kane County (a HUD-designated metropolitan county) is nowlisted as a metropolitan county andremoved from the list ofnonmetropolitan counties.

Section 8 certificate program AAFs formanufactured home spaces

For a manufactured home space rentalin the old Section 8 tenant-basedcertificate program, (under a HAPcontract entered before the ‘‘mergerdate’’ (10/1/99)), the AAFs in thispublication identified as ‘‘Highest CostUtility Excluded’’ are to be used toadjust the rent to owner for themanufactured home space. Theapplicable AAF is determined byreference to the geographic listingscontained in Schedule C, as describedin the preceding section. AAFs are notused for the Section 8 housing choicevoucher program.

How Factors Are Calculated

For Areas With CPI Surveys(1) Changes in the shelter rent and

utilities components were calculatedbased on the most recent CPI annualaverage change data.

(2) The ‘‘Highest Cost UtilityIncluded’’ column in Schedule C wascalculated by weighting the rent andutility components with thecorresponding components from the1990 Census.

(3) The ‘‘Highest Cost UtilityExcluded’’ column in Schedule C wascalculated by eliminating the effect ofheating costs that are included in therent of some of the units in the CPIsurveys.

For Areas Without CPI Surveys(1) HUD used random digit dialing

(RDD) regional surveys to calculateAAFs. The RDD survey method is basedon a sampling procedure that usescomputers to select a statisticallyrandom sample of rental housing, dialand keep track of the telephone calls,and process the responses. RDD surveysare conducted to determine the rentchange factors for the metropolitan parts

(exclusive of CPI areas) andnonmetropolitan parts of the 10 HUDregions, a total of 20 surveys.

(2) The change in rent with thehighest cost utility included in the rentwas calculated using the average of theratios of gross rent in the current yearRDD survey divided by the previousyear’s for the respective metropolitan ornonmetropolitan parts of the HUDregion.

(3) The change in rent with thehighest cost utility excluded (i.e., paidseparately by the tenant) was calculatedin the same manner, after subtractingthe median values of utilities costs fromthe gross rents in the two years. Themedian cost of utilities was determinedfrom the units in the RDD sample whichreported that all utilities were paid bythe tenant.

Other Matters

Environmental Impact

An environmental assessment isunnecessary, since revising AnnualAdjustment Factors is categoricallyexcluded from the Department’sNational Environmental Policy Actprocedures under 24 CFR 50.19(c)(6).

Executive Order 13132, Federalism

The General Counsel, as theDesignated Official under section 6(a) ofExecutive Order 13132, Federalism, hasdetermined that the policies containedin this Notice do not have federalismimplications and, thus, are not subjectto review under the Order. The Noticemerely announces the adjustmentfactors to be used to adjust contractrents in the Section 8 HousingAssistance Payment programs, asrequired by the United States HousingAct of 1937.

Catalog of Federal Domestic Assistance

The Catalog of Federal DomesticAssistance program number for LowerIncome Housing Assistance programs(Section 8) is 14.156.

Accordingly, the Departmentpublishes these Annual AdjustmentFactors for the Section 8 HousingAssistance Payments Programs as setforth in the following Tables:

Dated: December 17, 1999.Andrew Cuomo,Secretary.BILLING CODE 4210–32–P



[FR Doc. 99–33502 Filed 12–27–99; 8:45 am]BILLING CODE 4210–32–C


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