Notice: Low Income Housing: Housing Assistance Payments (Section 8) &#8212 Contract Rent Annual Adjustment Factors

Thursday,
December 1, 2005
Part III
Department of
Housing and Urban
Development
Section 8 Housing Assistance Payments
Program—Contract Rent Annual
Adjustment Factors, Fiscal Year 2006;
Notice
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72168 Federal Register / Vol. 70, No. 230 / Thursday, December 1, 2005 / Notices
DEPARTMENT OF HOUSING AND data information page: http:// The AAFs shown in Schedule C use
URBAN DEVELOPMENT www.huduser.org/datasets/aaf.html. the same Office of Management and
Budget (OMB) metropolitan area
I. Methodology
[Docket No. FR–5031–N–01] definitions, as revised by HUD, that are
AAFs are calculated using CPI data on used in the FY2006 Fair Market Rents.
Section 8 Housing Assistance rents and utilities for all metropolitan
areas with metropolitan-area specific Area Definitions in Schedule C
Payments Program—Contract Rent
Annual Adjustment Factors, Fiscal CPI estimates. AAFs for other areas are To make certain that they are using
Year 2006 calculated using HUD RDD telephone the correct AAFs, users should refer to
and mail surveys. AAFs are rent change the area definitions section at the end of
AGENCY: Office of the Assistant factors. Two types of AAFs are Schedule C. For units located in
Secretary for Policy Development and calculated. One type is a gross rent metropolitan areas with a local CPI
Research, HUD. change factor that should be used when survey, AAFs are listed separately. For
ACTION: Notice of revised contract rent the primary utility (normally heating) is units located in areas without a local
Annual Adjustment Factors. included in the rent. The other type is CPI survey, the metropolitan or non-
a shelter rent (i.e., rents without metropolitan counties receive the
SUMMARY: This notice announces utilities) factor that should be used regional CPI for that Census Region.
revised Annual Adjustment Factors when the primary utility is not included The AAF area definitions shown in
(AAFs) for adjustment of Section 8 in rent. Decennial census data are used Schedule C are listed in alphabetical
contract rents for specified programs. to establish the relationship between order by state. The associated CPI
These factors apply to housing gross rents and shelter rents. division is shown next to each state
assistance payment contract name. Areas whose AAFs are
anniversaries for calendar months CPI Surveys
determined by local CPI surveys are
commencing after the date of For specific metropolitan areas where listed first. All metropolitan areas with
publication of this notice. The AAFs are CPI surveys are conducted, changes in local CPI surveys have separate AAF
based on residential rent and utilities the shelter rent and utilities components schedules and are shown with their
time-series cost indices from the Bureau are calculated based on the most recent corresponding county definitions or as
of Labor Statistics Consumer Price Index CPI annual average change data. In this metropolitan counties. The regional CPI
(CPI) surveys. publication, the rent and utility CPIs for metropolitan and nonmetropolitan
EFFECTIVE DATE: December 1, 2005. metropolitan areas are based on changes counties of each state are listed after the
FOR FURTHER INFORMATION CONTACT:
in the index from 2003 to 2004. The metropolitan CPI areas (in those states
David Vargas, Senior Advisor, Housing ‘‘Highest Cost Utility Included’’ column that have such areas). In the six New
Voucher Management and Operations in Schedule C is calculated by England states, the listings are for
Division, Office of Public Housing and weighting the rent and utility change counties or parts of counties as defined
Voucher Programs, (202) 708–0477 can factors using the corresponding by towns or cities.
respond to questions relating to the components of gross rent in a particular Puerto Rico and the Virgin Islands use
Section 8 Voucher, Certificate, and area as calculated in the 2000 Census. the South Region AAFs. All areas in
Moderate Rehabilitation programs; Mark The ‘‘Highest Cost Utility Excluded’’ Hawaii use the AAFs identified in the
Johnston, Office of Special Needs column in Schedule C is calculated by Table as ‘‘STATE: Hawaii,’’ which are
Assistance Programs, Office of eliminating the utility portion of the based on the CPI survey for the
Community Planning and Development, gross rent change factor. Honolulu metropolitan area. The Pacific
For areas not covered by a specific
(202) 708–1234 for questions regarding Islands use the West Region AAFs.
metropolitan CPI survey, HUD uses the
the Single Room Occupancy Moderate
CPI surveys for the Northeast, South, II. Applying AAFs to Various Section 8
Rehabilitation program; Willie
Midwest, or West region, as appropriate. Programs
Spearmon, Director, Office of Housing
Rent and utility change factors are
Assistance and Grant Administration, AAFs established by this notice are
calculated from 2003 to 2004. For areas
Office of Housing, (202) 708–3000, for used to adjust contract rents for units
assigned Census Region CPI factors,
questions relating to all other Section 8 assisted in certain Section 8 housing
both metropolitan and non-metropolitan
programs. Marie L. Lihn, Economic and assistance payments programs during
areas received the same factor.
Market Analysis Division, Office of the original (i.e., pre-renewal) term of
Policy Development and Research (202) Geographic Areas the Housing Assistance Payments (HAP)
708–0590, is the contact for technical The current and former metropolitan contract. Three categories of Section 8
information regarding the development areas that use specific CPI factors are programs use the AAFs:
of the factors for specific areas or the listed alphabetically in the tables, Category 1—The Section 8 New
methods used for calculating the AAFs. according to the metropolitan area Construction and Substantial
Mailing address for above persons: where appropriate. Each AAF applies to Rehabilitation programs and the Section
Department of Housing and Urban a specified geographic area and to units 8 Moderate Rehabilitation program.
Development, 451 Seventh Street, SW., of all bedroom sizes. AAFs are Category 2—The Section 8 Loan
Washington, DC 20410. Hearing- or provided: Management (LM) and Property
speech-impaired persons may contact • For separate metropolitan areas, Disposition (PD) programs.
the Federal Information Relay Service at including counties that are currently Category 3—The Section 8 Project-
(800) 877–8339 (TTY). (Other than the designated as non-metropolitan, but are based Certificate (PBC) program.
‘‘800’’ TTY number, the above-listed part of the metropolitan area defined in Each Section 8 program category uses
telephone numbers are not toll-free.) the local CPI survey. the AAFs differently. The specific HAP
SUPPLEMENTARY INFORMATION: In • For the four Census Regions for contract, program regulation, program
addition to being published in the those metropolitan and non- requirement, or law determines the
Federal Register, this data will be metropolitan areas that are not covered application of the AAFs. Restrictions to
available electronically from the HUD by the local CPI surveys. the use of AAF are discussed below:
Federal Register / Vol. 70, No. 230 / Thursday, December 1, 2005 / Notices 72169
Renewal Rents. AAFs are not used to rent. In the Section 8 Moderate comparable rent level will be the new
determine renewal rents after expiration Rehabilitation program, the published rent to owner.
of the original Section 8 HAP contract AAF is applied to the pre-adjustment
IV. When To Use Reduced AAFs (From
(either for projects where the Section 8 base rent.
AAF Table 2)
HAP contract is renewed under a For category 1 programs, the Table 1
restructuring plan adopted under 24 AAF factor is applied before In accordance with Section 8(c)(2)(A)
CFR part 401; or renewed without determining comparability (rent of the United States Housing Act of
restructuring under 24 CFR part 402). In reasonableness). Comparability applies 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF
general, renewal rents are determined if the pre-adjustment gross rent (pre- is reduced by 0.01:
by applying a state-by-state operating adjustment contract rent plus any • For all tenancies assisted in the
cost adjustment factor (OCAF) allowance for tenant-paid utilities) is Section 8 Project-Based Certificate
published by HUD. above the published FMR. program.
Budget-based Rents. AAFs are not If the comparable rent level (plus any • In other Section 8 programs, for a
used for budget-based rent adjustments. initial difference) is lower than the unit occupied by the same family at the
For projects receiving Section 8 contract rent as adjusted by application time of the last annual rent adjustment
subsidies under the LM program (24 of the Table 1 AAF, the comparable rent (and where the rent is not reduced by
CFR part 886, subpart A) or under the level (plus any initial difference) will be application of comparability (rent
PD program (24 CFR part 886, subpart the new contract rent. However, the pre- reasonableness)).
C), contract rents are adjusted, at HUD’s adjustment contract rent will not be The law provides that:
option, either by applying the AAFs or decreased by application of Except for assistance under the certificate
by budget-based adjustments in comparability. program, for any unit occupied by the same
accordance with 24 CFR 207.19(e). In all other cases (i.e., unless the family at the time of the last annual rental
Budget-based adjustments are used for contract rent is reduced by adjustment, where the assistance contract
most Section 8/202 projects. comparability): provides for the adjustment of the maximum
Certificate Program. In the past, AAFs • The Table 1 AAF is used for a unit monthly rent by applying an annual
were used to adjust the contract rent occupied by a new family since the last adjustment factor and where the rent for a
unit is otherwise eligible for an adjustment
(including manufactured home space annual contract anniversary. based on the full amount of the factor, 0.01
rentals) in the tenant-based certificate • The Table 2 AAF is used for a unit shall be subtracted from the amount of the
program. However, this program has occupied by the same family as at the factor, except that the factor shall not be
been terminated. All tenancies in the time of the last annual contract reduced to less than 1.0. In the case of
tenant-based certificate program have anniversary. assistance under the certificate program, 0.01
been converted to the Housing Choice shall be subtracted from the amount of the
Category 2: The Loan Management annual adjustment factor (except that the
Voucher Program. AAFs are still used
Program (24 CFR Part 886, Subpart A) factor shall not be reduced to less than 1.0),
for adjustment of contract rent for
and Property Disposition Program (24 and the adjusted rent shall not exceed the
outstanding HAP contracts under the
CFR Part 886, Subpart C) rent for a comparable unassisted unit of
project-based certificate program. similar quality, type, and age in the market
Moderate Rehabilitation Program. At this time, rent adjustment by the
area. 42 U.S.C. 1437f(c)(2)(A).
Under the Section 8 Moderate AAF in the Category 2 programs is not
Rehabilitation program (both the regular subject to comparability. (Comparability To implement the law, HUD
program and the single room occupancy will again apply if HUD establishes publishes two separate AAF Tables,
program), the public housing agency regulations for conducting contained in Schedule C, Tables 1 and
(PHA) applies the AAF to the base rent comparability studies under 42 U.S.C. 2 of this notice. The difference between
component of the contract rent, not the 1437f(c)(2)(C).) Rents are adjusted by Table 1 and Table 2 is that each AAF
full contract rent. For the other covered applying the full amount of the in Table 2 is 0.01 less than the
programs, the AAF is applied to the applicable AAF under this notice. corresponding AAF in Table 1. Where
whole amount of the pre-adjustment The applicable AAF is determined as an AAF in Table 1 would otherwise be
contract rent. follows: less than 1.0, it is held harmless at 1.0;
• The Table 1 AAF is used for a unit the corresponding AAF in Table 2 will
III. Adjustment Procedures occupied by a new family since the last also be held harmless at 1.0.
This section of the notice provides a annual contract anniversary.
V. How To Find the AAF
broad description of procedures for • The Table 2 AAF is used for a unit
adjusting the contract rent. Technical occupied by the same family as at the The AAFs are contained in Schedule
details and requirements are described time of the last annual contract C, Tables 1 and 2 of this notice. There
in HUD notices, issued by the Office of anniversary. are two columns in each table. The first
Housing and the Office of Public and column is used to adjust contract rent
Category 3: Section 8 Certificate Project- for units where the highest cost utility
Indian Housing.
Because of statutory and structural Based Certificate Program is included in the contract rent, i.e.,
distinctions among the various Section The following procedures are used to where the owner pays for the highest
8 programs, there are separate rent adjust contract rent for outstanding HAP cost utility. The second column is used
adjustment procedures for the three contracts in the Section 8 PBC program: where the highest cost utility is not
program categories: • The Table 2 AAF is always used. included in the contract rent, i.e., where
The Table 1 AAF is not used. the tenant pays for the highest cost
Category 1: Section 8 New Construction, • The Table 2 AAF is always applied utility.
Substantial Rehabilitation, and before determining comparability (rent The applicable AAF is selected as
Moderate Rehabilitation Programs reasonableness). follows:
In the Section 8 New Construction • Comparability always applies. If the • Determine whether Table 1 or Table
and Substantial Rehabilitation comparable rent level is lower than the 2 is applicable. In Table 1 or Table 2,
programs, the published AAF factor is rent to owner (contract rent) as adjusted locate the AAF for the geographic area
applied to the pre-adjustment contract by application of the Table 2 AAF, the where the contract unit is located.
• Determine whether the highest cost utility is not included, select the AAF Dated: November 18, 2005.
utility is or is not included in contract from the column for ‘‘utility excluded’’. Darlene F. Williams,
rent for the contract unit. Accordingly, HUD publishes these Assistant Secretary for Policy Development
• If highest cost utility is included, Annual Adjustment Factors for the and Research.
select the AAF from the column for Section 8 Housing Assistance Payments
BILLING CODE 4210–62–P
‘‘highest cost included’’. If highest cost programs as set forth in the Tables.
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[FR Doc. 05–23506 Filed 11–30–05; 8:45 am]

BILLING CODE 4210–62–C
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Notice: Low Income Housing: Housing Assistance Payments (Section 8) &#8212 Contract Rent Annual Adjustment Factors

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Notice: Low Income Housing: Housing Assistance Payments (Section 8) &#8212 Contract Rent Annual Adjustment Factors

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[FR Doc. 05–23506 Filed 11–30–05; 8:45 am]

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