DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing Federal Housing Commissioner

24 CFR Part 888

[Docket No. R931697; FR3598P01]

RIN 2502 AG17

Section 8 Housing Assistance Payments Program: Contract Rent Annual Adjustment
Factors Revision to "Rounding'' Factor

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

ACTION: Proposed rule.

SUMMARY: This proposed rule would revise the method for "rounding'' contract
rents. Existing regulations provide for adjustment to be made to the contract
rent of a dwelling unit by rounding the computed monthly contract rent which
contains a fractional dollar amount to the next higher whole dollar amount.
(The monthly contract rent is rounded to the next higher whole dollar amount
even when the dollar fraction is as low as .01.) HUD would revise the
adjustment by providing for contract rents which contain fractional dollar
amounts of .01 to .50 to be rounded to the next lower dollar amount, and for
contract rents which contain fractional dollar amounts of .51 to .99 to be
rounded to the next higher dollar amount. This revision to the "rounding''
factor would more accurately reflect the actual rent adjustments, and would
result in significant savings of section 8 subsidies which HUD can use to help
other low-income families who need housing assistance.

DATES: Comment due date: February 28, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding this
proposed rule to the Office of General Counsel, Rules Docket Clerk, room
10276, Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC 20410. Communications should refer to the above docket number
and title. A copy of each communication submitted will be available for public
inspection and copying on weekdays between 7:30 a.m. and 5:30 p.m. at the
above address.

FOR FURTHER INFORMATION CONTACT: James J. Tahash, Director, Planning and
Procedures Division, Office of Housing, Department of Housing and Urban
Development, 451 Seventh Street, SW., room 6180, Washington, DC 20410.
Telephone (202) 7083944 (voice) or (202) 7084594 (TDD). (These are not
toll-free numbers.)

SUPPLEMENTARY INFORMATION: Section 888.203(b) of HUD's regulations in 24 CFR
part 888 provides as follows:

The adjusted monthly amount of the Contract Rent of a dwelling unit shall be
determined by multiplying the Contract Rent in Effect on the anniversary date
of the contract by the applicable Automatic Annual Adjustment Factor (see
paragraph (a) of this section) and rounding the result to the next higher
whole dollar amount.

The rounding procedure in  888.203(b) provides for all contract rents which
contain fractional dollar amounts to be rounded to the next higher whole,
regardless if the dollar fraction is as low as .01. HUD has determined that
there are approximately two million dwelling units receiving section 8
assistance. The rounding procedure provided by  888.203(b) costs about $24
million in annual section 8 subsidies (2,000,000 unitsx $1 per unitx 12
months=$24,000,000), and provides many housing authorities and project owners
with section 8 subsidies substantially beyond their section 8 assistance
needs.

Through this rule, HUD proposes to revise the rounding procedure to make this
procedure consistent with generally accepted mathematical and statistical
principles, and to bring disbursement of section 8 subsidies more in line with
a housing authority's or project owner's actual section 8 subsidy needs. HUD
proposes to revise  888.203(b) to read as follows:

The adjusted monthly amount of the Contract Rent of a dwelling unit shall be
determined by multiplying the Contract Rent in Effect on the anniversary date
of the contract by the applicable Automatic Annual Adjustment Factor (see
paragraph (a) of this section) and rounding the result as follows:

(1) If the result contains a fractional dollar amount ranging from $0.01 to
$0.50, round to the next lower whole dollar amount;

(2) If the result contains a fractional dollar amount ranging from $0.51 to
$0.99, round to the next higher whole dollar amount.

The proposed revision to  888.203(b) would adjust section 8 contract rents by
an average of fifty cents per unit per month less than contract rents are now
adjusted using the current rounding procedure. HUD estimates that it would
save approximately $12 million annually in section 8 subsidies subsidies that
are urgently needed to provide housing assistance to other low-income
families.

HUD acknowledges that the revised rounding procedure will result in less
section 8 subsidies for a considerable number of housing authorities and
project owners. However, the reduced section 8 subsidies are more consistent
with the actual computed contract rents. As stated earlier, the current
rounding procedure provides many housing authorities and owners with section 8
subsidies substantially beyond their section 8 assistance needs.

Because HUD's resources are tightly constrained, even as the need for housing
assistance intensifies, it is essential that HUD use existing resources more
efficiently so that HUD may meet the increased demands for housing assistance.
The revision to the method of rounding section 8 contract rents, as proposed
by this rule, is one way in which HUD is attempting to address these increased
housing needs through more effective use of existing resources.

Other Matters

Environmental Impact

An environmental assessment is unnecessary because statutorily required
establishment and review of rent schedules that do not constitute a
development decision affecting the physical condition of specific project
areas or building sites is categorically excluded from the Department's
National Environmental Policy Act procedures under 24 CFR 50.20(l).

Executive Order 12866

This proposed rule was reviewed by the Office of Management and Budget as a
significant regulatory action under Executive Order 12866.

Impact on Small Entities

The Secretary, in accordance with the Regulatory Flexibility Act (5 U.S.C.
605(b)), has reviewed this proposed rule before publication, and, by approving
it, certifies that this proposed rule would not have a significant economic
impact on a substantial number of small entities. The proposed rule, if
implemented, would result in reduced section 8 subsidies for a substantial
number of housing authorities (not necessarily small housing authorities) and
project owners. However, the reduced section 8 subsidies would not result in a
significant economic impact on these entities because a substantial number of
these authorities are currently receiving section 8 subsidies considerably
beyond their actual section 8 housing assistance needs. The savings in section
8 subsidies achieved by this rule, if implemented, would result in
disbursement of section 8 subsidies to additional housing authorities and
owners. Thus, the proposed rule would not result in a significant economic
impact on a substantial number of small entities within the meaning of the
order.

Federalism Impact

The General Counsel, as the Designated Official under section 6(a) of
Executive Order No. 12612, Federalism, has determined that this proposed rule
would not have a substantial, direct effect on the States or their political
subdivisions or on the relationship between the Federal government and the
States, or on the distribution of power or responsibilities among the various
levels of government. The proposed rule relates solely to the method of
determining Federal financial assistance that is, the method of determining
the amount of section 8 assistance needed by a housing authority or project
owner, based on the procedure for computing adjusted contract rent. This
matter does not affect the States or their political subdivisions or the
distribution of power or responsibilities among the various levels of
government.

Impact on the Family

The General Counsel, as the Designated Official under Executive Order 12606,
The Family, has determined that this proposed rule would not have a potential
significant impact on family formation, maintenance, and general well-being,
and thus is not subject to review under the order. No significant change in
existing HUD policies or programs will result from promulgation of this
proposed rule, as those policies and programs relate to family concerns.

Regulatory Agenda

This proposed rule was not listed in the Department's Semiannual Agenda of
Regulations published on October 25, 1993 (58 FR 56402) under Executive Order
12866 and the Regulatory Flexibility Act.

List of Subjects in 24 CFR Part 888

Grant programs housing and community development, Rent subsidies.

Accordingly, 24 CFR part 888 would be amended as follows:

PART 888 SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FAIR MARKET RENTS AND
CONTRACT RENT ANNUAL ADJUSTMENT FACTORS

1. The authority citation for part 888 would continue to read as follows:

Authority: 42 U.S.C. 1437c, 1437f, and 3535(d).

2. In  888.203, paragraph (b) would be revised to read as follows:

 888.203 Use of contract rent automatic annual adjustment factors.

                                  * * * * *

(b) The adjusted monthly amount of the Contract Rent of a dwelling unit shall
be determined by multiplying the Contract Rent in Effect on the anniversary
date of the contract by the applicable Automatic Annual Adjustment Factor (see
paragraph (a) of this section) and rounding the result as follows:

(1) If the result contains a fractional dollar amount ranging from $0.01 to
$0.50, round to the next lower whole dollar amount;

(2) If the result contains a fractional dollar amount ranging from $0.51 to
$0.99, round to the next higher whole dollar amount.

Dated: December 20, 1993.

Nicolas P. Retsinas,

Assistant Secretary for Housing Federal Housing Commissioner.

[FR Doc. 9331522 Filed 122793; 8:45 am]

BILLING CODE 421027P
