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U.S. Department of Housing and Urban Development H O U S I N G ___________________________________________________________________________ Special Attention of: Notice H 95-12 (HUD)
State Coordinators; Directors of Housing; Issued: March 7, 1995 Directors, Multifamily Housing Division, Expires: September 30, 1995 Multifamily Housing Management and ___________________________ Development Branch Chiefs; Cross References: Contract Administrators; Owners and Managers of Projects with Section 8 Contracts Adjusted by the Annual Adjustment Factor. ___________________________________________________________________________ Subject: Annual Adjustment Factor Rent Increase Requirements Pursuant to the Housing Appropriations Act of 1995 BACKGROUND. On September 28, 1994, P.L. 103-327, "Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1995," was enacted. Among the many measures developed in this bill, emphasis was placed on utilizing the mechanism in the Section 8 contract language which permits an analysis on the reasonableness of the AAF formula as it is applied to each project unit type. Under this Notice, review of AAF under the Overall Limitation clause of the HAP Contract would apply to Section 8 New Construction and Substantial Rehabilitation Properties where Section 8 rent levels for a unit type presently exceed the published Existing Housing Fair Market Rents (FMR) (See Part 1, below). For Section 8 New Construction and Substantial Rehabilitation Properties where rent levels for a particular unit type do not exceed the Existing FMR AND for all Loan Management Set Aside (LMSA) and Property Disposition (PD) Section 8 AAF Contracts, the method of rent adjustment under this Notice will continue to be by applying the appropriately published AAF (See Part 2, below). In Federal Fiscal Year 1995, HUD is publishing two tables of AAFs. Table One for turnover units and Table Two for non-turnover units. In situations where the review of comparable properties is not required by this Notice, or this review does not prohibit the application of the AAF, HUD will apply the appropriately published AAF for each unit. EFFECTIVE DATE: To effect all applicable contracts with HAP anniversary dates from the date of issuance to the end of Federal FY 1995 (through September 30, 1995). In order to allow time for owners to conduct the comparability study, contracts with HAP anniversary dates which fall within the first sixty (60) days after this Notice is issued: owill be permitted to have any rent increase paid retroactive to the HAP anniversary date, so long as oa request which meets the requirements of this Notice is received no later than sixty (60) days after the date this Notice is issued. ___________________________________________________________________________ HMHP : Distribution: W-3-1,W-2(H),W-3(A)(OGC)(ZAS),W-4(H),R-1,R-2, R-3-1(H)(RC),R-3-2,R-3-3,R-6,R-6-2,R-7,R-7-2,R-8 Previous Editions Are Obsolete HUD 21B (3-80) GPO 871 902
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2 If the request is submitted after the first sixty (60) days, the increase will be effective 60 days after receipt of the required material is submitted. NOTE: If the Field Office has already issued the rent increase approval letter and/or a new Rent Schedule implementing the AAF(s) for FY 1995, these rents will remain the approved rents regardless of whether or not they have been made effective at the property by the issuance date of this Notice. If a Field Office has approved the application of the AAF to contract rents, for FY 1995, the approved rents will not be reconsidered under the procedures of this Notice. The requirements outlined in this Notice may not be waived by the Local HUD Office. APPLICABILITY: This Notice has been broken into two parts for clarification purposes. The requirements outlined within, are applicable to the following types of Section 8 contracts where rents are adjusted via the AAF (regardless of whether or not the owner is required to request the AAF), in the following manner: 1.PART 1: New Construction and Substantial Rehab Contracts where the existing contract rent for the specific unit type (prior to the FY 1995 adjustment) exceeds the current published applicable Existing FMR. 2.PART 2: New Construction and Substantial Rehab Contracts where the existing contract rent for the specific unit type (prior to the FY 1995 adjustment) DOES NOT exceed the current published applicable Existing FMR; AND All Section 8 Loan Management and Property Disposition Contracts in which the method of adjustment is the Annual Adjustment Factor (AAF). NOTE: Section 8 Moderate Rehabilitation Programs and the Section 8 Certificate Program (Tenant-based and Project-based) are NOT covered by this Notice. Section 8 Contracts adjusted by the budget-based method are also NOT covered by this Notice. While the comparability provision of this Notice applies only to Section 8 New Construction and Substantial Rehabilitation Contracts (Part 1), this does not prohibit HUD from publishing regulations and requiring comparability studies on all AAF adjusted HAP Contracts. PURPOSE. The purpose of this notice is to outline the processing instructions Local HUD Offices will follow in processing rent increases for properties where the method of rent adjustment specified in the contract is the AAF.
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3 PART 1: NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION CONTRACTS WHERE CURRENT CONTRACT RENTS ARE ABOVE THE PUBLISHED FMRs: If current project rents on a SR or NC contract (before the application of the AAF) are above the published FMR for the area then in order to receive a rent increase, the owner must submit, at least 60 days prior to the HAP contract anniversary date, form HUD 92273, Estimates of Market Rent by Comparison, (see Handbook 4480.1) completed by a non-identity of interest, state certified, general appraiser, FOR EACH UNIT TYPE (e.g. 1 BR, 2 BR, etc). This form must contain at least three examples of unassisted housing in the same market area of similar age, type and quality. (If the owner fails to submit the information required by this Notice at least 60 days before the contract anniversary date, then the rent levels will not be adjusted on the contract anniversary date, rather the new rent levels will go into effect 60 days after receipt of the required information. However, if the owner fails to submit this information by the date of the FY 1996 HAP contract anniversary, then no increase will be granted for the FY 1995 contract year.) If Loan Management Staff is in question regarding the amount charged to the property for preparation of this form, they should request the owner submit evidence of compliance with the guidelines set forth in Paragraph 6.50, Handbook 4381.5, REV-2. Once HUD receives the form HUD 92273 evidencing rent levels in similar housing, Housing Development staff should review and approve the completed form if the Correlated Subject Rent listed on form HUD-92273 is greater than 105% of the current contract rent level for that unit type, or if there is concern regarding the comparable properties. The owner should also be notified by Development Staff for correction of any deficiencies which may exist on the HUD-92273. Once approved (if necessary), Loan Management staff will apply the published AAF in Table 1 to answer the question for each unit type, "Will the resulting rent level still be lower than the owner submitted comparable rent?" (NOTE: Throughout this Notice when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000.) A.If yes, then the published AAF factor in Table One (see Appendix 1) is the factor that would be applied to all units in which turnover occurred since the last HAP anniversary date (see Appendix 4). The published AAF in Table Two would be used for units in which turnover had not occurred. B.If no, then Loan Management Staff would need to assure that the initial difference which existed in the initial contract rents is protected, as required by the contract. The initial difference is the dollar amount by which the initial Section 8 contract rents exceeded the original comparable rents (or the Fair Market Rents if they were originally used instead of comparables). The owner must submit evidence of the initial difference which existed in the initial contract rents. If the owner does not submit evidence of this figure to HUD and the initial difference is not documented in the project file maintained by
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the local HUD Office, then the Loan Management Staff should use the amount equal to 10% of the initial Section 8 contract rent for that unit, as a substitute for the initial difference. In determining whether or not the AAF should be denied, the HAP contract provides for the following: "...adjustments as provided in this Section shall not result in a material difference between the rents charged for assisted and comparable unassisted units, as determined by HUD; provided that this limitation shall not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that such differences may have existed with respect to the initial contract rents." (form HUD-52751, Paragraph 1.8(d), emphasis added) In protecting the difference which existed in the initial contract rents, HUD has developed a term known as the Initial Difference. This is a dollar figure which existed between the initial Section 8 contract rents and the original comparables. (For Financial Adjustment Factor (FAF) properties, this should also include the original dollar figure of the FAF, if the FAF has not been removed as a part of a refinancing transaction.) The regulations permitted this difference to be between zero and 20% of the original comparables (or the FMRs). In order to provide a fair number to owners who may not be able to show proof of the initial difference which existed in the initial Section 8 contract rents, HUD will use 10% of the initial Section 8 contract rent (plus the FAF, if applicable) where evidence of the initial difference cannot be provided by the owner. Once the initial difference is determined for each unit type, either by owner documentation or by HUD, it should be added on to the comparable rent for each unit type to determine what is the maximum permissible rent level allowed for each unit. This will be referred to as the Adjusted Comparable Rent. This rent level will then be compared to the rent level adjusted by the Table One AAF, for each unit type. The lower of the two rent levels will become the new effective rents (unless this would require a rent reduction, then the current contract rent level will be maintained. No increase or decrease would be granted.) If application of the Table One AAF produces the lower rent, then HUD must take into account the unit turnover count submitted by the owner in determining what AAF to apply. Appendix 1, Table 1 will be used for units with turnover, while Table Two will be used for those units in which no turnover occurred. Once the rent for each unit has been determined, all the unit rent levels will be added together to
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5 calculate a new monthly Gross Rent Potential specific unit type. This monthly GRP will then be by the number of units for that specific unit type what the new monthly rent will be for all units of specific unit type. (GRP) for that divided to derive the
oIf the lower rent level is the adjusted comparable rent level, then this rent level will be applied to all units regardless of turnover. The owner will then be notified of the new rent level. The Field Office Worksheet (see Appendix 2) used to derive this new rent level should be attached to all correspondence informing the owner of the new rent level. UNDER NO CONDITION WILL A RENT ADJUSTMENT RESULT IN A RENT DECREASE FOR SECTION 8 NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION CONTRACTS. If an owner does not request an increase or fails to submit a request based on the guidelines in this chapter, then the rents will remain the same as the current contract rents, unmodified by HUD or the Contract Administrator. Rent decreases in Section 8 New Construction and Substantial Rehab properties are specifically prohibited by law, unless the project has been refinanced and the refinancing reduces owner's periodic payments. Throughout this Notice when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000. EXAMPLES OF IMPLEMENTATION: A New Construction Project with 100% Section 8 adjusted by the AAF. The property has 100 units, 20 have turned over since the last anniversary date, and 10 have remained vacant since the last anniversary date. The rents at this property for 1 BR units are $400 and $500 for 2 BR units. The initial Section 8 contract rents on this property in 1979 were $210 for 1 BR units and $260 for Two Bedroom Units. Published FMRs for this area are $375 for a 1 BR and $475 for a two bedroom. The published AAF in Table 1 (AAF for Turnover Units) is 1.054 and the published AAF in Table 2 (AAF for Non-Turnover Units) is 1.044. Scenario 1: Project is eligible to receive the AAF based on the comparable
The owner submits a form HUD-92273 for the 1 BR rents and a form HUD-92273 for 2 BR rents, both completed by a non-identity of interest, state certified, general appraiser. The Correlated Subject Rent on these forms are $410 for a 1 BR and $510 for a 2 BR. HUD receives these forms 60 days prior to the anniversary date and begins processing for a thirty day turnaround. Applying the Table One AAF to the current rents of $400 and $500 would result in new rent levels of $422 and $527, both above the rent levels which the comparable produced. The owner did not submit evidence of the initial difference, so the Loan Management staff would use 10% of the initial Section 8 contract rent as a substitute for the initial difference.
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For 1 BR units this figure would be $21 (10% of $210) and for 2 BR units, this figure would be $26 (10% of $260). These figures added to comparable rents of $410 and $510 would produce adjusted comparable rent levels of $431 for 1 BR units and $536 for 2 BR units. Since these rent levels are both above the rent levels produced by the Table One AAF of $422 and $527, respectively, then the maximum rent levels that would be permitted are the rents produced by application of the appropriate AAF published in the Federal Register. Since adjustment by the AAF is permitted based on the comparable rents plus the initial difference, then the 1 BR rent levels would be $422 for the units in which turnover occurred and $418 for units for the units in which turnover has not occurred (including any vacant units which were vacant at the time of the last annual adjustment). In deriving the new GRP for this unit type, $422 would be multiplied by 20 (turnover units) and $418 would be multiplied by 80 (non-turnover units) to produce a monthly GRP of $8440 (for turnover units) plus $33,440 (for non-turnover units) which equals $41,880 divided by 100 units would yield a rent of $419 for all one bedroom units. The same calculation would then be performed for the 2 BR units. Scenario 2: The Project is only eligible for the comparable rents
The owner submits a form HUD-92273 for the 1 BR rents and a form HUD-92273 for 2 BR rents, both completed by a non-identity of interest, state certified, general appraiser. The Correlated Subject Rent on these forms are $400 for a 1 BR and $500 for a two bedroom. HUD receives these forms 60 days prior to the anniversary date and begins processing for a thirty day turnaround. Applying the AAF to the current rents of $400 and $500 would result in new rent levels of $422 and $527, both above the rent levels which the comparable produced. The owner did not submit evidence of the initial difference, so the Loan Management staff would use 10% of the initial Section 8 contract rent as a substitute for the initial difference. For 1 BR units this figure would be $21 (10% of $210) and for 2 BR units, this figure would be $26 (10% of $260). These figures added to comparable rents would produce adjusted comparable rent levels of $421 for 1 BR units and $526 for 2 BR units. Since these rent levels are both below the rent levels produced by the AAF in Table 1 of $422 and $527, respectively, then the comparable rent plus the initial difference would be the maximum permissible rents HUD could approve. These rent levels would be applied to all units without regard to turnover.
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PART 2: NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION CONTRACTS WHERE THE EXISTING CONTRACT RENT FOR THE SPECIFIC UNIT TYPE DOES NOT EXCEED THE CURRENT PUBLISHED APPLICABLE EXISTING FMR; AND ALL SECTION 8 LMSA AND PD CONTRACTS IN WHICH THE METHOD OF RENT ADJUSTMENT IS THE ANNUAL ADJUSTMENT FACTOR. Where the rent level for a specific unit type falls under one of the conditions stated above, the appropriate AAF will be applied for each unit. The only information required to be submitted by the owner will be the number of units in which turnover occurred since the last HAP contract anniversary date. If the owner fails to submit the information required by this Notice at least 60 days before the contract anniversary date, then the rent levels will not be adjusted on the contract anniversary date, rather the new rent levels will go into effect 60 days after receipt of the required information by HUD. However, if the owner fails to submit this information by the date of the FY 1996 HAP contract anniversary, then no increase will be granted for the FY 1995 contract year. Once the information regarding unit turnover is received from the owner, then Loan Management Staff will apply the appropriate AAF to each unit, by unit type. When applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000. For units in which turnover did occur since the last HAP anniversary date, the AAF in Table 1: AAF for Units in Which Turnover Occurred, will be applied. For units in which turnover did NOT occur since the last HAP anniversary date, the AAF in Table 2: AAF for Units in Which No Turnover Occurred, will be applied. Once the rent for each unit has been determined, a new Gross Rent Potential (GRP) for that specific unit type will be calculated. This GRP will then be divided by the number of units for that specific unit type to derive what the new rent will be for all units of the specific unit type. UNDER NO CONDITION WILL A RENT ADJUSTMENT RESULT IN A RENT DECREASE FOR NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION PROPERTIES. UNDER THE TERMS OF THIS NOTICE, RENT REDUCTIONS WILL NOT BE PERMITTED FOR LMSA AND PD PROPERTIES. If an owner does not request an increase or fails to submit a request based on the guidelines in this Notice, then the rents will remain the same as the current contract rents, unmodified by HUD or the Contract Administrator. Rent decreases in Section 8 New Construction and Substantial Rehab properties are specifically prohibited by law, unless the project has been refinanced and the refinancing reduces owner's periodic payments. Throughout this Notice when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000.
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THE FIELD OFFICE WORKSHEET: Attached in Appendix 2 are sample worksheets for both Part 1 and Part 2 adjustments, which Field Offices may use to complete the process outlined in this notice. While the format may be modified, the process which is used to calculate the rents must be adhered to, as it is based in statute. A worksheet should be completed for each unit type. OWNER SUBMISSION REQUIREMENTS FOR PART 1: Where rent levels for a specific unit type, in a Substantial Rehab or New Construction contract, exceed the Existing Fair Market Rent for that specific unit type, then the owner must submit the following items in order to be eligible to receive a rent increase for that unit type. [ ] form-HUD 92273, Estimates of Market Rent by Comparison, completed by a non-identity of interest, state certified, general appraiser (See Appendix 5) [ ] a copy of the owner certification (Appendix 3) (Only one certification per project is necessary regardless of the number of unit types for which a rent increase is requested) [ ] The number of units in which turnover occurred since the last HAP contract anniversary, FOR EACH UNIT TYPE (a sample format for reporting is attached in Appendix 4) NOTE: Appendix 3 and Appendix 4 provide sample formats in which information may be reported or certification language is presented. These formats may be modified so long as the certification language contained in Appendix 3 is presented exactly as printed and the information required by Appendix 4 is contained in the modified format. Optional Information: [ ] Evidence of the Initial Difference which existed between the original contract rents and underwriting comparable, or the Fair Market Rents at the time of initial underwriting, including any Financial Adjustment Factor (FAF) which was a part of the original rents. (If this figure, and the documentation to support this figure, is not submitted, then HUD will use 10% of the initial Section 8 contract rent as a substitute for the initial difference)
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OWNER SUBMISSION REQUIREMENTS FOR PART 2: Where the rent levels for a specific unit type, in a Substantial Rehab or New Construction contract, DOES NOT exceed the Existing Fair Market Rent for that specific unit type, and for all LMSA and PD Section 8 contracts where rents are adjusted by the AAF. The owner must submit the following items in order to be eligible to receive a rent increase for that unit type. [ ] The number of units in which turnover occurred since the last HAP contract anniversary, FOR EACH UNIT TYPE (a sample format for reporting is attached in Appendix 4) OWNERS OF SUBSTANTIAL REHAB AND NEW CONSTRUCTION PROPERTIES WITH BOTH PART 1 AND PART 2 UNIT TYPES In some situations, New Construction and Sub Rehab properties may have some unit types which meet the requirements of Part 1 and other unit types which meet the requirements of Part 2. When an owner encounters this condition at a property, they will be required to submit the information for each unit type based on what part of this notice the rent increase will be processed under. For example, the 1 BR rents at a New Construction property exceed the current FMRs, however the 2 BR rents do not. In requesting a rent increase, the owner should detail in his letter of request to the Field Office that the 1 BR units do exceed the published FMR and thus the information submitted is that required for a Part 1 request. However, the 2 BR units do not exceed the published FMR and therefore the information submitted for the 2 BR units is that required for a Part 2 request. If you have any further questions regarding this notice please contact Janet Maccubbin at (202)708-4162, or your desk officer in the Operations Division.
___________________________________ Assistant Secretary for HousingFederal Housing Commissioner
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Appendix I 12596
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations =========================================================================== SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED New England Metropolitan New York/New Jersey Metropolitan Mid-Atlantic Metropolitan Southeast Metropolitan Midwest Metropolitan Southwest Metropolitan Great Plains Metropolitan Rocky Mountain Metropolitan Pacific/Hawaii Metropolitan Northwest/Alaska Metropolitan STATE MSA Hawaii Anchorage, AK 1.015 1.013 1.018 1.016 1.029 1.038 1.030 1.062 1.018 1.038 1.037 1.047 1.029 1.024 1.011 1.068 1.024 1.010 1.037 1.025 1.010 1.015 1.006 1.015 1.013 1.030 1.039 1.028 1.067 1.016 1.040 1.032 1.046 1.025 1.024 1.001 1.074 1.020 1.004 1.028 1.021 1.002
*Atlanta, GA PMSA Baltimore, MD
*COUNTY Berkeley, WV PMSA PMSA PMSA PMSA Boulder-Longmont, CO Bremerton, WA Brockton, MA Buffalo-Niagara Falls, NY
*Chicago, IL *COUNTY Clarke, VA Appendix I
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations (Cont.) ===========================================================================
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SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED New England Nonmetropolitan New York/New Jersey Nonmetropolitan Mid-Atlantic Nonmetropolitan Southeast Nonmetropolitan Midwest Nonmetropolitan Southwest Nonmetropolitan Great Plains Nonmetropolitan Rocky Mountain Nonmetropolitan Pacific/Hawaii Nonmetropolitan Northwest/Alaska Nonmetropolitan PMSA PMSA PMSA PMSA PMSA PMSA PMSA Akron, OH Ann Arbor, MI Atlantic-Cape May, NJ Bergen-Passaic, NJ Boston, MA-NH Brazoria, TX Bridgeport, CT 1.008 1.024 1.020 1.014 1.014 1.014 1.022 1.014 1.014 1.023 1.028 1.022 1.013 1.027 1.010 1.031 1.027 1.026 1.031 1.021 1.028 1.005 1.024 1.012 1.000 1.003 1.002 1.022 1.013 1.011 1.022 1.025 1.025 1.016 1.025 1.004 1.032 1.025 1.011 1.025 1.013 1.025
*COUNTY Brown, OH *COUNTY Carroll, GA *Cincinnati, OH-KY-IN PMSA Cleveland-Lorain-Elyria, OH
Appendix I Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12597 ===========================================================================
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SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *COUNTY Culpeper, VA PMSA PMSA PMSA PMSA PMSA PMSA Danbury, CT Denver, CO Dutchess County, NY Flint, MI Fort Worth-Arlington, TX Galveston-Texas City, TX 1.010 1.027 1.066 1.027 1.021 1.023 1.031 1.026 1.027 1.022 1.031 1.027 1.024 1.026 1.011 1.010 1.039 1.028 1.027 1.027 1.027 1.002 1.025 1.074 1.025 1.026 1.022 1.032 1.011 1.020 1.013 1.032 1.025 1.019 1.020 1.004 1.004 1.042 1.025 1.025 1.025 1.025
*COUNTY Grant, KY *COUNTY Grundy, IL PMSA PMSA PMSA MSA PMSA PMSA PMSA PMSA PMSA PMSA PMSA PMSA Hamilton-Middletown, OH Houston, TX Jersey City, NJ Kansas City, MO-KS Kenosha, WI Lawrence, MA-NH Lowell, MA-NH Miami, FL Milwaukee-Waukesha, WI Monmouth-Ocean, NJ Nassau-Suffolk, NV New Haven-Meriden, CT
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12597 (Cont.) =========================================================================== SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *Dallas, TX *COUNTY De Kalb, IL PMSA PMSA PMSA Detroit, MI Fitchburg-Leominster, MA Fort Lauderdale, FL 1.023 1.026 1.021 1.010 1.039 1.027 1.027 1.067 1.010 1.024 1.011 1.028 1.026 1.011 1.004 1.010 1.027 1.018 1.010 1.010 1.040 1.022 1.021 1.026 1.004 1.042 1.010 1.019 1.074 1.002 1.022 1.001 1.019 1.021 1.001 1.002 1.004 1.025 1.013 1.004 1.004 1.035
*COUNTY Gallatin, KY PMSA PMSA PMSA Gary, IN Greeley, CO Hagerstown, MD
*COUNTY Henderson, TX *COUNTY Jefferson, WV PMSA Kankakee, IL
*COUNTY Kendall, IL *COUNTY King George, VA PMSA PMSA PMSA MSA PMSA PMSA Los Angeles-Long Beach, CA Manchester, NH Middlesex-Somerset-Hunterdon, NJ Minneapolis-St. Paul, MN-WI Nashua, NH New Bedford, MA
*New Orleans, LA
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations =========================================================================== SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED PMSA PMSA PMSA PMSA New York, NY Newark, NJ Oakland, CA Olympia, WA 1.026 1.027 1.026 1.024 1.025 1.032 1.036 1.028 1.042 1.037 1.026 1.026 1.023 1.023 1.027 1.004 1.031 1.008 1.014 1.026 1.025 1.027 1.020 1.011 1.025 1.030 1.025 1.035 1.036 1.027 1.027 1.021 1.021 1.025 1.002 1.025 1.004 1.016
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*COUNTY Pendleton, KY *COUNTY Pickens, GA PMSA PMSA Portland-Vancouver, OR-WA Racine, WI
*COUNTY St. James Parish, LA PMSA PMSA PMSA PMSA PMSA PMSA PMSA Salem, OR San Francisco, CA Santa Cruz-Watsonville, CA Seattle-Bellevue-Everett, WA Tacoma, WA Trenton, NJ Ventura, CA
*COUNTY Walton, GA *Washington, DC-MD-VA PMSA Wilmington-Newark, DE-MD
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations (Cont.) =========================================================================== SCHEDULE C - TABLE 1 - CONTRACT RENT AAFS FOR UNITS WITH TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *COUNTY Westchester, NY PMSA Newburgh, NY-PA 1.026 1.027 1.025 1.003 1.013 1.024 1.010 1.005 1.017 1.000 1.026 1.026 1.027 1.029 1.026 1.013 1.010 1.027 1.010 1.026 1.025 1.011 1.002 1.017 1.028 1.004 1.002 1.016 1.000 1.027 1.027 1.025 1.028 1.027 1.017 1.002 1.025 1.004
12598
*COUNTY Ohio, IN PMSA PMSA PMSA PMSA PMSA MSA MSA PMSA PMSA PMSA MSA PMSA PMSA Orange County, CA Philadelphia, PA-NJ Pittsburgh, PA Portsmouth-Rochester, NH-ME Riverside-San Bernardino, CA St. Louis, MO-IL San Diego, CA San Jose, CA Santa Rosa, CA Stamford-Norwalk, CT Tampa-St. Petersburg-Clearwater, FL Vallejo-Fairfield-Napa, CA Vineland-Millville-Bridgeton, NJ
*COUNTY Warren, VA PMSA PMSA Waterbury, CT Worcester, MA-CT
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12599 =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED New England Metropolitan New York/New Jersey Metropolitan Mid-Atlantic Metropolitan Southeast Metropolitan Midwest Metropolitan Southwest Metropolitan Great Plains Metropolitan Rocky Mountain Metropolitan Pacific/Hawaii Metropolitan Northwest/Alaska Metropolitan STATE Hawaii 1.005 1.003 1.008 1.006 1.019 1.028 1.020 1.052 1.008 1.028 1.027 1.037 1.019 1.014 1.001 1.058 1.014 1.000 1.027 1.015 1.000 1.005 1.000 1.005 1.003 1.020 1.029 1.018 1.057 1.006 1.030 1.022 1.036 1.015 1.014 1.000 1.064 1.010 1.000 1.018 1.011 1.000
MSA Anchorage, AK *Atlanta, GA PMSA Baltimore, MD
*COUNTY Berkeley, WV PMSA PMSA PMSA PMSA Boulder-Longmont, CO Bremerton, WA Brockton, MA Buffalo-Niagara Falls, NY
*Chicago, IL *COUNTY Clarke, VA
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12599 (Cont.) =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED New England Nonmetropolitan New York/New Jersey Nonmetropolitan Mid-Atlantic Nonmetropolitan Southeast Nonmetropolitan Midwest Nonmetropolitan Southwest Nonmetropolitan Great Plains Nonmetropolitan Rocky Mountain Nonmetropolitan Pacific/Hawaii Nonmetropolitan Northwest/Alaska Nonmetropolitan PMSA PMSA PMSA PMSA PMSA PMSA PMSA Akron, OH Ann Arbor, MI Atlantic-Cape May, NJ Bergen-Passaic, NJ Boston, MA-NH Brazoria, TX Bridgeport, CT 1.000 1.014 1.010 1.004 1.004 1.004 1.012 1.004 1.004 1.013 1.018 1.012 1.003 1.017 1.000 1.021 1.017 1.016 1.021 1.011 1.018 1.000 1.014 1.002 1.000 1.000 1.000 1.012 1.003 1.001 1.012 1.015 1.015 1.006 1.015 1.000 1.022 1.015 1.001 1.015 1.003 1.015
*COUNTY Brown, OH *COUNTY Carroll, GA *Cincinnati, OH-KY-IN PMSA Cleveland-Lorain-Elyria, OH
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *COUNTY Culpeper, VA PMSA PMSA PMSA PMSA PMSA PMSA Danbury, CT Denver, CO Dutchess County, NY Flint, MI Fort Worth-Arlington, TX Galveston-Texas City, TX 1.000 1.017 1.056 1.017 1.011 1.013 1.021 1.016 1.017 1.012 1.021 1.017 1.014 1.016 1.001 1.000 1.029 1.018 1.017 1.017 1.017 1.000 1.015 1.064 1.015 1.016 1.012 1.022 1.001 1.010 1.003 1.022 1.015 1.009 1.010 1.000 1.000 1.032 1.015 1.015 1.015 1.015
12600
*COUNTY Grant, KY *COUNTY Grundy, IL PMSA PMSA PMSA MSA PMSA PMSA PMSA PMSA PMSA PMSA PMSA PMSA Hamilton-Middletown, OH Houston, TX Jersey City, NJ Kansas City, MO-KS Kenosha, WI Lawrence, MA-NH Lowell, MA-NH Miami, FL Milwaukee-Waukesha, WI Monmouth-Ocean, NJ Nassau-Suffolk, NY New Haven-Meriden, CT
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations (Cont.) =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *Dallas, TX *COUNTY De Kalb, IL PMSA PMSA PMSA Detroit, MI Fitchburg-Leominster, MA Fort Lauderdale, FL 1.013 1.016 1.011 1.000 1.029 1.017 1.017 1.057 1.000 1.014 1.001 1.018 1.016 1.001 1.000 1.000 1.017 1.008 1.000 1.000 1.030 1.012 1.011 1.016 1.000 1.032 1.000 1.009 1.064 1.000 1.012 1.000 1.009 1.011 1.000 1.000 1.000 1.015 1.003 1.000 1.000 1.025
12600
*COUNTY Gallatin, KY PMSA PMSA PMSA Gary, IN Greeley, CO Hagerstown, MD
*COUNTY Henderson, TX *COUNTY Jefferson, WV PMSA Kankakee, IL
*COUNTY Kendall, IL *COUNTY King George, VA PMSA PMSA PMSA MSA PMSA PMSA Los Angeles-Long Beach, CA Manchester, NH Middlesex-Somerset-Hunterdon, NJ Minneapolis-St. Paul, MN-WI Nashua, NH New Bedford, MA
*New Orleans, LA
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12601 =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED PMSA PMSA PMSA PMSA New York, NY Newark, NJ Oakland, CA Olympia, WA 1.016 1.017 1.016 1.014 1.015 1.022 1.026 1.018 1.032 1.027 1.016 1.016 1.013 1.013 1.017 1.000 1.021 1.000 1.004 1.016 1.015 1.017 1.010 1.001 1.015 1.026 1.015 1.025 1.026 1.017 1.017 1.011 1.011 1.015 1.000 1.015 1.000 1.006
*COUNTY Pendleton, KY *COUNTY Pickens, GA PMSA PMSA Portland-Vancouver, OR-WA Racine, WI
*COUNTY St. James Parish, LA PMSA PMSA PMSA PMSA PMSA PMSA PMSA Salem, OR San Francisco, CA Santa Cruz-Watsonville, CA Seattle-Bellevue-Everett, WA Tacoma, WA Trenton, NJ Ventura, CA
*COUNTY Walton, GA *Washington, DC-MD-VA PMSA Wilmington-Newark, DE-MD
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Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12601 (Cont.) =========================================================================== SCHEDULE C - TABLE 2 - CONTRACT RENT AAFS FOR UNITS WITH NO TURNOVER, SECTION 8 HAP PROGRAMS PREPARED ON 013095 HIGHEST COST UTILITY INCLUDED EXCLUDED *COUNTY Westchester, NY PMSA Newburgh, NY-PA 1.016 1.017 1.015 1.000 1.003 1.014 1.000 1.000 1.007 1.000 1.016 1.016 1.017 1.019 1.016 1.003 1.000 1.017 1.000 1.016 1.015 1.001 1.000 1.007 1.018 1.000 1.000 1.006 1.000 1.017 1.017 1.015 1.018 1.017 1.007 1.000 1.015 1.000
*COUNTY Ohio, IN PMSA PMSA PMSA PMSA PMSA MSA MSA PMSA PMSA PMSA MSA PMSA PMSA Orange County, CA Philadelphia, PA-NJ Pittsburgh, PA Portsmouth-Rochester, NH-ME Riverside-San Bernardino, CA St. Louis, MO-IL San Diego, CA San Jose, CA Santa Rosa, CA Stamford-Norwalk, CT Tampa-St. Petersburg-Clearwater, FL Vallejo-Fairfield-Napa, CA Vineland-Millville-Bridgeton, NJ
*COUNTY Warren, VA PMSA PMSA Waterbury, CT Worcester, MA-CT
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APPENDIX 2
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PART 1 ADJUSTMENTS WORKSHEET FIELD OFFICE WORKSHEET FOR PROCESSING RENT INCREASES FOR AAF RENTS FOR NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION UNIT TYPES WHICH EXCEED THE EXISTING HOUSING FAIR MARKET RENTS (NOT FOR USE ON BUDGET BASED RENT INCREASES) Property Name:____________________________________ Unit Type:_________ ================================================================= ESSENTIAL INFORMATION Existing FMR Level for Unit Type $____________ Current Contract Rent for Unit Type $_____________
AAF from Table 1 __________ Comparable Rent from HUD-92273 $___________ (Line 20) Initial Difference Submitted by Owner (if any) $_______________ ================================================================= STEP 1: Is this contract a New Construction or Sub Rehab contract?; AND Is the current rent for this unit type (before application of the AAF) above the Existing Housing FMR? [ ] [ ] If the answer to BOTH questions is YES, then proceed to Step 2 If the answer to EITHER question is NO, then this unit type should be adjusted under Part 2 of this Notice. This worksheet does not apply. Please find Part 2 Adjustments Worksheet at the end of Appendix 2. 1 STEP 2: Apply the appropriate AAF in Table 1 to the current contract rent. (NOTE: Throughout this Worksheet when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000.) _________________ X Current Rent for Unit Type ________________ = ______________________ Factor Used Rent Level Produced by the AAF
STEP 3: Is the Rent Level developed in Step 2, greater than the Correlated Subject Rent Level (CSR) on form 92273, for the particular unit type? _____________________ Rent Level produced by the AAF [ ] [ ] > _____________________ Comparable Rent Level (CSR, form HUD 92273)
Yes, then go to Step 4 No, then the AAF is granted. For units in which turnover occurred in the last year, use AAF Table 1 to calculate the rents. For units in which no turnover occurred in the last year use Table 2 to calculate the rents. Go to Step 6(b) and document the new rent levels.
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STEP 4: Since the AAF rent level derived in Step 2 is greater than the comparable rent submitted by the owner, then the initial difference must be added to the comparable rent. If documented evidence of the initial difference was submitted by the owner from the original underwriting documents, then use the dollar amount submitted by the owner. If not, then use 10% of the initial Section 8 Contract Rent as a substitute. $_____________________ Dollar Amount of the Initial Difference Method Used for the Initial Difference: [ ] Owner Submission [ ] Calculated by HUD
$________________ + $__________________ = ____________________ Comparable Rent Initial Difference Adjusted Comparable Level Rent Level 2 STEP 5: Is the Adjusted Comparable Rent Level (derived above) greater than the rent level obtained by applying the AAF in Step 2? $_____________________ Adjusted Comparable Rent Level [ ] > $_______________________ Rent Level Produced by the AAF (See Step 2)
Yes, then AAF is granted.
Rent levels cannot go higher than the AAF. For units in which turnover occurred in the last year, use AAF Table 1 to calculate the rents. For units in which no turnover occurred in the last year use AAF Table 2 to calculate the rents. (NOTE: Throughout this Worksheet when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000.) Turnover units $____________ Current Rent X ______________ Table 1 Factor = $_______________ New Rent Level
Units with no Turnover $____________ Current Rent X ______________ Table 2 Factor = $_______________ New Rent Level
Document these rent levels in Step 6(b) and proceed through Steps 7 and 8. [ ] No, then the adjusted comparable rent will be the new rent level for all units without regard to turnover. Document this rent level in Step 6(a). STEP 6: a) The new rent level(s) for ______ unit type is: $_______________ for all units (Document this rent level in Step 8); OR
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b)
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$_______________ for units with turnover (Number of Units ____ ); AND $_______________ for units with no turnover (Number of Units ____ ). 3
STEP 7: If Step 6 resulted in different rent levels for the same unit type, then a common rent level for this unit type must be derived. Use the rent levels listed in Step 6(b) above to derive a new monthly Gross Rent Potential (GRP). $_____ for units with turnover X ____ (No. of Units) = $_________ $_____ for units with no turnover X ___ (No. of Units) = $_______ Add the two numbers which you just calculated to derive total GRP: $____________ Turnover GRP X $_________________ No Turnover GRP = $_____________ Total GRP
Divide Total GRP by the number of units for this unit type to obtain the new rent level for all _________BR units. $____________ New Rent Level STEP 8: The new rent level for all ___ BR units is approved at $________. 4 Total GRP divide by _____ units = $_______________
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PART 2 ADJUSTMENTS WORKSHEET FIELD OFFICE WORKSHEET FOR PROCESSING RENT INCREASES FOR AAF RENTS FOR NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION UNIT TYPES WHICH DO NOT EXCEED THE EXISTING HOUSING FAIR MARKET RENTS AND FOR ALL LMSA AND PD SECTION 8 CONTRACT TYPES. (NOT FOR USE ON BUDGET BASED RENT INCREASES) Property Name:____________________________________ Unit Type:_________ ====================================================================== ESSENTIAL INFORMATION Existing FMR Level for Unit Type $____________ Current Contract Rent for Unit Type $_________
>
====================================================================== STEP 1: If this contract is a New Construction or a Substantial Rehab contract, then is the current rent for this unit type (before application of the AAF) below the Existing Housing FMR?; OR If this contract is a LMSA or PD contract, is method of adjustment for contract rent the application of the AAF (as opposed to budget-based)? (NOTE: Budget-based rents are NOT processed under this Notice. See Chapter 7, Handbook 4350.1) [ ] If the answer the applicable question is YES, then proceed to Step 2. [ ] If the answer to the applicable question is NO, and the first question is applicable, then this unit type should be adjusted under Part 1 of this Notice. This worksheet does not apply. Please find Part 1 Adjustments Worksheet at the beginning of Appendix 2. If the second question is applicable and the answer is NO, then this Notice is not applicable and the rents should be adjusted under Chapter 7, Handbook 4350.1. 1 STEP 2: For units in which turnover occurred in the last year, use AAF Table 1 to calculate the rents. For units in which no turnover occurred in the last year use AAF Table 2 to calculate the rents. (NOTE: Throughout this Worksheet when applying the published AAF, the factor of 1.000 should be used in all cases where the published factor is below 1.000.) Turnover units $____________ Current Rent X ______________ Table 1 Factor = $_______________ New Rent Level
Units with no Turnover $____________ Current Rent X ______________ Table 2 Factor = $_______________ New Rent Level
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STEP 3:
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The new rent level(s) for ______ unit type is:
$__________ for units with turnover (Number of Units ______ ) $__________ for units with no turnover (Number of Units ______) STEP 4: Since the calculation in Step 3 resulted in different rent levels for the same unit type, then a common rent level for this unit type must be derived. Use the rent levels listed in Step 3 above to derive a new monthly Gross Rent Potential (GRP). $_____ for units with turnover X ____ (No. of Units) = $_________ $_____ for units with no turnover X ___ (No. of Units) = $_______ Add the two numbers which you just calculated to derive total GRP: $____________ Turnover GRP X $_________________ No Turnover GRP = $_____________ Total GRP
Divide Total GRP by the number of units for this unit type to obtain the new rent level for all _________BR units. $____________ New Rent Level STEP 5: The new rent level for all ___ BR units is approved at $________. 2 Total GRP divide by _____ units = $_______________
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APPENDIX 3
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SAMPLE FORMAT FOR OWNER'S CERTIFICATION OF COMPLIANCE WITH THE REQUIREMENTS OF NOTICE: Annual Adjustment Factor Rent Increase Requirements Pursuant to the Housing Appropriations Act of 1995 Property Name:______________________________________________ FHA Number:_________________________________________________ Section 8 Contract Number:__________________________________ The attached represents a request for a rent increase for the aforementioned property and the following unit type(s) (e.g. 1 BR, 2BR/2BA, 3 BR, etc.): I certify as the owner of the property (or the agent empowered to act on behalf of the owner) that all of the following items are true: oPreparation of all copies of form HUD-92273 were completed by a state certified, general appraiser who does NOT have an identity of interest relationship with the project. oIf project funds were used to pay for the completion of form(s) HUD-92273, I certify that I am in compliance with the Contracting Guidelines set forth in Paragraph 6.50 of Handbook 4381.5, REV-2. oIf a figure is submitted for the initial difference, this figure is the same dollar difference which existed between the original comparable used in underwriting (or the FMRs) and the contract rents at the time of initial occupancy. If no initial difference is submitted, then I authorize HUD to use 10% of the initial Section 8 contract rent for each unit type as the initial difference. oThe figures submitted with this request regarding the number of units in which turnover has occurred since the last HAP anniversary date are complete and accurate. Under penalties and provisions of Title 18, United States Cost, Chapter 47, Section 1001, the statements contained in this request have been examined by me and to the best of my knowledge and belief are true, correct and complete.
___________________________________ Owner
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SAMPLE FORMAT FOR REPORTING UNIT TURNOVER This form or any other format may be used for reporting the number of units in which turnover occurred since the last HAP contract anniversary date. This information need only be submitted for the unit types in which a rent increase is being requested under this Notice. This information reflects the number of units in which turnover has occurred since __/__/__ (HAP Anniversary Date) Unit Type __________ Total Number of Units ___________
_________ Units have incurred turnover _________ Units did not incur turnover Unit Type __________ Total Number of Units ___________
_________ Units have incurred turnover _________ Units did not incur turnover Unit Type __________ Total Number of Units ___________
_________ Units have incurred turnover _________ Units did not incur turnover Unit Type __________ Total Number of Units ___________
_________ Units have incurred turnover _________ Units did not incur turnover Unit Type __________ Total Number of Units ___________
_________ Units have incurred turnover _________ Units did not incur turnover
______________________________ Owner/Agent ___________________________________________________________________________ Estimates of Market Rent by Comparison
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******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** ___________________________________________________________________________ form HUD-92273 (3/95)
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