[Federal Register Volume 63, Number 130 (Wednesday, July 8, 1998)]
[Notices]
[Pages 36931-36932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18094]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4373-N-01]
Utility Allowances for Use by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of Utility Allowances.
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SUMMARY: This notice announces that the Department has established
utility allowances in accordance with the Secretary's authority to
regulate the Federal National Mortgage Association (``Fannie Mae'') and
the Federal Home Loan Mortgage Corporation (``Freddie Mac''). (Each
enterprise is also referred to as a ``Government Sponsored Enterprise''
or ``GSE''). These allowances are used to determine whether rental
units financed by GSE mortgage purchases are affordable and may count
toward the achievement of the income-based housing goals established by
the Secretary. For these purposes, the allowances in this notice shall
be added to the contract rent for rental units in which: (1) tenant
income is not available; (2) contract rent does not include the cost of
utilities; and (3) the GSE does not use the HUD Section 8 utility
allowances.
EFFECTIVE DATE: July 1, 1998.
FOR FURTHER INFORMATION CONTACT: Janet Tasker, Director, Office of
Government-Sponsored Enterprises Oversight, Department of Housing and
Urban Development, Room 6154, 451 Seventh Street, S.W., Washington, DC
20410, telephone (202) 708-2224. (This is not a toll-free number). For
hearing-and speech-impaired persons, this number may be accessed via
TTY (text telephone) by calling the Federal Information Relay Service
at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
Environmental Impact
In accordance with 40 CFR 1508.4 of the regulations of the Council
on Environmental Quality and 24 CFR 50.20 (1) of the HUD regulation,
the policies and procedures contained in this notice relate only to
cost determinations that do not affect the physical condition of any
building and, therefore, are categorically excluded from the
requirements of the National Environmental Policy Act.
Background
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992, enacted as Title XIII of the Housing and Community Development
Act of 1992 (Pub. L.102-550, approved October 28, 1992, codified
generally at 12 U.S.C. 4501-4561) (``the Act'') \1\ requires the
Secretary, inter alia, to establish and monitor the performance of the
GSEs in meeting annual goals for mortgage purchases on housing for low-
and moderate-income families and
[[Page 36932]]
special affordable housing, i.e., housing meeting the needs of, and
affordable to, low-income families in low-income areas and very low-
income families. On January 2, 1996, the Secretary's regulation on the
GSEs, codified at 24 CFR, part 81, became effective. (See 60 FR 61846,
Dec. 1, 1995).
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\1\ Unless otherwise specified, all sections cited herein are in
the Federal Housing Enterprises Financial Safety and Soundness Act
of 1992. Sections 1331-1336 of that Act are codified at 12 U.S.C.
4561-66.
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Under the Act and regulations, in considering whether a rental
dwelling unit that is financed by a GSE mortgage purchase is affordable
and counts toward any housing goal, the Secretary must consider the
income of tenants if income information is available. Where income
information is not available, rent on the dwelling unit is used as a
proxy and compared to the rent levels affordable to very low-, low-,
and moderate-income families and families whose incomes do not exceed
50 percent of the area median income (``especially low-income
families'').\2\ To be considered affordable and count under the goal,
the rent cannot exceed 30 percent of the maximum income level of the
family's classification, with adjustments for unit size.\3\
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\2\ Sections 1332(c) and 1333(c).
\3\ Sections 1332(c)(2) and 1333(c)(2).
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Under the regulation, ``rent'' is defined as contract rent, but
only where the contract rent includes the cost of all utilities.\4\ In
all other instances, rent is contract rent plus (1) the actual cost of
utilities or (2) a utility allowance.\5\ The regulation allows the GSEs
to choose from two different utility allowances--the allowances used in
the HUD Section 8 Program or the utility allowances derived from the
American Housing Survey (AHS) and issued annually by the Secretary.\6\
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\4\ 24 CFR 81.2.
\5\ Id.
\6\ Id.
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On May 1, 1996, a notice was issued establishing the utility
allowances for 1996 and 1997 (61 FR 19466). Those utility allowances
were based on the Department's analysis of data from the 1993 AHS.
This notice announces the AHS-derived utility allowances for 1998
and 1999. In establishing these allowances, the Department analyzed
1995 AHS data on the mean costs, based on unit type (i.e., number of
bedrooms), paid by renters in both multifamily and single-family
properties for electricity, gas, oil, water, and other utilities.\7\
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\7\ The AHS means have been adjusted to reflect the 5.7 percent
increase in the Consumer Price Index for Fuel and Other Utilities
(CPIFOU) between the fourth quarter of 1995 (the approximate
midpoint of August 1995-February 1996, the period when the 1995 AHS
was conducted) and the fourth quarter of 1997 and the projected 0.3
percent decrease in the CPIFOU between the fourth quarter of 1997
and the fourth quarter of 1998, as projected by Data Resources, Inc.
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The GSEs were advised by letter dated May 12, 1998, that these
allowances would be published in the Federal Register and that they
would become effective on July 1, 1998, but could be implemented sooner
at the GSEs' option.
The Utility Allowances
In accordance with sections 1321, 1331-33, and 1336 of the Federal
Housing Enterprises Financial Safety and Soundness Act (12 U.S.C. 4541,
4561-63, and 4566), and as provided in paragraph (1) under the
definition of ``utility allowance'' in section 81.2(b) of Title 24 of
the Code of Federal Regulations, the AHS-derived utility allowances for
1998 and 1999 are as follows:
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Number of bedrooms in dwelling unit
Type of property ---------------------------------------------------
Efficiency 1 2 3 or more
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Multifamily................................................ $51 $61 $79 $105
Single family............................................... 61 81 111 145
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These utility allowances are applicable to the GSEs' determination
of eligibility of rental units to count toward their annual housing
goals and not to other programs or regulatory functions of the
Department of Housing and Urban Development.
Effect of Notice Beyond 1999
For 2000 and thereafter, the Secretary shall establish AHS-derived
utility allowances by subsequent notice. Pending establishment of such
allowances for 2000 and thereafter, the allowances in this notice shall
continue to be used by the GSEs.
Dated: July 1, 1998.
Andrew Cuomo,
Secretary.
[FR Doc. 98-18094 Filed 7-7-98; 8:45 am]
BILLING CODE 4210-27-P