[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] ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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). --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \2\ Sections 1332(c) and 1333(c). \3\ Sections 1332(c)(2) and 1333(c)(2). --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \4\ 24 CFR 81.2. \5\ Id. \6\ Id. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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: ---------------------------------------------------------------------------------------------------------------- Number of bedrooms in dwelling unit Type of property --------------------------------------------------- Efficiency 1 2 3 or more ---------------------------------------------------------------------------------------------------------------- Multifamily................................................ $51 $61 $79 $105 Single family............................................... 61 81 111 145 ---------------------------------------------------------------------------------------------------------------- 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