[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR882.410]

[Page 79-80]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL 
 
PART 882--SECTION 8 MODERATE REHABILITATION PROGRAMS--Table of Contents
 
    Subpart D--Special Procedures for Moderate Rehabilitation--Basic 
                                Policies
 
Sec. 882.410  Rent adjustments.

    (a) Annual and special adjustments. Contract Rents will be adjusted 
as provided in paragraphs (a) (1) and (2) of this section upon submittal 
to the PHA by the Owner of a revised schedule of Contract Rents, 
provided that the unit is in decent, safe, and sanitary condition and 
that the Owner is otherwise in compliance with the terms of the Lease 
and Contract. Subject to the foregoing, adjustments of Contract Rents 
will be as follows:
    (1) The Annual Adjustment Factors which are published annually by 
HUD (see Schedule C, 24 CFR part 888) will be utilized. On or after each 
annual anniversary date of the Contract, the Contract Rents may be 
adjusted in accordance with HUD procedures, effective for the month 
following the submittal by the Owner of a revised schedule of Contract 
Rents. The changes in rent as a result of the adjustment cannot exceed 
the amount established by multiplying the Annual Adjustment Factor by 
the base rents. However, if the amounts borrowed to finance the 
rehabilitation costs or to finance purchase of the property are subject 
to a

[[Page 80]]

variable rate or are otherwise renegotiable, Contract Rents may be 
adjusted in accordance with other procedures as prescribed by HUD, and 
specified in the Contract, provided that the adjusted Contract Rents 
cannot exceed the rents established by multiplying the Annual Adjustment 
Factor by the Contract Rents. Adjusted Contract Rents must then be 
examined in accordance with paragraph (b) of this section and may be 
adjusted accordingly. Contract Rents may be adjusted upward or downward, 
as may be appropriate.
    (2) Special Adjustments. (i) A special adjustment, to the extent 
determined by HUD to reflect increases in the actual and necessary 
expenses of owning and maintaining the unit which have resulted from 
substantial general increases in real property taxes, assessments, 
utility rates and utilities not covered by regulated rates, may be 
recommended by the PHA for approval by HUD. Subject to appropriations, a 
special adjustment may also be recommended by the PHA for approval by 
HUD when HUD determines that a project is located in a community where 
drug-related criminal activity is generally prevalent, and not specific 
to a particular project, and the project's operating, maintenance, and 
capital repair expenses have substantially increased primarily as a 
result of the prevalence of such drug-related activity. HUD may, on a 
project-by-project basis, provide adjustments to the maximum monthly 
rents, to a level no greater than 120 percent of the current gross rents 
for each unit size under a Housing Assistance Payments Contract, to 
cover the costs of maintenance, security, capital repairs and reserves 
required for the Owner to carry out a strategy acceptable to HUD for 
addressing the problem of drug-related criminal activity. Prior to 
approval of a special adjustment to cover the cost of physical 
improvements, HUD will perform an environmental review to the extent 
required by HUD's environmental regulations at 24 CFR part 50, including 
the applicable related authorities at 24 CFR 50.4.
    (ii) The aforementioned special rent adjustments will only be 
approved if and to the extent the Owner clearly demonstrates that these 
general increases have caused increases in the owners operating costs 
which are not adequately compensated for by annual adjustments.
    (iii) The Owner must submit financial information to the PHA which 
clearly supports the increase. For Contracts of more than twenty units, 
the Owner must submit audited financial information.
    (b) Overall limitation. Notwithstanding any other provisions of this 
part, adjustments as provided in this section must not result in 
material differences between the rents charged for assisted and 
comparable unassisted units, as determined by the PHA (and approved by 
HUD in the case of adjustments under paragraph (a)(2) of this section). 
However, unless the rents have been adjusted in accordance with 
Sec. 882.409, this limitation should not be construed to prohibit 
differences in rents between assisted and comparable unassisted units to 
the extent that differences existed with respect to the initial Contract 
Rents.

(Approved by the Office of Management and Budget under OMB approval 
number 2577-0196)

[47 FR 34379, Aug. 9, 1982, as amended at 59 FR 47773, Sept. 16, 1994]