[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR886.112]

[Page 136-137]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL
 
PART 886_SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM_SPECIAL 
ALLOCATIONS--Table of Contents
 
 Subpart A_Additional Assistance Program for Projects With HUD-Insured 
                         and HUD-Held Mortgages
 
Sec. 886.112  Rent adjustments.

    This section applies to adjustments of the dollar amount stated in 
the Contract as the Maximum Unit Rent. It does not apply to adjustments 
in rents payable to Owners as required by HUD in connection with its 
mortgage insurance and/or lending functions.
    (a) Funding of adjustments. Housing Assistance Payments will be made 
in increased amounts commensurate with Contract Rent adjustments up to 
the maximum annual amount of housing assistance payments specified in 
the Contract pursuant to Sec. 886.108(b).
    (b) Annual adjustments. The contract rents may be adjusted annually, 
or more frequently, at HUD's option, either (1) on the basis of a 
written request for a rent increase submitted by the owner and properly 
supported by substantiating evidence, or (2) by applying, on each 
anniversary date of the contract, the applicable Automatic Annual 
Adjustment Factor most recently published by HUD in the Federal Register 
in accordance with 24 CFR part 888, subpart B. Published Automatic 
Annual Adjustment Factors will be reduced appropriately by HUD where 
utilities are paid directly by Families. If HUD requires that the owner 
submit a written request, HUD, within a reasonable time, shall approve a 
rental

[[Page 137]]

schedule that is necessary to compensate for any increase in taxes 
(other than income taxes) and operating and maintenance costs over which 
owners have no effective control, or shall deny the increase stating the 
reasons therefor. Increases in taxes and maintenance and operating costs 
shall be measured against levels of such expenses in comparable assisted 
and unassisted housing in the area to ensure that adjustments in the 
Contract Rents shall not result in material differences between the 
rents charged for assisted and comparable unassisted units. Contract 
Rents may be adjusted upward or downward as may be appropriate; however, 
in no case shall the adjusted rents be less than the contract rents on 
the effective date of the contract.
    (c) Special additional adjustments. Special additional adjustments 
shall be granted, when approved by HUD, to reflect increases in the 
actual and necessary expenses of owning and maintaining the Contract 
units which have resulted from substantial general increases in real 
property taxes, utility rates or similar costs (i.e., assessment, and 
utilities not covered by regulated rates), but only if and to the extent 
that the Owner clearly demonstrates that such general increases have 
caused increases in the Owner's operating costs which are not adequately 
compensated for by automatic annual adjustments. The Owner shall submit 
to HUD financial statements which clearly support the increase.
    (d) Overall limitation. Notwithstanding any other provisions of the 
subpart, adjustments as provided in this section shall not result in 
material differences between the rents charged for assisted and 
comparable unassisted units, as determined by HUD.
    (e) Incorporation of rent adjustments. Any adjustment in Maximum 
Unit Rents shall be incorporated into the Contract by a dated addendum 
to the Contract establishing the effective date of the adjustment.

[42 FR 5603, Jan. 28, 1977, as amended at 45 FR 59149, Sept. 8, 1980; 47 
FR 24700, June 8, 1982]