[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: 24CFR886.312]

[Page 151-152]
 
                 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 C_Section 8 Housing Assistance Program for the Disposition of 
                           HUD-Owned Projects
 
Sec. 886.312  Rent adjustments.

    (a) Limits. Housing assistance payments will be made in amounts 
commensurate with contract rent adjustments under this paragraph, up to 
the maximum amount authorized under the contract. (See Sec. 886.308.)
    (b) Annual adjustments. The contract rents may be adjusted annually, 
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. If HUD requires that the owner 
submit a written request, HUD within a reasonable time shall approve a 
rental schedule that is necessary to compensate for any increase 
occurring since the last approved rental schedule 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, provided there was no fraud or 
mistake adverse to the Department's interest in determining the initial 
contract rent.
    (c) Special adjustments. Special adjustments in the contract rents 
shall be requested in writing by the owner and may be authorized by HUD 
to the extent HUD determines such adjustments are necessary 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., 
assessments and utilities not covered be regulated rates) which are not 
adequately compensated for by the adjustment authorized by paragraph (b) 
of this section.
    (d) Comparability between assisted and unassisted units. 
Notwithstanding any other provisions of this 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: Provided, however, 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 assuming no fraud or 
mistake adverse to the Department's interest.
    (e) Addendums to contract and leases. Any adjustment in contract 
rents shall be incorporated into the contract and

[[Page 152]]

leases by dated addendums to the contract and leases establishing the 
effective date of the adjustment.