[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR990.165]



[Page 712-714]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 

               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

PART 990_THE PUBLIC HOUSING OPERATING FUND PROGRAM--Table of Contents

 

                 Subpart C_Calculating Formula Expenses

 

Sec.  990.165  Computation of project expense level (PEL).



    (a) Computation of PEL. The PEL is calculated in terms of PUM cost 

and represents the costs associated with the project, except for utility 

and add-on costs. Costs associated with the PEL are administration, 

management fees, maintenance, protective services,



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leasing, occupancy, staffing, and other expenses, such as project 

insurance. HUD will calculate the PEL using regression analysis and 

benchmarking for the actual costs of Federal Housing Administration 

(FHA) projects to estimate costs for public housing projects. HUD will 

use the ten variables described in paragraph (b) of this section and 

their associated coefficient (i.e., values that are expressed in 

percentage terms) to produce a PEL.

    (b) Variables. The ten variables are:

    (1) Size of project (number of units);

    (2) Age of property (Date of Full Availability (DOFA));

    (3) Bedroom mix;

    (4) Building type;

    (5) Occupancy type (family or senior);

    (6) Location (an indicator of the type of community in which a 

property is located; location types include rural, city central 

metropolitan, and non-city central metropolitan (suburban) areas);

    (7) Neighborhood poverty rate;

    (8) Percent of households assisted;

    (9) Ownership type (profit, non-profit, or limited dividend); and

    (10) Geographic.

    (c) Cost adjustments. HUD will apply four adjustments to the PEL. 

The adjustments are:

    (1) Application of a $200 PUM floor for any senior property and a 

$215 PUM floor for any family property;

    (2) Application of a $420 PUM ceiling for any property except for 

New York City Housing Authority projects, which have a $480 PUM ceiling;

    (3) Application of a four percent reduction for any PEL calculated 

over $325 PUM, with the reduction limited so that a PEL will not be 

reduced to less than $325; and

    (4) The reduction of audit costs as reported for FFY 2003 in a PUM 

amount.

    (d) Annual inflation factor. The PEL for each project shall be 

adjusted annually, beginning in 2005, by the local inflation factor. The 

local inflation factor shall be the HUD-determined weighted average 

percentage increase in local government wages and salaries for the area 

in which the PHA is located, and non-wage expenses.

    (e) Calculating a PEL. To calculate a specific PEL for a given 

property, the sum of the coefficients for nine variables (all variables 

except ownership type) shall be added to a formula constant. The 

exponent of that sum shall be multiplied by a percentage to reflect the 

non-profit ownership type, which will produce an unadjusted PEL. For the 

calculation of the initial PEL, the cost adjustments described in 

paragraphs (c)(1), (c)(2), and (c)(3) of this section will be applied. 

After these initial adjustments are applied, the audit adjustment 

described in paragraph (c)(4) of this section will be applied to arrive 

at the PEL in year 2000 dollars. After the PEL in year 2000 dollars is 

created, the annual inflation factor as described in paragraph (d) of 

this section will be applied cumulatively to this number through 2004 to 

yield an initial PEL in terms of current dollars.

    (f) Calculation of the PEL for Moving to Work PHAs. PHAs 

participating in the Moving to Work (MTW) Demonstration authorized under 

section 204 of the Omnibus Consolidated Rescissions and Appropriations 

Act of 1996 (Pub. L. 104-134, approved April 26, 1996) shall receive an 

operating subsidy as provided in Attachment A of their MTW Agreements 

executed prior to November 18, 2005. PHAs with an MTW Agreement will 

continue to have the right to request extensions of or modifications to 

their MTW Agreements.

    (g) Calculation of the PELs for mixed-finance developments. If, 

prior to November 18, 2005, a PHA has either a mixed-finance arrangement 

that has closed or has filed documents in accordance with 24 CFR 941.606 

for a mixed-finance transaction, then the project covered by the mixed-

finance transaction will receive funding based on the higher of its 

former Allowable Expense Level or the new computed PEL.

    (h) Calculation of PELs when data are inadequate or unavailable. 

When sufficient data are unavailable for the calculation of a PEL, HUD 

may calculate a PEL using an alternative methodology. The 

characteristics may be used from similarly situated properties.

    (i) Review of PEL methodology by advisory committee. In 2009, HUD 

will convene a meeting with representation of appropriate stakeholders, 

to review the methodology to evaluate the PEL based on actual cost data. 

The meeting shall be convened in accordance with



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the Federal Advisory Committee Act (5 U.S.C. Appendix) (FACA). HUD may 

determine appropriate funding levels for each project to be effective in 

FY 2011 after following appropriate rulemaking procedures.