[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR990.165]

[Page 710-712]
 
                 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.