DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of the Assistant Secretary for Housing Federal Housing Commissioner 24 CFR Part 888 [Docket No. RÄ93Ä1697; FRÄ3598ÄPÄ01] RIN 2502 AG17 Section 8 Housing Assistance Payments Program: Contract Rent Annual Adjustment Factors Revision to "Rounding'' Factor AGENCY: Office of the Assistant Secretary for Housing Federal Housing Commissioner, HUD. ACTION: Proposed rule. SUMMARY: This proposed rule would revise the method for "rounding'' contract rents. Existing regulations provide for adjustment to be made to the contract rent of a dwelling unit by rounding the computed monthly contract rent which contains a fractional dollar amount to the next higher whole dollar amount. (The monthly contract rent is rounded to the next higher whole dollar amount even when the dollar fraction is as low as .01.) HUD would revise the adjustment by providing for contract rents which contain fractional dollar amounts of .01 to .50 to be rounded to the next lower dollar amount, and for contract rents which contain fractional dollar amounts of .51 to .99 to be rounded to the next higher dollar amount. This revision to the "rounding'' factor would more accurately reflect the actual rent adjustments, and would result in significant savings of section 8 subsidies which HUD can use to help other low-income families who need housing assistance. DATES: Comment due date: February 28, 1994. ADDRESSES: Interested persons are invited to submit comments regarding this proposed rule to the Office of General Counsel, Rules Docket Clerk, room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410. Communications should refer to the above docket number and title. A copy of each communication submitted will be available for public inspection and copying on weekdays between 7:30 a.m. and 5:30 p.m. at the above address. FOR FURTHER INFORMATION CONTACT: James J. Tahash, Director, Planning and Procedures Division, Office of Housing, Department of Housing and Urban Development, 451 Seventh Street, SW., room 6180, Washington, DC 20410. Telephone (202) 708Ä3944 (voice) or (202) 708Ä4594 (TDD). (These are not toll-free numbers.) SUPPLEMENTARY INFORMATION: Section 888.203(b) of HUD's regulations in 24 CFR part 888 provides as follows: The adjusted monthly amount of the Contract Rent of a dwelling unit shall be determined by multiplying the Contract Rent in Effect on the anniversary date of the contract by the applicable Automatic Annual Adjustment Factor (see paragraph (a) of this section) and rounding the result to the next higher whole dollar amount. The rounding procedure in  888.203(b) provides for all contract rents which contain fractional dollar amounts to be rounded to the next higher whole, regardless if the dollar fraction is as low as .01. HUD has determined that there are approximately two million dwelling units receiving section 8 assistance. The rounding procedure provided by  888.203(b) costs about $24 million in annual section 8 subsidies (2,000,000 unitsx $1 per unitx 12 months=$24,000,000), and provides many housing authorities and project owners with section 8 subsidies substantially beyond their section 8 assistance needs. Through this rule, HUD proposes to revise the rounding procedure to make this procedure consistent with generally accepted mathematical and statistical principles, and to bring disbursement of section 8 subsidies more in line with a housing authority's or project owner's actual section 8 subsidy needs. HUD proposes to revise  888.203(b) to read as follows: The adjusted monthly amount of the Contract Rent of a dwelling unit shall be determined by multiplying the Contract Rent in Effect on the anniversary date of the contract by the applicable Automatic Annual Adjustment Factor (see paragraph (a) of this section) and rounding the result as follows: (1) If the result contains a fractional dollar amount ranging from $0.01 to $0.50, round to the next lower whole dollar amount; (2) If the result contains a fractional dollar amount ranging from $0.51 to $0.99, round to the next higher whole dollar amount. The proposed revision to  888.203(b) would adjust section 8 contract rents by an average of fifty cents per unit per month less than contract rents are now adjusted using the current rounding procedure. HUD estimates that it would save approximately $12 million annually in section 8 subsidies subsidies that are urgently needed to provide housing assistance to other low-income families. HUD acknowledges that the revised rounding procedure will result in less section 8 subsidies for a considerable number of housing authorities and project owners. However, the reduced section 8 subsidies are more consistent with the actual computed contract rents. As stated earlier, the current rounding procedure provides many housing authorities and owners with section 8 subsidies substantially beyond their section 8 assistance needs. Because HUD's resources are tightly constrained, even as the need for housing assistance intensifies, it is essential that HUD use existing resources more efficiently so that HUD may meet the increased demands for housing assistance. The revision to the method of rounding section 8 contract rents, as proposed by this rule, is one way in which HUD is attempting to address these increased housing needs through more effective use of existing resources. Other Matters Environmental Impact An environmental assessment is unnecessary because statutorily required establishment and review of rent schedules that do not constitute a development decision affecting the physical condition of specific project areas or building sites is categorically excluded from the Department's National Environmental Policy Act procedures under 24 CFR 50.20(l). Executive Order 12866 This proposed rule was reviewed by the Office of Management and Budget as a significant regulatory action under Executive Order 12866. Impact on Small Entities The Secretary, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this proposed rule before publication, and, by approving it, certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities. The proposed rule, if implemented, would result in reduced section 8 subsidies for a substantial number of housing authorities (not necessarily small housing authorities) and project owners. However, the reduced section 8 subsidies would not result in a significant economic impact on these entities because a substantial number of these authorities are currently receiving section 8 subsidies considerably beyond their actual section 8 housing assistance needs. The savings in section 8 subsidies achieved by this rule, if implemented, would result in disbursement of section 8 subsidies to additional housing authorities and owners. Thus, the proposed rule would not result in a significant economic impact on a substantial number of small entities within the meaning of the order. Federalism Impact The General Counsel, as the Designated Official under section 6(a) of Executive Order No. 12612, Federalism, has determined that this proposed rule would not have a substantial, direct effect on the States or their political subdivisions or on the relationship between the Federal government and the States, or on the distribution of power or responsibilities among the various levels of government. The proposed rule relates solely to the method of determining Federal financial assistance that is, the method of determining the amount of section 8 assistance needed by a housing authority or project owner, based on the procedure for computing adjusted contract rent. This matter does not affect the States or their political subdivisions or the distribution of power or responsibilities among the various levels of government. Impact on the Family The General Counsel, as the Designated Official under Executive Order 12606, The Family, has determined that this proposed rule would not have a potential significant impact on family formation, maintenance, and general well-being, and thus is not subject to review under the order. No significant change in existing HUD policies or programs will result from promulgation of this proposed rule, as those policies and programs relate to family concerns. Regulatory Agenda This proposed rule was not listed in the Department's Semiannual Agenda of Regulations published on October 25, 1993 (58 FR 56402) under Executive Order 12866 and the Regulatory Flexibility Act. List of Subjects in 24 CFR Part 888 Grant programs housing and community development, Rent subsidies. Accordingly, 24 CFR part 888 would be amended as follows: PART 888 SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FAIR MARKET RENTS AND CONTRACT RENT ANNUAL ADJUSTMENT FACTORS 1. The authority citation for part 888 would continue to read as follows: Authority: 42 U.S.C. 1437c, 1437f, and 3535(d). 2. In  888.203, paragraph (b) would be revised to read as follows:  888.203 Use of contract rent automatic annual adjustment factors. * * * * * (b) The adjusted monthly amount of the Contract Rent of a dwelling unit shall be determined by multiplying the Contract Rent in Effect on the anniversary date of the contract by the applicable Automatic Annual Adjustment Factor (see paragraph (a) of this section) and rounding the result as follows: (1) If the result contains a fractional dollar amount ranging from $0.01 to $0.50, round to the next lower whole dollar amount; (2) If the result contains a fractional dollar amount ranging from $0.51 to $0.99, round to the next higher whole dollar amount. Dated: December 20, 1993. Nicolas P. Retsinas, Assistant Secretary for Housing Federal Housing Commissioner. [FR Doc. 93Ä31522 Filed 12Ä27Ä93; 8:45 am] BILLING CODE 4210Ä27ÄP