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119779 1 (1982-06-11)

handle is hein.gao/gaobacxup0001 and id is 1 raw text is: n (~UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON,. FILE COPY DSVS.OFILE DIVPSIO CO0MMUNITY AN SONOMI@ U Mr. E. S. Savas Assistant Secretqry for Policy Development and Research Department of Housing and Urban Development 119779 Dear Mr. Savas: Subject: Procedures for Adjusting Rents in the Section 8 Program Need Reexamination We have made a preliminary review of the procedures the Department of Housing and Urban Development (HUD) follows in mak- ing annual rent adjustments under its section 8 program. Our review indicated that present procedures are not sound and could be resulting in greater or lesser amounts being paid in rental sub- sidies than is justified. The problem stems from the way HUD uses data supplied by the Department of Labor's Bureau of Labor Statis- ties (BLS). The BLS data represents a nationwide sample of the rental costs used in developing the Consumer Price Index (CPI). Some of this data is not appropriate for HUD purposes without further refinement. We are recommending that HUD reexamine its procedures in cooperation with BLS and develop a more sound and supportable methodology for making rent adjustments. BACKGROUND Section 201 of the Housing and Community Development Act of 1974 (Public Law 93-383) authorizing the section 8 program states that section 8 rental assistance coztracts shall provide for adjustments annually, or more frequently, of the rents for units covered by the contracts. Such adjustments are to reflect changes in the fair market rentals in the housing area for similar types and sizes of dwelling units. The actgallows the Secretary of HUD to make necessary adjustments on the basis of a reasonable formula. HUD developed a formula approach to adjust section 8 rents and each year develops and publishes in the Federal Register annual rent adjustment factors for selected standard metropolitan statis- tical areas (SMSAs) and four census regions. Until the most recent factors were published, they were based on rent residential and fuel and other utilities components of the housing component of the CPI. For each SMSA and census region

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