U.S. Department of Housing and Urban Development

Office of Housing

Special Attention of: Notice H 98-3 (HUD)

State Coordinators; Director of

Housing; Director,

Multifamily Housing Division; Issued: 23 January 1998

Multifamily Asset Expires: 31 January 1999

Management and Development Branch

Chiefs; Contract Administrators; Cross References:

Owners and Managers of Projects with

Expiring Section 8 Contracts

Subject: ANNUAL ADJUSTMENT FACTORS (AAF)

This notice announces the extension of statutory rent adjustment

procedures for Section 8 projects that use the HUD-published Annual
Adjustment Factors (AAF) for adjustment of the contract rent.

These procedures concern (1) the application of comparability to rent

adjustment for Section 8 new construction and substantial rehabilitation
projects; and (2) rent adjustment for non-turnover Section 8 units (for
Section 8 new construction and substantial rehabilitation projects, loan
management (LMSA) projects, property disposition (PD) projects, and
renewal or extension projects). The procedures do not apply to rent
adjustments for the Section 8 Moderate Rehabilitation Program or the
Project-based Certificate (PBC) program.

The Section 8 rent adjustment requirements were originally enacted in
the HUD appropriation for Fiscal Year 1995, and were subsequently
extended through FY 1997 (amendments of 42 U.S.C. 1437f (c)(2)(A)). HUD
issued a series of notices implementing the statutory adjustment
requirements through FY 1997 (H 95-12 , H 9714). The Congress has
enacted legislation that extends the Section 8 adjustment requirements
beyond 1997, as permanent law. The HUD appropriation for FY 98 provides
that the amendments of Section 1437f(c)(2)(A) are effective through FY
1998 (P.L. 10565, 111 Stat. 1344, 1364, approved October 27,1997);
Administrative Provisions Section 201(c)(1) and (c)(2)).

The Balanced Budget Act of 1997 provides that these amendments are in
effect through FY 1999 and thereafter (P.L. l05-33, Section 2003 and
2004, 111 Stat. 251, approved August 5, 1997).

HMMM: Distribution: W-3-1, R-1,R-2,R-3-1 (H) (RC)
R-3-2,R-3-3,R-6,R-6-2,R-7, R-7-2,R-8

2

This Notice applies to Section 8 rent adjustments for HAP anniversary

dates from October 1, 1997 until further notice by HUD.

Since the law is now permanent, HUD hereby extends indefinitely, until

further notice, Housing Notice 97-14 , which describes procedures for

implementing statutory Section 8 adjustment requirements concerning

comparability for Section 8 new construction and substantial
rehabilitation

projects, and requiring reduced adjustments for non turnover units.

Notice H-97-14 shall apply to the calculation of rent adjustments for

Section 8 contract anniversaries on and after October 1, 1997 (as well
as adjustments prior to that date). The adjustments for a HAP contract

anniversary date shall be calculated using the AAF factors published in
the Federal Register (Table 1 or Table 2) in effect at the HAP contract

anniversary.

If you have any questions regarding this notice, please contact Peter

Giaquinto at (202) 708-4162, or your desk officer in the Operations
Division.

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner