U.S. Department of Housing and Urban Development

PUBLIC AND INDIAN HOUSING

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Special Attention of: Notice PIH 95-68 (IHA)

Indian Housing Authorities;

Administrators, Offices of Issued: November 13, 1995

Native American Programs Expires: November 30, 1996

Cross References:

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Subject: Calculating Ceiling Rents in the Indian Housing Rental Program;
Use

of Actual Debt Service

1\. PURPOSE. This Notice provides guidance on how to obtain and use
actual

debt service amounts to calculate ceiling rents in the Indian Housing

Rental Program. It also extends Notice PIH 89-21 (HUD), \"Ceiling Rents

in Indian Housing Authority Rental Programs,\" (Ceiling Rent Notice)

issued April 28, 1989, for a period of one year from the date this

Notice is issued.

2\. BACKGROUND. The Ceiling Rent Notice prescribes procedures under
which

the Area Offices of Native American Programs (AONAP) can review and

approve ceiling rents. Subsequently, through a Notice published in the

Federal Register on December 16, 1991 (56 FR 65274), the Department

withdrew authority for the AONAPs to approve ceiling rents, reserving

that authority to the Assistant Secretary for Public and Indian Housing.

Following publication of the Ceiling Rent Notice, many Indian Housing

Authorities (IRA) contacted the AONAPs and Headquarters requesting that

the method for calculating the statutory minimum ceiling rent, which is

based on imputed debt service and operating expenses, be changed. They

asserted that the use of imputed debt, rather than actual debt service,

resulted in ceiling rents that exceeded the rental value of similar

unassisted rental units and were therefore too high to be of benefit to

working families.

The Department has determined that the legislative history of Section

102(a) of the Housing and Community Development Act of 1987 reveals that

Congress was concerned with easing the burden of high rents on working

families. A primary purpose of enacting ceiling rents was to provide an

incentive for working families to remain in public and Indian housing

developments, where such families can act as role models within the

community.

PI: Distribution: W-3-1, W-2(H), R-9, 138-7

2

In response to these requests, and in an effort to implement

Congressional intent, the Department has reviewed its policy and

determined that the use of imputed debt was not required by Section

102(a).

3\. IMPLEMENTATION. This Notice extends the Ceiling Rent Notice for a

period of one year from the date this Notice is issued and revises it in

the following way: The Department has determined that actual debt

service, rather than muted debt service, shall be used. In addition,

the debt service calculation will not include grant funding.

IHAs should contact the AONAP to obtain actual debt service figures.

All other procedures contained in the Ceiling Rent Notice remain the

same, with the exception that requests to implement ceiling rents will

be reviewed by the AONAPs and forwarded to Headquarters, Office of

Native American Programs, for approval by the Assistant Secretary for

Public and Indian Housing.

Kevin Emanuel Marchman

Deputy Assistant Secretary for

Distressed and Troubled Housing Recovery