‘‘(1) IN
GENERAL.—Each assistance contract
entered into pursuant to this section shall establish
the maximum monthly rent (including utilities and
all maintenance and management charges) that the
owner is entitled to receive for each dwelling unit for
which rental assistance payments are to be made
under the contract. Except as provided in paragraph
(2), the maximum monthly rent shall not exceed by
more than 10 percent the fair market rental under
subsection (e) for the market area in which the
dwelling unit is located. If units assisted under this
section are exempt from local rent control while they
are so assisted or otherwise, the maximum monthly
rent for such units shall be reasonable in comparison
with other units in the market area that are exempt
from local rent control.
‘‘(2) EXCEPTION.—The maximum monthly rent
may exceed the fair market rental by more than 10
but not more than 20 percent, but only if the Sec-
retary determines that special circumstances warrant
such higher maximum rent or that such higher rent
is necessary to the implementation of a comprehen-
sive housing affordability strategy under section 105
of the Cranston-Gonzalez National Affordable Hous-
ing Act.
‘‘(3) ANNUAL ADJUSTMENTS.—Each assistance
contract shall provide for adjustment in the maxi-
mum monthly rents for units covered by the contract
not less than annually to reflect changes in the fair
market rentals established under subsection (e) for
the housing area for similar types and sizes of dwell-
ing units or, if the Secretary determines, on the
basis of a reasonable formula.
‘‘(4) ADJUSTMENTS DUE TO EXPENSES.—Each
assistance contract shall further provide for the Sec-
retary to make additional adjustments in the maxi-
mum monthly rent for units assisted under the con-
tract to the extent the Secretary determines such ad-
justments are necessary to reflect increases in the
actual and necessary expenses of owning and main-
taining the units that have resulted from substantial
general increases in real property taxes, utility rates,
or similar costs that are not adequately compensated
for by the adjustment in the maximum monthly rent
authorized by paragraph (3). The Secretary shall
make additional adjustments in the maximum
monthly rent for units under contract (subject to the
availability of appropriations for contract amend-
ments) to the extent the Secretary determines such
adjustments are necessary to reflect increases in the
actual and necessary expenses of owning and main-
taining the units that have resulted from the expira-
tion of a real property tax exemption.
‘‘(5) ADJUSTMENTS DUE TO CRIMINAL ACTIV-
ITY.—If the Secretary determines that a project as-
sisted under this section is located in a community
where criminal activity is generally prevalent and the
operating, maintenance, and capital repair expenses
for the project have been substantially increased pri-
marily as a result of the prevalence of such activity,
the Secretary may (at the discretion of the Secretary
and subject to the availability of appropriations for
contract amendments for this purpose), on a project-
by-project basis, provide adjustments to the maxi-
mum monthly rents, to a level not exceeding 120
percent of the project rents, to cover the costs of
maintenance, security, capital repairs, and reserves
required for the owner to carry out a strategy ac-
ceptable to the Secretary for addressing the problem
of criminal activity. The Secretary may waive the
applicability of any rent comparability standard re-
quired under this subsection to implement this para-
graph.
‘‘(6) ADJUSTMENTS
DUE
TO
LEAD-BASED
PAINT
REDUCTION
FOR
HOUSING
RECEIVING
PROJECT-BASED
ASSISTANCE.—The Secretary may
(at the discretion of the Secretary and subject to the
availability of appropriations for contract amend-
ments), on a project-by-project basis for projects re-
ceiving project-based assistance, provide adjustments
to the maximum monthly rents to cover the costs of
evaluating and reducing lead-based paint hazards, as
defined in section 1004 of the Residential Lead-
Based Paint Hazard Reduction Act of 1992.
‘‘(7) LIMITATIONS ON ADJUSTMENTS.—
‘‘(A) GENERAL
COMPARABILITY
RULE.—
Adjustments in the maximum rents under para-
graphs (3) through (6) shall not result in mate-
rial differences between the rents charged for
assisted units and unassisted units of similar
quality, type, and age in the same market area,
as determined by the Secretary.
‘‘(B) COMPARABILITY STUDIES.—
‘‘(i) To carry out subparagraph (A),
the Secretary shall issue regulations to
provide for conducting comparability stud-
ies for projects where the Secretary has
reason to believe that the application of the
formula adjustments under paragraph (3)
would result in such material differences.
The Secretary shall conduct such studies
upon the request of any owner of any
project, or as the Secretary determines to
be appropriate by establishing, to the ex-
tent practicable, a modified annual adjust-
ment factor for such market area, as the
Secretary shall designate, that is geo-
graphically smaller than the applicable
housing area used for the establishment of
the annual adjustment factor under para-
graph (3). The Secretary shall establish
such modified annual adjustment factor on
the basis of the results of a study con-
ducted by the Secretary of the rents
charged, and any change in such rents
over the previous year, for assisted units
and unassisted units of similar quality,
type, and age in the smaller market area.
Where the Secretary determines that such
modified annual adjustment factor cannot
be established or that such factor when ap-
plied to a particular project would result in
material differences between the rents
charged for assisted units and unassisted
units of similar quality, type, and age in
the same market area, the Secretary may
apply an alternative methodology for con-
ducting comparability studies in order to
establish rents that are not materially dif-
ferent from rents charged for comparable
unassisted units.
‘‘(ii) If the Secretary or appropriate
State agency does not complete and submit
to the project owner a comparability study
not later than 60 days before the anniver-
sary date of the assistance contract under
this section, the automatic annual adjust-
ment factor shall be applied. The Secretary
may not reduce the contract rents in effect
on or after April 15, 1987, for newly con-
structed, substantially rehabilitated, or
moderately rehabilitated projects assisted
under this section (including projects as-
sisted under this section as in effect prior
to November 30, 1983), unless the project
has been refinanced in a manner that re-
duces the periodic payments of the owner.
Any maximum monthly rent that has been
reduced by the Secretary after April 14,
1987, and prior to November 7, 1988,
for each area in the Federal Register with reason-
able time for public comment, and such fair market
rentals shall become effective upon the date of publi-
cation in final form in the Federal Register. Each
fair market rental in effect under this subsection
shall be adjusted to be effective on October 1 of each
year to reflect changes, based on the most recent
available data trended so the rentals will be current
for the year to which they apply, of rents for exist-
ing rental dwelling units, as the case may be, of var-
ious sizes and types in the market area suitable for
occupancy by families assisted under this section.
‘‘(3) CERTAIN AREAS.—The Secretary shall es-
tablish separate fair market rentals under this sub-
section for Westchester County in the State of New
York. The Secretary shall also establish separate fair
market rentals under this paragraph for Monroe
County in the Commonwealth of Pennsylvania. In
establishing fair market rentals for the remaining
portion of the market areas in which Monroe County
is located, the Secretary shall establish the fair mar-
ket rentals as if such portion included Monroe
County.
‘‘(f) AMOUNT
OF
MONTHLY
ASSISTANCE
PAY-
MENT.—