Aspects of Section 8 Fair Market Rents for New Construction in Lancaster, Pennsylvania

CED-77-84: Published: Jun 16, 1977. Publicly Released: Jun 16, 1977.

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A review was made of the adequacy of documentation of the Department of Housing and Urban Development (HUD) to support the fair market rent schedules published in the Federal Register on April 6, 1976, for new construction and rehabilitation in Lancaster County, Pennsylvania.

In general, there was an absence of documentation supporting the April 1976 fair market rent determinations for the Lancaster area, and the reasonableness of rents cannot be readily determined. Area office officials relied on comparable market rent data from areas outside of Lancaster (particularly York County), and did not keep documentation supporting the rents that were established. Comparable units were available in Lancaster which could have been considered in determining fair market rents for some of the rental categories. Moreover, HUD's Philadelphia area office has approved rental assistance contracts for two current projects in Lancaster County, for which the rental rates established will exceed the section 8 rent limitation by some $2 million over the contract period, if contingency fees concerning the cost of financing are paid. Thirty other projects in eastern Pennsylvania may have the same problem.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HUD should: direct that fair market rent instructions be revised to require that adequate documentation be maintained in support of fair market rent determinations; emphasize to the Philadelphia area office the need to obtain and develop comparable rent data; immediately notify field offices that contingency fees be included in determining whether monthly rental assistance for particular projects exceeds the section 8 limitation; and determine the extent of approved projects that contain rents in excess of section 8 fair market rent limitation, and the recourse available to HUD.

    Agency Affected:

 

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