Pirestone Tire and Rubber Company has petitioned for rulemaking to deley the cfective date of Standard No. 119 from March 1, 1975, to March 3, 1975, to permit a transition to the new labeling scheme on a non-workday. The present March 1, 1975, dale would require interruption of work on Friday or Saturday to effect changes to the tire molds, white a March 3, 1975, date will pernit those changes to be made on Sunday, March 2, 1975. While the NHTSA does not encourage requests for delays of labeling requiremenis, it concludes that the short delay requested in this case will not have a significant adverse effect on motor velicic safety and that the change will aid in the orderly implementation of the standard. The effective date of Standard No. 119 as a whole remains March 1, 1975, and tires may be marked according to the requirements on that date. However, compliance with the labeling requirements of S6.5, Tire Marking, will be optional during the first 2 days of March, and conformity with S6.5 will first be required on March 3, 1975. Pecause of the imminence of the effective date of the standard, and because this change in an effective date involves a minor relaxation of a rule that will not have a significant effect on motor vehicle safety, the National Highway Trafic Safety Administration finds, for good cause shown, that notice and public procedure thereon are impracticable and uneccessary. (Secs. 103, 119, Pub. L. 89-563, 80 Stat. 718 [Docket No. R-75-267] PART 275--LOW RENT PUBLIC HOUSING Prototype Cost Limits; Tennessee In the FEDERAL Registur İssued May 17, 1974, (33 FR 17679), prototype per mit cost schedules were published pursuant to section 15(5) of the United States Housing Act of 1937. Consideration of subsequent factual project cost data and other information received from the (15 U.S.C. 1392, 1407); delegation of author Knexillo Area Quita-didirales that co Ry at 49 CFR 1.51) Issued on February 24, 1975. JAMES B. GREGORY, [PR Doc.75-5197 Filed 2-24-75;2:07 pm] Tille 24-Housing and Urban Development CHAPTER 1-OFFICE OF ASSISTANT SEC.RETARY FOR HOUSING PRODUCTION AND MORTGAGE CREDIT FEDERAL HOUSING COMMISSIONER (FEDERAL HOUSING ADMINISTRATION), DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. R-75-267] PART 275-LOW RENT PUBLIC Prototype Cost Limits; Nevada In the FEDERAL REGISTER issued May 17, 1974, (39 FR 17678), prototype per unit cost schedules were published pursuant to section 15(5) of the United States Housing Act of 1937. Consideration of subsequent factual project cost data and other information received from the Reno Insuring Office and the San Francisco Area Office indicates a prototype per unit cost schedule should be established for the following Nevada prototype cost areas; Elko, Fallen and Gardnerville. Written data, views or statements may be filed with the appropriate HUD Area Office. The offices were listed in our pub tala prototype costs for Chattanooga, Tennessee published May 17, 1974, should bo revised. Written data, views or statements may be filed with the appropriate HUD Area Chattanooga, Te Detached and sidetached. Rew dwellings... Walk-up.. Elevator-structiud. Office. The onlces were listed in our pubEcation of May 17, 1974. Accordingly, 24 CFR Part 275 is amended as follows: 1. Ou page 17704 delete the existing prototype costs for Chattanooga and substitute in lieu thereof the revised prototype per unit costs shown on the table Ket forth hereinafter, entitied Prototype Per Unit Cost Schedule. (Sec. 7(d) of Dept. of HUD Act, U.S.C. 3535 (4)). Effective date. This amendment is effective February 26, 1975. DAVID M. DEWILDC, CHAPTER IV-OFFICE OF ASSISTANT SECRETARY FOR HOUSING MANAGEMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SUBCHAPTER A-INSURED MULTIFAMILY [Docket No. R-75-314] The Department of Housing and Urban Development (HUD) has received nunerous inquiries relating to the jurisdiction of local rent control boards over FHA projects. This has become an area of great concern to the Department, because it has been determined that local rent control is a significant factor in causing owners of FHA projects, especially subsidized projects, to default on their mortgage payments. The defaults are leading to a substantial number of mortgage insurance claims by mortgagees upon HUD and to the withdrawal from the nation's housing stock of an increasing number of units for low income families. Since HUD already regulates, pursuant to the National Housing Act, the maximum permissible rents that an mortgage insured by HUD may charge, owner of a project financed by a and since cach mortgage insurance claim typically requires the expenditure of several millions of dollars by the Department, HUD has an overriding Interest to FEDERAL REGISTLE, VOL 40, NO. 39-WEDNESDAY, FEBRUARY 26, 1975 8190 preempt state and local actions which contribute to such claims. Moreover, with respect to HUD-owned projects, they are property of the United States Government, and therefore not subject to local regulation. It is for these reasons that the Depart ment is adding to Charter IV of Title 24 8 new Part 103, "Local Rent Control," that formally sets forth HUD's position on local rent control of FHA projects. The rule essentially provides that the Department shall assert exclusive jurisdiction over the maximum rentals for unsubsidized projects with mortgages insured or held by HUD only when it deems that its economic interest in the project is jeopardized by the decision of the local rent control authority (or by a delay in making a decision). However, the Department has exclusive jurisdiction over the rents of all subsidized projects with mortgages Insured or held by IIUD and all HUD-owned projects. The rule also specifics procedures for handling cases where the local rent control board approves a lower maximum rent level than KUD does. This regulation is being adopted as an interim rule to be effective upen publication, because the Department considers it vital to avoid further mortgage insurance claims caused by local rent control restrictions. However, the Department invites interested persons to submit data, views, and suggestions with respect to this rule and is providing 60 days in le of the usual 30 days in which to le comments. All relevant inaterial received on or before April 25, 1975, will be considered before a final ruie is adopted. Filings should refer to the above Docket number and should be filed with the Rules Docket Clerk, Cifice of General Counsel, Room 10245, 451 Seventh Street, SW., Washington, D.C. 20419. Copies of the comments submitted will be available during business hours at the above address for examination by Interested persons. The Department has determined that an Environmental Impact Statement is not requited with respect to this rule. The Finding of Inapplicability is avallable for inspection at the above address, Title 24, Chapter IV is amended by adding Fart 403 to read as follows: Spart A-Uncabalized Insured Projects RULES AND REGULATIONS § 103.2 Rental charges. The Department will generally not interfere in the regulation by local rent control boards of rents of unsubsidized projects with mortgages insured or held by HUD. However, HUD will assert exclusive jurisdiction over the regulation of the rents of such a project when the authority jeopardizes the Department's delay or decision of a local rent control economic interest in the project. § 403.3 Procedures. (a) The local HUD office shall process a mortgagor's request for approval of increases in the maximum permissible rents pursuant to Part 401 of this Chapter and HUD Handbook 4350.1, "Insured Project Servicing Handbook," without regard to the existence or terms of a local rent control ordinance. The mortgagor should simultaneously submit a similar request to the local rent control board following the requirements of tho local jurisdiction. (b) The mortgagor is responsible for informing the local IUD Gee, if the rents for the project approved by the local board are lower than those approved by HUD, or if the board fails to act within a period of thirty (30) days following the filing of the application. Tho mortgagor shall furnish the local HUD ofce any financial data that was supplled to the local board, but not previously furnished to HUD, along with the reasons why he belloves that HUD's economic intercala the project is jeopardLed by the lonelimic w (c) Upen reviewing all the informathen submitted by the mortgagor, the local HUD ofice shall promptly send a written report to the Onice of Loan Management (HUD Central Ofice) and a copy to the Regional Oface, if it deems the delay or decision of the local rent control board jeopardizes the Department's economic interest in the project and the local board will not modify its position to the satisfaction of the local HUD office. (a) The Office of Loan Management shail promptly review the local HUD office's report and make a recommenda tion to the Office of General Counsel if it thinks that legal action in the inatter is desirable. Such action will be determined independently of any action taken by the racrigagor. Subpert D-Subsidized insued Projects $ 433.5 Applicability, This Subpart applies to all projects with mortgages insured or held by HUD, which receive a subsidy In the form of: (a) Literent reduction payments quesuant to recilen 235 of the National Housing Act; (b) below-market interest rates pursuant to section 221(d)(3) and (5) of the Natioanl Honding det; (e) rent Supplement payiocals pursuant to seetion tot of the Housing and Urban Developarcat Net of 1855; (d) cheeb loanz at below-wal.&fulent rebus paLTRANS to section fan of the Hosting Act of 1959; wad (e) hosting asslotenec pas ments (a) The mortgagor shall be responsible for notifying the local HUD office whenever a local rent control board takes any action to prevent the mortgagor from inplementing a HUD-approved rent increase. (b) Upon recelving such notification, the local HUD office shall promptly convey the Department's position on this subject, as reficcted in this Subpart, to the local rent control board. If the local. rent control board then fails to approve the rent schedule approved by HUD. the the Ofice of General Counsel, the Office local JiUD ollice shall promptly notify of Loan Management, and the Regional Office. Subpart C-1UD-Owned Projects § 493.3 Rental charges. The Department has exclusive jurisdellen over the rents of all projects which it cans, irrespective of the existence or the terms of any local rent control crdinance. $403.9 Procedures. Whenever a local reut control board takes any action to prevent the Department from implementing a rent increase, the local HUD ofcehall promptly convey the Department's position on this subject to the local rent contrel board. If the local rent control board then fails CD, the local 100 once shall promptly to approve the rent schedule instituted by notify the Office of General Couns. 1, the Office of Loan Management, and the Reclonal Ofice. Effective date. This amendinent is effective February 26, 1975. I. . CRAWFORD, FR Doe.75--5073 Fited 2-21-75;12:18 pa FEDERAL REGISTER, VOL 15, NO. 39--WEDPONDAY, FEBRUARY 26, 1975 STATEMENT PRESENTED TO HEARINGS BEFORE THE SUBCOMMITTEE ON COMMERCE, HOUSING, AND TRANSPORTATION OF THE HOUSE DISTRICT COMMITTEE By City-Wide Housing Coalition Metropolitan Washington Planning & Housing Association Greater Washington Central Labor Council, AFL-CIO The City-Wide Housing Coalition, the Metropolitan Washington Planning & Congress must not veto D.C. rent control. We are outraged at this threatened I. First of all, we protest this kangaroo-court-type hearing. Your witness list demonstrates utter disregard for the rights and protection of the seventy-five percent (75%) of D. C.'s residents who rent their homes. This is no representation of the District of Columbia. Where are the 600,000 tenants in the city? Only our four housing/public interest groups were notified of these hearings just last week. And our efforts to have a more representative witness list were rejected under the guise of time limits. With only sparse representation of tenants and tenant unions on the one hand, and this largely white, suburban set of non-residents from the real estate and business community on the other, we must call this "hearing" for what it is a sham. The inclusion of real estate profiteers who care nothing for the well-being of tenants, and of financial institutions who have guaranteed urban deterioration in D.C. through their racist redlining practices, are examples of the shallow and unjust farce you have here today. II. Secondly, we must go on record to strenuously oppose any such intervention by Congress in D. C. matters which are not sufficiently in the Federal interest. What legitimate Federal interest does Congress have in rent control? Clearly, you have none. We are fully aware that by granting only limited home rule instead of statehood, Congress intended to afford D. C. citizens only a form of participatory colonialism. But this plantation mentality must end! The intensive work of numerous community groups and the City Council over the past nine months must not be overlooked nor overthrown. Two public hearings, extensive research by community groups, a round-table dialogue with the City Council, landlords, and tenants, and daily lobbying, debates, and deliberations, all underline the amount of work and energy put into - 2 this most important legislation. But now, despite this overwhelming concentration of work by landlords and tenants through the legitimate legislative process of deliberation, landlords deceptively come crying to Capitol Hill for special favors. But tenants have not come pleading for extra-legislative favors, even though many tenants also felt sold out by the City Council's capitulation to the Mayor's veto and the Council's adoption of so many pro-landlord compromises. The ultimate outcome of D. C.'s rent control law is a greatly watered-down version which is literally filled with pro-landlord loopholes, because of the threats, bluffs, and lies of landlord special interest groups, and precisely so that Congress would not be upset so as to insure elimination of any possibility of a Congressional veto. (As you know, the Council weakened its professional tax provision last week to help overcome a Congressional veto. But what you also should know is that the City Council, with the Mayor, already significantly weakened the rent control law before its final passage for precisely the same reason.) It is simply unthinkable for Congress now to capitulate to the inappropriate and unjustified demands for special favors by the city's absentee landlords and their expedient Congressmen, while denying the democratic process of the local home rule government and the severe housing and economic needs of seventy-five percent of our city's residents. We don't see you threatening to veto rent control in Boston, or in Cambridge, or in New York City, or in Montgomery County, Md., or in Prince Georges County, Md., or in any of the other cities in the country who have some form of rent control. And there's a good reason why not--because it would make a mockery of the democratic process. And just so, in this year preceeding the nation's Bicentennial, we submit that this threatened veto itself mocks the basic principles of democracy and justice. III. Finally, we address the rent control legislation itself. As we have said, the Rental Accomodations Act of 1975 is already a weakened bill in terms of the protections afforded tenants. During the City Council's deliberations on the bill, tax benefits were removed from the income side of the rate of return formula and a fictional 2% depreciation "expense" was included. Furthermore, the Council was pressured by landlords to use assessed market value in the denominator of the formula as opposed to built-up equity, or the landlord's actual investment in the property. This allows landlords to earn a return on the full value of the property rather than on his actual investment. Finally, the Mayor's veto caused further weakening of the bill by raising the rate of return floor from 7% to 8% and by pushing the automatic rent increase figure from 4% to 5%. The District of Columbia needs strong rent control if the racial and economic heterogeneity of its people is to be maintained. This is the way the Housing and Urban Development Committee of the previous City Council described the state of housing in D.C. only six years ago in a special report: "A large portion of the District's housing stock is characterized by appalling maintenance both in private and public sectors; an extreme 3 shortage of accomodations for low income families, particularly those with four or more members; spiralling rents that place even inadequate housing beyond the reach of many families; and predatory landlord practices that degrade the dignity of low-income families." Specifically, the housing market in D.C. is currently characterized by the following: a vacancy rate of less than 2%, well below the 5% figure considered as a crisis. Overcrowding: 14.9% of the units in D.C. were overcrowded, according to the 1970 Census, compared with 5.4% and 4.6% of the units in the urbanized areas of Maryland and Virginia respectively. Rent as percentage of income: 39.6% pf D.C. tenants pay more than 25% of income for rent. By income group, the 1970 Census showed that low income D.C. residents paid more than 35% of their incomes for rent. Inflation is devastating the everyday folks of this city, and tenants simply cannot afford the rent gouging of an uncontrolled market. The Apartment and Office Building Association of Metropolitan Washington (AOBA) has conducted two income expense analyses in the last nine months which can shed tremendous light on the effect of rent control on the rental housing market, if honestly analyzed. Contrary to the dishonest public outcry of landlords, their first study (January, 1975) actually showed that a little more than 60% of the landlords had in fact increased their margins of profit under rent control (when carefully reviewed by an economist who works here on the Hill). The second study (September, 1975) reveals that the 12.32% increase allowed under the old bill (74-20) was almost adequate to fully recover cost-increases for the average landlord through the end of August. The 5% increase allowed for most landlords under the new bill you are now considering will again allow landlords to increase their profits over the next two years. More important, the second study showed a large discrepancy among landlords. While some landlords experienced declining profit margins over the past two and a half years, many others have had tremendous increases. Among twelve randomly selected buildings we examined, six experienced increasing profit margins, one by as much as $36,000 over the two year period. The large variation in increases in income and expenses is the basis for our support of the general rate-of-return approach to rent control. This form of rent control considers each landlord's situation individually and grants automatic increases only to those who need it based upon their rates of return. This approach is much fairer to landlords and tenants, for tenants can then be assured that, for the most part, any rent increases they must pay are not simply giving their landlords windfall profits. We do not Finally, we do not take a naive approach to housing or economics. consider rent control the ultimate solution to the housing problems of the city. Indeed, we are working vigorously for a comprehensive housing plan for D.C. However, strong rent control is absolutely necessary to make an emergency housing situation barely tolerable. Rent control must not be vetoed or weakened through Congressional intervention; for to kill rent control would be literally tragic for thousands and thousands of D.C. citizens. |