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also be an influence upon the uncontrolled housing stock. As rent control influences the deterioration of controlled stock, that stock will come into competition with the poorer units among the uncontrolled stock. Thus it has the tendency to drive down rents on these units (and perhaps exacerbate tendencies toward disinvestment and eventual abandonment by landlords holding these properties).

Conversely, occupants of controlled units, willing to pay for higherquality housing, may elect to move out as their controlled unit is allowed to deteriorate. This, in turn, may drive up prices of the better quality dwellings among the uncontrolled stock. Fisher suggests, but offers weak evidence in support of the suggestion, that developers of new rental apartments will avoid competition with the artificially depressed rental levels of the lower-quality rent-controlled units by building for the top of the market. This trend is already evident in New York City.

These effects on the non-controlled stock have not been examined satisfactorily by the policy-related research on rent control, and hence there are no real findings of relevance here. It is striking, however, that all of the alleged effects of rent control upon the non-controlled stock are deleterious.

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In summary, even without taking into account possible effects of rent control upon non-controlled buildings, the policy-related research on rent control suggests that it is an exceedingly poor instrument for keeping

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housing available to those most handicapped in obtaining it. While the program has some of the distributive effects that it should have, it produces them at the cost of tremendous waste and considerable inequity. Moreover, by its broader effects it worsens the very problems which it is intended to

solve.

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One is led to wonder why rent-control programs enjoy any popularity, and why they are proposed from time to time as solutions to housing problems. Other programs seem better able to achieve the same goals and do so without the deleterious consequences of rent control. Virtually any form of demand subsidy perhaps accompanied by, and partially financed by, a tax upon possible "windfall gains" enjoyed by landlords should work better. One suspects that the popularity of rent control derives in large part from its political expediency. Landlords have fewer votes than tenants; the costs of rent control to the taxpayers in general are well hidden; myths of profiteering landlords make the program seem more equitable than it is, and the effects of the program upon the housing stock are not immediately apparent.

F. CONCLUSIONS

The research literature on housing codes and regulations, rent control aside, does not support firm policy conclusions. It does, however, invite some concluding thoughts on the policy implications of research in the very complex area of local controls, particularly on the interplay of regulations and housing costs. We discuss these implications and the research gaps they reveal in this concluding section.

Three Tire and Rubber Company Laptoned for ruletaking to deley the date of Standard No. 113

March 1, 1975, to March 3, 1975, to pri fration to the new labeling Ander A Ban-workday. The present luth 1, 1975, dale would require interI

work on Friday or Saturday front cranes to the Ure molds, white vitam 3, 1975, date vili permit those dopista tu made on Sunday, March 2, 1015.

Lafe the 1TRA does not encourage Els dos deles of Labeling require& colds that the short drlay Mtd in Pots case all not have a dant advens effect on motor veKorldly and that the change will aid the buplementation of the

dard. The effective date of Etanderd Ma 13 as a viole remains March 1, 175, ced tuts by be macted accordHet les renuirements on thet date. Error, compare with the 1 beling Purevrats of S65, Tire Marking, will O optional during the first 2 days of Hith, and conformity with S95 will sbs required on March 3, 1975. Fause of the frminence of the effecdate of the standard, and because Utthange in an effective date involves a tricor relation of a rule that will A have a signicant effect on motor

le safety, the National Highway To Efety Administration finds, for End causeshan, that nolics and public Procedure thereon are impracticable and tackcessary.

(103, 119, Pub. L. 89-363, 81 Stat. 718 (SC 1353, 1507); delegation of author: 444222157)

Ised on I ebruary 24, 1975.

JAMES B. GarGORY,
Administrator.

[P2 Doc 75-5197 Fed 2-24-75;2:07 pm]

Title 24-Housing and Urban Development
CHAPTER II-OFFICE OF ASSISTANT SEC-
DETARY FOR HOUSING PRODUCTION
AND MORTGAGE CREDIT FEDERAL
HOUSING COMMISSIONER (FEDERAL
HOUSING ADMINISTRATION), DEPART-
MENT OF HOUSING AND URBAN DE-
VELOPMENT

[Docket No. E-75-207]
PART 275-LOW RENT PUBLIC
HOUSING

Prototype Cost Limits; Nevada

In the ForAL REGISTER Fsued May 11544, (29 FR 17678), prototype per tchedides were published purfort to reelion 15(5) of the United Sites Housing Act of 1937. Consideration of sequent factual project cost est and rther information received from the Iteo Insuring Office and the Sen Faneiro Area Ofice indicates a Anotype per unit cost schedule should athed for the following Nevada pretatype cont areas; Elko, Fallon and Grupullo

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CHAPTER

Office. The oflce; were listed in our pubIcation of May 17, 1974 Accordingly, 26 CFR Part 275 is amended as follows:

1. On page 197704 delete the existing prototype costs for Chattanooga and substitute in lieu thereof the revised prototype per unit costs shown on the table set forth hereinafter, cutitied Prototype Per Unit Cost Schedule.

(Sec. 7(d) of Dept. of KUD ACA, U.S.C. 3535 (4)).

active date. This amendment is ective February 26, 1975.

DAVID M. DE WILCE, Acting Assistant SecreleryCommissioner.

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[PR Doc.75-5075 Filed 2-25-75;8:45 am]

IV-OFFICE OF ASSISTANT SECRETARY FOR HOUSING MANAGEMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SUBCHAPTER A-INSMICO MULTIFAMILY NOSING MANAGEMENT AND MORTGAGE SERVICING

[Docket No. R-75 3141 FART 403-LOCAL RENT CONTROL Interim Rule

The Department of Housing and Urban Development (HUD) has received numerous inquiries relating to the jurisdiction of local rent control boards over FHA Fritten cats, views or statements may projets. This has become an area of bed with the appropriate HUD Area erit concern to the Department, because Ore. The offres were listed in our pub-it he been determined that local rent

control is a significant factor in causing owners of FIA projects, especially subsidized projects, to default on their mortgage payments. The defaults are leading to a substantial number of mortgage insurance cloiras 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 pancr of a project financed by a and since each mortgage inrance claim mortgage insured by HUD may charge, typically requires the expenditure of several millions of dollars by the Department, IUD has an overriding Interest to

FEDERAL REGISTER, 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 13 for these reasons that the Department is adding to Charter IV of Title 21 a new Part 103, "Local Rent Control," that formally sets forth HUD's position

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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, 1UD will assert exclusive jurisdiction over the regulation of the rents of such a project when the delay or decision of a local rept control economic interest in the project.

pursuant to section 3 of the Unite States Housing Act of 1937. $403.6 Rental charges.

national interest to assert exclusive Ju The Department finds that it is in th risdiction over the regulation of the rent of subsidized projects with mortgang which it insures or holds. Therefore, th Department has determined to preem

on local rent control of FHA projects. Authority jeopardizes the Department's the entire field of rent regulation by loca

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 IUD and all HUD-owned projects. The rule also specifies procedures for handling cases where the local rent control board approves a lower maximum rent level than IIUD does.

This regulation is being adopted as an terin rule to be effective upen publication, because the Department considers it vital to aveld further mortgage insurance claims caused by local rent control restrictions. However, the Department invites interested persons to subint data, views, ond suggestions with respect to this rule and is providing 60 days in te of the usual 20 days in which to le comnunts. All clevant material received on or before April 25, 1975, will be cor:Rered before a Anal rule is adopted. Fiings should refer to the above Docket number and should be filed with the Rules Docket Cleck, Clace of General Counsel, Rooin 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 cxrmination by Interested persons.

The Department has determined that an Environmental Impact Statement is not required with respect to this rule. The Winding of Inapplicability is avallable for inspection at the above address, Tillo 24. Chapter IV is amended by adding Part 403 to real as follows:

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(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 regard to the existence or terms of a Project Servicing Handbook," without local rent control ordinance. The mortgacor 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 office any financial data that was supplied to the local board, but not previously furnished to HUD, along with the reasons why he belloves that BUD's eco

romte interes in the project is jopard

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(c) Upon reviewing all the inform317ften subred by the mortgagor, the local HUD olice shall promptly send a written report to the Ohice of Loan Management (HGD Central Office) and a copy to the Regional Otaer, if it deems the delay or decision of the local rent control board jeopardizes the Departinent's economic interest in the project and the local board will not modify its position to the satisfaction of the local HUD office.

(d) The Office of Loan Monegement shail promptly review the local HUD office's report and make a reccrimendation to the Ofice of General Counsel it it thinks that legal action in the matter is desirable. Such action will be dqlermined independently of any action taken by the mortgagor.

Subpert D-Subsidized fusted Projects $403.5 Applicability.

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This Subpart applies to ait projects
with morteages insured or held by HUD,
which reene a subsidy In the foria of:
(a) Literest reduction payment
ant to reellen 236 of the Nationel Hous-
ing Act; (b) below-market interest rates
purtant to action 221(d) (3) and (5)
of the Natioanl Moning Act; (c) rent
surdement payzocals pursuant to see-
tion 101 of the Morsing and Viban Le-
selcpcot Nter 1256; (d) clavet Town:

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rent control boards neting pursuant t state or local law as applied to subsidize. projects with mortgages which are in sured or held by HUD. $103.7 Procedures,

(a) The mortgagor shall be responsibl for notifying the local UD office whea ever a local rent control board! takes an action to prevent the mortgagor from inplementing increase.

a HUD-approved ren

(b) Upon receiving such notiñeation the local HUD office shall promptly con subject, as reficcted in this Subpart, to vey the Department's position en th the local rent control board. If the feca rent control board then fails to enprove the rent schedule approved by HUD, the local JUD oflice shall promptly notify the Ofice of General Counsel, the Ofice of Loan Management, and the Regional Office.

Subpart C-HUD-Owned Projects $493.3 Rental charges.

doba over the rents of all projects The Department has exclusive jurls

which it oans, irrespective of the exist ence or the terms of any local rent control ordinance.

$403.9

Proce Inces.

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FEDERAL REGISTER, VOL 45, NO. 39--WEDHUNDAY, FEBUARY 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
D. C. Public Interest Research Group

Greater Washington Central Labor Council, AFL-CIO
October 1, 1975

The City-Wide Housing Coalition, the Metropolitan Washington Planning &
Housing Association, the D. C. Public Interest Research Group, and the
Greater Washington Central Labor Council, AFL-CIO, have prepared a joint
statement for presentation to this subcommittee this morning.

Congress must not veto D.C. rent control. We are outraged at this threatened
Intervention of Congress in such critical local concerns, and so we make
this joint statement of protest.

I.

This

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. 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

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