Housing Rental Rates Training for Managers & Supervisors

1. Housing Rental Rates Training for Managers & Supervisors U.S. Department of the Interior Doug Pokorney, Quarters Program Manager Laura Walters, Quarters Program Specialist Denver, Colorado

2. Common Misconceptions

3. Common Misconceptions • “Rents can be altered or not applied to help my employees out.” • False: Rents are established in accordance with Federal laws & regulations. Any lowering or non-collection of rent is considered a pay subsidy & thus forbidden by law. • “Rents are based on the Govt. maintenance costs or employee’s pay grade.” • False: Rents are based upon the private rental market; Govt. costs or employee pay is not a consideration. • “Rents are unfair because our housing is so isolated, or in such bad shape, or is so old, or doesn’t have good water, or…” • False: Rents are adjusted for many variables such as type, size, condition, age, isolation, and/or general lack of amenities.

4. Common Misconceptions • “Employees shouldn’t have to pay for utilities or any Govt.-provided appliances, services or furnishings.” • False: Tenants are to be charged for everything provided to them at the housing unit. Not charging for something that is a personal living expense is considered a pay subsidy & forbidden by law. • “Rents don’t have to be collected from certain individuals such as volunteers, students, contractors, VIPs, staff on travel, etc.” • False: There is no free rent. Rent is to be collected for every night occupied & may require a different method than payroll deduction. For example, the benefitting program should be paying for volunteers. Other methods would include MOUs, contracts, withholding of lodging portion of travel per diem, Interagency agreements, etc.

5. Common Misconceptions • “Rents should never change.” • False: Federal regulation requires rents to be updated every year for inflation & at least every five years with a new private rental market assessment. • “There is a limit to how much a rent can increase.” • False: There is nothing in the Federal regulations that limits how much rent can increase, just as there is nothing that limits increases in the private rental market. • “Rents can be changed to help with recruiting new employees or increase the occupancy of our housing.” • False: Federal regulation strictly prohibits using rents as a recruiting tool or to encourage occupancy of housing. Lowering the rent would be considered a pay subsidy which is forbidden by law.

6. How are Rents Established?Laws & Regulations

7. The Law - 5 USC 5911 • Authority for Government agencies to provide quarters • Rental charges must be based upon the “reasonable value” • Rents and charges for quarters shall be deposited in a special fund (applies only to Department of the Interior, U.S. Forest Service, & Indian Health Service)

8. The Regulation - OMB Circular A-45 http://www.whitehouse.gov/omb/circulars • Purpose: “This circular sets forth policies and administrative guidance…in establishing…rental rates and other charges for Government-furnished or leased quarters...according to 5 USC 5911.” [A-45, 1.] • Coverage: Applies to all civilian Government rental quarters located within the 50 states, Washington D.C. and the U.S. territories. [A-45, 1.]

9. The Regulation - OMB Circular A-45 • Reliance on Private Housing Market: “It is the Policy of the federal government to rely on the private housing market to provide housing for its civilian employees.” [A-45, 5. a.]

10. The Regulation - OMB Circular A-45 • Subsidies, Inducements Prohibited: “Rents and other charges may not be set so as to provide a housing subsidy, serve as an inducement in the recruitment or retention of employees, or encourage occupancy of existing government housing.” [A-45, 5. b) 2.]

11. The Regulation - OMB Circular A-45 • Reasonable Value: “…charges for rent and related facilities should be set at levels equal to those prevailing for comparable private housing in the same area…” [A-45, 5. b) 1.] “Reasonable value is … what an employee would pay for comparable housing in the open market.” [A-45, 6. h)]

12. How is “Reasonable Value” Determined?Surveys

13. The Regulation - OMB Circular A-45 • “The determination of reasonable value…will be based upon an impartial study of comparable private rental housing.” [A-45, 7.a)] • Must be studied at least every five years [A-45, 7.d (1) (a)] • Two methods: Appraisal or Regional Survey [A-45, 7.a)] • OMB prefers Surveys: “While both methods are accurate, agencies are encouraged to utilize the survey method whenever possible due to the costs & administrative burdens associated with conducting individual appraisals.” [A-45, 7.a] • DOI Quarters program uses Surveys

14. Survey Regions

15. Survey Schedule

16. The Regulation - OMB Circular A-45 Nearest Established Community (NEC): • Closest community • Population of 1,500 (5,000 in Alaska) as of last U.S. Census (2010), and • A doctor and dentist, and • A private rental market available to the general public [A-45, 6. f.]

17. Survey and Data Analysis • Develop sampling plans • Collect private rental data • Review market data; cull outliers • Run statistical regression • Produce new rent formulas • Test rent formulas against comps • Ensure rents meet “reasonable value” test • Publish results in Regional Survey Report • Code new rent formulas into iQMIS

18. Rent Formula Monthly Base Rental Rate (MBRR) Survey results +/ – Inflation (CPI) Annual OMB Mandate = CPI Adjusted MBRR – Administrative AdjustmentsOMB Authorized + Utilities Survey results adjusted w/ annual CPI + Govt. Provided Appliances, Services, Furnishings adjusted w/ annual CPI =Net Rent

19. Annual Rent Changes 2002: $500 - New Survey Single Year CPI 2003: $519 - CPI ($500 + $19) +$19 2004: $543 – CPI ($500 + $19 + $24) +$24 2005: $562 – CPI ($500 + $19 + $24 + $19) +$19 2006: $700 - New Survey 2007: $720 – CPI ($700 + $20) +$20 2008: $743 – CPI ($700 + $20 + $23) +$23 2009: $772 – CPI ($700 + $20 + $23 + $29) +$29 2010: $750 - New Survey 2011: $760 – CPI ($750 + $10) +$10 2012: $770 – CPI ($750 + $10 + $10) +$10

20. Rent Effective Dates • “The new rates shall be effective at the beginning of the first pay period that starts on or after March 1 of each year. [A-45, 7. d) 2.] • 2013: March 10, 2013 • 2014: March 9, 2014 • 2015: March 8, 2015 • 2016: March 6, 2016

21. Market Rents vs. iQMIS Rents

22. Market Rents vs. iQMIS Rents

23. Who Determines Rents

24. Participants • Department of Interior Quarters Program • Agencies with housing

25. DOI Quarters Program • Developed early 1980s • Comply with A-45 • Required DOI Bureaus to Utilize • Offered to other Agencies • Economies of Scale • Uniform rates across Agencies

26. DOI Housing Policy Office • Michael Wright Phone: 202-254-5522 E-mail: Michael_C_Wright@ios.doi.gov • DOI Housing Management Policy, 400 DM 3 http://www.doi.gov/pam/property.html • Decisions on DOI Housing Policy issues • Central point of contact with OMB • Clearinghouse for iQMIS rent appeals within DOI

27. DOI Housing Operations Office • Doug Pokorney, Quarters Rental Program Manager Phone: 303-969-5050 E-mail: dpokorney@nbc.gov • Laura Walters, Quarters Program Specialist Phone: 303-969-5696 (iQMIS Help Desk) Fax: 303-969-6634 E-mail: lwalters@nbc.gov Or E-mail: nbc_iqmis_sys_mgr@nbc.gov Web: http://www.doi.gov/ibc/services/finance/quarters/index.cfm

28. DOI Housing Operations Office • Establish rental rates that comply with A-45 • Survey/analyze private rental markets (3 or 4 regions annually, out of 15 total regions) • Compute CPI adjustments annually • Provide rent-setting system (iQMIS) • Provide Help Desk support • Conduct training • Defend rental rates

29. Federal Agencies Using iQMIS

30. Federal Agencies Responsibilities • Appoint National Housing Officer • Devise policy/procedures to implement A-45 • Supervise/monitor A-45 is being met • Provide process for rent appeals • Ensure tenants do not set rental rates [A-45, 9.]

31. National Housing Council Responsibilities • Reviews Survey schedule • Approves iQMIS change requests • Reviews/approves program changes • Clearinghouse for common housing issues

32. National Housing Council Responsibilities • Reviews Survey schedule • Approves iQMIS change requests • Reviews/approves program changes • Clearinghouse for common housing issues

33. What is my role as a manager?

34. What can you do? • Support your housing officer! • They are caught in the middle between tenants & the law • Don’t ask them to change the rents and violate A-45 – they can’t! • Review/ensure inventory is correct • Don’t assume data is correct; high turnover/inherited data • Errors in the data may be providing a subsidy • Familiarize yourself with A-45 and agency policy • Especially appeal procedures; time sensitive • Familiarize yourself with survey schedule • Effective dates of surveys

35. What can you do? • Educate tenants • Set expectations that rent will change every year • Prepare for rent changes; be proactive • Conduct tenant meetings • Review appeal process • Take advantage of housing expertise • Ask questions • Call your National Housing Officer • Call the DOI Quarters office • Visit our web site: http://www.doi.gov/ibc/services/finance/quarters/index.cfm