Housing Rental Rates Training for Tenants

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

2. Common Misconceptions

3. Common Misconceptions • “I shouldn’t have to pay rent. Housing should be included as a perk of the job I perform.” • False: Rents are established in accordance with Federal laws & regulations. Providing free rent is considered a pay subsidy & is strictly forbidden by law. • “My rent should be based on my pay grade.” • False: Rents are based upon the private rental market; Employee pay is not a consideration. • “My rent is unfair because my 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 • “I 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 is considered a pay subsidy & forbidden by law. • “My rent will 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.

5. Common Misconceptions • “There is a limit to how much my 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. • “My housing officer or manager can change my rent if I don’t like it.” • False: Housing officers or managers are not authorized to alter the rent. They can review your housing data to ensure it is correct, but the law prohibits them from arbitrarily lowering the rent. • “My rent will be frozen when there is a pay freeze in place.” • False: Rent is based on the private rental market, not an employee’s pay.

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”

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 • 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.]

10. 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)]

11. How is “Reasonable Value” Determined?Surveys

12. 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

13. Survey Regions

14. Survey Schedule

15. 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.]

16. 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

17. Market Rents vs. iQMIS Rents

18. Market Rents vs. iQMIS Rents

19. Who Determines Rents

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

21. 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

22. 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

23. 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

24. 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

25. Federal Agencies Using iQMIS

26. 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.]

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

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

29. How to Decipher Your Rent

30. 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

31. Rent Documents • Documents provided with new rent calculation (may vary depending upon agency) • Rent Computation Schedule • Tenant Rent Notice • Quarters Assignment Agreement (Lease) • Housing Inventory • Lead Based Paint Disclosure

32. Rent Formula Monthly Base Rental Rate (MBRR) +/ – CPI (Inflation) = CPI Adjusted MBRR – Administrative Adjustments + Utilities + Govt. Provided Appliances, Services, & Furnishings =Net Rent RENT COMPUTATION SCHEDULE

33. Rent Computation Schedule Survey being used; CPI being applied Date new rent will go into effect

34. Rent Computation Schedule MBRR Survey results; won’t change until new survey (every 4 yrs) CPI adjustment; changes every year Admin adjustments allowed for in A-45 if qualify Utilities, appliances & furnishings provided by Govt. Biweekly amount to be deducted from paycheck

35. 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

36. What Role Do I Play?

37. What can you do? • Review/ensure inventory is correct • Don’t assume data is correct; not all users have been trained • Familiarize yourself with A-45 and agency policy • Especially appeal procedures • Familiarize yourself with survey schedule • Effective dates of surveys • Take advantage of housing expertise • Ask questions; consult with your housing officer • Call your National Housing Officer • Visit our website - http://www.doi.gov/ibc/services/finance/quarters/tenant_faq.cfm • Tenant Brochure & Tenant Flyer • Call the DOI Quarters office

38. What can you do? • Appeal – Last Resort! • Agency specific policies • Request for Reconsideration must be filed first • 30-day deadline • Specific to A-45 • Lack of maintenance isn’t valid • Can only appeal survey results in year it is implemented • Cannot appeal CPI adjustment • Provide proof • Min 5 comps from NEC • Same housing type – house or apt or mobile home, similar size, with same number of bedrooms • Use the “Private Rental Market Survey” Form (OS-2000) as a guide (http://www.doi.gov/nbc/formsmgt/forms/OS-2000_2010.pdf)

39. What can you do?