Reports and guidance documents; availability, etc.: Cost-of-living allowances (nonforeign areas) survey reports— Caribbean and Washington, DC, areas,

[Federal Register: August 4, 2005 (Volume 70, Number 149)]

[Notices]

[Page 44978-44989]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr04au05-92]

[[Page 44978]]

OFFICE OF PERSONNEL MANAGEMENT

2002 and 2003 Nonforeign Area Cost-of-Living Allowance Survey Report: Revised Shelter Analyses

AGENCY: Office of Personnel Management.

ACTION: Notice.

SUMMARY: This notice publishes revised shelter (rent) analyses relating to the ``2002 Nonforeign Area Cost-of-Living Allowance Survey Report: Caribbean and Washington, DC, Areas'' and the ``2003 Nonforeign Area Cost-of-Living Allowance Survey Report: Alaska and Washington, DC, Areas.'' The Federal Government uses the results of surveys such as these to set cost-of-living allowance (COLA) rates for General Schedule, U.S. Postal Service, and certain other Federal employees in Alaska, Hawaii, Guam and the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. This notice explains the revised shelter analyses adopted by the Office of Personnel Management based on additional research undertaken after the publication of these two reports.

DATES: Comments on this report must be received on or before October 3, 2005.

ADDRESSES: Send or deliver comments to Donald J. Winstead, Deputy Associate Director for Pay and Performance Policy, Strategic Human Resources Policy Division, Office of Personnel Management, Room 7H31, 1900 E Street, NW., Washington, DC 20415-8200; fax: (202) 606-4264; or e-mail: COLA@opm.gov.

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838; fax: (202) 606-4264; or e-mail: COLA@opm.gov.

SUPPLEMENTARY INFORMATION: Section 591.229 of title 5, Code of Federal Regulations, requires the Office of Personnel Management (OPM) to publish nonforeign area cost-of-living allowance (COLA) survey summary reports in the Federal Register. On February 9, 2004, OPM published the ``2002 Nonforeign Area Cost-of-Living Allowance Survey Report: Caribbean and Washington, DC, Areas'' at 69 FR 6020. On March 12, 2004, OPM published the ``2003 Nonforeign Area Cost-of-Living Allowance Survey Report: Alaska and Washington, DC, Areas'' at 69 FR 12002. Since publishing the results of these surveys, OPM has adopted a new methodology for calculating rent indexes. This notice describes the new methodology, the effect on the rent indexes, and the effect on the final indexes.

New Shelter (Rental) Analyses

OPM developed a new methodology for analyzing rental prices in consultation with the Survey Implementation Committee (SIC) and Technical Advisory Committee (TAC). The SIC and the TAC were established pursuant to the settlement of Caraballo, et al. v. United States, No. 1997-0027 (D.V.I.), August 17, 2000. The SIC advises and assists OPM in the implementation of the new COLA methodology to which the parties agreed. The SIC consists of five plaintiffs' representatives from the COLA areas and two OPM representatives. The TAC consists of three economists who have expertise in living-cost measurement. The TAC performs research for and advises the SIC.

As described in the 2002 and 2003 survey reports, OPM hired a contractor, the Center of International and Interarea Comparisons (CIIC), to analyze the housing data and estimate relative rental rates and rental indexes. CIIC is well-known for its work in international price comparisons, and one of its co-directors of research is a member of the TAC. CIIC consulted closely with the TAC and the SIC in analyzing the rental survey results.

As noted in both the 2002 and 2003 survey reports, the TAC recommended that OPM review the issue of which rental equation to use and how to choose among equations as additional rental data become available. OPM agreed to do this. As OPM acquired more rental data and more experience analyzing these data, it became apparent that the hedonic regressions (a form of multiple linear regression) used in the 2002 and 2003 analyses could be improved.

Therefore, in consultation with the SIC and TAC, OPM recomputed the rent indexes for the 2002 Caribbean and 2003 Alaska surveys. Table 1 below shows the new rent indexes. Appendix 1 shows the regression equation in SAS code and the regression results for the 2002 Caribbean survey. (SAS is a proprietary statistical analysis computer software package.) Appendix 2 shows the regression equation in SAS code and the regression results for the 2003 Alaska survey.

Table 1.--Rent Indexes

Previous New rent Area

rent index index

Puerto Rico...................................

65.52

70.89 St. Croix, USVI...............................

67.50

71.71 St. Thomas/St. John, USVI.....................

84.22

88.63 Anchorage, Alaska.............................

86.06

89.99 Fairbanks, Alaska.............................

78.84

79.96 Juneau, Alaska................................

92.91

91.68 Washington, DC, Area.......................... *100.00 *100.00

* By definition, the index of the base area is always 100.00.

New COLA Indexes

Once OPM computed new rent indexes, it became necessary to compute new final overall COLA indexes because these indexes would have changed compared with those OPM published with the 2002 and 2003 survey reports. Table 2 shows the new final indexes. Appendix 3 shows the derivation of the Caribbean final indexes. Appendix 4 shows the derivation of the Alaska final indexes.

[[Page 44979]]

Table 2.--Final Living-Cost Indexes

Previous New final Area

final index index

Puerto Rico................................... 103.60 105.10 U.S. Virgin Islands........................... 121.44 122.84 Anchorage, Alaska............................. 112.63 113.79 Fairbanks, Alaska............................. 115.26 115.61 Juneau, Alaska................................ 118.34 118.03 Rest of the State of Alaska................... 134.80 136.00

Office of Personnel Management. Linda M. Springer, Director.

Appendix 1--2002 Caribbean Survey Hedonic Rental Data Equations and Results

data temp; set opm.dcprvi; survey--area = `XX'; location = substr(compnumber,1,1); if location = `A' then survey--area = `SC'; if location = `B' then survey--area = `ST'; if location = `C' then survey--area = `PR'; if location = `D' then survey--area = `DC'; *Q1 yrbuilt; age = 2002 - yrbuilt; agesq = age*age; if age = 200 then delete; sqsqspace = sqfootage*sqfootage; baths = fullbaths + halfbaths*.5 + threeqtrbaths*.75; Extrnl--Cond = 0; if extrcond = `A' then Extrnl--Cond = 1; *(Good); Neighbor--Cond = 0; if neighcond = `A' then Neighbor--Cond = 1; *(Desirable); hasgarage = 0; if garage in (`A' `B' `C') then hasgarage = 1; *(Yes); Dup--Apartment = 0; if unittype in (`B' `C' `E' `F' `H') then Dup--Apartment = 1; *(Duplex, Triplex, Walkup, In-home, or other apartmnt); Highrise = 0; if unittype = `G' then Highrise = 1; *(high rise apartment); Detached--Town = 0; *if unittype in (`A' `D') then Detached--Town = 1; *(Detached, Townhouse, Row House); *omitting the above makes it the base condition; SqftXDup--Apartment = 0; if unittype in (`B' `C' `E' `F' `H') then SqftXDup--Apartment = sqfootage; SqftXHighrise = 0; if unittype = `G' then SqftXHighrise = sqfootage; SqftXDetached--Town = 0; if unittype in (`A' `D') then SqftXDetached--Town = sqfootage; sqfootagesq = sqfootage* sqfootage; hasclothesdryer = 0; if cldryer = `Y' then hasclothesdryer = 1; hasdishwasher = 0; if dishwasher = `Y' then hasdishwasher = 1; hasmicrowave = 0; if microwave = `Y' then hasmicrowave = 1; hassecurity = 0; if gated = `Y' or accessctl = `Y' or guards = `Y' or alarms = `Y' then hassecurity = 1; ExceptionalView = 0; If excview = `Y' then ExceptionalView = 1; St--Croix = 0; if survey--area = `SC' then St--Croix = 1; St--Thomas = 0; if survey--area = `ST' then St--Thomas = 1; Puerto--Rico = 0; if survey--area = `PR' then Puerto--Rico = 1; Wash--DC = 0; *** if survey--area = `WA' then Wash--DC = 1--Omitting this makes DC the base area; lrent = log(rent); PROC REG DATA = temp; MODEL lrent = SqftXDup--Apartment SqftXHighrise SqftXDetached--Town

sqfootagesq age agesq baths bedrooms Dup--Apartment Highrise

Neighbor--Cond hasclothesdryer hasdishwasher hasmicrowave

Extrnl--Cond hassecurity ExceptionalView

St--Croix St--Thomas Puerto--Rico; TITLE `2002 Caribbean Rental Data--Revised Rental Analyses Federal Register Model'; RUN;

2002 Caribbean Rental Data--Revised Rental Analyses Federal Register Model [The REG procedure model: MODEL1 dependent variable: lrent]

Number of Observations Read..................................... 1599 Number of Observations Used..................................... 1599

Analysis of variance

Sum of Source

DF squares Mean square F Value Pr > F

Model............................................... 20 345.01809 17.25090 388.32 Variable

DF estimate

error t Value [bond]t[bond]

Intercept...................................... 1 6.16053 0.07083

86.97 F

Model............................................... 22 216.72733 9.85124 393.42 Variable

DF Parameter Standard t Value [verbarlm]t estimate

error

[verbarrm]

Intercept........................................ 1 6.78428 0.04463

152.01

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