Cite as: 508 U. S. 10 (1993)
Opinion of the Court
units or, if the Secretary determines, on the basis of a reasonable formula.
. . . . . "(C) Adjustments in the maximum rents as herein-before provided shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the Secretary." 42 U. S. C. §§ 1437f(c)(2)(A) and (C) (1982 ed.).
The respondents in this case are private developers who entered into long-term contracts with HUD—known as Housing Assistance Payments (HAP) Contracts or "assistance contracts"—to lease newly constructed apartment units to Section 8 tenants. Their contracts established initial contract rents for each unit and provided, consistent with the statutory authorization, that these rents would be adjusted regularly, on the basis of a reasonable formula, to keep pace with changes in rental values in the private housing market. Section 1.9b of their contracts provides:
"b. Automatic Annual Adjustments
"(1) Automatic Annual Adjustment Factors will be determined by the Government at least annually; interim revisions may be made as market conditions warrant. Such Factors and the basis for their determination will be published in the Federal Register. . . .
"(2) On each anniversary date of the Contract, the Contract Rents shall be adjusted by applying the applicable Automatic Annual Adjustment Factor most recently published by the Government. Contract Rents may be adjusted upward or downward, as may be appropriate; however, in no case shall the adjusted Contract Rents be less than the Contract Rents on the effective date of the Contract." App. to Brief for Petitioners 8a.
The Automatic Annual Adjustment Factors to which the contracts refer are developed by HUD based upon market
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