Nonforeign Area Cost-of-Living Allowances; Revised Living-Cost Indexes, 43876-43896 [06-6623]

Agencies

• Office of Personnel Management
• Personnel Management Office

[Federal Register Volume 71, Number 148 (Wednesday, August 2, 2006)]
[Notices]
[Pages 43876-43896]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-6623]



[[Page 43875]]

-----------------------------------------------------------------------

Part III





Office of Personnel Management





-----------------------------------------------------------------------



5 CFR Part 591



Nonforeign Area Cost-of-Living Allowances--Revised Living-Cost Indexes 
and COLA Rate Change; Notice and Final Rule

Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / 
Notices

[[Page 43876]]


-----------------------------------------------------------------------

OFFICE OF PERSONNEL MANAGEMENT


Nonforeign Area Cost-of-Living Allowances; Revised Living-Cost 
Indexes

AGENCY: Office of Personnel Management.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice publishes revised living-cost indexes relating to 
the ``2002 Nonforeign Area Cost-of-Living Allowance Survey Report: 
Caribbean and Washington, DC, Areas;'' the ``2003 Nonforeign Area Cost-
of-Living Allowance Survey Report: Alaska and Washington, DC, Areas;'' 
and the ``2004 Nonforeign Area Cost-of-Living Allowance Survey Report: 
Pacific and Washington, DC, Areas.'' The Federal Government uses the 
results of these surveys 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. The Office of Personnel 
Management revised the COLA area living-cost indexes based on 
additional rental data analyses undertaken after the publication of 
these reports in response to comments we received.

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

SUPPLEMENTARY INFORMATION: Section 5941 of title 5, United States Code, 
authorizes Federal agencies to pay nonforeign area cost-of-living 
allowances (COLAs) to white-collar Federal and U.S. Postal Service 
employees stationed in Alaska, Hawaii, Guam and the Northern Mariana 
Islands, Puerto Rico, and the U.S. Virgin Islands. Executive Order 
10000, as amended, delegates to the Office of Personnel Management 
(OPM) the authority to administer COLAs and prescribes certain 
operational features of the program. We conduct living-cost surveys in 
each allowance area and in the Washington, DC, area to determine 
whether, and to what degree, COLA area living costs are higher than 
those in the DC area. We set the COLA rate for each area based on the 
results of these surveys.
    Section 591.229 of title 5, Code of Federal Regulations, requires 
OPM to publish 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. On August 4, 2005, OPM published the ``2004 
Nonforeign Area Cost-of-Living Allowance Survey Report: Pacific and 
Washington, DC, Areas'' at 70 FR 44989. OPM also published on August 4, 
2005, a notice on revised shelter (rent) analyses at 70 FR 44978 and a 
proposed rule on COLA rate changes at 70 FR 44976.
    As described in the reports, OPM conducts living-cost surveys in 
each of the COLA areas and in the Washington, DC, area and compares 
living-costs between the COLA areas and the DC area to set COLA rates. 
As also described in the reports, we survey rents in both the COLA 
areas and DC areas to compute the relative cost of shelter. OPM 
typically collects over 1,000 rental observations in each survey and 
also obtains information on over 80 characteristics of each of the 
rental observations.
    Because housing can differ significantly within and between areas, 
OPM uses hedonic regressions (a type of multiple regression) to compare 
rents while holding quality and quantity constant. The rent comparisons 
are in the form of rent indexes, and the survey reports described the 
hedonic regression equations we use to compute rent indexes. The 
reports did not describe, however, how OPM selects the variables it 
uses in the hedonic regressions, and it is this process that OPM 
changed in response to comments it received.
    To develop the process and its recent refinement, OPM consulted 
with the Survey Implementation Committee (SIC) and the Technical 
Advisory Committee (TAC). The SIC was established under the stipulation 
of settlement in Caraballo et al. v. United States, No. 1997-0027 
(D.V.I), August 17, 2000, and is composed of representatives of the 
parties in Caraballo. The SIC in turn consults with the TAC, which was 
also established under the Caraballo settlement and is composed of 
three economists with expertise in living-cost comparisons. One of the 
issues OPM consulted with the SIC and TAC about is how to select 
defensible and objective variables for the rental hedonic regressions.
    For the proposed rule, OPM used a multi-step process developed in 
consultation with the SIC and the TAC. The first step in the process 
was to identify ``core'' variables (e.g., number of bedrooms, number of 
bathrooms, and square footage). Core variables we use are consistently 
highly significant in our joint research, and we use them in all of our 
hedonic rental regression models.
    The remaining variables are the ``non-core'' variables. In the 
process we used, statistically insignificant non-core variables were 
dropped from the hedonic regressions. OPM dropped non-core variables 
that were not statistically significant from the hedonic regressions. 
We did this in a series of steps, sequentially increasing the threshold 
for the significance tests because dropping variables could affect the 
significance of other variables. In the end, OPM had a hedonic 
regression model with a limited number of variables, each of which were 
highly significant (i.e., had a Type III probability of F less than or 
equal to 0.001).
    In response to comments received on the proposed rule (and as 
described in the final rule accompanying this notice), OPM performed 
additional hedonic regressions (e.g., added listing source). Using the 
process described in the paragraph above. After comparing the results 
of the new regressions with those we proposed, the TAC recommended 
adding additional steps in the selection of variables for the hedonic 
regressions. These additional steps involved examining the effect of 
non-core variables on the standard errors of the survey area 
parameters.
    As explained in the survey reports, the survey area parameter 
estimates, when converted from logarithms and after a slight correction 
for the use of logarithms, become the rent indexes. The standard errors 
of the survey area parameter estimates are a measure of the precision 
of the estimates, i.e., a measure of the precision of the rent index. 
The additional steps recommended by the TAC involved examining the 
effect of non-core variables on standard errors and deleting non-core 
variables that increased the standard errors. In other words, in these 
last steps, OPM removed variables whose inclusion would otherwise make 
the rent index less precise.
    The additional steps resulted in fewer variables compared to the 
regressions OPM published in the previous notices. We also corrected 
errors in the 2002, 2003, and 2004 data bases. We uncovered some of the 
errors as a result of new automated quality assurance software we 
developed after we published these surveys. We uncovered other errors 
as we researched the comments on the proposed rule. We made the 
corrections to the data bases and used the new hedonic regression 
procedures recommended by the TAC. The new regressions for 2002, 2003, 
and

[[Page 43877]]

2004 are in Appendices 1, 2, and 3 respectively of this notice. Both 
the previously published and new rent indexes are shown in Table 1 
below.

                              Table 1.--Previously Published and Final Rent Indexes
----------------------------------------------------------------------------------------------------------------
                                                                                   Previous rent
                    Year                                     Area                      index      New rent index
----------------------------------------------------------------------------------------------------------------
2002.......................................  Puerto Rico........................           70.89           63.49
2002.......................................  St. Croix, USVI....................           71.71           69.51
2002.......................................  St. Thomas/St. John, USVI..........           88.63           88.37
2003.......................................  Anchorage, Alaska..................           89.99           89.46
2003.......................................  Fairbanks, Alaska..................           79.96           79.98
2003.......................................  Juneau, Alaska.....................           91.68           91.90
2004.......................................  Honolulu, HI.......................          132.21          125.85
2004.......................................  Hilo, HI...........................           81.19           74.97
2004.......................................  Kailua Kona\Waimea Area, HI........          106.75          101.35
2004.......................................  Kauai, HI..........................          117.61          108.15
2004.......................................  Maui, HI...........................          127.62          118.00
2004.......................................  Guam...............................           89.52           88.72
                                             Washington, DC, Area...............         *100.00        *100.00
----------------------------------------------------------------------------------------------------------------
* By definition, the index of the base area is always 100.00. OPM surveys the Washington, DC, area every year.

    Using the new rent indexes, OPM computed new final overall COLA 
indexes. Table 2 shows the new final indexes. Appendix 4 to this notice 
shows the derivation of the new Caribbean final indexes. Appendix 5 
shows the derivation of the new Alaska final indexes. Appendix 6 shows 
the derivation of the new Pacific final indexes.

       Table 2.--Previous Published and Final Living-Cost Indexes
------------------------------------------------------------------------
                                            Previously
                                             published    Revised living-
         Allowance area/category            living-cost    cost indexes
                                              indexes
------------------------------------------------------------------------
Puerto Rico.............................          105.10          103.04
U.S. Virgin Islands.....................          122.84          122.53
Anchorage, Alaska.......................          113.79          113.64
Fairbanks, Alaska.......................          115.61          115.62
Juneau, Alaska..........................          118.03          118.09
Rest of the State of Alaska.............          136.00          135.84
Honolulu County, Hawaii.................          127.78          125.80
Hawaii County, Hawaii...................          119.11          117.25
Kauai County, Hawaii....................          130.58          127.63
Maui County, Hawaii.....................          134.49          131.50
Guam and the Northern Mariana Islands...          127.65          127.40
------------------------------------------------------------------------

    These are the indexes that are used in the final rule to produce 
the final COLA rates for each of the COLA areas.

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

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

libname opm 'p:\swsd\cola\survey2002\rental data\data files\';
data temp;
set opm.QC--2002--Corrections--less--garages;
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';
*Drop 6 Georgetown zip code observations from data;
if int(compzip) = 20007 then delete;
IF COMPNUMBER = 'CHC08' then delete;
*Q1 yrbuilt;
age = 2002-yrbuilt;
agesq = age**2;
if age<0 then delete;
if age = >200 then delete;
baths = fullbaths + halfbaths*.5 + threeqtrbaths*.75;
Neighbor--cond = 0;
if neighcond = 'A' then Neighbor--cond = 1; * (Desirable);
DetTownRow = 0;
*if unittype in ('A' 'D') then DetTownRow = 1;
*Omitting the line above makes DetTownRow the base condition;
Apt--Other--Dup = 0;
if unittype in ('B' 'C' 'E' 'H') then Apt--Other--Dup = 1;
HighRise--Walkup = 0;
if unittype in ('F' 'G') then HighRise--Walkup = 1;
SqftXHighRise--Walkup = 0;
if unittype in ('F','G') then SqftXHighRise--Walkup = sqfootage;
SqftXApt--Other--Dup = 0;
if unittype in ('B' 'C' 'E' 'H') then SqftXApt--Other--Dup = 
sqfootage;
SqftXDetTownRow = 0;
if unittype in ('A','D') then SqftXDetTownRow = sqfootage;
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;
hasgarage = 0;
if garage in ('A' 'B' 'C') then hasgarage = 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);
run;
PROC REG DATA = temp;

[[Page 43878]]

MODEL lrent = SqftXHighRise--Walkup SqftXApt--Other--Dup 
SqftXDetTownRow age agesq baths bedrooms Apt--Other--Dup HighRise--
Walkup neighbor--cond hasmicrowave hassecurity ST--CROIX ST--THOMAS 
Puerto--Rico;
Title1 '2002 CARIBBEAN RENTAL DATA';
Title2 'REVISED RENTAL ANALYSIS WITH CORRECTED DATA FEDERAL REGISTER 
MODEL';
run;

2002 Caribbean Rental Data.--Revised Rental Analysis with Corrected Data
                         Federal Register Model
              [The REG Procedure Dependent Variable: lrent]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Observations Read....................................     1591
Number of Observations Used....................................     1591
------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Analysis of variance
---------------------------------------------------------------------------------------------------------------------------------------------------------
                           Source                                   DF          Sum of squares      Mean square          F Value             Pr > F
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model.......................................................              15          334.69800           22.31320             461.64             <.0001
Error.......................................................            1575           76.12753            0.04833
                                                             ------------------------------------
Corrected Total.............................................            1590          410.82553
--------------------------------------------------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Root MSE...................................         0.21985  R-Square...........................          0.8147
Dependent Mean.............................         7.03485  Adj R-Sq...........................          0.8129
Coeff Var..................................         3.12518
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                      Parameter       Standard                         Pr >
                 Variable                     DF       estimate        error          t Value      [bond]t[bond]
----------------------------------------------------------------------------------------------------------------
Intercept................................        1     6.59523        0.03803             173.44          <.0001
SqftXHighRise--Walkup....................        1     0.00056133     0.00004296           13.07          <.0001
SqftXApt--Other--Dup.....................        1     0.00071946     0.00004765           15.10          <.0001
SqftXDetTownRow..........................        1     0.00024384     0.00001964           12.42          <.0001
age......................................        1    -0.00384        0.00069696           -5.51          <.0001
agesq....................................        1     0.00006036     0.00000759            7.95          <.0001
baths....................................        1     0.10998        0.01193               9.22          <.0001
BEDROOMS.................................        1     0.03593        0.01042               3.45          0.0006
Apt--Other--Dup..........................        1    -0.60421        0.05066             -11.93          <.0001
HighRise--Walkup.........................        1    -0.40358        0.04816              -8.38          <.0001
Neighbor--cond...........................        1     0.23154        0.01458              15.88          <.0001
hasmicrowave.............................        1     0.12859        0.01456               8.83          <.0001
hassecurity..............................        1     0.08879        0.01375               6.46          <.0001
ST--CROIX................................        1    -0.37738        0.02727             -13.84          <.0001
ST--THOMAS...............................        1    -0.13664        0.02605              -5.25          <.0001
Puerto--Rico.............................        1    -0.46246        0.01636             -28.26          <.0001
----------------------------------------------------------------------------------------------------------------

Appendix 2--2003 Alaska Survey; Hedonic Rental Data Equations and 
Results

libname opm `P:\SWSD\COLA\ Survey 2003\Rental Data\ SAS Files & 
programs\ SAS rental data sets';
data temp; set OPM.qc-- 2003-- corrections-- less--garages;
survey--area = `XX';
location = substr(compnumber,1,1);
if location = `A' then survey--area = `JU';
if location = `B' then survey--area = `FB';
if location = `C' then survey--area = `AN';
if location = `D' then survey--area = `DC';
*Q1 yrbuilt;
age = 2003-yrbuilt;
agesq = age**2;
baths = fullbaths +halfbaths*.5 +threeqtrbaths*.75;
Neighbor--Cond = 0;
if neighcond = `A' then Neighbor--Cond = 1;
hasgarage = 0;
if garage in (`A' `B' `C') then hasgarage = 1;
Dup--Othr = 0;
if unittype in (`B' `C' `E' `H') then Dup--Othr = 1;
Wlkp--HiRz = 0;
if unittype in (`F' `G') then Wlkp--HiRz = 1;
DetTownRow = 0;
*if unittype in (`A' `D') then DetTownRow = 1;
*omitting the above line makes DetTownRow the base condition;
SqftXDup--Othr = 0;
if unittype in (`B' `C' `E' `H') then SqftXDup--Othr = sqfootage;
SqftXWlkp--HiRz = 0;
if unittype in (`F' `G') then SqftXWlkp--HiRz = sqfootage;
SqftXDetTownRow = 0;
if unittype in (`A' `D') then SqftXDetTownRow = sqfootage;
hasclothesdryer = 0;
if cldryer = `Y' then hasclothesdryer = 1;
hasfireplace = 0;
if fireplace = `Y' then hasfireplace = 1;
Anchorage = 0;
if survey--area = `AN' then Anchorage = 1;
Fairbanks = 0;
if survey--area = `FB' then Fairbanks = 1;
Juneau = 0;
if survey--area = `JU' then Juneau = 1;
Wash--DC = 0;
*** if survey--area = `WA' then Wash--DC = 1--Omitting this makes DC 
the base area;
pctallbasq = pctall ba--**2;
mediansq = medianincome**2;
lrent = log(rent);
run;
PROC REG DATA = temp;
MODEL lrent = Dup--Othr Wlkp-- HiRz SqftXDup--Othr SqftXWlkp --HiRz 
SqftXDetTownRow age agesq baths bedrooms Neighbor--Cond hasgarage 
hasclothesdryer hasfireplace medianincome mediansq pctallbasq 
pctallba-- PctSchoolAge Anchorage Fairbanks Juneau;
TITLE `2003 Alaskan Rental Data';
Title2`Revised Rental Analyses with Corrected Data Federal Register 
Model';
RUN;

[[Page 43879]]



 2003 Alaskan Rental Data.--Revised Rental Analyses With Corrected Data
                         Federal Register Model
              [The REG Procedure Dependent Variable: lrent]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Observations Read....................................     1668
Number of Observations Used....................................     1668
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                              Analysis of Variance
-----------------------------------------------------------------------------------------------------------------
                                                                 Sum of
                      Source                           DF       squares    Mean square    F Value       Pr > F
----------------------------------------------------------------------------------------------------------------
Model............................................         21    213.03988     10.14476       401.58       <.0001
Error............................................       1646     41.58122      0.02526
                                                  -------------------------
Corrected Total..................................       1667    254.62110  ...........  ...........
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Root MSE...................................         0.15894  R-Square...........................          0.8367
Dependent Mean.............................         7.07009  Adj R-Sq...........................          0.8346
Coeff Var..................................         2.24807  ...................................  ..............
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                Parameter                                              Pr >
             Variable                 DF         estimate        Standard error       t Value      [bond]t[bond]
----------------------------------------------------------------------------------------------------------------
Intercept........................        1            6.81582            0.04483          152.03          <.0001
Dup--Othr........................        1           -0.09774            0.04706           -2.08          0.0380
Wlkp--HiRz.......................        1           -0.30134            0.03542           -8.51          <.0001
SqftXDup--Othr...................        1         0.00012700         0.00003434            3.70          0.0002
SqftXWlkp--HiRz..................        1         0.00027339         0.00003183            8.59          <.0001
SqftXDetTownRow..................        1         0.00006988         0.00001603            4.36          <.0001
age..............................        1           -0.00435         0.00068425           -6.36          <.0001
agesq............................        1         0.00005845         0.00000820            7.12          <.0001
baths............................        1            0.06396            0.00916            6.98          <.0001
BEDROOMS.........................        1            0.11464            0.00768           14.93          <.0001
Neighbor--Cond...................        1            0.28518            0.03963            7.20          <.0001
hasgarage........................        1            0.12415            0.01103           11.26          <.0001
hasclothesdryer..................        1            0.05988            0.00887            6.75          <.0001
hasfireplace.....................        1            0.04929            0.01024            4.81          <.0001
MedianIncome.....................        1        -0.00000236        9.087546E-7           -2.60          0.0094
mediansq.........................        1        2.23567E-11        5.52092E-12            4.05          <.0001
pctallbasq.......................        1            0.12714            0.11737            1.08          0.2788
PCTAllBA--.......................        1            0.26181            0.10972            2.39          0.0171
PctSchoolAge.....................        1           -0.84487            0.11140           -7.58          <.0001
Anchorage........................        1           -0.11739            0.01201           -9.77          <.0001
Fairbanks........................        1           -0.23032            0.01376          -16.73          <.0001
Juneau...........................        1           -0.09326            0.01763           -5.29          <.0001
----------------------------------------------------------------------------------------------------------------

Appendix 3.--2004 Pacific Survey; Hedonic Rental Data Equations and 
Results

libname opm `P:\SWSD\ COLA\Survey 2004 Rental Data\Sas Files & 
Programs\SAS rental data sets\'; data temp;
set OPM.qc--2004-- corrections-- less--garages;
*following corrects for excise tax not included in Kona apt rents;
if compnumber in (`CEE07', `CED08', `CAE01', `CAF01', `CEB19', 
`CEC05', `CEB16', `CEA01', `CEB13', `CEF04', `CDB06', `CEF09', 
`CEF19', `CEA03', `CEA06', `CEE19', `CEB33', `CEC10', `CEE20', 
`CEB24', `CEB37', `CEB31', `CEC11', `CEE09', `CEE21', `CEF02', 
`CEB09', `CEB10', `CEE05', `CEE11', `CEB08', `CED01', `CEE05', 
`CEF12', `CED03', `CEB07', `CEC01', `CEB27', `CEC03') then rent = 
rent*1.0416;
survey--area = `XX';
location = substr(compnumber,1,1);
if location = `A' then survey--area = `GU';
if location = `B' then survey--area = `KA';
if location = `C' then survey--area = `KO';
if location = `D' then survey--area = `HI';
if location = `E' then survey--area = `MA';
if location = `F' then survey--area = `HO';
if location = `G' then survey--area = `DC';
age = 2004-yrbuilt;
agesq = age*age;
baths = fullbaths +halfbaths*.5+three qtrbaths*.75;
Extrnl--Cond = 0;
if extrcond = `A' then Extrnl--Cond = 1;
Neighbor--Cond = 0;
if neighcond = `A' then Neighbor--Cond = 1;
hasgarage = 0;
if garage in (`A' `B' `C') then hasgarage = 1;
exceptional--view = 0;
if excview = `Y' then exceptional--view = 1;
hassecurity = 0;
if gated = `Y' or accessctl = `Y' or guards = `Y' or alarms = `Y' 
then hassecurity = 1;

Dup--Tri--InHome = 0;
if unittype in (`B',`C',`E') then Dup--Tri--InHome = 1;
Wlkp--Highrise = 0;
if unittype in (`F',`G') then Wlkp--Highrise = 1;
DetTownRow = 0;
*if unittype in (`A' `D') then DetTownRow = 1;
*omitting the above makes it the base condition;
SqftXDup--Tri--InHome = 0;
if unittype in (`B' `C' `E') then SqftXDup-- Tri--InHome = 
sqfootage;
SqftXWlkp--Highrise = 0;
if unittype in (`F' `G') then SqftXWlkp--Highrise = sqfootage;
SqftXDetTownRow = 0;
if unittype in (`A' `D') then SqftXDetTownRow = sqfootage;
hasclothesdryer = 0;
if cldryer = `Y' then hasclothesdryer = 1;
hasrecreation = 0;
if pool = `Y' or tenniscourt = `Y' or clubhouse = `Y' or 
exerciseroom = `Y' or otherrecfac = `Y' then hasrecreation = 1;
haselectric = 0;
if elec = `Y' then haselectric = 1;
heatedgarage = 0;
if hgarage = `Y' then heatedgarage = 1;
sqfootagesq = sqfootage**2;
pctallbasq = pctallba--**2;
Honolulu = 0;

[[Page 43880]]

if survey--area = `HO' then Honolulu = 1;
Hilo = 0;
if survey--area = `HI' then Hilo = 1;
Kona = 0;
if survey--area = `KO' then Kona = 1;
Kauai = 0;
if survey--area = `KA' then Kauai = 1;
Maui = 0;
if survey--area = `MA' then Maui = 1;
Guam = 0;
if survey--area = `GU' then Guam = 1;
Wash--DC = 0;
*** if survey--area = `WA' then Wash--DC = 1 Omitting this makes DC 
the base area; lrent = log(rent);
run;
PROC REG DATA = temp;
MODEL lrent = SqftXDup--Tri-- InHome SqftXWlkp-- Highrise 
SqftXDetTownRow age agesq baths bedrooms haselectric heatedgarage 
Dup--Tri-- InHome Wlkp-- Highrise Extrnl--Cond Neighbor --Cond 
hasgarage exceptional-- view hasclothesdryer hasrecreation 
PctallBA-- PctallBAsq PctSchoolAge Honolulu Hilo Kona Kauai Maui 
Guam;
TITLE1 `2004 PACIFIC RENTAL DATA';
Title2 `RENTAL ANALYSIS FEDERAL REGISTER MODEL';
RUN;

    2004 Pacific Rental Data.--Rental Analysis Federal Register Model
              [The REG Procedure Dependent Variable: lrent]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Observations Read....................................     2713
Number of Observations Used....................................     2713
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                              Analysis of Variance
-----------------------------------------------------------------------------------------------------------------
                                                                 Sum of
                      Source                           DF       squares    Mean square    F Value       Pr > F
----------------------------------------------------------------------------------------------------------------
Model............................................         26    379.89750     14.61144       394.69       <.0001
Error............................................       2686     99.43664
                                                  ------------------------
Corrected Total..................................       2712    479.33414
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Root MSE...................................         0.19241  R-Square...........................          0.7926
Dependent Mean.............................         7.18883  Adj R-Sq...........................          0.7905
Coeff Var..................................         2.67647
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                      Parameter       Standard
                 Variable                     DF       estimate        error          t Value         Pr > t
----------------------------------------------------------------------------------------------------------------
Intercept................................        1     6.71644        0.03879             173.14          <.0001
SqftXDup--Tri--InHome....................        1     0.00027535     0.00003241            8.50          <.0001
SqftXWlkp--Highrise......................        1     0.00040841     0.00002703           15.11          <.0001
SqftXDetTownRow..........................        1     0.00011596     0.00001498            7.74          <.0001
age......................................        1    -0.00247        0.00054994           -4.50          <.0001
agesq....................................        1     0.00003635     0.00000640            5.68          <.0001
baths....................................        1     0.08769        0.00831              10.55          <.0001
BEDROOMS.................................        1     0.10540        0.00744              14.16          <.0001
haselectric..............................        1     0.08951        0.01199               7.46          <.0001
heatedgarage.............................        1     0.20487        0.05953               3.44          0.0006
Dup--Tri--InHome.........................        1    -0.27216        0.03742              -7.27          <.0001
Wlkp--Highrise...........................        1    -0.46694        0.02793             -16.72          <.0001
Extrnl--Cond.............................        1     0.09677        0.01459               6.63          <.0001
Neighbor--Cond...........................        1     0.19095        0.01675              11.40          <.0001
hasgarage................................        1     0.06508        0.01109               5.87          <.0001
exceptional--view........................        1     0.08748        0.01923               4.55          <.0001
hasclothesdryer..........................        1     0.06394        0.00838               7.63          <.0001
hasrecreation............................        1     0.08545        0.01041               8.21          <.0001
PCTAllBA--...............................        1     0.00112        0.09969               0.01          0.9910
pctallbasq...............................        1     0.55655        0.10981               5.07          <.0001
PctSchoolAge.............................        1    -0.79399        0.09062              -8.76          <.0001
Honolulu.................................        1     0.22418        0.01153              19.44          <.0001
Hilo.....................................        1    -0.29661        0.01715             -17.29          <.0001
Kona.....................................        1     0.00390        0.01905               0.20          0.8379
Kauai....................................        1     0.06919        0.01828               3.79          0.0002
Maui.....................................        1     0.15740        0.01628               9.67          <.0001
Guam.....................................        1    -0.12739        0.01530              -8.33          <.0001
----------------------------------------------------------------------------------------------------------------


                                        Appendix 4.--2002 Final Living-Cost Results for the Caribbean COLA Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            MEG  weight     PEG  weight
         Major expenditure group  (MEG)              Primary expenditure group  (PEG)        (percent)       (percent)      PEG  index      MEG  index
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Puerto Rico
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Food........................................  .......................................           13.16  ..............  ..............          101.85
                                                 Cereals and bakery products............            0.98            7.45          105.91  ..............
                                                 Meats, poultry, fish, and eggs.........            1.47           11.16           99.40  ..............

[[Page 43881]]

 
                                                 Dairy products.........................            0.65            4.94          124.86  ..............
                                                 Fruits and vegetables..................            0.73            5.56          107.05  ..............
                                                 Processed foods........................            1.54           11.68          106.42  ..............
                                                 Other food at home.....................            0.42            3.16           92.62  ..............
                                                 Nonalcoholic beverages.................            0.49            3.74          133.21  ..............
                                                 Food away from home....................            5.93           45.04           91.91  ..............
                                                 Alcoholic beverages....................            0.96            7.28          123.96  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
2. Shelter and Utilities.......................  .......................................           31.30  ..............  ..............           78.63
                                                 Shelter................................           28.07           89.67           64.56  ..............
                                                 Energy utilities.......................            2.65            8.46          236.07  ..............
                                                 Water and other public services........            0.59            1.87           41.54  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
3. Household Furnishings and Supplies..........  .......................................            6.06  ..............  ..............           98.84
                                                 Household operations...................            1.36           22.51           64.95  ..............
                                                 Housekeeping supplies..................            1.06           17.53          113.20  ..............
                                                 Textiles and area rugs.................            0.25            4.16           93.40  ..............
                                                 Furniture..............................            1.05           17.39           95.70  ..............
                                                 Major appliances.......................            0.37            6.03          116.32  ..............
                                                 Small appliances, misc. housewares.....            0.21            3.46          108.32  ..............
                                                 Miscellaneous household equipment......            1.75           28.91          114.40  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
4. Apparel and services........................  .......................................            4.00  ..............  ..............          112.80
                                                 Men and boys...........................            0.75           18.69          107.05  ..............
                                                 Women and girls........................            1.67           41.66          114.32  ..............
                                                 Children under 2.......................            0.18            4.55          103.86  ..............
                                                 Footwear...............................            0.70           17.48           88.96  ..............
                                                 Other apparel products and services....            0.71           17.63          141.24  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
5. Transportation..............................  .......................................           16.93  ..............  ..............          107.51
                                                 Motor vehicle costs....................            9.09           53.67          109.17  ..............
                                                 Gasoline and motor oil.................            2.71           16.02           84.24  ..............
                                                 Maintenance and repairs................            1.81           10.72           94.31  ..............
                                                 Vehicle insurance......................            1.73           10.24          122.13  ..............
                                                 Public transportation..................            1.58            9.35          136.92  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
6. Medical.....................................  .......................................            4.44  ..............  ..............           73.31
                                                 Health insurance.......................            2.08           46.97           59.73  ..............
                                                 Medical services.......................            1.43           32.31           72.76  ..............
                                                 Drugs and medical supplies.............            0.92           20.72          104.93  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
7. Recreation..................................  .......................................            6.23  ..............  ..............          102.99
                                                 Fees and admissions....................            1.46           23.38           95.96  ..............
                                                 Television, radios, sound equipment....            0.77           12.38          115.85  ..............
                                                 Pets, toys, and playground equipment...            1.15           18.48           98.43  ..............
                                                 Other entertainment supplies, etc......            0.97           15.57          106.71  ..............
                                                 Personal care products.................            0.69           11.10           98.89  ..............
                                                 Personal care services.................            0.70           11.29          105.17  ..............
                                                 Reading................................            0.49            7.80          109.76  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
8. Education and Communication.................  .......................................            4.09  ..............  ..............          132.89
                                                 Education..............................            0.21            5.06          216.35  ..............
                                                 Communications.........................            3.24           79.32          132.97  ..............
                                                 Computers and computer services........            0.64           15.62          105.41  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
9. Miscellaneous...............................  .......................................           13.79  ..............  ..............          103.10
                                                 Tobacco products, etc..................            0.48            3.51           87.91  ..............
                                                 Miscellaneous..........................            2.09           15.12          123.28  ..............
                                                 Personal insurance and pensions........           11.22           81.37          100.00  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
Overall Price Index............................    MEG Total............................          100.00  ..............  ..............           96.04
Plus Adjustment Factor.........................  .......................................  ..............  ..............  ..............            7.00
Index Plus Adjustment Factor...................  .......................................  ..............  ..............  ..............          103.04
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             St. Croix, U.S. Virgin Islands
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Food........................................  .......................................           13.16  ..............  ..............          116.05

[[Page 43882]]

 
                                                 Cereals and bakery products............            0.98            7.45          129.89  ..............
                                                 Meats, poultry, fish, and eggs.........            1.47           11.16          129.25  ..............
                                                 Dairy products.........................            0.65            4.94          155.69  ..............
                                                 Fruits and vegetables..................            0.73            5.56          108.80  ..............
                                                 Processed foods........................            1.54           11.68          128.02  ..............
                                                 Other food at home.....................            0.42            3.16          108.01  ..............
                                                 Nonalcoholic beverages.................            0.49            3.74          132.85  ..............
                                                 Food away from home....................            5.93           45.04          105.82  ..............
                                                 Alcoholic beverages....................            0.96            7.28           99.25  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
2. Shelter and Utilities.......................  .......................................           31.30  ..............  ..............           98.79
                                                 Shelter................................           28.07           89.67           72.97  ..............
                                                 Energy utilities.......................            2.65            8.46          343.31  ..............
                                                 Water and other public services........            0.59            1.87          230.60  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
3. Household Furnishings and Supplies..........  .......................................            6.06  ..............  ..............          126.20
                                                 Household operations...................            1.36           22.51           58.68  ..............
                                                 Housekeeping supplies..................            1.06           17.53          138.03  ..............
                                                 Textiles and area rugs.................            0.25            4.16           98.61  ..............
                                                 Furniture..............................            1.05           17.39          141.31  ..............
                                                 Major appliances.......................            0.37            6.03          121.13  ..............
                                                 Small appliances, misc. housewares.....            0.21            3.46          101.87  ..............
                                                 Miscellaneous household equipment......            1.75           28.91          169.19  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
4. Apparel and Services........................  .......................................            4.00  ..............  ..............          102.52
                                                 Men and boys...........................            0.75           18.69          115.94  ..............
                                                 Women and girls........................            1.67           41.66           98.51  ..............
                                                 Children under 2.......................            0.18            4.55           83.57  ..............
                                                 Footwear...............................            0.70           17.48           97.20  ..............
                                                 Other apparel products and services....            0.71           17.63          107.95  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
5. Transportation..............................  .......................................           16.93  ..............  ..............          111.02
                                                 Motor vehicle costs....................            9.09           53.67          112.02  ..............
                                                 Gasoline and motor oil.................            2.71           16.02           73.46  ..............
                                                 Maintenance and repairs................            1.81           10.72           88.94  ..............
                                                 Vehicle insurance......................            1.73           10.24          119.53  ..............
                                                 Public transportation..................            1.58            9.35          185.59  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
6. Medical.....................................  .......................................            4.44  ..............  ..............          102.17
                                                 Health insurance.......................            2.08           46.97          110.99  ..............
                                                 Medical services.......................            1.43           32.31           83.05  ..............
                                                 Drugs and medical supplies.............            0.92           20.72          111.99  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
7. Recreation..................................  .......................................            6.23  ..............  ..............          107.72
                                                 Fees and admissions....................            1.46           23.38           85.81  ..............
                                                 Television, radios, sound equipment....            0.77           12.38           94.05  ..............
                                                 Pets, toys, and playground equipment...            1.15           18.48          124.46  ..............
                                                 Other entertainment supplies, etc......            0.97           15.57          118.42  ..............
                                                 Personal care products.................            0.69           11.10          120.92  ..............
                                                 Personal care services.................            0.70           11.29          107.77  ..............
                                                 Reading................................            0.49            7.80          115.28  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
8. Education and Communication.................  .......................................            4.09  ..............  ..............          173.59
                                                 Education..............................            0.21            5.06          268.97  ..............
                                                 Communications.........................            3.24           79.32          180.93  ..............
                                                 Computers and computer services........            0.64           15.62          105.41  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
9. Miscellaneous...............................  .......................................           13.79  ..............  ..............          105.08
                                                 Tobacco products, etc..................            0.48            3.51           52.54  ..............
                                                 Miscellaneous..........................            2.09           15.12          144.64  ..............
                                                 Personal insurance and pensions........           11.22           81.37          100.00  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             St. Thomas, U.S. Virgin Islands
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Food........................................  .......................................           13.16  ..............  ..............          118.86
                                                 Cereals and bakery products............            0.98            7.45          135.94  ..............

[[Page 43883]]

 
                                                 Meats, poultry, fish, and eggs.........            1.47           11.16          133.18  ..............
                                                 Dairy products.........................            0.65            4.94          161.42  ..............
                                                 Fruits and vegetables..................            0.73            5.56          120.34  ..............
                                                 Processed foods........................            1.54           11.68          139.00  ..............
                                                 Other food at home.....................            0.42            3.16          115.51  ..............
                                                 Nonalcoholic beverages.................            0.49            3.74          139.29  ..............
                                                 Food away from home....................            5.93           45.04          104.61  ..............
                                                 Alcoholic beverages....................            0.96            7.28           96.20  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
2. Shelter and Utilities.......................  .......................................           31.30  ..............  ..............          116.00
                                                 Shelter................................           28.07           89.67           92.16  ..............
                                                 Energy utilities.......................            2.65            8.46          343.31  ..............
                                                 Water and other public services........            0.59            1.87          230.60  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
3. Household Furnishings and Supplies..........  .......................................            6.06  ..............  ..............          126.12
                                                 Household operations...................            1.36           22.51           63.82  ..............
                                                 Housekeeping supplies..................            1.06           17.53          137.67  ..............
                                                 Textiles and area rugs.................            0.25            4.16          117.68  ..............
                                                 Furniture..............................            1.05           17.39          141.31  ..............
                                                 Major appliances.......................            0.37            6.03          121.04  ..............
                                                 Small appliances, misc. housewares.....            0.21            3.46          102.41  ..............
                                                 Miscellaneous household equipment......            1.75           28.91          163.62  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
4. Apparel and Services........................  .......................................            4.00  ..............  ..............          101.14
                                                 Men and boys...........................            0.75           18.69          102.33  ..............
                                                 Women and girls........................            1.67           41.66           97.41  ..............
                                                 Children under 2.......................            0.18            4.55           83.57  ..............
                                                 Footwear...............................            0.70           17.48           99.03  ..............
                                                 Other apparel products and services....            0.71           17.63          115.33  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
5. Transportation..............................  .......................................           16.93  ..............  ..............          119.49
                                                 Motor vehicle costs....................            9.09           53.67          111.91  ..............
                                                 Gasoline and motor oil.................            2.71           16.02          122.52  ..............
                                                 Maintenance and repairs................            1.81           10.72           80.37  ..............
                                                 Vehicle insurance......................            1.73           10.24          119.53  ..............
                                                 Public transportation..................            1.58            9.35          202.62  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
6. Medical.....................................  .......................................            4.44  ..............  ..............          114.18
                                                 Health insurance.......................            2.08           46.97          110.99  ..............
                                                 Medical services.......................            1.43           32.31          121.45  ..............
                                                 Drugs and medical supplies.............            0.92           20.72          110.08  ..............
                                                   PEG Total............................  ..............          100.00  ..............  ..............
7. Recreation..................................  .......................................            6.23  ..............  ..............          106.38
                                                 Fees and admissions....................            1.46           23.38           58.55  ..............
                                                 Television, radios, sound equipment....            0.77           12.38          104.26  ..............
                                                 Pets, toys and playground equipment....            1.15           18.48          132.35  ..............
                                                 Other entertainment supplies, etc......            0.97           15.57          130.73
                                                 Personal care products.................            0.69           11.10          113.14  ..............
                                                 Personal care services.................            0.70           11.29          116.88  ..............
                                                 Reading................................            0.49            7.80          118.17  ..............
                                                   PEG Total..