Section 8 Housing Assistance Payments Program-Annual Adjustment Factors, Fiscal Year 2018, 51853-51856 [2017-24330]

Download as PDF Federal Register / Vol. 82, No. 215 / Wednesday, November 8, 2017 / Notices allows importers to deposit estimated duties, fees and taxes on a monthly basis using ACH. A PMS summarizes daily statements into a consolidated statement each month for a single monthly payment by the 15th working day of the month following the month of entry or release. CBP last modified and clarified the PMS test in a Federal Register notice (82 FR 50656) published on November 1, 2017. Currently, monthly statements are generated, transmitted and updated in ACS. ethrower on DSK3G9T082PROD with NOTICES II. Transition Into the Automated Commercial Environment (ACE) In an effort to modernize the business processes essential to securing U.S. borders, facilitating the flow of legitimate shipments, and targeting illicit goods pursuant to Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. 103–182, 107 Stat. 2057, December 8, 1993), commonly known as the Customs Modernization Act, or Mod Act, and the Security and Accountability for Every (SAFE) Port Act of 2006 (Pub. L. 109– 347, 120 Stat. 1884), CBP developed ACE to eventually replace ACS as the CBP-authorized EDI system. Over the last several years, CBP has tested ACE and provided significant public outreach to ensure that the trade community is fully aware of the transition from ACS to ACE. On October 13, 2015, CBP published an Interim Final Rule in the Federal Register (80 FR 61278) that designated ACE as a CBP-authorized EDI system, to be effective November 1, 2015. In the Interim Final Rule, CBP stated that ACS would be phased out and anticipated that ACS would no longer be supported for entry and entry summary filing by the end of February 2016. Filers were encouraged to adjust their business practices so that they would be prepared when ACS was decommissioned. CBP has developed a staggered transition strategy for decommissioning ACS to give the trade additional time to adjust their business practices. The first two phases of the transition were announced in a Federal Register notice published on February 29, 2016 (81 FR 10264). The third phase was announced in a Federal Register notice published on May 16, 2016 (81 FR 30320). The fourth phase of the transition was announced in a Federal Register notice published on May 23, 2016 (81 FR 32339). This notice announces a further transition as CBP is transitioning statement processing for both daily and monthly statements from ACS to ACE. VerDate Sep<11>2014 17:26 Nov 07, 2017 Jkt 244001 III. Announcement of Daily and Monthly Statements Being Generated, Transmitted and Updated in ACE This document announces that beginning on December 9, 2017, ACE will be the sole CBP-authorized EDI system for generating, transmitting and updating daily and monthly statements for all entries except reconciliation (type 09) entries, and that as of that date, ACS will be decommissioned for such purposes. Until reconciliation entries are filed in ACE, statements for reconciliation entries will continue to be generated, transmitted and updated in ACS. Once reconciliation entries are filed in ACE, ACE will be the sole CBPauthorized EDI system for generating, transmitting and updating all statements, and ACS will no longer be a CBP-authorized EDI system for such purpose. Dated: November 3, 2017. Brenda B. Smith, Executive Assistant Commissioner, Office of Trade. [FR Doc. 2017–24336 Filed 11–7–17; 8:45 am] BILLING CODE 9111–14–P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–6059–N–01] Section 8 Housing Assistance Payments Program—Annual Adjustment Factors, Fiscal Year 2018 Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Notice of Fiscal Year (FY) 2018 Annual Adjustment Factors (AAFs). AGENCY: The United States Housing Act of 1937 requires that certain assistance contracts signed by owners participating in the Department’s Section 8 housing assistance payment programs provide annual adjustments to monthly rentals for units covered by the contracts. This notice announces FY 2018 AAFs for adjustment of contract rents on the anniversary of those assistance contracts. The factors are based on a formula using residential rent and utility cost changes from the most recent annual Bureau of Labor Statistics Consumer Price Index (CPI) survey. Beginning with the FY 2014 AAFs and continuing with these FY 2018 AAFs, the Puerto Rico CPI is used in place of the South Region CPI for all areas in Puerto Rico. These factors are applied at the anniversary of Housing Assistance Payment (HAP) contracts for which rents are to be adjusted using the AAF for those calendar months SUMMARY: PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 51853 commencing after the effective date of this notice. AAFs are distinct from, and do not apply to the same properties as, Operating Cost Adjustment Factors (OCAFs). OCAFs are annual factors used to adjust rents for project-based rental assistance contracts issued under Section 8 of the United States Housing Act of 1937 and renewed under section 515 or section 524 of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). A separate Federal Register Notice, to be published at a later date, will be used in the calculation of the calendar year (CY) 2018 Housing Choice Voucher (HCV) renewal funding for public housing agencies (PHAs). DATES: Applicable November 8, 2017. FOR FURTHER INFORMATION CONTACT: Contact Becky Primeaux, Director, Management and Operations Division, Office of Housing Voucher Programs, Office of Public and Indian Housing, 202–708–1380, for questions relating to the Project-Based Certificate and Moderate Rehabilitation programs (not the Single Room Occupancy program); Norman A. Suchar, Director, Office of Special Needs Assistance Programs, Office of Community Planning and Development, 202–402–5015, for questions regarding the Single Room Occupancy (SRO) Moderate Rehabilitation program; Katherine Nzive, Director, OAMPO Program Administration Office, Office of Multifamily Housing, 202–402–3440, for questions relating to all other Section 8 programs; and Marie Lihn, Economist, Economic and Market Analysis Division, Office of Policy Development and Research, 202–402–5866, for technical information regarding the development of the schedules for specific areas or the methods used for calculating the AAFs. The mailing address for these individuals is: Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410. Hearing- or speech-impaired persons may contact the Federal Information Relay Service at 800–877–8339 (TTY). (Other than the ‘‘800’’ TTY number, the above-listed telephone numbers are not toll free.) SUPPLEMENTARY INFORMATION: Tables showing AAFs will be available electronically from the HUD data information page at http:// www.huduser.gov/portal/datasets/ aaf.html. I. Applying AAFs to Various Section 8 Programs AAFs established by this Notice are used to adjust contract rents for units assisted in certain Section 8 housing E:\FR\FM\08NON1.SGM 08NON1 51854 Federal Register / Vol. 82, No. 215 / Wednesday, November 8, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES assistance payment programs during the initial (i.e., pre-renewal) term of the HAP contract and for all units in the Project-Based Certificate program. There are three categories of Section 8 programs that use the AAFs: Category 1: The Section 8 New Construction, Substantial Rehabilitation, and Moderate Rehabilitation programs; Category 2: The Section 8 Loan Management (LM) and Property Disposition (PD) programs; and Category 3: The Section 8 ProjectBased Certificate (PBC) program. Each Section 8 program category uses the AAFs differently. The specific application of the AAFs is determined by the law, the HAP contract, and appropriate program regulations or requirements. AAFs are not used in the following cases: Renewal Rents. AAFs are not used to determine renewal rents after expiration of the original Section 8 HAP contract (either for projects where the Section 8 HAP contract is renewed under a restructuring plan adopted under 24 CFR part 401; or renewed without restructuring under 24 CFR part 402), except in the Project-Based Certificate program (Category 3). In general, renewal rents are established in accordance with the statutory provision in the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), as amended, under which the HAP is renewed. After renewal, annual rent adjustments will be provided in accordance with MAHRA. Budget-based Rents. AAFs are not used for budget-based rent adjustments. For projects receiving Section 8 subsidies under the LM program (24 CFR part 886, subpart A) and for projects receiving Section 8 subsidies under the PD program (24 CFR part 886, subpart C), contract rents are adjusted, at HUD’s option, either by applying the AAFs or by budget-based adjustments in accordance with 24 CFR 886.112(b) and 24 CFR 886.312(b). Budget-based adjustments are used for most Section 8/ 202 projects. Housing Choice Voucher Program. AAFs are not used to adjust rents in the Tenant-Based or the Project-Based Voucher programs. II. Adjustment Procedures This section of the notice provides a broad description of procedures for adjusting the contract rent. Technical details and requirements are described in HUD notices H 2002–10 (Section 8 New Construction and Substantial Rehabilitation, Loan Management, and Property Disposition) and PIH 97–57 VerDate Sep<11>2014 17:26 Nov 07, 2017 Jkt 244001 (Moderate Rehabilitation and ProjectBased Certificates). Because of statutory and structural distinctions among the various Section 8 programs, there are separate rent adjustment procedures for the three program categories: Category 1: Section 8 New Construction, Substantial Rehabilitation, and Moderate Rehabilitation Programs In the Section 8 New Construction and Substantial Rehabilitation programs, the published AAF factor is applied to the pre-adjustment contract rent. In the Section 8 Moderate Rehabilitation program (both the regular program and the single room occupancy program) the published AAF is applied to the pre-adjustment base rent. For Category 1 programs, the Table 1 AAF factor is applied before determining comparability (rent reasonableness). Comparability applies if the pre-adjustment gross rent (preadjustment contract rent plus any allowance for tenant-paid utilities) is above the published Fair Market Rent (FMR). If the comparable rent level (plus any initial difference) is lower than the contract rent as adjusted by application of the Table 1 AAF, the comparable rent level (plus any initial difference) will be the new contract rent. However, the preadjustment contract rent will not be decreased by application of comparability. In all other cases (i.e., unless the contract rent is reduced by comparability): • Table 1 AAF is used for a unit occupied by a new family since the last annual contract anniversary. • Table 2 AAF is used for a unit occupied by the same family as at the time of the last annual contract anniversary. Category 2: Section 8 Loan Management Program (24 CFR Part 886, Subpart A) and Property Disposition Program (24 CFR Part 886, Subpart C) Category 2 programs are not currently subject to comparability. Comparability will again apply if HUD establishes regulations for conducting comparability studies under 42 U.S.C. 1437f(c)(2)(C). The applicable AAF is determined as follows: • Table 1 AAF is used for a unit occupied by a new family since the last annual contract anniversary. • Table 2 AAF is used for a unit occupied by the same family as at the time of the last annual contract anniversary. PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 Category 3: Section 8 Project-Based Certificate Program Under the PBC program, the PHA and owner must have executed an Agreement to enter a HAP contract before January 16, 2001. The aggregate total term of the PBC HAP contract (the initial and any renewal terms) may not exceed 15 years. Therefore, most PBC HAP contracts have expired (or have been renewed as a project-based voucher contract in accordance with 24 CFR 983.10(b)(1)(ii)). In the case of a PBC HAP contract that is still in effect, the following procedures are used to adjust contract rent: • Table 2 AAF is always used. The Table 1 AAF is not used. • Table 2 AAF is always applied before determining comparability (rent reasonableness). • Comparability always applies. If the comparable rent level is lower than the rent to owner (contract rent) as adjusted by application of the Table 2 AAF, the comparable rent level will be the new rent to owner. • The new rent to owner will not be reduced below the contract rent on the effective date of the HAP contract. III. When To Use Reduced AAFs (From AAF Table 2) In accordance with Section 8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF is reduced by 0.01: • For all tenancies assisted in the Section 8 Project-Based Certificate program. • In other Section 8 programs, for a unit occupied by the same family at the time of the last annual rent adjustment (and where the rent is not reduced by application of comparability (rent reasonableness)). The law provides that: Except for assistance under the certificate program, for any unit occupied by the same family at the time of the last annual rental adjustment, where the assistance contract provides for the adjustment of the maximum monthly rent by applying an annual adjustment factor and where the rent for a unit is otherwise eligible for an adjustment based on the full amount of the factor, 0.01 shall be subtracted from the amount of the factor, except that the factor shall not be reduced to less than 1.0. In the case of assistance under the certificate program, 0.01 shall be subtracted from the amount of the annual adjustment factor (except that the factor shall not be reduced to less than 1.0), and the adjusted rent shall not exceed the rent for a comparable unassisted unit of similar quality, type and age in the market area. 42 U.S.C. 1437f(c)(2)(A). Legislative history for this statutory provision states that ‘‘the rationale [for lower AAFs for non-turnover units is] E:\FR\FM\08NON1.SGM 08NON1 Federal Register / Vol. 82, No. 215 / Wednesday, November 8, 2017 / Notices that operating costs are less if tenant turnover is less . . .’’ (see Department of Veteran Affairs and Housing and Urban Development, and Independent Agencies Appropriations for 1995, Hearings Before a Subcommittee of the Committee on Appropriations 103d Cong., 2d Sess. 591 (1994)). The Congressional Record also states the following: Because the cost to owners of turnoverrelated vacancies, maintenance, and marketing are lower for long-term stable tenants, these tenants are typically charged less than recent movers in the unassisted market. Since HUD pays the full amount of any rent increases for assisted tenants in section 8 projects and under the Certificate program, HUD should expect to benefit from this ‘tenure discount.’ Turnover is lower in assisted properties than in the unassisted market, so the effect of the current inconsistency with market-based rent increases is exacerbated. (140 Cong. Rec. 8659, 8693 (1994)). To implement the law, HUD publishes two separate AAF Tables, Table 1 and Table 2. The difference between Table 1 and Table 2 is that each AAF in Table 2 is 0.01 less than the corresponding AAF in Table 1. Where an AAF in Table 1 would otherwise be less than 1.0, it is set at 1.0, as required by statute; the corresponding AAF in Table 2 will also be set at 1.0, as required by statute. ethrower on DSK3G9T082PROD with NOTICES IV. How To Find the AAF AAF Table 1 and Table 2 are posted on the HUD User Web site at http:// www.huduser.gov/portal/datasets/ aaf.html. There are two columns in each AAF table. The first column is used to adjust contract rent for rental units where the highest cost utility is included in the contract rent, i.e., where the owner pays for the highest cost utility. The second column is used where the highest cost utility is not included in the contract rent, i.e., where the tenant pays for the highest cost utility. The applicable AAF is selected as follows: • Determine whether Table 1 or Table 2 is applicable. In Table 1 or Table 2, locate the AAF for the geographic area where the contract unit is located. • Determine whether the highest cost utility is or is not included in contract rent for the contract unit. • If highest cost utility is included, select the AAF from the column for ‘‘Highest Cost Utility Included.’’ If highest cost utility is not included, select the AAF from the column for ‘‘Highest Cost Utility Excluded.’’ VerDate Sep<11>2014 17:26 Nov 07, 2017 Jkt 244001 51855 V. Methodology Geographic Areas AAFs are rent inflation factors. Two types of rent inflation factors are calculated for AAFs: Gross rent factors and shelter rent factors. The gross rent factor accounts for inflation in the cost of both the rent of the residence and the utilities used by the unit; the shelter rent factor accounts for the inflation in the rent of the residence, but does not reflect any change in the cost of utilities. The gross rent inflation factor is designated as ‘‘Highest Cost Utility Included’’ and the shelter rent inflation factor is designated as ‘‘Highest Cost Utility Excluded.’’ AAFs are calculated using CPI data on ‘‘rent of primary residence’’ and ‘‘fuels and utilities.’’ 1 The CPI inflation index for rent of primary residence measures the inflation of all surveyed units regardless of whether utilities are included in the rent of the unit or not. In other words, it measures the inflation of the ‘‘contract rent’’ which includes units with all utilities included in the rent, units with some utilities included in the rent, and units with no utilities included in the rent. In producing a gross rent inflation factor and a shelter rent inflation factor, HUD decomposes the contract rent CPI inflation factor into parts to represent the gross rent change and the shelter rent change. This is done by applying data from the Consumer Expenditure Survey (CEX) on the percentage of renters who pay for heat (a proxy for the percentage of renters who pay shelter rent) and also American Community Survey (ACS) data on the ratio of utilities to rents. For Puerto Rico, the Puerto Rico Community Survey (PRCS) is used to determine the ratio of utilities to rents, resulting in different AAFs for some metropolitan areas in Puerto Rico.2 AAFs are produced for all Class A CPI cities (CPI cities with a population of 1.5 million or more) and for the four Census Regions. They are applied to Core-Based Statistical Areas (CBSAs) where more than 75 percent of the population of the CBSA is covered by the CPI city-survey. The AAF that is based on that CPI survey is applied to the whole CBSA and to any HUDdefined metropolitan area, called the ‘‘HUD Metro FMR Area’’ (HMFA), within that CBSA. If the CBSA is not covered by a CPI city-survey, the CBSA uses the relevant regional CPI factor. All non-metropolitan counties use regional CPI factors, except for those that are in CPI cities, but have been dropped from metropolitan area by OMB definitions (Lenawee County, MI; Ashtabula County, OH; Henderson County, TX; King George County, VA; Island County, WA). For areas assigned the Census Region CPI factor, both metropolitan and non-metropolitan areas receive the same factor. Each metropolitan area that uses a local CPI update factor is listed alphabetically in the tables and each HMFA is listed alphabetically within its respective CBSA. Each AAF applies to a specific geographic area and to units of all bedroom sizes. AAFs are provided: • For separate metropolitan areas, including HMFAs and counties that are currently designated as nonmetropolitan, but are part of the metropolitan area defined in the local CPI survey. • For the four Census Regions (to be used for those metropolitan and nonmetropolitan areas that are not covered by a CPI city-survey). AAFs use the same OMB metropolitan area definitions, as revised by HUD, that are used for the FY 2018 FMRs. Survey Data Used To Produce AAFs The rent and fuel and utilities inflation factors for large metropolitan areas and Census regions are based on changes in the rent of primary residence and fuels and utilities CPI indices from 2015 to 2016. The CEX data used to decompose the contract rent inflation factor into gross rent and shelter rent inflation factors come from a special tabulation of 2016 CEX survey data produced for HUD. The utility-to-rent ratio used to produce AAFs comes from 2015 ACS median rent and utility costs. 1 CPI indexes CUUSA103SEHA and CUSR0000SAH2 respectively. 2 The formulas used to produce these factors can be found in the Annual Adjustment Factors overview and in the FMR documentation at www.HUDUSER.gov. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 Area Definitions To make certain that they are using the correct AAFs, users should refer to the Area Definitions Table section at http://www.huduser.gov/portal/ datasets/aaf.html. The Area Definitions Table lists CPI areas in alphabetical order by state, and the associated Census region is shown next to each state name. Areas whose AAFs are determined by local CPI surveys are listed first. All metropolitan areas with local CPI surveys have separate AAF schedules and are shown with their corresponding county definitions or as metropolitan counties. In the six New England states, the listings are for counties or parts of counties as defined by towns or cities. The remaining E:\FR\FM\08NON1.SGM 08NON1 51856 Federal Register / Vol. 82, No. 215 / Wednesday, November 8, 2017 / Notices Dated: November 1, 2017. Todd M. Richardson, Deputy Assistant Secretary, Office of Policy Development, Office of Policy Development and Research. [FR Doc. 2017–24330 Filed 11–7–17; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service [Docket No. FWS–HQ–IA–2017–0070; FXIA16710900000–178–FF09A30000] Endangered Species; Marine Mammal Receipt of Applications for Permit AGENCY: Fish and Wildlife Service, Interior. Notice of receipt of applications for permit. ACTION: We, the U.S. Fish and Wildlife Service, invite the public to comment on the following applications to conduct certain activities with endangered species, marine mammals, or both. With some exceptions, the Endangered Species Act (ESA) and Marine Mammal Protection Act (MMPA) prohibit activities with listed species unless Federal authorization is acquired that allows such activities. DATES: We must receive comments or requests for documents on or before December 8, 2017. ADDRESSES: Submitting Comments: You may submit comments by one of the following methods: • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments on Docket No. FWS–HQ–IA–2017–0070. • U.S. mail or hand-delivery: Public Comments Processing, Attn: Docket No. FWS–HQ–IA–2017–0070; U.S. Fish and Wildlife Service Headquarters, MS: BPHC; 5275 Leesburg Pike, Falls Church, VA 22041–3803. When submitting comments, please indicate the name of the applicant and ethrower on DSK3G9T082PROD with NOTICES SUMMARY: VerDate Sep<11>2014 17:26 Nov 07, 2017 Jkt 244001 the PRT# you are commenting on. We will post all comments on http:// www.regulations.gov. This generally means that we will post any personal information you provide us (see the Public Comments section for more information). Viewing Comments: Comments and materials we receive will be available for public inspection on http:// www.regulations.gov, or by appointment, between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays, at the U.S. Fish and Wildlife Service, Division of Management Authority, 5275 Leesburg Pike, Falls Church, VA 22041–3803; telephone 703–358–2095. FOR FURTHER INFORMATION CONTACT: Joyce Russell, Government Information Specialist, Division of Management Authority, U.S. Fish and Wildlife Service Headquarters, MS: IA; 5275 Leesburg Pike, Falls Church, VA 22041– 3803; telephone 703–358–2023; facsimile 703–358–2280. SUPPLEMENTARY INFORMATION: delivered to an address other than those listed above (see ADDRESSES). I. Public Comment Procedures counties use the CPI for the Census Region and are not separately listed in the Area Definitions Table at http:// www.huduser.gov/portal/datasets/ aaf.html. Puerto Rico uses its own AAFs calculated from the Puerto Rico CPI as adjusted by the PRCS, the Virgin Islands uses the South Region AAFs and the Pacific Islands uses the West Region AAFs. All areas in Hawaii use the AAFs listed next to ‘‘Hawaii’’ in the Tables which are based on the CPI survey for the Honolulu metropolitan area. The Pacific Islands use the West Region AAFs. II. Background A. How do I request copies of applications or comment on submitted applications? To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(a)(1)(A) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.; ESA), and the Marine Mammal Protection Act of 1972, as amended (16 U.S.C. 1361 et seq.), along with Executive Order 13576, ‘‘Delivering an Efficient, Effective, and Accountable Government,’’ and the President’s Memorandum for the Heads of Executive Departments and Agencies of January 21, 2009—Transparency and Open Government (74 FR 4685; January 26, 2009), which call on all Federal agencies to promote openness and transparency in Government by disclosing information to the public, we invite public comment on these permit applications before final action is taken. Under the MMPA, you may request a hearing on any MMPA application received. If you request a hearing, give specific reasons why a hearing would be appropriate. The holding of such a hearing is at the discretion of the Service Director. Send your request for copies of applications or comments and materials concerning any of the applications to the contact listed under FOR FURTHER INFORMATION CONTACT. Please include the Federal Register notice publication date, the PRT-number, and the name of the applicant in your request or submission. We will not consider requests or comments sent to an email or address not listed under ADDRESSES. If you provide an email address in your request for copies of applications, we will attempt to respond to your request electronically. Please make your requests or comments as specific as possible. Please confine your comments to issues for which we seek comments in this notice, and explain the basis for your comments. Include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include. The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) Those that include citations to, and analyses of, the applicable laws and regulations. We will not consider or include in our administrative record comments we receive after the close of the comment period (see DATES) or comments PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 B. May I review comments submitted by others? Comments, including names and street addresses of respondents, will be available for public review at the street address listed under ADDRESSES. The public may review documents and other information applicants have sent in support of the application unless our allowing viewing would violate the Privacy Act or Freedom of Information Act. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. III. Permit Applications We invite the public to comment on applications to conduct certain activities with endangered species. With some exceptions, the Endangered Species Act (16 U.S.C. 1531 et seq.; ESA) prohibits activities with listed species unless Federal authorization is acquired that allows such activities. E:\FR\FM\08NON1.SGM 08NON1

Agencies

[Federal Register Volume 82, Number 215 (Wednesday, November 8, 2017)]
[Notices]
[Pages 51853-51856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24330]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6059-N-01]


Section 8 Housing Assistance Payments Program--Annual Adjustment 
Factors, Fiscal Year 2018

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research, HUD.

ACTION: Notice of Fiscal Year (FY) 2018 Annual Adjustment Factors 
(AAFs).

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

SUMMARY: The United States Housing Act of 1937 requires that certain 
assistance contracts signed by owners participating in the Department's 
Section 8 housing assistance payment programs provide annual 
adjustments to monthly rentals for units covered by the contracts. This 
notice announces FY 2018 AAFs for adjustment of contract rents on the 
anniversary of those assistance contracts. The factors are based on a 
formula using residential rent and utility cost changes from the most 
recent annual Bureau of Labor Statistics Consumer Price Index (CPI) 
survey. Beginning with the FY 2014 AAFs and continuing with these FY 
2018 AAFs, the Puerto Rico CPI is used in place of the South Region CPI 
for all areas in Puerto Rico. These factors are applied at the 
anniversary of Housing Assistance Payment (HAP) contracts for which 
rents are to be adjusted using the AAF for those calendar months 
commencing after the effective date of this notice. AAFs are distinct 
from, and do not apply to the same properties as, Operating Cost 
Adjustment Factors (OCAFs). OCAFs are annual factors used to adjust 
rents for project-based rental assistance contracts issued under 
Section 8 of the United States Housing Act of 1937 and renewed under 
section 515 or section 524 of the Multifamily Assisted Housing Reform 
and Affordability Act of 1997 (MAHRA). A separate Federal Register 
Notice, to be published at a later date, will be used in the 
calculation of the calendar year (CY) 2018 Housing Choice Voucher (HCV) 
renewal funding for public housing agencies (PHAs).

DATES: Applicable November 8, 2017.

FOR FURTHER INFORMATION CONTACT: Contact Becky Primeaux, Director, 
Management and Operations Division, Office of Housing Voucher Programs, 
Office of Public and Indian Housing, 202-708-1380, for questions 
relating to the Project-Based Certificate and Moderate Rehabilitation 
programs (not the Single Room Occupancy program); Norman A. Suchar, 
Director, Office of Special Needs Assistance Programs, Office of 
Community Planning and Development, 202-402-5015, for questions 
regarding the Single Room Occupancy (SRO) Moderate Rehabilitation 
program; Katherine Nzive, Director, OAMPO Program Administration 
Office, Office of Multifamily Housing, 202-402-3440, for questions 
relating to all other Section 8 programs; and Marie Lihn, Economist, 
Economic and Market Analysis Division, Office of Policy Development and 
Research, 202-402-5866, for technical information regarding the 
development of the schedules for specific areas or the methods used for 
calculating the AAFs. The mailing address for these individuals is: 
Department of Housing and Urban Development, 451 7th Street SW., 
Washington, DC 20410. Hearing- or speech-impaired persons may contact 
the Federal Information Relay Service at 800-877-8339 (TTY). (Other 
than the ``800'' TTY number, the above-listed telephone numbers are not 
toll free.)

SUPPLEMENTARY INFORMATION: Tables showing AAFs will be available 
electronically from the HUD data information page at http://www.huduser.gov/portal/datasets/aaf.html.

I. Applying AAFs to Various Section 8 Programs

    AAFs established by this Notice are used to adjust contract rents 
for units assisted in certain Section 8 housing

[[Page 51854]]

assistance payment programs during the initial (i.e., pre-renewal) term 
of the HAP contract and for all units in the Project-Based Certificate 
program. There are three categories of Section 8 programs that use the 
AAFs:
    Category 1: The Section 8 New Construction, Substantial 
Rehabilitation, and Moderate Rehabilitation programs;
    Category 2: The Section 8 Loan Management (LM) and Property 
Disposition (PD) programs; and
    Category 3: The Section 8 Project-Based Certificate (PBC) program.
    Each Section 8 program category uses the AAFs differently. The 
specific application of the AAFs is determined by the law, the HAP 
contract, and appropriate program regulations or requirements.
    AAFs are not used in the following cases:
    Renewal Rents. AAFs are not used to determine renewal rents after 
expiration of the original Section 8 HAP contract (either for projects 
where the Section 8 HAP contract is renewed under a restructuring plan 
adopted under 24 CFR part 401; or renewed without restructuring under 
24 CFR part 402), except in the Project-Based Certificate program 
(Category 3). In general, renewal rents are established in accordance 
with the statutory provision in the Multifamily Assisted Housing Reform 
and Affordability Act of 1997 (MAHRA), as amended, under which the HAP 
is renewed. After renewal, annual rent adjustments will be provided in 
accordance with MAHRA.
    Budget-based Rents. AAFs are not used for budget-based rent 
adjustments. For projects receiving Section 8 subsidies under the LM 
program (24 CFR part 886, subpart A) and for projects receiving Section 
8 subsidies under the PD program (24 CFR part 886, subpart C), contract 
rents are adjusted, at HUD's option, either by applying the AAFs or by 
budget-based adjustments in accordance with 24 CFR 886.112(b) and 24 
CFR 886.312(b). Budget-based adjustments are used for most Section 8/
202 projects.
    Housing Choice Voucher Program. AAFs are not used to adjust rents 
in the Tenant-Based or the Project-Based Voucher programs.

II. Adjustment Procedures

    This section of the notice provides a broad description of 
procedures for adjusting the contract rent. Technical details and 
requirements are described in HUD notices H 2002-10 (Section 8 New 
Construction and Substantial Rehabilitation, Loan Management, and 
Property Disposition) and PIH 97-57 (Moderate Rehabilitation and 
Project-Based Certificates). Because of statutory and structural 
distinctions among the various Section 8 programs, there are separate 
rent adjustment procedures for the three program categories:

Category 1: Section 8 New Construction, Substantial Rehabilitation, and 
Moderate Rehabilitation Programs

    In the Section 8 New Construction and Substantial Rehabilitation 
programs, the published AAF factor is applied to the pre-adjustment 
contract rent. In the Section 8 Moderate Rehabilitation program (both 
the regular program and the single room occupancy program) the 
published AAF is applied to the pre-adjustment base rent.
    For Category 1 programs, the Table 1 AAF factor is applied before 
determining comparability (rent reasonableness). Comparability applies 
if the pre-adjustment gross rent (pre-adjustment contract rent plus any 
allowance for tenant-paid utilities) is above the published Fair Market 
Rent (FMR).
    If the comparable rent level (plus any initial difference) is lower 
than the contract rent as adjusted by application of the Table 1 AAF, 
the comparable rent level (plus any initial difference) will be the new 
contract rent. However, the pre-adjustment contract rent will not be 
decreased by application of comparability.
    In all other cases (i.e., unless the contract rent is reduced by 
comparability):
     Table 1 AAF is used for a unit occupied by a new family 
since the last annual contract anniversary.
     Table 2 AAF is used for a unit occupied by the same family 
as at the time of the last annual contract anniversary.

Category 2: Section 8 Loan Management Program (24 CFR Part 886, Subpart 
A) and Property Disposition Program (24 CFR Part 886, Subpart C)

    Category 2 programs are not currently subject to comparability. 
Comparability will again apply if HUD establishes regulations for 
conducting comparability studies under 42 U.S.C. 1437f(c)(2)(C).
    The applicable AAF is determined as follows:
     Table 1 AAF is used for a unit occupied by a new family 
since the last annual contract anniversary.
     Table 2 AAF is used for a unit occupied by the same family 
as at the time of the last annual contract anniversary.

Category 3: Section 8 Project-Based Certificate Program

    Under the PBC program, the PHA and owner must have executed an 
Agreement to enter a HAP contract before January 16, 2001. The 
aggregate total term of the PBC HAP contract (the initial and any 
renewal terms) may not exceed 15 years. Therefore, most PBC HAP 
contracts have expired (or have been renewed as a project-based voucher 
contract in accordance with 24 CFR 983.10(b)(1)(ii)). In the case of a 
PBC HAP contract that is still in effect, the following procedures are 
used to adjust contract rent:
     Table 2 AAF is always used. The Table 1 AAF is not used.
     Table 2 AAF is always applied before determining 
comparability (rent reasonableness).
     Comparability always applies. If the comparable rent level 
is lower than the rent to owner (contract rent) as adjusted by 
application of the Table 2 AAF, the comparable rent level will be the 
new rent to owner.
     The new rent to owner will not be reduced below the 
contract rent on the effective date of the HAP contract.

III. When To Use Reduced AAFs (From AAF Table 2)

    In accordance with Section 8(c)(2)(A) of the United States Housing 
Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF is reduced by 0.01:
     For all tenancies assisted in the Section 8 Project-Based 
Certificate program.
     In other Section 8 programs, for a unit occupied by the 
same family at the time of the last annual rent adjustment (and where 
the rent is not reduced by application of comparability (rent 
reasonableness)).
The law provides that:

    Except for assistance under the certificate program, for any 
unit occupied by the same family at the time of the last annual 
rental adjustment, where the assistance contract provides for the 
adjustment of the maximum monthly rent by applying an annual 
adjustment factor and where the rent for a unit is otherwise 
eligible for an adjustment based on the full amount of the factor, 
0.01 shall be subtracted from the amount of the factor, except that 
the factor shall not be reduced to less than 1.0. In the case of 
assistance under the certificate program, 0.01 shall be subtracted 
from the amount of the annual adjustment factor (except that the 
factor shall not be reduced to less than 1.0), and the adjusted rent 
shall not exceed the rent for a comparable unassisted unit of 
similar quality, type and age in the market area. 42 U.S.C. 
1437f(c)(2)(A).

Legislative history for this statutory provision states that ``the 
rationale [for lower AAFs for non-turnover units is]

[[Page 51855]]

that operating costs are less if tenant turnover is less . . .'' (see 
Department of Veteran Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations for 1995, Hearings Before a 
Subcommittee of the Committee on Appropriations 103d Cong., 2d Sess. 
591 (1994)). The Congressional Record also states the following:

    Because the cost to owners of turnover-related vacancies, 
maintenance, and marketing are lower for long-term stable tenants, 
these tenants are typically charged less than recent movers in the 
unassisted market. Since HUD pays the full amount of any rent 
increases for assisted tenants in section 8 projects and under the 
Certificate program, HUD should expect to benefit from this `tenure 
discount.' Turnover is lower in assisted properties than in the 
unassisted market, so the effect of the current inconsistency with 
market-based rent increases is exacerbated. (140 Cong. Rec. 8659, 
8693 (1994)).

    To implement the law, HUD publishes two separate AAF Tables, Table 
1 and Table 2. The difference between Table 1 and Table 2 is that each 
AAF in Table 2 is 0.01 less than the corresponding AAF in Table 1. 
Where an AAF in Table 1 would otherwise be less than 1.0, it is set at 
1.0, as required by statute; the corresponding AAF in Table 2 will also 
be set at 1.0, as required by statute.

IV. How To Find the AAF

    AAF Table 1 and Table 2 are posted on the HUD User Web site at 
http://www.huduser.gov/portal/datasets/aaf.html. There are two columns 
in each AAF table. The first column is used to adjust contract rent for 
rental units where the highest cost utility is included in the contract 
rent, i.e., where the owner pays for the highest cost utility. The 
second column is used where the highest cost utility is not included in 
the contract rent, i.e., where the tenant pays for the highest cost 
utility.
    The applicable AAF is selected as follows:
     Determine whether Table 1 or Table 2 is applicable. In 
Table 1 or Table 2, locate the AAF for the geographic area where the 
contract unit is located.
     Determine whether the highest cost utility is or is not 
included in contract rent for the contract unit.
     If highest cost utility is included, select the AAF from 
the column for ``Highest Cost Utility Included.'' If highest cost 
utility is not included, select the AAF from the column for ``Highest 
Cost Utility Excluded.''

V. Methodology

    AAFs are rent inflation factors. Two types of rent inflation 
factors are calculated for AAFs: Gross rent factors and shelter rent 
factors. The gross rent factor accounts for inflation in the cost of 
both the rent of the residence and the utilities used by the unit; the 
shelter rent factor accounts for the inflation in the rent of the 
residence, but does not reflect any change in the cost of utilities. 
The gross rent inflation factor is designated as ``Highest Cost Utility 
Included'' and the shelter rent inflation factor is designated as 
``Highest Cost Utility Excluded.''
    AAFs are calculated using CPI data on ``rent of primary residence'' 
and ``fuels and utilities.'' \1\ The CPI inflation index for rent of 
primary residence measures the inflation of all surveyed units 
regardless of whether utilities are included in the rent of the unit or 
not. In other words, it measures the inflation of the ``contract rent'' 
which includes units with all utilities included in the rent, units 
with some utilities included in the rent, and units with no utilities 
included in the rent. In producing a gross rent inflation factor and a 
shelter rent inflation factor, HUD decomposes the contract rent CPI 
inflation factor into parts to represent the gross rent change and the 
shelter rent change. This is done by applying data from the Consumer 
Expenditure Survey (CEX) on the percentage of renters who pay for heat 
(a proxy for the percentage of renters who pay shelter rent) and also 
American Community Survey (ACS) data on the ratio of utilities to 
rents. For Puerto Rico, the Puerto Rico Community Survey (PRCS) is used 
to determine the ratio of utilities to rents, resulting in different 
AAFs for some metropolitan areas in Puerto Rico.\2\
---------------------------------------------------------------------------

    \1\ CPI indexes CUUSA103SEHA and CUSR0000SAH2 respectively.
    \2\ The formulas used to produce these factors can be found in 
the Annual Adjustment Factors overview and in the FMR documentation 
at www.HUDUSER.gov.
---------------------------------------------------------------------------

Survey Data Used To Produce AAFs

    The rent and fuel and utilities inflation factors for large 
metropolitan areas and Census regions are based on changes in the rent 
of primary residence and fuels and utilities CPI indices from 2015 to 
2016. The CEX data used to decompose the contract rent inflation factor 
into gross rent and shelter rent inflation factors come from a special 
tabulation of 2016 CEX survey data produced for HUD. The utility-to-
rent ratio used to produce AAFs comes from 2015 ACS median rent and 
utility costs.

Geographic Areas

    AAFs are produced for all Class A CPI cities (CPI cities with a 
population of 1.5 million or more) and for the four Census Regions. 
They are applied to Core-Based Statistical Areas (CBSAs) where more 
than 75 percent of the population of the CBSA is covered by the CPI 
city-survey. The AAF that is based on that CPI survey is applied to the 
whole CBSA and to any HUD-defined metropolitan area, called the ``HUD 
Metro FMR Area'' (HMFA), within that CBSA. If the CBSA is not covered 
by a CPI city-survey, the CBSA uses the relevant regional CPI factor. 
All non-metropolitan counties use regional CPI factors, except for 
those that are in CPI cities, but have been dropped from metropolitan 
area by OMB definitions (Lenawee County, MI; Ashtabula County, OH; 
Henderson County, TX; King George County, VA; Island County, WA). For 
areas assigned the Census Region CPI factor, both metropolitan and non-
metropolitan areas receive the same factor.
    Each metropolitan area that uses a local CPI update factor is 
listed alphabetically in the tables and each HMFA is listed 
alphabetically within its respective CBSA. Each AAF applies to a 
specific geographic area and to units of all bedroom sizes. AAFs are 
provided:
     For separate metropolitan areas, including HMFAs and 
counties that are currently designated as non-metropolitan, but are 
part of the metropolitan area defined in the local CPI survey.
     For the four Census Regions (to be used for those 
metropolitan and non-metropolitan areas that are not covered by a CPI 
city-survey).
    AAFs use the same OMB metropolitan area definitions, as revised by 
HUD, that are used for the FY 2018 FMRs.

Area Definitions

    To make certain that they are using the correct AAFs, users should 
refer to the Area Definitions Table section at http://www.huduser.gov/portal/datasets/aaf.html. The Area Definitions Table lists CPI areas in 
alphabetical order by state, and the associated Census region is shown 
next to each state name. Areas whose AAFs are determined by local CPI 
surveys are listed first. All metropolitan areas with local CPI surveys 
have separate AAF schedules and are shown with their corresponding 
county definitions or as metropolitan counties. In the six New England 
states, the listings are for counties or parts of counties as defined 
by towns or cities. The remaining

[[Page 51856]]

counties use the CPI for the Census Region and are not separately 
listed in the Area Definitions Table at http://www.huduser.gov/portal/datasets/aaf.html.
    Puerto Rico uses its own AAFs calculated from the Puerto Rico CPI 
as adjusted by the PRCS, the Virgin Islands uses the South Region AAFs 
and the Pacific Islands uses the West Region AAFs. All areas in Hawaii 
use the AAFs listed next to ``Hawaii'' in the Tables which are based on 
the CPI survey for the Honolulu metropolitan area. The Pacific Islands 
use the West Region AAFs.

    Dated: November 1, 2017.
Todd M. Richardson,
Deputy Assistant Secretary, Office of Policy Development, Office of 
Policy Development and Research.
[FR Doc. 2017-24330 Filed 11-7-17; 8:45 am]
 BILLING CODE 4210-67-P