Section 8 Housing Assistance Payments Program-Annual Adjustment Factors, Fiscal Year 2019, 66726-66729 [2018-28097]

Download as PDF 66726 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices regularly scheduled air carrier operations. Further, DHS will notify the news media of this determination. In addition, as a result of this determination, 49 U.S.C. 44907(d)(l)(B) requires that each United States and foreign air carrier (and their agents) providing transportation between the United States and MNL will provide written notice of DHS’s determination to each passenger buying a ticket for transportation between the United States and MNL. Dated: December 18, 2018. Kirstien M. Nielsen, Secretary of Homeland Security. [FR Doc. 2018–27983 Filed 12–26–18; 8:45 am] BILLING CODE 9110–14–P DEPARTMENT OF HOMELAND SECURITY Transportation Security Administration New Agency Information Collection Activity Under OMB Review: Law Enforcement Officers (LEOs) Flying Armed Transportation Security Administration, DHS. ACTION: 30-Day notice. AGENCY: This notice announces that the Transportation Security Administration (TSA) has forwarded the new Information Collection Request (ICR) abstracted below to the Office of Management and Budget (OMB) for review and approval under the Paperwork Reduction Act (PRA). The ICR describes the nature of the information collection and its expected burden. The collection involves gathering information from Federal, State, local, and tribal armed law enforcement officers (LEOs) who require specialized screening at the TSA checkpoint. DATES: Send your comments by January 28, 2019. A comment to OMB is most effective if OMB receives it within 30 days of publication. ADDRESSES: Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, OMB. Comments should be addressed to Desk Officer, Department of Homeland Security/TSA, and sent via electronic mail to dhsdeskofficer@ omb.eop.gov. FOR FURTHER INFORMATION CONTACT: Christina A. Walsh, TSA PRA Officer, Information Technology (IT), TSA–11, Transportation Security Administration, 601 South 12th Street, Arlington, VA khammond on DSK30JT082PROD with NOTICES SUMMARY: VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 20598–6011; telephone (571) 227–2062; email TSAPRA@tsa.dhs.gov. SUPPLEMENTARY INFORMATION: TSA published a Federal Register notice, with a 60-day comment period soliciting comments, of the following collection of information on July 27, 2018, 83 FR 35675. Comments Invited In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The ICR documentation will be available at https://www.reginfo.gov upon its submission to OMB. Therefore, in preparation for OMB review and approval of the following information collection, TSA is soliciting comments to— (1) Evaluate whether the proposed information requirement is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency’s estimate of the burden; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond, including using appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Consistent with the requirements of Executive Order (E.O.) 13771, Reducing Regulation and Controlling Regulatory Costs, and E.O. 13777, Enforcing the Regulatory Reform Agenda, TSA is also requesting comments on the extent to which this request for information could be modified to reduce the burden on respondents. Information Collection Requirement Title: Law Enforcement Officers (LEOs) Flying Armed. Type of Request: New collection. OMB Control Number: 1652–XXXX. Form(s): TSA Form 413A, Checkpoint Sign-In Log. Affected Public: Federal, state, local, and tribal armed LEOs. Abstract: Under 49 CFR 1540.111(b), LEOs may carry a firearm or other weapons while in the performance of law enforcement duties at the airport. In addition, LEOs may fly armed if they meet the requirements of 49 CFR 1544.219. TSA has established a specialized screening process for Federal, State, local, and tribal LEOs when they are flying armed. To PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 document completion of TSA’s specialized screening process, LEOs who traverse a TSA checkpoint must complete TSA Form 413A, Checkpoint Sign-in Log. This process confirms, documents, and memorializes that LEOs have met the requirements of 49 CFR 1544.219, presented themselves at the airport for specialized screening with authenticated credentials, and are flying armed to conduct or in furtherance of official law enforcement duties. Number of Respondents: 68,000. Estimated Annual Burden Hours: An estimated 1,133 hours annually. Dated: December 18, 2018. Christina A. Walsh, TSA Paperwork Reduction Act Officer, Information Technology. [FR Doc. 2018–27942 Filed 12–26–18; 8:45 am] BILLING CODE 9110–05–P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–6134–N–01] Section 8 Housing Assistance Payments Program-Annual Adjustment Factors, Fiscal Year 2019 Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Notice of Fiscal Year (FY) 2019 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 2019 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 2019 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 SUMMARY: E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 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 following the finalization of the FY 2019 federal appropriations, will be used in the calculation of the calendar year (CY) 2019 Housing Choice Voucher (HCV) renewal funding for public housing agencies (PHAs). DATES: December 27, 2018. 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.) Tables showing AAFs will be available electronically from the HUD data information page at https:// www.huduser.gov/portal/datasets/ aaf.html. SUPPLEMENTARY INFORMATION: II. Adjustment Procedures khammond on DSK30JT082PROD with NOTICES 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 assistance payment programs during the initial (i.e., pre-renewal) term of the HAP contract. There are two categories of Section 8 programs that use the AAFs: VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 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. 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). 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. 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 ProjectBased Certificates). Because of statutory and structural distinctions among the various Section 8 programs, there are separate rent adjustment procedures for the two program categories: PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 66727 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. 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: In Section 8 programs, for a unit occupied by the same family at the time E:\FR\FM\27DEN1.SGM 27DEN1 66728 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 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] 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: khammond on DSK30JT082PROD with NOTICES 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. IV. How to Find the AAF AAF Table 1 and Table 2 are posted on the HUD User website at https:// www.huduser.gov/portal/datasets/ aaf.html. There are two columns in each AAF table. The first column is used to VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 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 1 CPI indexes CUUSA103SEHA and CUSR0000SAH2 respectively. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 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 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 2016 to 2017. 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 2017 CEX survey data produced for HUD. The utility-to-rent ratio used to produce AAFs comes from 2016 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 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 non2 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. E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 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 2019 FMRs. Area Definitions To make certain that they are using the correct AAFs, users should refer to the Area Definitions Table section at https://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 counties use the CPI for the Census Region and are not separately listed in the Area Definitions Table at https:// 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. Dated: December 20, 2018. Todd M. Richardson, General Deputy Assistant Secretary for Office of Policy Development and Research. [FR Doc. 2018–28097 Filed 12–26–18; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–7006–N–15] 60-Day Notice of Proposed Information Collection: Comment Request: Agency Information Collection Activities: Public Housing Annual Contributions Contract for Capital and Operating Grant Funds Office of the Assistant Secretary for Public and Indian Housing, HUD. ACTION: Notice. khammond on DSK30JT082PROD with NOTICES AGENCY: HUD is seeking approval from the Office of Management and Budget (OMB) for the information and collection described below. The public housing program provides Operating SUMMARY: VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 Funds and Capital Funds to low rent projects owned and operated by public housing agencies (PHAs), subject to the terms and conditions contained in the Annual Contributions Contract (ACC) grant agreement. These program requirements govern how projects are funded and operated by PHAs. HUD has made changes and updates to its grant agreement, the Annual Contributions Contract (ACC) (the ‘‘New ACC’’), based on current applicable statutes and regulations. This notice is to provide PHAs with notice of the changes and the opportunity to comment on such changes. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment. DATES: Comments Due Date: February 25, 2019. ADDRESSES: Interested persons are invited to submit comments regarding this proposal. All comments must refer to the proposal by name and OMB Control Number. There are two methods for submitting public comments. 1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410–0500. 2. Electronic Submission of Comments. Interested persons may also submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the www.regulations.gov website can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically. Note: To receive consideration as public comments, comments must be submitted through one of the methods specified above. Again, all submissions must refer to the docket number and title of the notice. No Facsimiled Comments. Facsimiled (faxed) comments are not acceptable. Public Inspection of Public Comments. Copies of all comments submitted are available for inspection and downloading at PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 66729 www.regulations.gov. In addition, all properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m., weekdays, at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202–708– 3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at 800–877–8339 (this is a tollfree number). FOR FURTHER INFORMATION CONTACT: Arlette Mussington, Office of Policy, Programs and Legislative Initiatives, PIH, Department of Housing and Urban Development, 451 7th Street SW, Room 3178, Washington, DC 20410; telephone 202–402–4109, (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877– 8339. Copies of available documents submitted to OMB may be obtained from Ms. Mussington. SUPPLEMENTARY INFORMATION: This notice informs the public that the Department is re-submitting the proposed information collection to OMB for review, under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended). HUD is seeking approval from OMB for the information collection described in Section A. A. Overview of Information Collection Title of Information Collection: Public Housing Annual Contributions Contract for Capital and Operating Grant Funds.1 OMB Approval Number: 2577–0075. Type of Request: Revision of a currently approved collection. Form Number: HUD–52840A; HUD– 53012A; HUD–53012 B. Description of the need for the information and proposed use: The ACC establishes the basic terms and conditions for the PHA’s public housing programs and requires the PHA to manage and operate its public housing properties in accordance with the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) (1937 Act) and all applicable HUD requirements. The ACC governs the award and use of two distinct public housing grant funds. The Capital Fund Program (CFP) provides financial assistance in the form of grants 1 The previous title was ‘‘Public Housing Annual Contribution Contract and Inventory Removal Application’’. E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66726-66729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28097]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6134-N-01]


Section 8 Housing Assistance Payments Program-Annual Adjustment 
Factors, Fiscal Year 2019

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

ACTION: Notice of Fiscal Year (FY) 2019 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 2019 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 
2019 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

[[Page 66727]]

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 following the finalization of the FY 2019 
federal appropriations, will be used in the calculation of the calendar 
year (CY) 2019 Housing Choice Voucher (HCV) renewal funding for public 
housing agencies (PHAs).

DATES: December 27, 2018.

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 https://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 assistance payment 
programs during the initial (i.e., pre-renewal) term of the HAP 
contract. There are two 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.
    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). 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 two 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.

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:
    In Section 8 programs, for a unit occupied by the same family at 
the time

[[Page 66728]]

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] 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 website at 
https://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 2016 to 
2017. 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 2017 CEX survey data produced for HUD. The utility-to-
rent ratio used to produce AAFs comes from 2016 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-

[[Page 66729]]

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 2019 FMRs.

Area Definitions

    To make certain that they are using the correct AAFs, users should 
refer to the Area Definitions Table section at https://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 counties use the CPI for the Census 
Region and are not separately listed in the Area Definitions Table at 
https://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.

    Dated: December 20, 2018.
Todd M. Richardson,
General Deputy Assistant Secretary for Office of Policy Development and 
Research.
[FR Doc. 2018-28097 Filed 12-26-18; 8:45 am]
 BILLING CODE 4210-67-P
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