Section 8 Housing Assistance Payments Program-Annual Adjustment Factors, Fiscal Year 2021, 81949-81952 [2020-27708]
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81949
Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices
This
notice informs the public that HUD has
submitted to OMB a request for
approval of the information collection
described in Section A. The Federal
Register notice that solicited public
comment on the information collection
for a period of 60 days was published
on September 23, 2020 at 85 FR 59816.
SUPPLEMENTARY INFORMATION:
A. Overview of Information Collection
Title of Information Collection:
Emergency Waivers Reporting.
OMB Approval Number: 2577–0292.
Type of Request: Extension of a
currently approved collection.
Form Numbers: HUD–5883, HUD–
5884, HUD–5885.
Description of the need for the
information and proposed use: The
purpose of this notice is to solicit public
comment on the proposed Emergency
Waivers Reporting.
In response to the national COVID–19
emergency, the Coronavirus Aid, Relief,
and Economic Security Act (CARES
Act) was enacted on March 27, 2020.
The Act gives the Department the ability
to waive regulatory and statutory
provisions that apply to Public Housing
Agencies (PHAs). Specifically, the
CARES Act allows the Secretary of HUD
to ‘‘waive, or specify alternative
requirements for, any provision of any
statute or regulation (except for
requirements related to fair housing,
nondiscrimination, labor standards, and
the environment) . . . . upon a finding
by the Secretary that any such waivers
or alternative requirements are
necessary for the safe and effective
administration of these funds . . . to
prevent, prepare for, and respond to
coronavirus.’’
HUD issued a notice detailing the
waivers available in response to the
COVID–19 crisis, posted on April 10,
2020, as PIH Notice 2020–05. This
notice states: PHAs are required to keep
written documentation that record
which waivers the PHA applied to their
programs(s) and the effective dates.
Number of
respondents
Information collection
Frequency
of response
Responses
per annum
In response to presidentially declared
Major Disaster Declarations (MDDs),
FR–6050–N–04 is: Relief from HUD
Public Housing and Section 8
Requirements Available During CY2020
and CY2021 to Public Housing Agencies
to Assist with Recovery and Relief
Efforts. This notice lists the specific
waivers and relief options available for
use by PHAs.
No respondent is mandated to use a
waiver but use of the waivers is
encouraged by HUD in response to
specific emergencies to reduce burdens
and administrative requirements. The
notice announcing the availability of
waivers becomes the checklist which
respondents use to note responses as to
which waivers they elected to use and
their start date.
Estimation of the total numbers of
hours needed to prepare the information
collection including number of
respondents, frequency of responses,
and hours of response:
Burden
hour per
response
Annual
burden
hours
Hourly cost
Total
annual cost
HUD–5883 ...................................................................
HUD–5884 ...................................................................
HUD–5885 ...................................................................
3,800
300
1,000
1
1
1
3,800
300
1,000
1
1
1
3,800
300
1,000
36.86
36.86
36.86
$140,068
11,058
36,860
Total .....................................................................
5,100
1
5,100
1
5,100
36.86
187,986
B. Solicitation of Public Comment
This notice is soliciting comments
from members of the public and affected
parties concerning the collection of
information described in Section A on
the following:
(1) Whether the proposed collection
of information is necessary for the
proper performance of the functions of
the agency, including whether the
information will have practical utility;
(2) The accuracy of the agency’s
estimate of the burden of the proposed
collection of information;
(3) Ways to enhance the quality,
utility, and clarity of the information to
be collected; and
(4) Ways to minimize the burden of
the collection of information on those
who are to respond; including through
the use of appropriate automated
collection techniques or other forms of
information technology, e.g., permitting
electronic submission of responses.
(5) Ways to minimize the burden of
the collection of information on those
who are to respond, including the use
of automated collection techniques or
other forms of information technology.
HUD encourages interested parties to
submit comment in response to these
questions
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18:52 Dec 16, 2020
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C. Authority
Section 3507 of the Paperwork
Reduction Act of 1995, 44 U.S.C.
Chapter 35.
Colette Pollard,
Department Reports Management Officer,
Office of the Chief Information Officer.
[FR Doc. 2020–27770 Filed 12–16–20; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[FR–6241–N–01]
Section 8 Housing Assistance
Payments Program—Annual
Adjustment Factors, Fiscal Year 2021
Office of the Assistant
Secretary for Policy Development and
Research, Housing and Urban
Development (HUD).
ACTION: Notice of Fiscal Year (FY) 2021
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
SUMMARY:
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monthly rentals for units covered by the
contracts. This notice announces FY
2021 AAFs for adjustment of contract
rents on the anniversary of those
assistance contracts. A separate Federal
Register notice, to be published
following the finalization of the FY 2021
Federal appropriations, will be used in
the calculation of the calendar year (CY)
2021 Housing Choice Voucher (HCV)
renewal funding for public housing
agencies (PHAs).
DATES: The FY 2021 AAFs are effective
December 17, 2020.
FOR FURTHER INFORMATION 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,
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Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices
for questions relating to all other
Section 8 programs; and Marie Lihn,
Economist, Program Parameters and
Research 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.)
The
factors are based on a formula using
residential rent and utility cost changes
from the most recent annual Bureau of
Labor Statistics (BLS) Consumer Price
Index (CPI) survey. The FY 2020 AAFs
were the first to use the revised BLS
area definitions for local area CPI. The
revised area definitions for local CPI
reduced the number of metropolitan
areas covered by local data from 123
metropolitan areas (including some
nonmetro counties) that were formerly
in metropolitan areas to 70 metropolitan
areas. The AAFs 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).
Tables showing AAFs will be available
electronically from the HUD data
information page at https://
www.huduser.gov/portal/datasets/
aaf.html.
SUPPLEMENTARY INFORMATION:
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
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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 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 ProjectBased Certificates). 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.
Because of statutory and structural
distinctions among the various Section
8 programs, there are separate rent
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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 (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
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is reduced by 0.01 in 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]
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)).
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
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Jkt 253001
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
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81951
Survey Data Used To Produce AAFs
The rent inflation factor and fuel and
utilities inflation factor for each large
metropolitan area and Census region are
based, respectively, on changes in the
CPI index for rent of primary residence
and the CPI index for fuels and utilities
from 2018 to 2019. 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 2019 CEX survey data
produced for HUD. The utility-to-rent
ratio used to produce AAFs comes from
2018 ACS median rent and utility costs.
Geographic Areas
Beginning with the data collection for
2018, BLS revised the sample for the
CPI to be based on Core Based Statistical
Areas (CBSAs). Previously the sample
was based on Metropolitan Statistical
Areas (MSAs) as defined in 1998. In
addition, the population required to be
designated a Class A CPI city was
increased from 1.5 million to 2.5
million. The following major
metropolitan areas were eliminated
under the new sample design:
Pittsburgh PA, Cincinnati-Hamilton OHKY-IN, Cleveland-Akron OH,
Milwaukee-Racine WI, Kansas City MOKS, and Portland-Salem OR-WA. With
the change in metropolitan area
definitions and the designation of Class
A cities, the number of CPI cities
declined from 28 metropolitan areas to
23 metropolitan areas (Riverside-San
Bernardino has been split off from the
Los Angeles survey area). This decline
has resulted in fewer metropolitan
component areas receiving local CPI
adjustments, down to 70 metropolitan
areas and subareas (HUD Metro FMR
Areas) from 124 metropolitan and
nonmetropolitan areas. The 2018 CPI
data with new metropolitan area
definitions was first used with the FY
2020 AAFs. There are no longer any
nonmetropolitan areas using local CPI
inflation factors in the U.S. This change
did not impact Puerto Rico which
applies an island-wide CPI to all
metropolitan and nonmetropolitan
areas.
Each metropolitan area that uses a
local CPI update factor is listed
alphabetically in the tables and each
HUD Metro FMR Area (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 metropolitan areas at the MSA
or HMFA level.
overview and in the FMR documentation at
www.HUDUSER.gov.
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Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices
• For the four Census Regions (to be
used for those metropolitan areas that
are not covered by a CPI city-survey and
non-metropolitan areas).
AAFs use the same Office of
Management and Budget (OMB)
metropolitan area definitions, as revised
by HUD, that are used for the FY 2021
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 survey areas 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 use the West Region
AAFs.
Todd M. Richardson,
General Deputy Assistant Secretary, Office
of Policy Development and Research.
[FR Doc. 2020–27708 Filed 12–16–20; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF THE INTERIOR
Public Availability of Comments
Fish and Wildlife Service
• Written comments we receive will
become part of the public record
associated with this action. Please be
aware that your entire comment—
including your personal identifying
information, address, phone number,
and email—may be made publicly
available at any time. While you may
request in your comment that we
withhold your personal identifying
information from public review, we
cannot guarantee that we will be able to
do so. All submissions from
organizations or businesses, and from
individuals identifying themselves as
representatives or officials of
organizations or businesses, will be
made available for public disclosure in
their entirety.
[FWS–R2–NWRS–2020–N072;
FVRS84510200000–20X–FF02R05000]
Notice of Receipt of Right-of-Way
Application for Natural Gas Pipeline
Crossing San Bernard National Wildlife
Refuge
Fish and Wildlife Service,
Interior.
ACTION: Notice of Receipt of Right-ofWay Application for Natural Gas
Pipeline; request for comment.
AGENCY:
The U.S. Fish and Wildlife
Service has received two applications
for 30-year right-of-way permits from
Baymark Pipeline LLC and South Texas
NGL Pipeline LLC, respectively. The
U.S. Fish and Wildlife Service will open
the National Wildlife Refuge System
lands, allowing for this infrastructure,
under the authority of the National
Wildlife Refuge System Administration
Act. The U.S. Fish and Wildlife Service
requests public comment on the permit
applications and associated documents.
DATES: We must receive any written
comments on or before January 19,
2021.
SUMMARY:
Send your comments or
requests by any one of the following
methods.
• Email: jennifer_sanchez@fws.gov
(use ‘‘Enterprise ROW’’ as your subject
line).
• Fax: 979–964–4021 (use ‘‘Enterprise
ROW’’ as your subject line).
• U.S. mail: Project Leader, Texas
Mid-coast Complex, U.S. Fish and
Wildlife Service, 2547 County Road 316,
Brazoria, TX 77422.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Jennifer Sanchez, 979–964–4011
(phone), or jennifer_sanchez@fws.gov
(email). Individuals who are hearing or
speech impaired may call the Federal
Relay Service at 1–800–877–8339 for
TTY assistance.
The U.S.
Fish and Wildlife Service (Service), has
received two applications for 30-year
right-of-way (ROW) permits under the
Mineral Leasing Act.
SUPPLEMENTARY INFORMATION:
Applicants’ Permit Proposals
Baymark Pipeline LLC and South
Texas NGL Pipeline LLC have each
requested a 30-ft-wide pipeline right-ofway across a 203-ft-long section of the
San Bernard National Wildlife Refuge
NWR in Brazoria County, Texas.
The applicants request ROW permits
for the following pipelines:
Applicant
Pipeline description
Baymark Pipeline LLC ......................................................
South Texas NGL Pipeline LLC .......................................
12-inch-diameter pipeline, steel ......................................
8-inch-diameter pipeline, steel ........................................
The ROW permits, if granted by the
Service, would enable each respective
applicant to construct, operate,
maintain, and terminate an ethylene and
propylene pipeline. The purpose of the
new pipelines would be to transport
ethylene and propylene through
Matagorda, Brazoria, Galveston, and
Harris Counties in Texas. The requested
ROWs would be collocated within an
existing 30-fit pipeline ROW that is
used by Florida Gas and Lavaca to
transport natural gas. The existing
pipeline ROW is not an exclusive area;
therefore, additional uses may be
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18:52 Dec 16, 2020
Jkt 253001
collocated within the same cleared
corridor.
The applicants’ pipelines would be
installed by means of a conventional
bore technique under refuge land;
therefore, the construction would not
require trenching on refuge lands. No
additional permit boundaries beyond
the existing ROW are required. The bore
holes would be located 300 ft outside
the refuge property line on adjacent
private lands.
Next Steps
Material to be transported
permit applications from Baymark
Pipeline LLC and South Texas NGL
Pipeline LLC, which includes the
preparation of the National
Environmental Policy Act
documentation along with terms and
conditions of the right-of-way permit.
Authority
Applications for ROW for natural gas
pipelines are to be filed in accordance
with Section 28 of the Mineral Leasing
This notice informs the public that
the Service will process the ROW
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natural gas (ethylene).
natural gas (propylene).
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]]>Agencies
[Federal Register Volume 85, Number 243 (Thursday, December 17, 2020)]
[Notices]
[Pages 81949-81952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27708]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[FR-6241-N-01]
Section 8 Housing Assistance Payments Program--Annual Adjustment
Factors, Fiscal Year 2021
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, Housing and Urban Development (HUD).
ACTION: Notice of Fiscal Year (FY) 2021 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 2021 AAFs for adjustment of contract rents on the
anniversary of those assistance contracts. A separate Federal Register
notice, to be published following the finalization of the FY 2021
Federal appropriations, will be used in the calculation of the calendar
year (CY) 2021 Housing Choice Voucher (HCV) renewal funding for public
housing agencies (PHAs).
DATES: The FY 2021 AAFs are effective December 17, 2020.
FOR FURTHER INFORMATION 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,
[[Page 81950]]
for questions relating to all other Section 8 programs; and Marie Lihn,
Economist, Program Parameters and Research 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: The factors are based on a formula using
residential rent and utility cost changes from the most recent annual
Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) survey. The
FY 2020 AAFs were the first to use the revised BLS area definitions for
local area CPI. The revised area definitions for local CPI reduced the
number of metropolitan areas covered by local data from 123
metropolitan areas (including some nonmetro counties) that were
formerly in metropolitan areas to 70 metropolitan areas. The AAFs 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). 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 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). 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. 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
[[Page 81951]]
is reduced by 0.01 in 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] 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)).
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\
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\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.
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Survey Data Used To Produce AAFs
The rent inflation factor and fuel and utilities inflation factor
for each large metropolitan area and Census region are based,
respectively, on changes in the CPI index for rent of primary residence
and the CPI index for fuels and utilities from 2018 to 2019. 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 2019 CEX survey data produced for HUD. The utility-to-rent ratio
used to produce AAFs comes from 2018 ACS median rent and utility costs.
Geographic Areas
Beginning with the data collection for 2018, BLS revised the sample
for the CPI to be based on Core Based Statistical Areas (CBSAs).
Previously the sample was based on Metropolitan Statistical Areas
(MSAs) as defined in 1998. In addition, the population required to be
designated a Class A CPI city was increased from 1.5 million to 2.5
million. The following major metropolitan areas were eliminated under
the new sample design: Pittsburgh PA, Cincinnati-Hamilton OH-KY-IN,
Cleveland-Akron OH, Milwaukee-Racine WI, Kansas City MO-KS, and
Portland-Salem OR-WA. With the change in metropolitan area definitions
and the designation of Class A cities, the number of CPI cities
declined from 28 metropolitan areas to 23 metropolitan areas
(Riverside-San Bernardino has been split off from the Los Angeles
survey area). This decline has resulted in fewer metropolitan component
areas receiving local CPI adjustments, down to 70 metropolitan areas
and subareas (HUD Metro FMR Areas) from 124 metropolitan and
nonmetropolitan areas. The 2018 CPI data with new metropolitan area
definitions was first used with the FY 2020 AAFs. There are no longer
any nonmetropolitan areas using local CPI inflation factors in the U.S.
This change did not impact Puerto Rico which applies an island-wide CPI
to all metropolitan and nonmetropolitan areas.
Each metropolitan area that uses a local CPI update factor is
listed alphabetically in the tables and each HUD Metro FMR Area (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 metropolitan areas at the MSA or HMFA level.
[[Page 81952]]
For the four Census Regions (to be used for those
metropolitan areas that are not covered by a CPI city-survey and non-
metropolitan areas).
AAFs use the same Office of Management and Budget (OMB)
metropolitan area definitions, as revised by HUD, that are used for the
FY 2021 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 survey
areas 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 use the West Region AAFs.
Todd M. Richardson,
General Deputy Assistant Secretary, Office of Policy Development and
Research.
[FR Doc. 2020-27708 Filed 12-16-20; 8:45 am]
BILLING CODE 4210-67-P
