Section 108 Loan Guarantee Program: Announcement of Fee To Cover Credit Subsidy Costs for FY 2023, 53662-53664 [2022-19009]
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Federal Register / Vol. 87, No. 169 / Thursday, September 1, 2022 / Rules and Regulations
is taking neither of those actions with
respect to the standard for frame child
carriers. Therefore, ASTM F2549–22
will take effect as the new mandatory
standard for frame child carriers on
December 3, 2022, 180 days after June
6, 2022, when the Commission received
notice of the revision.
J. Preemption
Section 26(a) of the CPSA provides
that where a consumer product safety
standard is in effect and applies to a
product, no state or political
subdivision of a state may either
establish or continue in effect a
requirement dealing with the same risk
of injury unless the state requirement is
identical to the federal standard. 15
U.S.C. 2075(a). Section 26(c) of the
CPSA also provides that states or
political subdivisions of states may
apply to CPSC for an exemption from
this preemption under certain
circumstances. Section 104(b) of the
CPSIA deems rules issued under that
provision ‘‘consumer product safety
standards.’’ Therefore, once a rule
issued under section 104 of the CPSIA
takes effect, it will preempt in
accordance with section 26(a) of the
CPSA.
K. Environmental Considerations
The Commission’s regulations
provide a categorical exclusion for the
Commission’s rules from any
requirement to prepare an
environmental assessment or an
environmental impact statement where
they ‘‘have little or no potential for
affecting the human environment.’’ 16
CFR 1021.5(c)(2). This rule falls within
the categorical exclusion, so no
environmental assessment or
environmental impact statement is
required.
jspears on DSK121TN23PROD with RULES
L. Congressional Review Act
The Congressional Review Act (CRA;
5 U.S.C. 801–808) states that before a
rule may take effect, the agency issuing
the rule must submit the rule, and
certain related information, to each
House of Congress and the Comptroller
General. 5 U.S.C. 801(a)(1). The CRA
submission must indicate whether the
rule is a ‘‘major rule.’’ The CRA states
that the Office of Information and
Regulatory Affairs determines whether a
rule qualifies as a ‘‘major rule.’’
Pursuant to the CRA, this rule does
not qualify as a ‘‘major rule,’’ as defined
in 5 U.S.C. 804(2). To comply with the
CRA, CPSC will submit the required
information to each House of Congress
and the Comptroller General.
VerDate Sep<11>2014
16:19 Aug 31, 2022
Jkt 256001
List of Subjects in 16 CFR Part 1230
Consumer protection, Imports,
Incorporation by reference, Imports,
Infants and children, Law enforcement,
Safety, Toys.
For the reasons discussed in the
preamble, the Commission amends 16
CFR chapter II as follows:
PART 1230—SAFETY STANDARD FOR
FRAME CHILD CARRIERS
1. The authority citation for part 1230
continues to read as follows:
■
Authority: The Consumer Product Safety
Improvement Act of 2008, Pub. L. 110–314,
104, 122 Stat. 3016 (August 14, 2008); Pub.
L. 112–28, 125 Stat. 273 (August 12, 2011).
■
2. Revise § 1230.2 to read as follows:
§ 1230.2 Requirements for Frame Child
Carriers.
Each frame child carrier must comply
with all applicable provisions of ASTM
F2549–22, Standard Consumer Safety
Specification for Frame Child Carriers,
approved on approved April 1, 2022.
The Director of the Federal Register
approves this incorporation by reference
in accordance with 5 U.S.C. 552(a) and
1 CFR part 51. A read-only copy of the
standard is available for viewing on the
ASTM website at www.astm.org/
READINGLIBRARY/. You may obtain a
copy from ASTM International, 100 Barr
Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428–2959;
telephone (610) 832–9585;
www.astm.org. You may inspect a copy
at the Office of the Secretary, U.S.
Consumer Product Safety Commission,
Room 820, 4330 East-West Highway,
Bethesda, MD 20814, telephone (301)
504–7479, email cpsc-os@cpsc.gov, or at
the National Archives and Records
Administration (NARA). For
information on the availability of this
material at NARA, email fr.inspection@
nara.gov, or go to: www.archives.gov/
federal-register/cfr/ibr-locations.html.
Alberta E. Mills,
Secretary, Consumer Product Safety
Commission.
[FR Doc. 2022–18786 Filed 8–31–22; 8:45 am]
BILLING CODE 6355–01–P
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DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 570
[FR–6341–N–01]
Section 108 Loan Guarantee Program:
Announcement of Fee To Cover Credit
Subsidy Costs for FY 2023
Office of the Assistant
Secretary for Community Planning and
Development, HUD.
ACTION: Announcement of fee.
AGENCY:
This document announces the
fee that HUD will collect from
borrowers of loans guaranteed under
HUD’s Section 108 Loan Guarantee
Program (Section 108 Program) to offset
the credit subsidy costs of the
guaranteed loans pursuant to
commitments awarded in Fiscal Year
2023 in the event HUD is required or
authorized by statute to do so,
notwithstanding subsection (m) of
section 108 of the Housing and
Community Development Act of 1974.
DATES: Applicability Date: October 1,
2022.
SUMMARY:
Paul
Webster, Director, Financial
Management Division, Office of Block
Grant Assistance, Office of Community
Planning and Development, U.S.
Department of Housing and Urban
Development, 451 7th Street SW, Room
7282, Washington, DC 20410; telephone
number 202–402–4563 (this is not a tollfree number). Individuals with speech
or hearing impairments may access this
number through TTY by calling the tollfree Federal Relay Service at 800–877–
8339. FAX inquiries (but not comments)
may be sent to Mr. Webster at 202–708–
1798 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Background
The Transportation, Housing and
Urban Development, and Related
Agencies Appropriations Act, 2015
(division K of Pub. L. 113–235,
approved December 16, 2014) (2015
Appropriations Act) provided that ‘‘the
Secretary shall collect fees from
borrowers, notwithstanding subsection
(m) of such section 108, to result in a
credit subsidy cost of zero for
guaranteeing . . .’’ Section 108 loans.
Section 108(m) of the Housing and
Community Development Act of 1974
states that ‘‘No fee or charge may be
imposed by the Secretary or any other
Federal agency on or with respect to a
guarantee made by the Secretary under
this section after February 5, 1988.’’
Identical language was continued or
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Federal Register / Vol. 87, No. 169 / Thursday, September 1, 2022 / Rules and Regulations
included in the Department’s
continuing resolutions and
appropriations acts authorizing HUD to
issue Section 108 loan guarantees
during Fiscal Years (FYs) 2016, 2017,
2018, 2019, 2020, 2021, and 2022. The
Fiscal Year (FY) 2023 HUD
appropriations bill under
consideration 1 also has identical
language suspending the prohibition
against charging fees for loans issued
with Section 108 guarantees after
February 5, 1988 and requiring that the
Secretary collect fees from borrowers to
result in a credit subsidy cost of zero for
the Section 108 Program.
On November 3, 2015, HUD
published a final rule (80 FR 67626) that
amended the Section 108 Program
regulations at 24 CFR part 570 to
establish additional procedures,
including procedures for announcing
the amount of the fee each fiscal year
when HUD is required to offset the
credit subsidy costs to the Federal
Government to guarantee Section 108
loans. For FYs 2016, 2017, 2018, 2019,
2020, 2021, and 2022 HUD published
notifications to set the fees.2
jspears on DSK121TN23PROD with RULES
II. FY 2023 Fee: 0.94 Percent of the
Principal Amount of the Loan
If authorized by statute, this
document sets the fee for Section 108
loan disbursements under loan
guarantee commitments awarded for FY
2023 at 0.94 percent of the principal
amount of the loan. HUD will collect
this fee from borrowers of loans
guaranteed under the Section 108
Program to offset the credit subsidy
costs of the guaranteed loans pursuant
to commitments awarded in FY 2023 if
the FY 2023 HUD appropriations bill
under consideration is enacted, or if
HUD is otherwise required or
authorized by statute to collect fees from
borrowers to offset the credit subsidy
costs of the guaranteed loans,
notwithstanding subsection (m) of
section 108 of the Housing and
Community Development Act of 1974
(42 U.S.C. 5308(m)). For this fee
announcement, HUD is not changing the
underlying assumptions or creating new
considerations for borrowers. The
calculation of the FY 2023 fee uses a
similar calculation model as the FY
2016, FY 2017, FY 2018, FY 2019, FY
2020, FY 2021, and FY 2022 fee
notifications, but incorporates updated
1 Division A, Title II of H.R. 8294, 117th Cong.,
under the heading ‘‘Community Development Loan
Guarantees Program Account.’’
2 80 FR 67634 (November 3, 2015), 81 FR 68297
(October 4, 2016), 82 FR 44518 (September 25,
2017), 83 FR 50257 (October 5, 2018), 84 FR 35299
(July 23, 2019), 85 FR 52479 (August 26, 2020), and
86 FR 59302 (October 27, 2021) respectively.
VerDate Sep<11>2014
16:19 Aug 31, 2022
Jkt 256001
information regarding the composition
of the Section 108 portfolio and the
timing of the estimated future cash
flows for defaults and recoveries. The
calculation of the fee is also affected by
the discount rates required to be used by
HUD when calculating the present value
of the future cash flows as part of the
Federal budget process.
As described in 24 CFR 570.712(b),
HUD’s credit subsidy calculation is
based on the amount required to reduce
the credit subsidy cost to the Federal
Government associated with making a
Section 108 loan guarantee to the
amount established by applicable
appropriation acts. As a result, HUD’s
credit subsidy cost calculations
incorporated assumptions based on: (1)
data on default frequency for municipal
debt where such debt is comparable to
loans in the Section 108 loan portfolio;
(2) data on recovery rates on collateral
security for comparable municipal debt;
(3) the expected composition of the
Section 108 portfolio by end users of the
guaranteed loan funds (e.g., third-party
borrowers and public entities); and (4)
other factors that HUD determined were
relevant to this calculation (e.g.,
assumptions as to loan disbursement
and repayment patterns).
Taking these factors into
consideration, HUD determined that the
fee for disbursements made under loan
guarantee commitments awarded in FY
2023 will be 0.94 percent, which will be
applied only at the time of loan
disbursements. Note that future
notifications may provide for a
combination of upfront and periodic
fees for loan guarantee commitments
awarded in future fiscal years but, if so,
HUD will provide the public an
opportunity to comment if appropriate
under 24 CFR 570.712(b)(2).
The expected cost of a Section 108
loan guarantee is difficult to estimate
using historical program data because
there have been no defaults in the
history of the program that required
HUD to invoke its full faith and credit
guarantee or use the credit subsidy
reserved each year for future losses.3
This is due to a variety of factors,
including the availability of Community
Development Block Grant (CDBG) funds
as security for HUD’s guarantee as
provided in 24 CFR 570.705(b). As
authorized by Section 108 of the
Housing and Community Development
Act of 1974, as amended (42 U.S.C.
5308), borrowers may make payments
3 U.S. Department of Housing and Urban
Development, Study of HUD’s Section 108 Loan
Guarantee Program, (prepared by Econometrica,
Inc. and The Urban Institute), September 2012, at
pp. 73–74. This fact has not changed since the
issuance of this report.
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53663
on Section 108 loans using CDBG grant
funds. Borrowers may also make Section
108 loan payments from other
anticipated sources but continue to have
CDBG funds available should they
encounter shortfalls in the anticipated
repayment source. Despite the
program’s history of no defaults, Federal
credit budgeting principles require that
the availability of CDBG funds to repay
the guaranteed loans cannot be assumed
in the development of the credit subsidy
cost estimate (see 80 FR 67629,
November 3, 2015). Thus, the estimate
must incorporate the risk that
alternative sources are used to repay the
guaranteed loan in lieu of CDBG funds,
and that those sources may be
insufficient. Based on the rate that
CDBG funds are used annually for
repayment of loan guarantees, HUD’s
calculation of the credit subsidy cost
must acknowledge the possibility of
future defaults if those CDBG funds
were not available. The fee of 0.94
percent of the principal amount of the
loan will offset the expected cost to the
Federal Government due to default,
financing costs, and other relevant
factors. To arrive at this measure, HUD
analyzed data on comparable municipal
debt over an extended period. The
estimated rate is based on the default
and recovery rates for general purpose
municipal debt and industrial
development bonds. The cumulative
default rates on industrial development
bonds were higher than the default rates
on general purpose municipal debt
during the period from which the data
were taken. These two subsectors of
municipal debt were chosen because
their purposes and loan terms most
closely resemble those of Section 108
guaranteed loans.
In this regard, Section 108 guaranteed
loans can be broken down into two
categories: (1) loans that finance public
infrastructure and activities to support
subsidized housing (other than
financing new construction) and (2)
other development projects (e.g., retail,
commercial, industrial). The 0.94
percent fee was derived by weighting
the default and recovery data for general
purpose municipal debt and the data for
industrial development bonds according
to the expected composition of the
Section 108 portfolio by corresponding
project type. Based on the dollar amount
of Section 108 loan guarantee
commitments awarded from FY 2017
through FY 2021, HUD expects that 70
percent of the Section 108 portfolio will
be similar to general purpose municipal
debt and 30 percent of the portfolio will
be similar to industrial development
bonds. In setting the fee at 0.94 percent
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Federal Register / Vol. 87, No. 169 / Thursday, September 1, 2022 / Rules and Regulations
of the principal amount of the
guaranteed loan, HUD expects that the
amount generated will fully offset the
cost to the Federal Government
associated with making guarantee
commitments awarded in FY 2023. Note
that the FY 2023 fee represents a 1.06
percent decrease from the FY 2022 fee
of 2.00 percent.
This document establishes a
statutorily required fiscal requirement
in the form of a fee based on rate and
cost determinations that does not
constitute a development decision that
affects the physical condition of specific
project areas or building sites.
Accordingly, under 24 CFR 50.19(c)(6),
this document is categorically excluded
from environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Marion M. McFadden,
Principal Deputy Assistant Secretary for
Community Planning and Development.
[FR Doc. 2022–19009 Filed 8–31–22; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG–2022–0737]
RIN 1625–AA00
Safety Zone; Fireworks Display, Lewis
Bay, Hyannis, MA
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
The Coast Guard is
establishing a temporary safety zone for
navigable waters within a 350-yard
radius of the fireworks barge in the
vicinity of Lewis Bay, Hyannis, MA.
The safety zone is needed to protect
personnel, vessels, and the marine
environment from potential hazards
created by the firework display. Entry of
vessels or persons into this zone is
prohibited unless specifically
authorized by the Captain of the Port
Sector Southeastern New England.
DATES: This rule is effective from 8 p.m.
through 11 p.m. on September 3, 2022.
ADDRESSES: To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type USCG–2022–
0737 in the search box and click
‘‘Search.’’ Next, in the Document Type
column, select ‘‘Supporting & Related
Material.’’
jspears on DSK121TN23PROD with RULES
SUMMARY:
VerDate Sep<11>2014
16:19 Aug 31, 2022
Jkt 256001
If
you have questions on this rule, call or
Petty Officer Robert Fetters, Sector
Southeastern New England, U.S. Coast
Guard; telephone 401–435–2342, email
SENEWWM@uscg.mil.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Table of Abbreviations
CFR Code of Federal Regulations
COTP Captain of the Port Sector
Southeastern New England
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code
II. Background Information and
Regulatory History
The Coast Guard is issuing this
temporary rule without prior notice and
opportunity to comment pursuant to
authority under section 4(a) of the
Administrative Procedure Act (APA) (5
U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b)(B), the Coast Guard finds that
good cause exists for not publishing a
notice of proposed rulemaking (NPRM)
with respect to this rule because doing
so would be impracticable and contrary
to the public interest. The Coast Guard
was not provided the final details for
this event sufficient time to execute the
full NPRM process. Any delay
encountered in this regulation’s
effective date by publishing a NPRM
would be contrary to public interest
since immediate action is needed to
facilitate the safety of the persons and
vessels involved in the fireworks
display.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective less than 30
days after publication in the Federal
Register. Delaying the effective date of
this rule would be contrary to public
interest because immediate action is
needed to ensure the safety of people
and vessels during the Barnstable
Fireworks display on September 3,
2022.
III. Legal Authority and Need for Rule
The Coast Guard is issuing this rule
under authority in 46 U.S.C. 70034
(previously 33 U.S.C. 1231). The
Captain of the Port Sector Southeastern
New England (COTP) has determined
that potential hazards associated with
the Barnstable Fireworks display on
September 3, 2022 will be a safety
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concern for anyone within a 350-yard
radius of the fireworks barge in the
vicinity of Lewis Bay, Hyannis, MA.
This rule is needed to protect personnel,
vessels, and the marine environment in
the navigable waters within the safety
zone while the Barnstable Fireworks
display is occurring.
IV. Discussion of the Rule
This rule establishes a safety zone
from 8 p.m. through 11 p.m. on
September 3, 2022. The safety zone will
cover all navigable waters within a 350yard radius of the fireworks barge in the
vicinity of Lewis Bay, Hyannis, MA.
The duration of the zone is intended to
protect personnel, vessels, and the
marine environment in the navigable
waters within the safety zone while the
Barnstable Fireworks display is
occurring. No vessel or person will be
permitted to enter the safety zone
without obtaining permission from the
COTP or a designated representative.
V. Regulatory Analyses
We developed this rule after
considering numerous statutes and
Executive orders related to rulemaking.
Below we summarize our analyses
based on a number of these statutes and
Executive orders, and we discuss First
Amendment rights of protestors.
A. Regulatory Planning and Review
Executive Orders 12866 and 13563
direct agencies to assess the costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits.
This rule has not been designated a
‘‘significant regulatory action,’’ under
Executive Order 12866. Accordingly,
this rule has not been reviewed by the
Office of Management and Budget
(OMB).
This regulatory action determination
is based on the size, location, duration,
and time-of-day of the safety zone. The
Coast Guard would issue a Broadcast
Notice to Mariners via VHF–FM marine
channel 16 about the zone, and the rule
would allow vessels to seek permission
to enter the zone.
B. Impact on Small Entities
The Regulatory Flexibility Act of
1980, 5 U.S.C. 601–612, as amended,
requires Federal agencies to consider
the potential impact of regulations on
small entities during rulemaking. The
term ‘‘small entities’’ comprises small
businesses, not-for-profit organizations
that are independently owned and
operated and are not dominant in their
fields, and governmental jurisdictions
with populations of less than 50,000.
E:\FR\FM\01SER1.SGM
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]]>Agencies
[Federal Register Volume 87, Number 169 (Thursday, September 1, 2022)]
[Rules and Regulations]
[Pages 53662-53664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19009]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 570
[FR-6341-N-01]
Section 108 Loan Guarantee Program: Announcement of Fee To Cover
Credit Subsidy Costs for FY 2023
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Announcement of fee.
-----------------------------------------------------------------------
SUMMARY: This document announces the fee that HUD will collect from
borrowers of loans guaranteed under HUD's Section 108 Loan Guarantee
Program (Section 108 Program) to offset the credit subsidy costs of the
guaranteed loans pursuant to commitments awarded in Fiscal Year 2023 in
the event HUD is required or authorized by statute to do so,
notwithstanding subsection (m) of section 108 of the Housing and
Community Development Act of 1974.
DATES: Applicability Date: October 1, 2022.
FOR FURTHER INFORMATION CONTACT: Paul Webster, Director, Financial
Management Division, Office of Block Grant Assistance, Office of
Community Planning and Development, U.S. Department of Housing and
Urban Development, 451 7th Street SW, Room 7282, Washington, DC 20410;
telephone number 202-402-4563 (this is not a toll-free number).
Individuals with speech or hearing impairments may access this number
through TTY by calling the toll-free Federal Relay Service at 800-877-
8339. FAX inquiries (but not comments) may be sent to Mr. Webster at
202-708-1798 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
The Transportation, Housing and Urban Development, and Related
Agencies Appropriations Act, 2015 (division K of Pub. L. 113-235,
approved December 16, 2014) (2015 Appropriations Act) provided that
``the Secretary shall collect fees from borrowers, notwithstanding
subsection (m) of such section 108, to result in a credit subsidy cost
of zero for guaranteeing . . .'' Section 108 loans. Section 108(m) of
the Housing and Community Development Act of 1974 states that ``No fee
or charge may be imposed by the Secretary or any other Federal agency
on or with respect to a guarantee made by the Secretary under this
section after February 5, 1988.'' Identical language was continued or
[[Page 53663]]
included in the Department's continuing resolutions and appropriations
acts authorizing HUD to issue Section 108 loan guarantees during Fiscal
Years (FYs) 2016, 2017, 2018, 2019, 2020, 2021, and 2022. The Fiscal
Year (FY) 2023 HUD appropriations bill under consideration \1\ also has
identical language suspending the prohibition against charging fees for
loans issued with Section 108 guarantees after February 5, 1988 and
requiring that the Secretary collect fees from borrowers to result in a
credit subsidy cost of zero for the Section 108 Program.
---------------------------------------------------------------------------
\1\ Division A, Title II of H.R. 8294, 117th Cong., under the
heading ``Community Development Loan Guarantees Program Account.''
---------------------------------------------------------------------------
On November 3, 2015, HUD published a final rule (80 FR 67626) that
amended the Section 108 Program regulations at 24 CFR part 570 to
establish additional procedures, including procedures for announcing
the amount of the fee each fiscal year when HUD is required to offset
the credit subsidy costs to the Federal Government to guarantee Section
108 loans. For FYs 2016, 2017, 2018, 2019, 2020, 2021, and 2022 HUD
published notifications to set the fees.\2\
---------------------------------------------------------------------------
\2\ 80 FR 67634 (November 3, 2015), 81 FR 68297 (October 4,
2016), 82 FR 44518 (September 25, 2017), 83 FR 50257 (October 5,
2018), 84 FR 35299 (July 23, 2019), 85 FR 52479 (August 26, 2020),
and 86 FR 59302 (October 27, 2021) respectively.
---------------------------------------------------------------------------
II. FY 2023 Fee: 0.94 Percent of the Principal Amount of the Loan
If authorized by statute, this document sets the fee for Section
108 loan disbursements under loan guarantee commitments awarded for FY
2023 at 0.94 percent of the principal amount of the loan. HUD will
collect this fee from borrowers of loans guaranteed under the Section
108 Program to offset the credit subsidy costs of the guaranteed loans
pursuant to commitments awarded in FY 2023 if the FY 2023 HUD
appropriations bill under consideration is enacted, or if HUD is
otherwise required or authorized by statute to collect fees from
borrowers to offset the credit subsidy costs of the guaranteed loans,
notwithstanding subsection (m) of section 108 of the Housing and
Community Development Act of 1974 (42 U.S.C. 5308(m)). For this fee
announcement, HUD is not changing the underlying assumptions or
creating new considerations for borrowers. The calculation of the FY
2023 fee uses a similar calculation model as the FY 2016, FY 2017, FY
2018, FY 2019, FY 2020, FY 2021, and FY 2022 fee notifications, but
incorporates updated information regarding the composition of the
Section 108 portfolio and the timing of the estimated future cash flows
for defaults and recoveries. The calculation of the fee is also
affected by the discount rates required to be used by HUD when
calculating the present value of the future cash flows as part of the
Federal budget process.
As described in 24 CFR 570.712(b), HUD's credit subsidy calculation
is based on the amount required to reduce the credit subsidy cost to
the Federal Government associated with making a Section 108 loan
guarantee to the amount established by applicable appropriation acts.
As a result, HUD's credit subsidy cost calculations incorporated
assumptions based on: (1) data on default frequency for municipal debt
where such debt is comparable to loans in the Section 108 loan
portfolio; (2) data on recovery rates on collateral security for
comparable municipal debt; (3) the expected composition of the Section
108 portfolio by end users of the guaranteed loan funds (e.g., third-
party borrowers and public entities); and (4) other factors that HUD
determined were relevant to this calculation (e.g., assumptions as to
loan disbursement and repayment patterns).
Taking these factors into consideration, HUD determined that the
fee for disbursements made under loan guarantee commitments awarded in
FY 2023 will be 0.94 percent, which will be applied only at the time of
loan disbursements. Note that future notifications may provide for a
combination of upfront and periodic fees for loan guarantee commitments
awarded in future fiscal years but, if so, HUD will provide the public
an opportunity to comment if appropriate under 24 CFR 570.712(b)(2).
The expected cost of a Section 108 loan guarantee is difficult to
estimate using historical program data because there have been no
defaults in the history of the program that required HUD to invoke its
full faith and credit guarantee or use the credit subsidy reserved each
year for future losses.\3\ This is due to a variety of factors,
including the availability of Community Development Block Grant (CDBG)
funds as security for HUD's guarantee as provided in 24 CFR 570.705(b).
As authorized by Section 108 of the Housing and Community Development
Act of 1974, as amended (42 U.S.C. 5308), borrowers may make payments
on Section 108 loans using CDBG grant funds. Borrowers may also make
Section 108 loan payments from other anticipated sources but continue
to have CDBG funds available should they encounter shortfalls in the
anticipated repayment source. Despite the program's history of no
defaults, Federal credit budgeting principles require that the
availability of CDBG funds to repay the guaranteed loans cannot be
assumed in the development of the credit subsidy cost estimate (see 80
FR 67629, November 3, 2015). Thus, the estimate must incorporate the
risk that alternative sources are used to repay the guaranteed loan in
lieu of CDBG funds, and that those sources may be insufficient. Based
on the rate that CDBG funds are used annually for repayment of loan
guarantees, HUD's calculation of the credit subsidy cost must
acknowledge the possibility of future defaults if those CDBG funds were
not available. The fee of 0.94 percent of the principal amount of the
loan will offset the expected cost to the Federal Government due to
default, financing costs, and other relevant factors. To arrive at this
measure, HUD analyzed data on comparable municipal debt over an
extended period. The estimated rate is based on the default and
recovery rates for general purpose municipal debt and industrial
development bonds. The cumulative default rates on industrial
development bonds were higher than the default rates on general purpose
municipal debt during the period from which the data were taken. These
two subsectors of municipal debt were chosen because their purposes and
loan terms most closely resemble those of Section 108 guaranteed loans.
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\3\ U.S. Department of Housing and Urban Development, Study of
HUD's Section 108 Loan Guarantee Program, (prepared by Econometrica,
Inc. and The Urban Institute), September 2012, at pp. 73-74. This
fact has not changed since the issuance of this report.
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In this regard, Section 108 guaranteed loans can be broken down
into two categories: (1) loans that finance public infrastructure and
activities to support subsidized housing (other than financing new
construction) and (2) other development projects (e.g., retail,
commercial, industrial). The 0.94 percent fee was derived by weighting
the default and recovery data for general purpose municipal debt and
the data for industrial development bonds according to the expected
composition of the Section 108 portfolio by corresponding project type.
Based on the dollar amount of Section 108 loan guarantee commitments
awarded from FY 2017 through FY 2021, HUD expects that 70 percent of
the Section 108 portfolio will be similar to general purpose municipal
debt and 30 percent of the portfolio will be similar to industrial
development bonds. In setting the fee at 0.94 percent
[[Page 53664]]
of the principal amount of the guaranteed loan, HUD expects that the
amount generated will fully offset the cost to the Federal Government
associated with making guarantee commitments awarded in FY 2023. Note
that the FY 2023 fee represents a 1.06 percent decrease from the FY
2022 fee of 2.00 percent.
This document establishes a statutorily required fiscal requirement
in the form of a fee based on rate and cost determinations that does
not constitute a development decision that affects the physical
condition of specific project areas or building sites. Accordingly,
under 24 CFR 50.19(c)(6), this document is categorically excluded from
environmental review under the National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Marion M. McFadden,
Principal Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 2022-19009 Filed 8-31-22; 8:45 am]
BILLING CODE 4210-67-P
